RBI chief backs retail FDI; wants better governance

Reserve Bank of India governor Duvvuri Subbarao today threw his weight behind the government's decision to allow foreign direct investment in multi-brand retail and lift the FDI cap on single-brand wholesale.

He stressed that allowing foreign direct investment in multi-brand retail is important for India's overall economic growth and for controlling inflation.

''It's commendable that government has taken the initiative. Let's hope that it will improve the logistics and supply chain in agriculture," Subbarao said in a speech at a university function in Chandigarh.

"It's important for not only raising overall growth but also important for containing inflation and improving quality of life over 50 per cent of population," he said.

Subbarao outlined 10 challenges threatening India's growth story; but stressed that the key to them all was "providing good governance".

He said identification of problem areas and drawing up plans to address them was the relatively easy part - "What is infinitely more difficult is the translation of those policies into action. In the ultimate analysis, it is the quality of governance that separates success and failure in economic development."