FDI in retail - A second gamble of UPA.

FDI in retail - a second gamble by UPA ?

UPA , during its first term, took a gamble with its move to get
support from its alliance partners and outside supporters for the
Indo-US nuclear pact as most of them were not convinced of the need
for the same. The government was able to get it passed in the
parliament. However, the pile of currency notes put on the table of
the house by the members of the parliament has raised some questions
which have not been answered up to now. During the discussion in the
house, the government told us that this nuclear deal would bring
energy security to India and reduce carbon footprint. All this faded
after Fukushima disaster and the reluctance of suppliers of nuclear
reactors to take liability in case of nuclear disaster. A recent
special report by the Economist on Nuclear Energy was entitled, " The
dream that failed" (March10,2012) and concluded that the role of
nuclear power may never be more than marginal.

This time UPA is taking another gamble on FDI in retail. The majority
of the members are not convinced that it is in the interest of the
country as it is likely to reduce employment in the unorganised trade
sector without bringing in marked improvement in the agricultural
sector - reduce the gap between the farm-gate price and the consumer
price and prevent wastage of fruits and vegetables. Some have
questioned how FDI in retail can set up cold storage chain when there
is power shortage all over the country ? How can there be job
increase when efficiency requires automation ?

The government expects FDI in retail will bring in a revolution in
food production - fruits and vegetables - which it has failed to do it
in the last 20 years through the Ministry of Agriculture, agricultural
colleges and universities. There is a distrust of foreign capital,
especially in agriculture on which more than 60 percent of our
population depends.The Indians still remember that the British came to
India for trade and stayed here for 200 years. Some have ideological
reason. They believe that private capital and profiteering go
together. Whatever the reasons, the fact remains most of the political
parties do not support FDI in retail. The government is now engaged in
breaking the opposition with carrots and sticks. The government is
seeking support from parties which have opposed Indian big business
entering this sector. Some members of these parties have damaged and
destryed stores run by them in UP, West Bengal and Kerala.

Foreign investment in India has been a mixed blessing. FDI in
automobile industry has expanded the choice to the Indian consumer and
strengthened ancillary industry. However, it has failed in power
sector. Enron produced most expensive electricity in the country and
had to sell its operations to the state. The PM told Indians that
nuclear power would help in solving the power shortage. But not a
single nuclear power palnt has come up in India as people are afraid
of radiation ( the Japanese experience is fresh in the minds of many)
and have opposed proposed plants in Ratnagiri in Maharashtra.
Monsanto's cotton Bt seeds increased the cotton yield immediately but
now the farmers have to use more pesticides. Another report states
that declining yields, higher input costs, and crop failure caused by
delayed monsoon pushed farmers into debt and suicide.

As far as FDI in retail is concerned, there are conflicting
assessments. It can reduce wastage and the number of intermediaries
between the farmer and the consumer benefiting the both. However, it
can also eliminate neighborhood stores and will not lead to employment
generation. The critics have pointed out that if the multi-brand
retail has not helped even the American farmers as they are being
given massive subsidy of US $ 307 billion under the US Farm Bill 2008
for five years. It is the same in the OECD countries. Farmer's income
has fallen down everywhere. Farmers in Scotland have formed " Fair
Deal Food" to seek higher price for their produce. They have also
pointed out that these stores pay lower salaries and lower benefits to
their employees. These stores are accused of 'squeezing' the farmers
and 'predatory' pricing.

India has more than 1.2 million retail outlets with a turnover of US$
400 billion, it employs 7.2 percent of workers and provides jobs to
33.1 million. Wall-Mart also has a turnover of US$400 billion but
employs only 2.1 million. Multi-brand retail may be good for the
middle class but not to the people in general.

India should find its own solution to meet its needs which is
integrative and inclusive. Here is an example.The Gujarat Co-operative
Milk Federation ( GCMMF) which processes 10 million liters of milk
from 3 million farmers across 15,000 villages. " We didn't need any
foreign capital or expertise to accomplish this. Besides, we involved
the community instead of excluding it" says R.S.Sodhi, managing
director of GCMMF which popularized the Amul brand. He says 80 percent
of the money consumers pay for milk goes back to the dairy farmers as
against 30-35 percent in the US and EU.

India has to encourage Indian entrepreneurs to launch similar
enterprises which makes use of the present retail outlets. Let the
associations of retailers access fruits and vegetables directly from
the farmers, refrigerate it and distribute it. There are many experts
in all these fields in the country. The government has to formulate a
comprehensive plan and create a conducive tax regime. The GCMMF and
other similar co-operatives could be mandated to enter this field as
they have direct contact with the farmers. In five to ten years there
would be a new model of development - inclusive of farmers and the
retailers.

The telecommunications and software revolutions in India were ushered
in by Indians. The retail revolution can also be led by Indians. Now
the ruling establishment wants the foreigners to lead it. We seem to
be going from one extreme to another - after Independence, it was
socialist pattern of society where private sector and foreign
investment were look down upon. Now we want everything from foreign
countries. Gandhiji and Nehruji must be turning in their grave!

November 28,2012.

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Balasaheb's mixed legacy.

Balasaheb's mixed legacy.

Sreenivasan Jain (DNA,19/11/12) is right that Shiv Sena's decline started
1999 as it failed to give good governance to the state. Maharashtrians
gave a mandate to Shiv Sena-BJP coailition government in 1995 but it
failed to make any difference to the state. At the fag end of the term
it built Mumbai-Pune Express Highway and a number of fly-overs. It
conceived the Bandra-Worli bridge but could not finish it. It promised
to give houses to slum-dwellers but could not initiate it. It revived
the expensive gas-based power project of Enron initiated by the
Congress which became the white elephant of the state. Shiv Sena-BJP
alliance has been in power in Mumbai for many years but have nothing
to be proud of – pot-holed roads, garbage continues to be a problem,
municipal education in dire straits etc. Shiv Sena and all other
parties have failed to get justice for the mill workers.

However, Balasaheb roared like a lion on behalf of Maharashtrians who
were marginalized in the city's life – political, social and economic
– due to historical reasons. There has been improvement in these
spheres for the Maharashtrian youth in the city. That is why many
lakhs of people came to bid farewell to the Saheb.

November 19,2012.

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Probity & Accountability of the rulers.

CAG Vinod Rai is right ( I.E.,Nov.8). Our rulers have become
appallingly brazen as far as accountability and probity in public life
is concerned. We all remember Lal Bahadur Shastri who resigned after a railway accident.
Now we have ministers who would not resign till they are
charge-sheeted.

It is high time that CBI and CVC are freed from the government
control. They should be under a parliamentary committee's control or under the
Supreme Court so that these institutions are not misused by the ruling party to
benefit it supporters and harass the opposition parties.
Accountability and probity are as important in a democratic system as
periodic elections and majority rule.

Another report on the same day explains how an imaginative IAS
officer, Alok Kumar Singh, has transformed the small town, ,Ashrafpur
Kichaucha, a model of good governance. It is to be hoped that this
would be duplicated in our towns and villages.

Vinod Rai and Alok Kumar Singh give us hope for a better India.

November 9,2012.

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Naipaul & Karnad.

Naipaul & Karnad.

The report, " Karnad slams Naipaul" (The Indian Express,3/11/12) makes
sad reading as one
writer condemns another for his views on history, and this in a
democratic country which values freedom of expression. V.S. Naipaul,
who has a special attachment to India due his Indian ancestry, has
written extensively on India after meeting many ordinary Indians and
visiting various parts of India. After visiting Hampi, where one can
see the destruction of a great city, he writes that the Indian history
books mention invasion of India by Persians and Afghans who happened
to be Muslims as the 'arrival of Islam' as if they were some tourists..
All that he points out is that these invasions have not just destroyed
cities and temples but the inquisitive and innovative spirit of India.
Indian people
have became more conservative and defensive. This may or may not be
accurate but it is his view or his interpretation. Of course, it is
almost opposite of what the Indian government and its historians have
been telling us in our schools. In a democratic country issues of this
nature should be discussed dispassionately rather than criticize the
views." I do not agree with you but I will defend your right to hold your
views" sums up the democratic spirit.Can his views on Indian history
be held against him as a great writer of our time ?

November 4,2012.

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