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Hello and goodbye to FDI

 | December 2, 2011

Instead of behaving like mature adults and seeking a debate on FDI, the opposition has chosen to stall parliament proceedings – all at the taxpayers’ cost.

COMMENT

Often, India’s growth has been derailed or impeded by political parties which believe that only state or privately-owned Indian enterprises can help the nation of a billion-plus population to forge ahead.

Indeed, till the early 1990s, India did not open up its economy, and its progress was frighteningly slow, caught as it was in the vicious web of licence raj.

Even after the economy opened, there have been several barricades on the path of economic liberalisation.

Some 15 years ago, when mobile telephones came into the country, there was massive opposition. Some felt that they were largely anti-people. What use would they be of for the poor masses, 70 percent of whom lived in rural areas?

But, then, mobile telephones helped even the small farmer, the landless labourer, the taxi driver, the rickshaw puller, the woman who sold fish on the road, the flower-seller, the temple priest and many others.

Also, after many years, mobile telephone service providers realised that they could hope to better their incomes only through higher volumes. Which meant cheaper call rates by making mobile telephones affordable to a larger number of people.

Again, some years ago, Singapore Airlines wanted to tap the domestic Indian aviation market by partnering with the Tatas, one of the most respected companies in the country.

But another non-government airline in India reportedly sabotaged the Tatas-Singapore Airline plan.

Now with two of India’s biggest players in the skies, Jet Airways and Kingfisher, struggling to survive – the latter is on the verge of collapse and has been pleading with the government to bail it out – those who had opposed the entry of foreign airlines are probably having second thoughts.

It is in this context that the latest hullabaloo over the government’s decision to allow foreign direct investment (FDI) in multibrand retail seems like a kneejerk reaction from the opposition political parties and even some of the allies of the ruling coalition, headed by the Congress.

10 million new jobs

The opposition did not allow Parliament to function for the past couple of days, but the government is firm on not going back on its decision. It may, at best, defer the implementation of FDI. One hopes that even this does not happen.

For, FDI has been the government biggest reform initiative in many, many months, and it should not let anybody kill India’s trying-to-wake-up growth story.

FDI is far more beneficial than what is commonly presumed.

Some of the key advantages will be huge investments in retail, including agriculture, that will see 10 million new jobs in the next three years.

Farmers, exploited by middlemen for decades, will get remunerative prices. Middlemen will have no role. Which means the consumer will pay less for his potato and onion.

Overseas investments in the farm sector will mean an efficient supply chain: FDI mandates a minimum investment of US$100 million with at least half that amount to be ploughed into cold chains, refrigeration, transport, packing and sorting.

This will stop agriculture produce from perishing, and hence check wastage and the runaway food inflation.

Common man

Also, the FDI plan makes it compulsory for overseas firms to source at least 30 percent of their requirements from Indian micro and small industry.

The common man will ultimately gain. Maybe even enormously.

Undoubtedly, FDI can transform India’s chaotic and unorganised retail segment, hugely help farmers and, most importantly, ease the high inflation, now refusing to be tamed.

But, in India, where the opposition has a misplaced idea of its tag, it feels that it must oppose every decision that the government takes.

Instead of behaving like mature adults and seeking a debate on FDI, the opposition has chosen to stall Parliament proceedings – all at the taxpayers’ cost.

At a television debate the other night, some members of parliament were so brazen to say that they would not care even if their salaries were cut!

With Indian companies having taken Rs 3 lakh crores out of the country in the past 18 months, the opposition must realise the gravity of the situation.

And, all this noise in Parliament and the unreasonableness of it all (with the FDI retail facing a blockade in 28 of the 53 cities where it is to be launched), foreign investors, already uneasy over the stagnation and inflation in India, may just about decide to bid goodbye even before saying hello.

Gautaman Bhaskaran is a Chennai-India based author, columnist and film critic, and can be contacted at [email protected] He is an FMT columnist.


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