February 16, 2006

Retail FDI - Selling India short



One of the most provocative interpretations of globalisation comes from former U.S. secretary of state Henry Kissinger, who has said the process "is really another name for the dominant role of the United States." [read here]

The Government has been talking a lot about FDI transforming not only the Retail business but also thereby, virtually the entire economy.

So far, the Government has NOT been able to show any single concrete and undeniable evidence of these benefits accruing to any economy of significance.

The way in which the entire issue has developed till date raises certain doubts which have to be clarified:

  1. Everyone has been talking of benefits of organised retail. The modernisation of retail trade is going to happen as a natural evolution as other parts of the economy are also modernising. This will happen without government doing anything and just leaving things alone.
  2. Modern retail may result in some advantages but there may be disadvantages too. In any case, the advantages of modern retail DO NOT mean that the country needs FDI. The Government is deliberately trying to confuse people by mixing the two. It has been misrepresenting and misleading and not working transparently.
  3. Allowing FDI in Retail is clearly going to give benefits to the foreign countries without corresponding benefit to the host country viz. India. Therefore, it would have been appropriate to use this as a bargaining point in multilateral trade negotiations. Instead, government is just giving away the bargaining strength.
  4. There is no worthwhile benefit to the country and this is a low priority area for FDI. The investors are going to reap huge benefits relative to their negligible investments by pulling out large dividends year after year. The present government has no right to place this heavy burden on the balance of payments which will have to be faced by future governments and the people.
  5. It is very clear that the Walmart lobby has very effectively 'handled' and 'tackled' those who matter viz. political parties and government administration as well as certain business interests. All of them are virtually pleading the case of Walmart while Walmart lets these parties and individuals work for them and goes about its planning for entry into India.
  6. As stated in an earlier article(see here), the Left parties are just making a show of protesting and getting upset. If they were really serious, instead of waiting for the Government to announce the decision, they would have mobilised protests already beforehand, which they have been only threatening. The Left parties have proven themselves to be as hypocritical as other parties. Their Chief Minister in West Bengal has already publicly stated that he would welcome Walmart and other FDI in Retail. The FICCI Secretary General further let the cat out of the bag by saying that SITARAM YECHURY,a CPIM politburo member is convinced about bringing FDI in Retail(read here). This means that CPIM is fooling the people and not capable of looking after their interests. The CPI is, in any case, too weak to take any firm stand at variance with CPIM or against the Congress.
  7. There is a serious doubt in the minds of some that allowing FDI in Retail is somehow also linked by the U.S. Government as part of the nuclear deal. Even if this condition may not be explicit because this is a trade matter and distinct from nuclear deal, this must have been told to the Indian government in an informal way.
  8. This decision of the government clearly shows that it has been heavily influenced and sucked into the sweet talk and pressure tactics of other countries mainly USA, even as the Indian government keeps talking of always looking after national interest etc.