NEW DELHI — After months of dithering on the economy, India’s beleaguered government roared back to life in dramatic fashion on Friday, announcing big bang reforms as part of package of measures aimed at reviving growth and staving off a ratings downgrade.

In the biggest policy push of Prime Minister Manmohan Singh’s second term, proposals to allow overseas retailers like Wal-Mart Stores and Carrefour to own 51 per cent of supermarket chains, shelved last year after alliance partners threatened to revolt, have been enforced now, Commerce Minister Anand Sharma said. Overseas airlines are allowed to own 49 per cent of Indian carriers.

A day after sharply increasing the price of heavily subsidised diesel, the government said it was opening up its supermarket sector to foreign chains and would allow more foreign investment in airlines and broadcasters. It also approved the sale of stakes in four state-run industries.

Facing the threat of having its credit rating downgraded to junk, the Indian government has been running out of time to show it is serious about fixing an economy that has been hard-hit by a global economic crisis and political gridlock at home.

“I believe that these steps will help strengthen our growth process and generate employment in these difficult times,” Singh said via Twitter.

The retail reform allows global firms such as Wal-Mart Stores to hold a majority stake in a local partner and sell directly to consumers for the first time, which supporters say could transform India’s $450 billion retail market and tame inflation.

“We are grateful that the government has realised and appreciated the value that we will bring to strengthen the Indian economy,” said Raj Jain, president of Wal-Mart India. “This policy change will allow us to connect directly with the consumer and help save them money.”

The government has championed the policy as a way to unclog supply bottlenecks that cause a third of fresh produce to rot before it reaches an Indian table. It is hoped global chains will offer better prices to farmers by cutting out middle men, while also pumping investment into cold storage facilities. But it will also come with stiff riders. Foreign retailers will only be allowed to set up in cities with a population of more than one million, and must source at least 30 per cent of goods from local, small industries.

State governments will have the freedom to decide whether to allow the supermarkets on their patch and the minimum investment will be $100 million, Sharma said. Half of that investment must be in rural areas. In less than 24 hours, the government announced more measures to liberalise the economy than in the past eight years — a sign of the urgency felt in New Delhi after high spending and low growth battered India’s finances in recent months.

Inflation jumps

India’s inflation rate jumped to 7.55 per cent in August, mainly from higher food prices, data showed on Friday. The Wholesale Price Index rose to 7.55 per cent from 6.87 per cent in July, which was a near three-year low.