Indian Cabinet approves new economic reforms

Associated Press Modified: October 4, 2012 at 8:01 pm •  Published: October 4, 2012
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Last month, the Cabinet decided to allow huge multi-brand retailers such as Wal-Mart to own a majority state in retail outlets. It also allowed increased foreign investment in airlines and the broadcast industry.

The government also slightly eased concerns about its huge deficit by decreasing subsidies on diesel and cooking fuel. However, those decisions could be made by the Cabinet directly, and did not need the parliamentary approval required for Thursday's proposals.

Though an important coalition ally quit over the reforms and Prime Minister Manmohan Singh was left in charge of a minority coalition, the government showed that it could make a risky and decisive move without backing down.

"What really has changed over the last month or so is that the decision-making process has become much faster," said Samiran Chakraborty, head of research at Standard Chartered, a financial services company. "All these reforms are reinforcing the view that foreign investment is welcome in this country."

The government has been buoyed by the response to its moves, with business leaders expressing cautious optimism that the nation's policy logjam may have finally been broken.

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