Take for example the argument of the Trinamool Congress regarding the FDI in multi-brand retail sector. The party wants the UPA government to backtrack on this as it claims that this move would destroy small and medium retailers in India. While there may be some truth in that argument, such a development can be tackled through stringent laws and regulations like what China has done. For the moment, FDI in multi-brand retail is allowed only in 53 cities with a population of over one million. That would amount to less than fifteen per cent of India’s population. Also, it is naive to think that even to buy goods worth just a few hundred rupees ordinary people will now rush to Wal-Marts, Carrefours and Tescos, considering the fact that sometimes you have to wait in a long queue for billing even if you have bought just a couple of items. No sensible person would want to waste time and energy like that.
Further, cleverly the Centre has given freedom to state governments to decide whether or not they wish to allow foreign retailers into their territory. So strictly speaking, there does not seem to be rationale in opposing FDI on such flimsy grounds.
The issue, however, is much larger which unfortunately most of those who are opposed to this decision have failed to look into. The world today, and especially the West, reckons India to be an emerging economic superpower of the 21st century. What does that mean?
An emerging economic superpower must have independent economic policies and must set certain standards for other emerging economies to follow. However, in the decision to allow 51 per cent FDI in multi-brand retail, it seems quite obvious that it has come on account of the huge foreign pressure. For several years now, global giants such as Wal-Mart have been lobbying hard seeking entry into the retail market in India. Now, by crumbling under outside pressure India has proved once again that it is a fertile land for foreign retailers to graze, without really contributing much to boost local economy.
The UPA government by taking such ‘drastic’ measures wants us to believe that it had no other choice, given the rising inflation and the falling rupee. However, the rise in inflation and the rupee hitting record low was due to a combination of bad policy decisions and global factors. It is not that India did not have a choice. A case in point is the year 2008-09. When the whole world was reeling under global recession and mighty global banks were crumbling, Indian economy could withstand the pressure to a large extent, mainly because of the well-knit network of banking system which was insulated from the onslaught of FDI. Even back then, there was considerable outside pressure to allow FDI in India’s banking system and insurance sector. However, better sense prevailed mainly due to the unyielding opposition from the Left allies. If India could withstand foreign pressure then and showcase certain independent economic policy decisions, one wonders why the UPA suddenly would want us to believe that it had no choice now.
Sunil Khilnani, in his celebrated book The Idea of India opines that a democracy faces mainly two threats all the time: military challenges and the pressure of global economy. He says, “Unlike the threat of war between states, which nowadays is usually intermittent or sporadic, the challenge of the global economy is ceaseless. The routine viability of India’s democracy will therefore come to be tied more closely to its economic performance, assessed in terms of stability, growth and distribution.”
Economic stability and growth of a democracy take place when the domestic markets are strengthened and not when foreign investors are imposed on the already volatile local retail market. The question one must ask here is, by allowing FDI in multi-brand retail into a market that is already choked with innumerable super markets, whose purpose is the government serving? Definitely, not that of the common man. The major concern of a democracy must be to provide livelihoods to people through sustainable growth and not by allowing redundancy. What India needs at this moment is to boost the ailing manufacturing sector rather than allow entry to retail giants which will mostly sell goods manufactured elsewhere.
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