Hundreds of millions of the poorest people in India will have to pay more for staple foods like rice and vegetables, if foreign supermarkets are refused permission to open in India, the country's chief economist told The Times of India on Tuesday.

Kaushik Basu, one of Prime Minister Manmohan Singh's close advisers, said allowing supermarket chains like Tesco and Wal-Mart to open their first stores in India would be one of the most effective ways of helping the country deal with food inflation, which stands close to 10 percent.

There is a lot of misunderstanding about these changes, he said, Without them, Indians will just have to get used to paying higher prices for food.

He further explained that approximately 40 percent of Indian fruits and vegetable supplies became spoilt before they reached the consumers, citing poor quality roads, a lack of infrastructure and a general lack of infrastructure. Additional investment, he reasoned, would keep prices down and help the overall economy.

The Indian economy, which is Asia's third-largest, threw open its $450 billion retail market to global supermarket giants last week, with Food Minister K.V. Thomas saying the government would allow Foreign Direct Investment (FDI) of up to 51 percent in multi-brand retail stores, as supermarkets are known in India. He also said the government would raise the cap on foreign investment in single-brand retailing to 100 percent from 51 percent.

However, the government appeared to be backtracking on Monday, following pressure from its political opposition over what is, potentially, one of the most far-reaching reforms in recent years.