The cabinet has given its nod to 51% FDI in multi-brand retailing and 100% in single-brand retailing. This decision has been welcomed by many industry experts but at the same time some have lambasted the authorities for the clearance.
The BJP and the Left are opposing the move. It’s a sort of an ironic position. A right wing party ie the BJP (whose ideology is based on free market and open economy) is opposing the move and a centre-left party (who is a beneficiary of the Socialist model of Nehruvian ideology which talks of a controlled economy) is promoting this to give further flare to the Indian Incorporation. I find the BJP’s stand far more ironic because on one hand they say that price rise is a concern and on the other hand they oppose FDI in retail just to save the jobs of those middlemen (apart from small scale commodity sellers) who play a very pivotal role in sending the prices up. The BJP fears for the jobs of those middlemen who might get eliminated once organized retail creeps into India.
I don’t find the Congress’s stand ironic at all even though it’s against their centre-left ideology. The current PM Dr Manmohan Singh during Narsimha Rao’s regime de-regulated the economy demolishing Nehru’s Socialistic economic model and ever since then the Congress has moved in a direction which has been very different from the one envisaged by Nehru. I personally feel that the Cabinet’s nod to this particular issue is a good one. Organized as well as unorganized retail both can easily co-exist in India. Local vendors will give tough competition to the foreign players. Foreign players shouldn’t expect to completely take over the market as the local players won’t be giving them a cakewalk. What will lie in store will be intense competition and the co-existence of both organized as well as unorganized retail will help play a role in diminishing the demand-supply imbalance.
It’s an ironic world. When the Cabinet gives its clearance to Foreign Direct Investment in the field of retail to initiate retail revolution, to boost growth, to bring in necessary capital, to propel development, to improve the supply system, to turn a highly unorganized retail sector into a hugely organized one, it is accused of being capitalistic, administering in favour of American companies and is referred to as a government which is controlled by corporations and multi-billionaires. When the Cabinet gives its nod to a highly ambitious Food Security Bill with the aim of providing subsidized food to millions across the country living in a deprived state in rural as well as urban areas then the Government is accused of indulging in populism, it is said that the Government is concentrating on elections by strengthening its rural votebank and it’s decision is called economically expensive.
Similarly when somebody opposes FDI in retail, he is branded as a pseudo-poor sympathizer, anti-west, technology-basher and is thought to be caught in the web of 19th century. When somebody speaks out against the Food Security Bill he is looked upon as an elitist, spokesperson of some greedy private organization and as somebody who has no concern for the poor. I don’t understand why we resort to baseless stereotyping. All individuals have a right to voice their concern but it needs to be substantiated with valid arguments. I am a great admirer of the idea of having FDI in retail since it will bring in better technology and capital, will eliminate middlemen, establish a better supply chain and most importantly provide both the farmers as well as the consumers with more options. According to me they won’t pose any significant threat to the roadside small ‘kirana’ shops. If Walmart will come to India it will go and open its stores in established commercial places like Connaught Place, Saket, Vasant Kunj, Noida Sector 18 etc. It will not open a store in a residential colony. If I need to buy some small item like a pencil or a refill for my pen then I’ll buy it from the small store next to my place. I will not take the pains of going to buy a pencil, a small item or any commodity required in urgency to CP or Noida. This is the reason why road side small shops will never cease to exist and will always be in demand. They should be ready to take on and wrestle with malls. They’ve been doing so since quite a while. The only difference is that once FDI in retail is brought, the owners of the malls will be foreigners. Why should small store kirana shop owners be afraid of malls? And believe me they’re not. This huge concern raised over FDI is purely political rhetoric and nothing else.
I also find the intention of the Government especially Sonia Gandhi led NAC behind the Food Security Bill as commendable but I have certain reservations. If we would have brought in FDI in retail instead of suspending the decision under widespread political pressure, we would have managed to arrange for enough funds required to provide subsidized food to the poor but now since FDI in retail is out of the loop, how do we arrange for necessary cash? In such testing times is it logical enough to further burden the Public Exchequer with subsidies? Let’s be realistic. We can afford to heckle and tumble a bit on the economic graph but we cannot afford to let our people die of hunger. Sometimes short term growth can be sacrificed or compromised on for the sake of greater benefits in the future. But my biggest concern is not the subsidy in relation to the Food Security Bill (I know that the Government will arrange for necessary finance somehow) but the fact as to how will the Government overcome distribution discrepancies is the issue which is playing on my mind. It’s tough to think as to how the Indian bureaucracy will be able to implement this scheme (it has failed miserably in enacting rural schemes in the past) and it remains to be seen as to what changes they will bring in to make this venture successful. I personally feel that in relation to this particular initiative the Government needs to decentralize the assignment of handing out food items to small NGO’s working in rural areas and Panchayats instead of banking on bureaucratic establishments. These are matters which need to be debated. But we need to be very clear about one thing, we cannot hold the rich guilty for being wealthy nor can we penalize the poor for being financially broken. The poor and the rural areas need to be brought up by means of government plans and schemes but that doesn’t mean we hold back the rich and the urban areas from further developing until and unless the poor rise up to the same status. I again stress on the need for ‘inclusive growth’.