Indian Retail Opened Up For FDI: The Day After Diesel Price Hike!

The economist in Dr. Manmohan Singh, Prime Minister of India, has finally decided to take control of the country’s economy and growth, and end the nearly one-year-long policy plus reforms paralysis politically enforced by the opportunist opposition parties as well as the allies of the ruling coalition. Undaunted by the countywide rallies and protests against the diesel price hike on September 13, 2012 Dr. Singh captained his government along to push through the reforms further the very next day. Goodness for the country’s economy and future growth prospects in a global perspective must be kept beyond politics and political fortunes of the government; he seemed to have decided upon.

In a landmark decision on the evening of September 14, 2012 the Government of India approved the much opposed 51% FDI (Foreign Direct Investment) in the over $500 billion Indian multi-brand retail market and 49% FDI in the misery-ridden Indian aviation sector. The FDI cap for the Broadcasting sector has also been raised from the current 49% to 74%. Prime Minister Dr. Manmohan Singh has justified this decision and the diesel price hike as much needed reforms to rescue the country’s economy from stagnating growth and the fears of being termed junk by the international credit rating agencies. But still the reforms were not imposed on all states leaving the governments free to allow FDI or not in their respective states.

The markets immediately responded to the diesel price hike buoyantly. The industrialists, business experts and the economists hailed both of the courageous steps as the much awaited policy reforms to sail the economy out of the present crisis. Many of the experts dismissed common perceptions that marginal and small retailers will go out of business, global giants will make profits at the expense of indigenous entrepreneurs and farmers will be adversely affected as completely unfounded. They pointed out that in various advanced countries where the multi-brand giants opened shops the small retailers continued to exist, that in a global economy no country could afford to go back to self-reliant policies and that the farmers in fact stand to benefit getting better prices for their crops in the absence of the middlemen.

But unfortunately the opposition political parties and allies do not want anything good happen to the country at the moment, because at the moment they only want to capitalize on the crisis-ridden government and want to come to power forcing early elections. They are not ready even to debate the possibilities as was corroborated by their tactics to stall the entire monsoon session of the Indian Parliament. They are sure of victory, because they represent the middlemen and moneylenders who exploit and loot the farmers often driving them to suicides; because they represent all the unscrupulous traders who adulterate our food serving poison on our plates; because they represent all the apathetic and comfort loving middle classes who spend thousands at restaurants and bars but grimacing at the 20 bucks to be paid as taxes and who swoop down on the cinema multiplexes or most expensive shopping complexes spending dirty sums and yet bargaining with the local vegetable vendors for a buck and because they represent all the gullible masses, their largest vote banks and divided on caste or religion or language or whatever lines, who know little politics and much less economics. 

Of course, one cannot be damn sure about all possible benefits or losses of reforms at the moment and therefore befitting a perfect democracy the people can elect their beloved leaders like Mulayam Singh Yadav, Mamata Bannerji and a whole lot of aspiring others into power. Their beloved leaders will never let them down, because they will oblige by never raising the fuel prices again or will try even reducing; because they will oblige by never allowing foreign investors enter the country; because they will oblige all their vested interest groups and protect them viciously. If finally, the worst economic crisis of the millennium engulfs the country and threatens the very existence of the masses they will simply pass on the blame to their predecessors and lead the masses again on protests.

At the moment if a political leader says that going back to the good old days of the barter system would be beneficial for all the democratic people would hardly get the difference!

Retail FDI Suspended to Let Parliament Work!

Finally Indian industrial and agricultural interests lost out to the political ones today. Cornered and forced by opposition political parties including lobbies in the ruling coalition the government of India had to suspend its decision of allowing 51% Foreign Direct Investment (FDI) in the Indian retail sector.

The winter session of the Indian Parliament had been stalled for nine days out of which fives days were lost because of the FDI decision. Today morning the government called for an all party meeting on the burning issue and decided to suspend it on reaching consensus. The opposition parties called it victory for democracy. And, the Indian Parliament was allowed to function normally from today. Very forceful democracy indeed!

Ironically, the industrial and agricultural experts welcomed the government’s decision of allowing retail FDI pointing out the benefits of more employment, availability of goods at cheaper rates for the consumers and the long run favorable impact on the inflation rate. Farmers of different parts of the country had also extended support to the policy because of the inherent benefit of selling their produce directly to the multinational buyers. Some of them also gave a healthy condition that at least 75% of farmers’ produce must be bought directly by the firms.If such people are not part of the 'democracy' then who are?

This leads to the vested interests that dominate Indian politics all the time every time. The extensive networks of middlemen who buy farmers’ produce at ridiculously cheap rates and sell those in multiples of that to the consumers just cannot afford to lose out. The call for a Bharat Bandh was basically a reflection of these vested interests. Nobody wanted to understand the economics of it and about how their ‘democratic’ country’s future development could get a boost.

Okay, let us thank the opposition political parties for their kindness to allow Parliament to function on its tenth day of the session! How they relish and savor their sweet democracy!  Hats off to them! But wait a minute, this is indeed a plus considering the fact that the anti-corruption Bill was to be presented in this session only.

Now the clock ticks for the presentation of the Bill on December 9, 2011. Let us hope politics does not dominate the process again to work it out in favor of the eternal vested interests.

Bharat Bandh Today! But What About Retail FDI?

Article first published as The Indian Retail Not For Sale on Technorati.

The government of India’s decision to allow 51% Foreign Direct Investment (FDI) in the Indian multi-brand retail sector has led to a virtual ‘no sales’ politically for eight days on a trot and for the real markets today.

The much awaited winter session of Parliament could not function for eight consecutive days four of which have gone to the FDI implosion. The political protests inspired more than fifty million Indian traders go for a Bharat Bandh (a general strike call to shut down markets all over India). The major trade unions as well as the opposition political parties extended support to this protest closure.

The din of politics is not letting anyone to listen to the economics. Like in the India-US 123 Nuclear Deal outrage three years back when hardly anybody read the content of the deal document, this time around too ‘no sale’ ignorance rules the roost.

Like the FDI puzzle the Bandh call has got a mixed response...

Read more: 

Retail Politics!

Article first published as Retail Politics! on Technorati.

 The Indian parliament began its winter session on November 22, 2011 and so far it could not function even for one day. That is say the supreme constitutional body was not allowed to function by the opposition political parties.

First was the issue of the continuous price rise despite the fact the inflation rate had been showing a declining trend for the last three weeks. Then there were issues of bringing back the black money deposited in foreign banks and other regional tangles.

The first week was guillotined on these issues. Before the second week started the Indian Government announced a 51% Foreign Direct Investment (FDI) package thus opening up the very attractive multi-brand Indian retail market for international players like Wal-Mart and others. The opposition parties including coalition allies of the government got another sought-after excuse to go on disrupting the Parliament.

The opposition political parties always brand themselves as the eternal service providers of the masses or the common people and in everything they do they do mention this underlying justification.
Problem is they never want to engage in a fruitful debate. It is very clear that they know little of economics and less FDI related angles. They are ably supported by the equally ignorant masses on such issues. Learned opposition is blissfully absent in this country.

While announcing the FDI initiative the government described how this was going to help the small consumers and farmers; how this was going to create more employment opportunities; and that the interest of the local small retailers was also being taken into proper consideration.
Of course, there could be defects in the policy that might hurt the country’s interest badly. For this a healthy debate is necessary and definitely not the politics.

The so-called mass leaders are only focused on getting more and more votes to finally defeat the ruling party in the next general elections. Knowing fully well that crucial Bills have to be passed in the current session they still block the way. They support Team Anna on its fight against corruption, but do nothing to help Parliament pass it its Bill. Their political strategy is clear—block all the Bills including the anti-corruption one from being passed, extend support to Team Anna’s next agitation since the Bill will not be passed and target the government continuously cornering it from all possible sides.
The political leaders take on the ‘retail’ naturally because they always seem to miss the ‘whole’.

The Prime Minister of India chairs an all party meeting today to find a way out of the logjam. The opposition parties are adamant on total roll back.