This open letter seeks to stir your conscience and sensitize you to your duties to this nation. Your electors rightly demand of you your valuable time and application of mind. There are moments in the life of a nation when individuals are called upon to do their duty, free from the bonds of political or other kind of party whip or even coalition compulsions. You are all learned, experienced, responsible public servants. Hence this appeal to your conscience, wisdom and patriotism. You are obliged to listen to your electors and your conscience.
The Government has notified Foreign Direct Investment in retail trade WITHOUT the sanction of the parliament under the erroneous view that it is not obligatory for it to seek parliament’s approval before notifying any policy decision. Contrary to this view, it is obligatory on the part of the government to seek prior approval of the parliament before allowing FDI in retail. It is a “Major” policy decision. In the past, before changing even the definition of the Small Scale Industry or Dominance or monopoly, the government had first moved the parliament. Even the present Prime Minister, as the then Finance Minister, had done so in respect of the revision of the definition of the SSI. How can the government adopt a different line now? It cannot for several reasons, including small industry, which is a state List subject and there is no resolution from the Rajya Sabha authorizing the government to draw up legislation on the subject. Any Bill that seeks to grant financial concessions to foreign investors, necessarily needs parliament approval. If the government gives effect to new provisions in piecemeal manner, as in the matter of FDI in retail, it circumvents the rules of business and parliamentary conventions. On the one hand FDI rules have been notified, and on the other agreements for 2020 have already been finalized to reduce customs duties on several items these retail stores will be marketing in India. Unless these are read together, the patterns do not clearly emerge.
It is no simple question of economic or financial kind. The importance of these two matters may be judged from the fact that the Constitution has provided under Article 360 “Provisions as to financial emergency”. The Constituent Assembly debates would make it clear to you that economic and financial disaster, existing or impending, have to be taken very seriously. This is a totally different kind of Emergency- different from internal disturbance or external aggression emergency. It is in this special context that each Member of Parliament has to consider the matter in his/her individual capacity as an Indian, elected MP and custodian of the national interests of India. What is being pushed in the name of the farmers as FDI in retail is going to throw India into a financial and/or economic disaster after a decade or two, which is not being envisioned by the government of the day. Unless Parliament acts in the best national interest, there can be no insurance against trade leading to colonization. If the parliament can make the government open all the facts before it and assure the people of India that FDI in retail will really prove as beneficial to them as the government has been saying, it will convince all. Otherwise, the power of the parliament to exercise oversight over the Executive or even change it, if need be, through a vote of confidence, has to be used.
The long term consequences of FDI in retail need to be considered. Foreign Financial and/or technical collaboration, has been there with the approval of parliament for more than 6 decades now. The new name of FDI seeks to do away with all kinds of “regulatory” mechanism in the name of “reforms”. The regulatory mechanism is what laws and Rules etc the parliament has passed. In a dynamic democracy change for improvement is always welcome. But the law should be same for everyone so that a level playing field is provided to all. The hurry in approving FDI in retail and the fervent statements from the government in its justification give an impression as if everything is wrong with India, and this government is pushing much needed reforms for the first time. It is neither reforms nor first time: reforms were initiated by Rajiv Gandhi in 1985 when he removed more than 40% industrial products from the necessity of obtaining an industrial licence before any production facility could be set up. Unfortunately, the government has not revealed any mission or vision about FDI. The developed countries pushed globalization fervently, as it served their economic interests. The developing countries went for it actively. But in less than 20 years, they have started putting trade barriers! The current credo in favour of FDI is nothing more than an extension of the same economic policies of developed world, which has not recovered from the 2008 economic meltdown. And our government, rather some vested lobbies within the government, is busy diverting public attention from the reality. On the one hand is the very well worked out long term economic policy of countries like America, EU and China and on the other hand is the short term election oriented policy of government of India, which is against not only the long term but also the short term interests of the country. It will lead to disastrous economic, social and political consequences that this government has neither envisioned nor is capable of handling in future. They will find it more convenient to clamp economic emergency, reduce salaries and pensions across the board including MPs and judges.
Though FDI is being pushed in the name of the farmers, it is going to affect even industrial production in the country. It is mischievous to propagate it as an effective antidote for the middle men in farm produce marketing. Foreign retail will not be selling only farm produce but industrial products too. Even GM crops will enter surreptitiously, harming the Indian agriculture forever. Unless a policy takes a long term view of, say next 15, 25 or 50 years, in matters of agriculture or industry, it opens a poor country’s economy to fatal economic consequences. The government has been very casual and superficial by just saying that it will generate more employment, without clearly laying down how many jobs will be lost and new ones created. This is no way of “policy” formulation. The very fact that the government is desperate to avoid any discussion on the subject in the parliament is proof of its unfair and unjust attitude to national interests. To fully appreciate the contribution of indigenous industrial products to the GDP, two sets of figures can be compared: 1950 & 2012. It would transpire that the contribution from the small, cottage, village, handloom & handicraft sectors has touched around 40%. If these units have developed, it is because they have both the domestic as well as export market for them. With FDI in retail, it is bound to dry up completely, leading to closure of such units and permanent loss of jobs. The FDI was started with an assurance that 30% items will be procured from local industries. It is being stoutly resisted by the FDIs. The government has assured them that it may not start with the first year itself, but counted on the total of 3 years. So it will be 100% imports initially. Once the imported goods capture the market, there will be left no scope for the indigenous industry. Unless the Members of Parliament consciously take a decision, this policy foretells economic catastrophe for India.
Economic conditions in many countries will compel them to sell below cost price in big markets like India. Worse than that, the Indian production capabilities will be crippled forever. The vast pool of entrepreneurs, which has emerged due to huge investments in development of a strong industrial base in the country in the past 60 years, will go waste and further growth in this area would come to a standstill. The future cannot be bright in such a scenario. Internal & external trade is a critical aspect of governance and the parliament cannot be kept out of policy formulations on the subject. This is a subject where long term view is a sine qua non of any policy. The most significant aspect of the foreign policy of any government is trade. It is an instrument of creating zones of influence. In a nutshell this all about capitalism, colonization, communism and now neo-liberalism. The new definition of trade stands reformed- it includes agriculture and services. In fact, every remunerative activity now falls within the term trade. Regimes are changed for securing trade interests. All the world wars and subsequent operations since then are nothing more than trade wars. Why are we so desperate to invite the colonizers this time to subjugate us? The humiliating expressions like subsidy, food coupons, BPL, APL, EWS,LIG etc in a country whose constitution prides in declaring itself a “socialist” democracy will only expand as never before once the industrial, trade and services base is capped. FDI in retail is the first effective demarche in the future subjugation of India. It has always been the history of Indian subjugation, which started with trade and ended in loss of freedom.
Dear Members of Parliament, economic and financial interests of the country are above all political parties. They are a-political in nature and intent. It is, thus, the personal responsibility of each one of you to employ your best judgement in taking any decision on the FDI in retail, before you allow the Executive to bypass the Legislature and implement their ill advised policy.
A citizen of India
November 16, 2012
The Members of Parliament