First, the decision to open up multi-brand retail trade to foreign investors. In an effort to forcibly showcase the fact that the government was not gripped by policy paralysis, they gave life to the policy that allowed majority share holding to foreign companies in retail trading in India. However, given their inability to think through (and at the same time appease the nay sayers) they put in such irrational conditionalities that none of the global majors evinced any interest in investment (even after nine months have passed since the trumpeted path breaking decision) save for seeking a few clarifications now and then. The government might have liked to believe that the attraction of the Indian economy is beyond doubt and the opening up of retail trade will lead to a stampede by the global biggies. On the contrary, however, there was a deafening silence – as the investors can only see a slowing economy mismanaged by a rudderless government.
As the government’s monumental inefficiency has resulted in historically highest level of CAD, financing of which is becoming extremely difficult with each passing day, the desperation to get FDI inflows to ease the pressure has now resulted in the government having to eat a humble pie. There is now thinking within the government that the restrictions need to be diluted to get the investments flowing.
Then the now-on now-off ordinance on food security bill. For the ruling UPA government, this is crucial to their dream of getting a shot at forming the third successive ruling government. However, with the budget session of the parliament being adjourned sine die with virtually no business being conducted save for passing the finance act, the government had been mulling the ordinance route to make food security bill a reality. However, given the muddled thinking within the government, they have announced promulgation of ordinance a multiple times only to chicken out later at the thought of facing major opposition. However, with the rising possibility of the opposition parties bringing in enough roadblocks to delay the implementation if the discussion takes place during the monsoon session of the parliament which is scheduled to kick start soon, the jittery government finally went ahead and got the ordinance done so that they have enough time to set the ball rolling before the election rolls in. This is another instance of reality winning over propriety, never mind the economic cost of such a move.