India abruptly backtracked on plans to allow international supermarkets and department store to enter the market. The surprise move, announced on Wednesday, suspended a previous Cabinet decision that would have allowed foreign companies such as Wal-Mart Stores (NYSE: WMT) to own 51 percent of multi-brand supermarkets operating in India. Speaking in Parliament, Finance Minister Pranab Mukherjee announced that, “The decision to bring 51 percent foreign direct investment in retail has been suspended till a consensus is brought among various stakeholders.” The decision was seen as a blow to Prime Minister Manmohan Singh’s influence and a sign of growing political paralysis in the country. Singh’s coalition government has been rocked by a series of scandals and infighting among allied parties. The government said that opening up its retail sector to foreign business would improve India’s supply chain and stimulate foreign investment in the country. Opponents said the proposed law would jeopardize the livelihoods of farmers.

India’s government recently slashed its forecast for gross domestic product (GDP) growth in the fiscal year ending March 2012 to a range of 7.25 percent to 7.75 percent, down from the original estimate of 9 percent. In a mid-year review of the Indian economy, Finance Minister Pranab Mukherjee said it “will not be easy” to meet the 2011-2012 fiscal deficit target of 4.6 percent of GDP. Headline inflation will decline starting in December and inflation will come in at 7 percent for the full fiscal year.

Inflation in China declined sharply in China, opening the door to further pro-growth measures from the government. The country’s consumer prices rose 4.2 percent in November, down from 5.5 percent the previous month, according to data from the National Bureau of Statistics. Declining prices were attributed to better-than-expected harvests and government measures to tamp down inflation. Meanwhile, industrial output expanded by 12.4 percent year over year during the month, down from the 13.2 percent yearly increase booked in October, indicating that China’s economic growth has cooled significantly. China last week announced that it would cut the banks’ reserve requirement ratio by 50 basis points–the first such move in three years, and one that was widely viewed as a sign that China’s economic policy was pivoting toward stimulating growth. However, China’s state-run media announced that the country will maintain a “prudent” monetary policy next year, citing a decision by the powerful Communist Party Politburo.

South Korea’s economy is expected to grow by 3.7 percent in 2012 and 4.2 percent in 2013, compared with 3.8 percent this year, according to the country’s central bank. However, the downside risks to this estimate are “high” because of Europe’s sovereign-debt crisis, possible disruptions to growth in major economies and unrest in global financial markets, the central bank said. Inflation is expected to increase by 3.3 percent next year compared to 4 percent in 2011.