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Pantaloon`s shares have slumped by their biggest one-day percentage drop in almost a decade

SHARES in Indian retailer Pantaloons have slumped by their biggest one-day percentage drop in almost a decade, and business leaders rounded on the government after Prime Minister Manmohan Singh put on hold a landmark reform of India’s retail industry.

Postponing the reforms - which some claim will destroy the livelihood of millions of small shop owners - is embarrassing for a government that has failed to pass any big-ticket economic reforms as it battles corruption allegations and a limp economy.

The policy shift, that would allow big foreign chains such as Wal-Mart Stores Inc, Tesco and Carrefour to own a majority stake in supermarket operations, has been shelved until Singh can build a consensus behind it.

Singh`s chief political fire-fighter, Finance Minister Pranab Mukherjee, called opposition leaders individually to inform them of the decision, which was prompted by widespread dissent from coalition allies to reforms the government hoped would attract much-needed investment and tackle inflation.

"(The finance minister) has assured them that FDI in retail will be kept in abeyance for now in deference to the views expressed by different political parties," a senior government source said.

"It will be in abeyance until a consensus is built on the issue."

Mukherjee said he would make a statement on the reform issue when parliament meets tomorrow (December 7), and not before.

The delay hit shares in local retail firms that had been expected to benefit from tie-ups with the foreign groups.

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