RIP retail FDI: Memorial at Wal-Mart with overpriced Indian flowers

So how is the world reacting to the government’s decision to shelve the proposal to allow 51 percent foreign direct investment (FDI) in multi-brand retail?

Predictably, with disappointment, and growing conviction that things will go nowhere on the economic reforms front from now on.

As Rajiv Kumar, secretary general of the Federation of Indian Chambers of Commerce and Industry, told The New York Times:“It’s going to take a long time to come back.This waiting for a ‘consensus’ - I can’t see it happening now.”

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On Wednesday, the government announced that the decision to introduce FDI in retail would be put on hold until a consensus was reached among all stakeholders (farmers, middlemen, traders and consumers).

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The furious ruckus that erupted in Parliament over the issue has also sowed doubt among some foreign observers on India’s ability to become one of the key drivers of global economic growth in the future.

“This episode is more than just a political embarrassment; it may be remembered an inflection point in the ‘rising India’ story, a moment when skepticism about India’s future finally started to overshadow optimism,” a blog report on_Time_noted.

The report also noted the disturbing mismatch between the government’s words and deeds.“What’s troubling isn’t the underlying health of the Indian economy; it’s a sense that the Indian government’s actions on encouraging free markets and economic growth don’t quite match its words.

“It plays a sort of economic double game, in which top officials talk up India’s dynamic economy and entrepreneurial spirit abroad while pandering at home to those who still see India as a poor country in need of protection from the evil forces of foreign imperialism.”

Hopes of India introducing big-bang reforms to kick-start a sputtering economy have also been squelched firmly. “It is frustrating to look at unresolved issues and know that they’re resolvable if you can get some leadership and orientation around them,” John Flannery, chief executive officer for General Electric’s India unit, told Bloomberg.

Those qualities, unfortunately, will no longer be forthcoming. “For anyone hoping that this government would do something, it’s effectively another nail in the coffin,” Robert Prior-Wandesforde, head of India and Southeast Asia economics at Credit Suisse, told Bloomberg. “They will be even more cautious in taking reforms forward than they were before.”

Finally, _Financial Times_carried a tongue-in-cheek obituary on the demise of FDI in retail.“India’s most revolutionary economic reform in years died on Wednesday. It was 12 days old,” it said. “Its single aim in its short life was to open up India’s $450 billion consumer market to international players like Wal-Mart, Tesco and Carrefour and bring Indian shopping into the 21st century.”

But it was half strangled at birth and expired soon after, the blog noted.

“Memorial services will be held in the offices of Wal-Mart, Tesco and Carrefour. Overpriced flowers bought from local Indian traders are welcome,” it concluded.