Critique of Discussion Paper - FDI in Indian Multi Brand Retail Trade - Rationalizing Indian Food Industry vis Foreign Retail Chains ? Wrong Medicine for Wrong diagnosis - Delusions of Crony capitalism and evaluation of emerging market capital inflows in Indian food supply chains
Critique of Discussion Paper - FDI in Indian Multi Brand Retail Trade - Rationalizing Indian Food Industry vis Foreign Retail Chains ? Wrong Medicine for Wrong diagnosis - Delusions of Crony capitalism and evaluation of emerging market capital inflows in Indian food supply chains
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Critique of Discussion Paper - FDI in Indian Multi Brand Retail Trade - Rationalizing Indian Food Industry vis Foreign Retail Chains ? Wrong Medicine for Wrong diagnosis - Delusions of Crony capitalism and evaluation of emerging market capital inflows in Indian food supply chains
Copyright:
Attribution Non-Commercial (BY-NC)
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Download as TXT, PDF, TXT or read online from Scribd
Critique of Discussion Paper : UPA Chants FDI Mantra for Multi Brand
Retail Samadhi in India
Subject : ISSUE OF DISCUSSION PAPER ON FOREIGN DIRECT INVESTMENT (FDI) IN MULTI BRAND RETAIL TRADING â MB-RT FORMAT IN INDIA In line with many policy experiments in the liberalization agenda of the ManMohan Singh era in Indian politics, this paper seems to be an experimental achaar / pickle making of wishy washy aspirations. It seems the obsession with social engineering and political economy changes is being attempted in a covert manner. The ideology of emerging market economic liberalization, based on World Bank and IMF paradigms of GDP growth, via suitable, host country, policy flexibility, to invite unbridled foreign investment as the prime engine of economic change seems to be a outdated approach. The framers of the Discussion Paper also at times seem to be spluttering in their attempts to act as unconvincing apologists for crony capitalism in modern India. Consequently, one can conclude, the Discussion Paper is seriously inadequate in the hands of the Department of Industrial Policy and Promotion (DIPP) or the commerce Ministry without fresh thinking and informed inputs from political stakeholders in the Indian retail, agricultural and labour markets. Instead of serious due diligence in the process of dialogue and policy incentives with the diversity of political stakeholders and a critical examination of regulatory infrastructure in developed economies, arbitrary half truths and wishful thinking is being peddled as economic vision for development of Indian retail sector and upgradation of the fruits and vegetables market backend. The BJP, the main opposition party in India and its coalition avatar NDA, have foolishly vacated the bandwagon of non sectarian inclusive growth. Man Mohan Singh has redesigned the Congress Party as the sole placard holder for the economic agenda of non sectarian inclusive growth. This placard is however looking worn and tattered after the recent fuel hike policy decision. The BJP is yet unable to get its act together on the bandwagon of non sectarian inclusive growth to refashion its political economy ideology despite its tentacles like penetration into the visible stakeholders who are going to get edged out in the battle for Indian retail space. Under Nitin Gadkari, the BJP seems to be incapable of reinventing itself to snatch the agenda of non sectarian inclusive growth from Congress and UPA. India will surely become an interesting place for politics once the FDI in Multi Brand Retail is bulldozed through by UPA. Maybe the very introduction of this policy will make the non visible stakeholders visible and bring them to the policy making forefront, eclipsing UPA and Manmohanomics vision. Or maybe the Gandhi family may still realize that the Prime Minister could lead them into electoral debacle if the BJP and the invisible stakeholders of Indian retail democracy are able to reinvent themselves on the platform of non sectarian inclusive growth. The absence of BJP as a serious political contender in the policy debate does not mean that UPA-2 cannot find the resources for a more balanced view towards retail investment keeping in view Indian social and economic objectives. That this is being done in the absence of serious and sustained inputs from stakeholders and likely social dropouts of social engineering on a massive and national scale, whose economic impact is clearly not on the radar of the UPA-2 government and policy making circles, is alarming. Migration, demographics of tropical countries, reskilling, deskilling, labour movements, distress migrations, rural suicides, slum social mobility in India are all unfashionable sub branches of economics and the national statistics community when compared to issues like globalization, power projection, economic growth models and aspirational economics of Planning Commission and economists turned politicians. So while sustained studies of globalization and compulsions of recession in industrial developed economies are still not fashionable topics amongst the economic mandarins of emerging countries, it is scandalous that labour and social capital are not serious bureaucratic skills cultivated by Indian bureaucrats and economists turned politicians or technologists turned civil administrators. As such this paper fails to deliver a coherent basis for discussion on liberalization of Big monopolistic retail in India on Western MNC models. As per the current models of Western origin MNC models of retail space creation, penetration, growth, market share consolidation and expansion, large scale assumptions about social conditions need to be met for big retail to deliver national objectives of GDP multiplication and supply chain rationalization and closing of productivity gaps. Wishful overtly optimistic thinking articulated in such discussion papers serves no purpose, even as alarmist scenarios about FDI in retail are not warranted. Such a critique is totally absent from the forwarded Discussion Paper. It fails to test the waters of social costs to be borne by stakeholders in Indian retail economy by a one sided projection of economic gains from GDP multiplication through the route of Central government led liberalization of FDI in MB-RT format in all of India. The supposed advantages of regulated FDI in MBRT are enumerated without conviction and more as wishful free market dogma. This is unacceptable in the post Lehmann Brothers global banking and economic regulatory scenario. There are some sub issues which could easily be resolved if one had a detailed study into aspects of MB-RT in developed economies and it is futile to expect people to comment on these as if stakeholders are astrologers and bureaucrats and mandarins who write such discussion papers are patriots with best interests of the country at heart. One sub issue : study impact of large retail stores on rural employment study impact of MB-LRS on local economies study impact of MB-Large Retail Store Chains on Food Policy making, Food Wastage, Packaging Disposal and Recycling, Net Employment Created or decimated in a country of comparable population growth and migration patterns to India. Impact on regulatory infrastructure, law making and government anti monopolistic machinery. 1. The discussion Paper clearly mentions that FDI inflow 194.69 million USD represents 0.21% of FDI inflow into the country during the period April 2006 â March 2010. The reasons for this â pittance of FDI inflowsâ merits serious consideration and revaluation of the doctrine of liberalization practised by the Congress Party under ManMohan Singh and its failure to engineer social development through economic dogma. 2. There is no indication if there has been any approach from any of the state governments for the review of policy. In the absence of such, the case for the blanket introduction of such an abrupt U-turn or change in policy at the national level has not been made. 3. Limitations of the present setup have been mentioned regarding lack of investment in the logistics of the retail chain leading to inefficient market mechanism. Again no analysis has been provided why this failure has been presided upon for so many decades. There seems to be a paralysis in the agriculture sector where the minister in charge is more interested in local politics and issues like cricket to focus on more serious issues. Are there really no options to deal with fragmentation and linking to distant markets ? This is a tragic comment on the priorities and paralysis of UPA government. And then to suggest that opening of MBRT will solve the woes of fruits and vegetable sector is absurd and like a dying man clutching at the straws before sinking in deep waters. Much attention has been placed in non independent studies and their recommendations in the Discussion Paper in Section 4.0 â Gist of Recommendations of Various Studies â , from Pages 7 â 13 These read like a parroting out of puerile prescriptions of Crony Capitalism in a country where stake holder rights are still not enshrined in Industrial Law nor mechanism evolved to incorporate views in policy making : 1. FICCI and ICICI Property Services Report February 2005 2. Center for Policy Alternatives Report 3. Mid Term Appraisal of Tenth Plan 4. ICRIER Study of 2005 â FDI in Retail Sector in India 5. ICRIER stury of 2008 â Impact of Organized Retailing on Unorganized Sector 6. Economic Survey 2008-2009 7. Parliamentary Standing Committee on Commerce - Committee on Foreign and Domestic Investment in Retail Sector â Again no targets, no detailed statistics and what-if Scenarios are adequately examined. This is shocking to say the least. The last of these is the only study with political weightage. The other reports seem like influence peddling reports in the service of crony capitalism by non independent sectorals like real estate speculators, credit multiplier agencies interested in working capital recycling. It seems food retailing is the segment that is most mouth watering for the proponents of Crony Capitalism and FDI in MBRTF â Multi Brand Retail Trade Format. It seems that the Discussion Paper is yet another attempt of proponents of Crony Capitalism to divert attention from serious policy studies to rapid judgements based policy making. This is unfortunate and tragic. Impacts on : Food Security Food Prices Food Waste Farmer Incomes Cropping Patterns Land Treatment Employment Potential Packaging Materials Energy Diversion It is puerile to think that the Tescos, Carrefours and Walmarts are desperate to lend a helping hand to an Agriculture Ministry of a country headed by a minister more interested in the politics of CRICKET. The bias against farmer incomes evident. No attention paid to likelihood of further decreasing farmer bargaining power. In fact government, with its policy of compulsory levy, is the last resort for squeezing farm gate prices further to assist food chains. Farmer incomes have been stabilized only due to EU and American subsidies. One wonders what steps Indian government is proposing for subsidizing Indian farm produce. One gets the feeling it is an essay written by some bureaucrats in a hurry to dash into the air conditioned environs of a retail shopping mall as a diversion from having to write an essay in South Bloc, on the instructions of political masters. On how the Carrefours in Paris, Tesco in London and Dublin, Marks and Spencer are desperate to align the Indian food chain along rational principals imagined by economists desperate to upgrade indian food chain efficiencies. Forced to write an essay on the supposed conglomeration of all round advantages to consumers, food producers, food chain value adders, warehousing facilities providers, logistics specialists from cold countries desperate to move lumbering frozen food caravans through the dusty roads of Punjab hinterlands to Bangalore and Chennai. The pipedreams of economists on social engineering mission in India, through the superficial route of central FDI approvals to MBRT from France, UK and US, reveal the hollowness of economic prescriptions for development of Indian fruits, vegetables and horticulture sector or food industry. As for the supposed ultimate benefits to consumers not mentioned in the discussion paper is that, at last one will have air conditioned shopping malls and clean elevators and shining glass windows to stare into to get away from the oppressively long power cuts in non metro India and the heartlands where Indian public continues to eke out a miserable existence far away from the air conditioned chambers and offices of New Delhi mandarins wearing white linen trousers they picked up cheap on the last foreign jaunt to Singapore, Hong Kong or Dubai retail shopping heaven. So does this Discussion Paper seriously advance the debate on transforming the Indian retail landscape from peddling worn down arguments advanced by retail consultants and their more dignified elder cousins, the ideologues of crony capitalism to a vibrant, competitive landscape of value addition from urban to rural India ? I am afraid it does not. Possible advantages : The upper middle class section of Indian population which can get visas to experience retail shopping in foreign countries may be persuaded to increase domestic consumption rather than make foreign country shopping jaunts. Some low skilled jobs like shelf stacking, merchandising grocery and manning checkout counters and security jobs of preventing retail theft will be created which will take the pressure away from government of failing in creating industrial and manufacturing employment avenues for poorly educated urban students looking for their first job in a labour market experiencing glut. Conclusion : No Indian economist worth his imported Dandi salt or for that matter his locally manufactured Cambridge or London School of Economics salt would wish that upwardly mobile urban dwellers of Indian nationality should be deprived of their chance to take off from Indira Gandhi International Airport Terminal 3 or that the retail arbitrage involved in the commerce of Wimbledon cotton towels manufactured in Gujarat or the cool linen trousers manufactured for Marks and Spencers in the sweatshops of Okhla and Noida being available for purchase only in Paris, London, dubai, singapore, Shanghai or New York. The politician inside the economist would surely want the VAT to be collected by the Indian government and contribute to the tax receipts of Pranab Babu. One is puzzled what exactly has changed so soon after the Honorable Parliamentary Committee Report as to merit a Discussion Paper in preparation for the wholescale reexamination of the question of the supposed benefits of Retail FDI to the farmer in Vidarbha or Mrs Kalawati of Rahul Gandhi fame ? Maybe Indian Retail Democracy still has some lessons to teach to economists. Let us prepare for an interesting political landscape in the years to come, when we have the figures of the much hyped net foreign investment inflow into food backend technologies and logistics of Indian food industry. Regards, Nagarjuna