India capable of 10% growth

Even as there are some concerns over rising interest rates impacting growth, the Planning Commission believes that India's can achieve a GDP growth rate of 10 per cent by increasing the pace of agricultural and infrastructure expansion.

The apex panel is also of the opinion that the growth of manufacturing sector is important to ensure more employment for unskilled labourers by bringing in work force from the agriculture sector.

It also believes that allowing FDI in retail could improve the farmer's conditions by ending the monopoly of mandis.

"If a domestic player puts in a large number of outlets, the domestic retailers will have a greater impact on the supply logistics of the retail sector than the foreign players," a Planning Commission official said.

Favouring a phased and a go-slow approach on foreign direct investments in the retail sector, the official added: "The belief stems from the fact of the plans to shift the accent from the FDI in retail to the modernisation of the retail space through domestic players.

This approach has been earmarked as the domestic players can bring in capacity, scale and investments as compared to the foreign players."

The government wants to get a sense of how the domestic retailers will impact the local kirana stores. It wants to gauge the employment effect of the domestic retailers.

Depending on this first stage of liberalisation, the government will take a full view of the opening of this sector to the foreign players. The policy will involve mandatory sourcing and even some local manufacturing content.