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FDI In Multi-Brand Retail : Implications For India

The government seems to have made it a prestige issue or economic superpowers are breathing hot on their neck to allow multi-brand retail to foreign direct investors. The govt has not released any worthwhile information on the loss of self-employment opportunities for the low income groups, who will be destroyed by the FDI in retail. Self-employment & fixed wage employment are two different things: one is the guarantee of independence of a nation and the other a promissory note for future slavery (have we forgotten the entry of the East India Company?). In 1991, the reserved list for SSI was under attack and promises of half a million jobs were made. The game was on for a very long time both at the UNIDO level as also the WEF meetings to de-reserve the list. We have no impact study available on the success or failure of the scheme, but the medium scale has been included in the definition of SSI. Whether it ate away the support given by the government to the SSI sector or helped inject better technology in the small scale industry sector or simply made it easy for the big fish to make windfall gains is not known publicly. The marketing of the FDI in retail is being so fiercely pursued that one feels like asking about the permanent loss of jobs in the rural, rurban and tier II & III cities as a consequence of multi-brand retail, numbers of individuals affected and families joining the ranks of extremely poor people. When the government says it will benefit the farmer, it injures & insults the farmer. Either the current breed of Babus and Netas has absolutely no idea of the consumption pattern of the poor farmers or it mistakes a farmer for a politician controlling 1000 or more acres of land, who lives in posh houses which are centrally air conditioned and drives around town in flashy cars. Let me take just symbolic example: how many farmers wear branded shoes in India? An international brand costs anything between 3999 and 10000. Can our politicians & bureaucrats selling this FDI to us wear even for one day the shoe that the farmer wears in summer, winter, rains etc during marriage or visiting market etc as he can’t afford separate shoes for jogging, office, tennis, golf, party. And they talk of benefits to the farmer!

This cunning foxy sight truly has its eyes on the farm produce, which they want to control right from the sowing stage to the marketing stage and cartelize the demand supply. Then freely introduce GM foods, destroy the agriculture economy that creates delusions of a superpower to a poor country like India, make enormous profits that make the black money stashed abroad look like small change and control it as Neo-liberalism seeks to do. A newer variety of colonization! What more branded goods is the farmer going to consume? The whole exercise serves interests other than Indian and is the biggest yet very dangerous hoax on the nation. It needs to be opposed.

When the SSI sector contributes to the GDP to the extent of 50%, it goes without saying that it has a ready market for its products and services in the domestic as well as the export market. Now, consider the disastrous consequences of just one policy change in favour of multi brand retail by foreign corporations (only to attract FDI) if the obligation of 30% procurement from the SSI is waived off to satisfy them. The “market” for the 50% of the SSI products etc will be lost forever. The foreign corporation will be free to procure from anywhere in the world, including China. Can Indian products ever compete with China in pricing? Our production units will have no other option but to shut down and our entrepreneurs to become wage employees at best. The consumer will opt for the cheapest goods, as is our experience of the last few years in respect of Chinese products. FDI will open the floodgates of opportunities for them and floods for us! How can any economy go on producing without a market? Who will buy Indian products if our own market refuses to buy? The votaries of FDI in multi-brand retail care only two hoots!

There are Central Economies that export their products below even cost price. Their primary goal is to keep their workers employed, even if it means selling below cost price. It is better than rise in the figures of the unemployed. Can India ever match such political and economic thinking? The unemployed in Central Economies can create political upheavals in those countries. Hence they need to be kept busy. Products from such sources can destroy any economy. Inspite of our elaborate infrastructure to check dumping, it is taking place on a frighteningly large scale. Products also come in CKD form which can be easily assembled in India. Fake products of all the best international brands in all product segments are available from the Asian markets. India will be a ready market for them. When the consumer can get a mobile, laptop, ladies handbag or anything else for a fraction of the genuine, would he care for it being fake and not being the real thing?

The loss will be widespread. Once the market for SSI dries up, entrepreneurship will dry up. The single most precious contribution of the SSI sector is the development & promotion of entrepreneurship in the country. A comparative study of the contributions of the traditional and new entrepreneurs is bound to reveal the impressive growth of new entrepreneurs. Majority of these new entrepreneurs is technical. It is different from family businesses, where birth ensured succession. The new entrepreneur achieves it on merit alone. This trend is bound to suffer in adverse market conditions. So will the growth of Managers that the SSI sector has produced in large numbers. They have also promoted several other professionals like MBA, CA, CS, Excise & Customs, Import & Export etc, who got ample opportunities for direct employment or fee-based professional engagement. Where will the products of the  ITIs(industrial training institutes) get absorbed without a strong small scale base? Can the votaries of FDI in multi brand retail honestly ignore these facts?

Further, investments will dry up in the absence of healthy markets. The government will be compelled to announce “bailout” packages, with no success. The “Sensex” will dive southwards while the Dow or other international indices may journey North. Current account deficits will breach healthy limits. The whole economy will become sick. A devastated economy, with food supply in foreign hands can do unimaginable damages. Weak governments will keep giving booster dosages with negative success rates.

Had the nation not suffered a famine of able Leadership in  past several years, such anti people policy measures would not have even been thought. The government will serve the people better if they consider all issues of the policy on FDI in multi brand retail before rushing into giving it a final push.

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