FDI in Multi-brand Retail - a Rejected Takeoff

FDI in Multi-brand Retail is a good economic proposition for agrowing economy like India. All fears so far expressed arise out of ignorance of how this branch of trade operates, the devout faith that the old order shall not be changed, also the vested personal and political interests. No one in his senses would want to believe that the existing millenias-old Kirana stores concept is the ideal thing for a fast-growing country, with people becoming more literate, sophisticated and empowered. This was what was said about farming, fishing etc. Also, we have witnessed over the past few decades the total vanishing of the traditional methods travel, photography, telephony, long distance communication, banking technology etc.The gramophone, radio or the film-based camera, the shaving system etc have all been revolutionised beyond recognition. People are asking for new things and news ways of doing traditional chores. The domestic help or the Kirana store is also waiting to disappear very soon, unless they adopt new concepts and upgrade themselves to meet the just aspirations of an educated and affluent society. To those who would interject on behalf of India's poor and hungry, I would say that their lot can only be improved in the long, long run. Our political system has a vested interest in keeping them where they are! God take care of them, in the meanwhile!

In this situation, in spite of the demonstrated objections and fears, FDI in Retail sector has become the national policy and the NDA Congress Government is getting ready to implement it and gain credit and mileage in future elections. Would they succeed? I have doubts, and my reasons are far from "economic". The Government itself has built into the policy-frame-work an unintelligent rider, that the State Governments will be free to decide whether or not to implement it within their territories. With this kind of an "albatross", around the neck, let us look at the Indian political map, and the States that would implement the policy.

The Congress is now in power in Delhi, Rajasthan, Andhra Pradesh, Assam, Kerala, Maharashtra, J&K and some other small states. The NCP has already thundered in Parliament that they would not allow implementation in Maharashtra, so has the Kerala Chief Minister declared. It is most uncertain that the Congress party will again rule over Delhi or Andhra Pradesh, Maharashtra or J&K. The other states are ruled by those opposing the FDI policy, such as the BJP, AIDMK, TMC, SP etc. Like Sage Dhurvasa, they pronounced curses on the policy during the parliamentary debates. A clear case of "the operation succeeding but the patient dying". Also, the Government spokesmen though unintentionally, appear to be sabotaging the policy implementation by mocking at the Opposition and ensuring that their resistance becomes rigid. Rather than building a broad consensus among the major political groups, what was seen was a clear demarcation of the battle-lines for the future. Statesmanship, which was badly needed at the level of the PM and the UPA Chairperson was totally lacking. Wounds have been inflicted on the Indian body-politic, and it will take a long, long time to heal.

What is the message coming out of Parliament to the outside World of big-time Investors? Trust the leadership of a Mulayam, Mayawati or Karunanidhi and sink billions of dollars in India, and regret later? These have pledged they are against the policy and will not implement it, though they helped the Government to make the policy final. How can foreign investors, who are clever by half, trust these polItical formulations who would regulate and help implement this policy in future? Forget, the Indian people who can be fooled, merrily, for a long long time.

Ratan Tata was not out of place or context when he rated China as a much safer and better investment destination than our own motherland. The dichotomy in political leadership, the uncertainties of policy-formulation and implementation, the costly and frustrating delays and, above all, the massive corruption and fragile decision-making must all have weighed in his mind when he castigated our Government.


Senior Advocate

New Kalpathy



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