Foreign Direct Investment (FDI) is being pushed with all the force at their command by the Indian Hyper Cosmopolitanist Economists. First of all the word investment itself is misleading. Is India really so poor a country that it can not even make investments in retail trade? How does this flawed economic logic compare with investments in giant projects like Bharat Electricals or Bharat Earth Movers or Bharat Electronics etc? India would never have moved an inch in the direction of setting up such huge investment projects, had the cosmopolitanist economic czars ruled the country at that time. Political-economics cautions against any such ill-advised mission. Countries like India have their own economic solutions in retail trade, as we not only consume but produce too. The programme is being touted as an effective anti-inflation measure. Nothing can be more absurd than this silly idea. Nothing can be a worse trick than attempting to fool the gullibIe people by such hollow propaganda. It will only add to inflation and not contain it, that is for sure. Evidence lies in price increase in all essential commodities ever since Reliance and ITC were allowed to take over part of the retail trade. Besides , valuable land asset of the farmers have changed hands in the name of SEZs etc for the benefit of these retailers. As if this were not enough, it is being propagated that the farmers will get more remunerative prices for their produce. Aren’t these “farmers” the new breed of absentee landlords (politicians owning vast tracks of land), who will get more remunerative prices? The marginal farmers and owners of small pieces of land will rather be compelled to sell to the retail chain, as other markets will be dried by the economic muscle of these big chains. The organized trade, transportation, preservation and fast delivery of these hyper super markets will enfeeble the poor farmer, who (like the small scale entrepreneur) is one in all—producer, investor, transporter, marketer, accountant etc.. Is the small scale manufacturer of shoes, for example, getting more remunerative price or the retailer under the brand name of Bata etc? The farmer will either be choked to economic death or sqeezed out of retail altogether. But the concept of FDI in retail does not sell without being packed as a farmer friendly initiative. Hence the gift wrapping!
It is also being sold as consumer friendly. The historical achievement of unprecedented price rise under the misrule of the present set of economists in the past 7 years does not bear testimony to any such claim of consumer friendly behavior of the retail chains. The retailers have hiked prices not based on production costs but business expenses built into the pricing mechanism. Business expenses is a liberal terminology for costs of setting up businesses and making money in the process by the investor, running costs, social costs, political contributions(gift/donation/bribes etc), entertainment, margins and several other uncounted heads of expenditure. It generates black money, that is carted away to foreign countries and damages the Economy of the nation for centuries. The entire cost of the operation is charged to the consumer. When traditional sources of procurement, which are convenient and cheap e.g. the neighbourhood retailer or the weekly market called the haat, are dried up, the consumer is compelled to visit the only source of retail run by these chains. Obviously the cost has also to be borne by the consumer. So a lunch being sold by the Delhi government for Rs 14/= a full plate/thaali will cost not less than Rs 125/= in the retail store (even a puff sells for 55/-a piece as compared to the humble samosa for 7/=per piece. The story is the same across all consumer goods segments ). Besides, these chains will not be serving the rural population. It is perhaps convenient to the urbanites to drive down to retail chain to buy a loaf of bread, but the rural folk will call it costly purchase! Though for the urban, and particularly the cosmopolitan population, who are short on time and surplus on incomes, these retail chains are convenient and reliable. Besides, they are a statement of urban standards. They do have their benefits and advantages, but the loss to the economy as a whole is too much and a country like India can’t run its economy for the pleasure of the less than 10% affluent people. That distorts even the constitution and other laws, as equality of status and opportunity is the bedrock of our polity, and economic policy. Distorting that policy in the name of FDI is fraught with dangerous consequences that the hyper cosmopolitanist economists have deliberately chosen to ignore for immediate gains and scoring political brownies on rivals. Marxism might be dead, but Indian societry’s practice of a kind of socialism is centuries old healthy practice. The whole philosophy of the swadeshi movement of the freedom struggle is inspired by this philosophy of Indian socialism. Our post independence economic policy stated loudly that monopolies and concentration of means of production and incomes in a few hands shall not be permitted. The ruling clan of our economists are doing exactly the opposite of it and intentionally promoting economic monopolies and concentrations in a few hands. There are global pressures also working in pushing the agenda of 100% FDI in retail trade.
This set of economists have failed, and failed miserably, to create gainful employment opportunities in the past 7 years. Unemployment has increased , people’s purchasing power has shrunken further and consumption has reduced. Generations of children have suffered malnutrition or have been deprived of nutritious diet due to unconscionable price rise of essential items of consumption. The pushers of the FDI agenda are again practicing guile on the nation when they say that the FDI in retail shall create 3-4 million new jobs. It is such a transparent veil of deception that the figure itself calls its bluff. They make no issue of the difference of 1 million jobs: it is 3 to 4 million ! They are smart enough not to reveal the figures of the loss of jobs, which will be 10 times the number of jobs being promised to be created. It would have been welcome if these would be created in addition to the present employment in the retail sector. But that is not the case. Instead, it is in lieu of the jobs that will get lost! What economic brilliance!! The self employed, workers, labour, primary producers, intermediary producers, final product producers, sellers, distributors and retailers will all be thrown out of employment. Millions of families will go hungry as their employment would be forfeited to provide a lesser number of jobs to others. There is a big economic difference in self employment and wage employment, in incomes as also expenses, consumption and happiness quotient. FDI in retail will rendered both types unhappy, the self employed having become unemployed and the employed being unable to meet both ends meet.
The worst of it all is the circulation of black money. The sheer complex nature of turning black into white has made our investigation agencies look sheepish several times. With FDI they will find it impossible to understand the management skills of black money stashed abroad. India is poor not because of shortage of investible funds, but because of flight of capital to banks in tax havens. Instead of genuine reform of the tax system, the current ruling clique is hell bent on destroying the strongest pillars of the Indian economy. They are ignorant of the socio-political cost of their misadventures. Let them note that it is India first.
FDI in retail will fuel consumerism of the most undesirable kind. Buyers don’t buy because they need but simply to splurge, to show, to make a statement of the economic class they belong to. Consequently prices go up across the board. The fashion of a few becomes the economic burden of the many. At its height consumerism creates the best market for fashion, but generates urban waste of a magnitude that is unmanageable everywhere. Millions of pieces of black & white TV sets must be replaced by coloured TV sets, but nobody knows what to do with the old sets. So a peep into all nooks and corners, underneath the overbridges, by the side of the highways and in the countryside, tonnes of urban waste is quietly disposed of. If it was thought to be a problem of the developing countries alone, a reality check would reveal the nuisance in the most celebrated capitals of the western world. The fashionable must change, and be the first to acquire the new gadget, rendering the earlier one useless, deserving to be thrown out of the house. Houses in cities don’t have enough space even for books or a prayer room, hence there is no question of keeping the useless gadgets inside. There is no ready market for such old goods. So the best thing is to put them by the roadside with a note reading “Please take away”! It is okay for colonial masters to live in the luxury of such a wasteful economy, but threatening to the poor, least developed countries(LDCs), developing countries and above all India. India can’t manage such huge amounts of urban waste, our cosmopolitanist economists may utter whatever they like. Urbanization makes life happier but is unaffordable to the entire global population. Economists can’t think about economic growth in isolation. Are current global issues like drinking water availability and the apprehended water wars of the future, energy crisis staring us in the face, climate change threatening the very survival of the species on the planet, pollution, industrial waste management , safe disposal of spent nuclear fuel etc being considered by these economists side by side? These issues do not favour economic monopolies and concentration of means of production-distribution-incomes etc nor wholesale urbanization across the board. Elaboration of each one of the issues mentioned afore, will require the space of a full book to dwell on the subjects in detail. But, to state it briefly, FDI in retail is not suited for countries like India. The economic ideas of the Cosmopolitanist Economists of India are bogus, flawed and devoid of all socio-political logic and , thus, deserve to be dumped without a second thought.
The industrial products of the earlier part of the industrial revolution were made to last for life, so to say. The business philosophy has since changed—it should have a shorter life, so that newer products under the name of technological improvement, design or next generation etc can be marketed. Take the white goods like refrigerators. They need repairs, which is closer to the product price. A cardiologist’s fees for a home visit is Rs 250/=, but the Samsung plasma TV technician’s visit costs the customer Rs 2000/= , repairs are extra. But what does the consumer do with his fridge, TV or AC when there is no power supply for 18 hours a day? If power is made available, it will consume coal or fossil fuel, which will not be available in the 23rd century. It creates pollution by adding enormous quantities of carbon dioxide in the atmosphere. Besides it generates garbage and waste degrading the quality of soil, water and air. Unless the whole cycle is studied, which economists of the kind I am referring to refuse to do, there can be no respite.
An action plan needs to be drawn up immediately to put a stop to the attempts being made to allow FDI in retail in India. Some , among others, could include measures such as:
- Formation of an apex Federation or Chamber of the unorganized sector retail segment comprising self-employed persons;
- A website should be opened for their benefit, where they can raise their voice and exchange useful ideas on the matter;
- Organize training , workshops and seminars for dissemination of information and upgrading their knowledge & skills;
- Catalog the advantages flowing from giant retail chains and provide the same to the consumers, if lagging behind;
- Similar catalog of the advantages flowing from the existing retailers to the consumers need be prepared. The consumer needs to be sensitized, before she gets beguiled by advertising blitz of the organized chains. (Mark the change in attitudes when housewives’ labours were converted to money or religious services were termed as “services” and charged for & others. Similarly, retailers also do a service and are entitled to charge for it. How much is it will be determined by the consumer and the retailer mutually in the light of costing considerations. The retail chains operate on the concept of scale of economy, but other factors like convenience, nearness, saving on driving cost etc are equally important and need to be converted into money and factored into before making comparisons).
- List out special features like sales on credit, home delivery, personalized services and commiseration when stressed by rising prices;
- The age old stigma of the Indian shoppers as dishonest profit making self-centered people needs to be dispelled, not by advertisements but actual change in style of functioning and attitude;
- Inflation is an unethical way of levying indirect tax on the consumer, bulk of whom are poor by any definition of poverty anywhere in the world. The attitude of the ruling class economist is that the consumer pays, but the government simply watches as if it is totally helpless. This attitude inflates the inflation further, leaving an impression of governance deficit in the country. It would be a very distorted definition of “reforms” if it were to mean withdrawal of governance by absence of regulatory mechanism altogether. On the contrary, it should mean faithful compliance with the legal provisions. India can’t allow unrestricted pricing mechanism for essential as well as other goods and/or services. Regulatory mechanism suffers from no inherent weaknesses, excepting that the corrupt establishment leads to inefficiency, bad implementation, misuse of public funds & authority. Allowing unrestricted price rise is no remedy for poor governance;
- Indian retailers will have to draw up a set of values and code of conduct . They will need to match the very best in the world. So far, it has enjoyed protected markets and ignored the consumer interests. If it renders world class services, it can hope to win the impending tough competition, as the consumer is bitter and unhappy with them. You can’t ignore the consumer and avoid competition too!;
- Better for the retailer in India to ensure that no short cuts are taken or bribery resorted to as a normal practice;
- Liberty is mistaken for licence in Indian society. Discipline is not granted the value it deserves. Retailers may choose not to take up the membership or attend training and seminars. But they pay a heavy price in modern competitive market. Membership has to be compulsory. We can hardly afford economic policies which disrupt easy employment for millions of citizens.
The Cosmopolitanist fraternity, inspired by seeing London, New York, Paris , Amsterdam or Shanghai are under the majic spell of development visible there, without stopping to think for a moment that it has taken those countries centuries to develop those places . What infrastructure our cosmopolitanist class has laid in India? They are thrilled only to sell at dirt cheap rates our national assets in the form of public sector undertakings, which have been built assiduously by the sweat and money of every Indian. They have no right to fiddle with those national assets. Similarly, they turn their face away from history: India lost her freedom by allowing trade concessions for the foreigners, who started collecting revenue for us in no time, only to put to use their fancy device of doctrine of lapse and then the Jalianwallah mass massacre when public anger led to revolt against the confidence tricksters. But some economists were happy serving the masters even before the arrival of the British and during the British regime as also after they had left for home! India should watch out against repeat of history through the instrumentality of FDI in retail trade.
Hyper Cosmopolitanist refers to economists dreaming to replace all infrastructrure by cosmopolitan megapolises they have seen abroad where all services are priced heavily and blindly imitate them at any cost without taking into consideration other factors.