DISCUSSION FORUM : FDI IN RETAIL

Date: Tue, 6 Dec 2011 14:44:39 +0530
From: Sultan Fazelbhoy (sarasmahim@yahoo.co.in)
Subject: Re: VOX POPULI:Issue: 89 A THOUGHTFUL RESPONSE TO YOUR INVITATION

Usually I have no time to respond, but recently I have felt that our politics is going more and more downhill to the great detriment of the 'aam admi'.

YOUR piece on the PM on FDI (issue 89) has some points I agree with -- I do think the UPA is weak in public relations. They should brief the public in advance on any important new legislation and why they think it is necessary.. They should present the positive aspects without glossing over the negatives.

At present they are giving the Opposition parties a chance to brow beat them. In general people are more willing to believe the negatives and hesitate to support the positives. Thus the Opposition has a field day.

The Opposition is also wrong -- they have not studied the economics of FDI in retail, nor the reasons why countries like China continue with these arrangements. Surely China sees more positives than we in India are prepared to admit ????

The Indian Express issue of Sunday Dec 4th, page 13, has a very good analysis of the pros and cons of Retail FDI. Do read it for better understanding of the larger issues. For one thing, with our vast population we need massive capital to generate jobs, improve infrastucture, avoid wastage of food and vegetables in transit, improve management techniques, etc.

We have the intellectual talent and love for our country. But corruption and the general environment is not congenial to rapid growth. Sadly, our devotion to religion is excessive and different to spirituality and virtuous living. It builds walls between communities instead of bridges of understanding.

I often wonder how the PM gets good sleep at night and remains healthy. His wife surely deserves appreciation for a well managed and harmonious home. And the integrity inculcated in the children as they have not exploited their father's status.

It is time to reflect and tell our political parties on all fronts, to devote their energies to nation building, and not in finding ways to pull down the Govt so they can come to power. And sadly they have no clarity in their action programme, except building a Ram Temple, as if that will solve all economic and political problems.

I am told that the devotees of the Ram Mandir are hoping for release from the cycle of rebirth once the Ram Mandir is built in Ayodhya ! ! !

Vox Populi I request you to include some appreciation of the positives in your regular news letters. These are thoughts from a concerned minority citizen at age 84. I want people to understand that I am an Indian Muslim first and NOT a Muslim Indian when I write the above views .....sincerely.

PM On FDI In Retail

The PM’s stand on FDI in retail is untenable. Whatever is beneficial for the country should not be necessarily the wisdom of one individual particularly in a democracy. The decision has to be collective or at least through a consultative process made to look as collective. The PM at the least should have the ability to convince and carry along the nation on any policy. But where the timing and manner of the announcement of the FDI policy has raised the hackles of every single party in the country including some of the UPA’s allies the possibility of constructive dialogue has been negated. To be generous one must think that maybe it is the lack of knowledge of procedure and form in the announcement of major policy by the UPA time and again which gets itself into a mess. In the alternate it sows the seeds of suspicion that the political class and this nation is being taken for granted by the PM and this UPA government in its insurmountable arrogance which is not what one would expect to see in a democracy. Further the comment attributed to the PM that those States which do not want the FDI in retail can opt out of it, does not behove the occupant of the high office of the PM. Such comments are essentially divisive in nature and Manmohan Singh should know better than making such comments. It also gives rise to the question whether Manmohan Singh is the PM of the whole country or only of those States which agree to go along with him when he gets onto his high horse. The FDI in retail decision is clearly orchestrated by big business interests, both from India and abroad, and one does not understand why even now we continue to be driven by foreign dictates. One of the advantages of FDI in retail is touted to bring the required back end investment like cold chain and the like which will go a long way to cut down on the perishables which is the major problem with fruits and vegetables. What is not understood why we, within India cannot do it on our own and why we need FDI for it. We have major firms within the country who have the relevant deep freezer and airconditioning technologies, who can surely be relied to supply the cold chain. On a pilot scale why this was not tried in any area of the country as a proof of concept is not fathomable before we think of handing over not only the cold chain but the entire retail trade to foreign entities. Manmohan Singh by starting to look adamant with the FDI in retail decision has got his petulant pout out as we had seen during the Indo-US nuclear deal. We do hope that this policy decision does not go the way of the Indo-US nuclear where Manmohan Singh staked his political career on the matter. If that happens it will be a sorry situation for the country where the PM is always shown up as someone who is unable to carry his people along with him and has to resort to blackmail to get his programs through. It should not also be that FDI in retail gets stalled just like the Indo-US nuclear deal which is mired in seemingly intractable problems relating to supply of uranium and public liability issues. If that happens then overall FDI to India will be surely affected considering that India takes one step forward and two steps backward on any major policy involving foreign technology and/or investment.

FDI In Retail

The incumbent UPA government has thrown another spanner in this economy’s works by announcing FDI in retail. At first glance it seems that this is yet another knee-jerk reaction to the criticism that the government is facing from domestic constituents particularly industry leaders and foreign countries as well about policy paralysis. This decision one presumes in this government’s assumption will show that they are capable of taking major policy decisions. The timing of the decision by the Cabinet seems rather inopportune considering that Parliament was in session and it was well-known that this matter would be a sensitive one. In the alternate one can also look at the devious option of saying that the UPA government deliberately took this decision at this time to derail Parliament so that they could monopolise the process of governance according to their own wishes. By avoiding putting anything up for debate you side-step the possibility of getting questioned on the floor of the House. The UPA spokespersons taking the virtuous position by saying that they did not postpone the FDI decision until the present Parliament session was over and wanted to be open about it with the House, is showing up their lack of management skills and the awareness of gamesmanship as a tactic to get things moving. What is achieved by stalling Parliament and blaming each other for it is something that the aam admi does not understand. For him the option is simple and that is the steering wheel had been given by him to the Congress and the UPA, but he sees them at each parliament session driving the House car into an alley and then saying that the Opposition put up a wall in front of them. It is by now clear that the Congress and the UPA needs someone to give them a lesson in House management. Coming back to the announcement of FDI in retail (51% in multi-brand and 100% in single brand) is only to benefit the foreign retail chains like Walmart, Tesco and others. It is going to benefit them more than the Indian farmer or consumer. There will be no reduction in prices that the consumer will see or no higher realization that the farmer will get but the retail chains will only add another layer to the farm gate to consumer chain. And the Indian aam admi be it consumer or farmer will have to pay for the ambience, air-conditioning, computer systems and livery of the employees of the big retail chains in the food or item cost. The projections that prices of food will come down as now being suggested by the US retail industry which has welcomed India’s decision can be assessed by drawing an equivalence between our domestic air fares a few years ago and what is prevailing now. At that time you would see the airlines promoting the Rupee 1 fare or the cut rate fares which have all but vanished. The reason that they are no longer existing today is that they have served their purpose to bring the customers in. So also retail chains initially to draw the fly ( consumer) into the spider’s web (retail chain) will price items attractively and then once the consumers are hooked, they will in the manner of lifting the kitten by the scruff of the neck will hike the prices to prevailing international levels. This has been the marketing strategy of the retail chains from time immemorial in the Western world and why we have to succumb to these sucker deals is something which is not understood. As for Shri Anand Sharma, Minister of Commerce’s claim that 10 million jobs both direct and indirect would be created over a period of time once the FDI policy kicks in, is all humbug. Who will be there to assess the number of jobs created? These figures are just being quoted to overwhelm the aam admi’s imagination so that the policy sails through. If this was the level of job creation why was the FDI policy kept hanging fire since 2004 and not implemented earlier on priority. There are also many clauses within the FDI policy which are purely decorative like the stipulation of sourcing from local SME’s which is against WTO norms and will be struck down if someone goes to court. This policy of handling the retail trade in India will cause a massive loss of livelihood of local people particularly that of the non-literate and unskilled work force who will have no alternative but to starve if the FDI policy is appr4oaved. Not only that the onus of managing prices within the Indian economy for items like food, commodities and white goods will be shifted to the corporate MNC’s like Walmart etc. and then our government will have to track and manage prices and inflation through Walmart CPI indices and not their own. A good thing some would say, since it will constitute a leaner government and allow the Indian consumer to be firmly in the maws of the MNC’s. The problem finally with this policy is that it proves that though India became independent some 64 years ago we have not been able to rid our minds of the servile, colonial mentality and at every chance we are willing to give our tikki or pig-tail to foreign entities so that we are dragged by it whether willingly or unwillingly. When will Purna Swaraj dawn on this country, God only knows!

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