Originally Published 2011-12-06 00:00:00 Published on Dec 06, 2011
The Government's decision to bring in FDI in retail has created an uproar, but it is not surprising at all as it has not only been ill-timed but is also being clumsily handled by the political class.
FDI issue clumsily handled by political class
The Government's decision to bring in FDI in retail has created an uproar, but it is not surprising at all as it has not only been ill-timed but is also being clumsily handled by the political class. The decision to allow 100 per cent FDI in single-brand retail has created such a storm that parliamentary business has almost come to a standstill.

First let us look at the policy rollout. The policy shall cover only cities with a population of more than one million (as per 2011 census) so this would apply to 53 cities only. The FDI in multi-brand retail has been allowed up to 51 per cent through the government approval route, subject to adequate safeguards for domestic stakeholders. The policy mandates a minimum investment of $100 million with at least half the amount to be invested in backend infrastructure, including clod chains, refrigeration and transportation, packing, sorting and processing.

The Government has also made it mandatory that sourcing of a minimum of 30 per cent would have to be from Indian micro and small industries having capital investment of not more than $1 million. May be the Government came up with this clause as an afterthought but still it makes sense as it would introduce the element of business of scales. The policy, if accepted and implemented, would go a long way to create a chain of cold storages and market network which would help to ameliorate the conditions of farmers, small growers and small shopkeepers.

Political leaders are never tired of speaking on behalf of farmers, workers and small shop owners in belief that by championing their cause, they can ensure their political present and future. The current discourse on the issue is devoid of content and is dominated by rhetoric. Unfounded fears are being evoked and people are being driven to false conclusions.

The Government could have timed it better by taking the decision not so close to Assembly elections in five states, and particularly in Uttar Pradesh. The Congress, which is trying to recover its political space in the biggest state, gave ready ammunition to all its three main opponents, with BSP supremo Mayawati going as far as to say that the decision was taken to help Rahul Gandhi's "foreign friends".

The UPA should also have taken the Opposition parties on board before taking the decision. An all-party meeting or informal consultation with top leaders would have made the Opposition more amenable to the policy.

While the Left has been consistent in its opposition as they refuse to learn with changing times, the BJP's volte face on the issue is not only strange but beyond comprehension. The party which once prided itself as being committed to see India as a major global player has been betraying that vision and playing a negative role ever since it lost power. The main opposition party might imagine that it stands to lose among small traders if it does not make loud protests to protect their so-called interests. It may also be doing so in its belief that the Opposition must corner the ruling party, whether it conforms to its own long-term goals or not. The BJP's stand exposes its double standards on issues such as FDI.

Regional parties such as the DMK, AIADMK, SP, BSP and others are playing to gallery as they are neither aware of the nuances of the issue, nor do they have a proper understanding. Political parties are convinced that their stand would fetch them votes as voters know much less than they know. Such opposition would only delay the results further. There was opposition to the economic reforms in 1990s, when fears were evoked of East Indian Company recapturing the country. There was a similar resistance to computers, but results are there for everyone to see. Blind opposition has only resulted in accidents and history is replete with such political manoeuvring.

(Satish Misra is a Senior Fellow at Observer Research foundation)

Courtesy: Business Standard
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