FDI-an American safety valve for India !

Rakesh Manchanda

Investments indigenous or Foreign in industry, agriculture and services sectors are essential for growth of the country’s economy, global governance and for job creation. Foreign Direct Investment (FDI) is one such tap with effective flow in developing India. This is an essential holistic desire. No one can deny it. What we fail to realise is the fact that 51%FDI does not mean a magic wand to bring happiness to all as it has its own hidden pound of flesh hooked up in advance.

Inviting 51% FDI means a full control to foreigners. It also a certificate that old indigenous investment ways failed to recover the money for re-investments. Why can`t the foreign share be less then 50%? Crisis is triggered by ‘war-like’ situation in India due to American driven FDI backdoor entry with 51% share, price rise, loans and policy mismanagement. Now there is a deadlock in the Parliament on FDI war and MPs are getting ready to vote and as usual there shall be horse trading and backroom deals. Walmart media reports has pumped billions in India to favour this entry in India.

National Strike and People`s anger stopped India`s work on 20th. Sept-2012.This was followed by a huge political rally of FDI supporters generated by Government to display their network and support muscles in support of FDI recently in Delhi. When investment is necessary why the Indian investors with dirty money cannot be motivated so that the administrative control, profit and assets remain within the nation? Why is this a shameful helpless situation for powerful government? 51% FDI is more of an American safety valve then the indigenous trouble shooter. Why more protection is not extended to indigenous investors?

FDI, communication, technology and transport etc. are progressive engines of a same chain of a country`s survival and progress.FDI is only the driver of the economy, not a player but a new driver with a brand new battery of employees as a support system. Drivers may speed up the accelerator, may reach the target in time at a lesser cost initially but drivers do not cure the future survival in the market alone. Industry and Agriculture are the major players and stakeholders together with technology and science. Finally it is the squeezed pocket of the majority people that decides the future of any services in the market.

FDI is only a market driver having no power to pay off country’s loans or generate more jobs
Let us stand to be understood first. New foreign retail stores and food chains are going to be the `new` drivers of the economy without any skills to generate more wealth. Drivers are not the `sole breadwinning champions` of the market -we must never forget. How can a bare footed delivery boy from a rural retail shop become a tie wearing Wal Mart salesman ? Rural consumers in America say they have to travel not less then 30 kms to big Marts as the small retails have been wiped off. Wal mart in future may replace the old network of services in retail by their new network and new battery of employees but FDI in retail can never increase the purchasing power of people and provide more jobs to repair sick economy.

“Bite the bullet and go down fighting courageously”-was the recent war cry of Indian Prime Minister. Is this a war with bullets to ensure better Governance ? Or is this a war to protect Corporate and bail out American economy in India ? Our `honest` PM is demanding more sacrifices to counter new price rise. He safeguards FDI backdoor entry and asks the nation to be prepared. It is the magic of pressure of majority people fighting for better life and dignified daily works that forced a split in the Union Government and six ministers of TMC resigned. See the importance of `no participation` and `no consultancy mechanism` which forced this split.

On one hand Government declares war against people by rising prices and on the other hand it wishes to hoodwink and put FDI as the `Big Bang` terminator. A `magical medicine` for the national debts and loans ! All this is done under America Pressure to bail out their loans and unemployment.

Last time in Parliament, the FDI issue was somehow closed by the then Finance Minster Pranab Mukherjee because the government got no support from its allies and it was decided that 51% FDI would not be allowed without a proper discussion in Parliament. All this debate among 1% took place but the consent of the common man with shrinking pockets was still missing. Without increasing the pocket power or living standard of commons, this backdoor action of FDI entry on retail network replacement is a senseless dream.

India needs a more balanced agriculture-industrial policy first instead of FDI in retail market to stop suicides and agitations of farmers involving unlimited greed for selling land to developers and making selective1% more powerful.

It is not difficult to understand politicians and their disconnect with the market and with loans. The government is taking pride to display their ‘no controls’ on the market prices? Ministers say that price rise is natural and is beyond their control. Print and electronic media are full of false stories of ‘courage’ where FDI entry = Loan waiver.

Only Finance Minster or PM decides whether to allow Wal Mart Retail Food Chain or not. Ministers must stop shedding Crocodile tears and stop painting FDI as a future loan waiver. Why should FDI- a shinning new driver of economy- be appointed by America as our future loan terminator?

The fear of multinational retail chains forecasting lower prices to consumers and higher prices to farmers is a false trick. This raises a number of questions. Is FDI indeed a disadvantage? Do we want to ensure higher margins to traders? What about the horror tales of exploitative and non-value adding middle-men in different tested countries? The forecast of eventual `squeezing’ of the consumer is equally bizarre. If there is more competition, prices will drop ! How, then, would FDI in retail favour monopolistic pricing? In any event, if large-scale retailing does squeeze the consumer, is it that an indigenous squeeze is more bearable than a foreign bear-hug? One section of opinion in the past was that there is plenty of money for investment in retail and, hence, foreign participation is unnecessary. This section is powerful but is silent now due to unending recession. If this is true why is the huge opportunity in food processing and packaged branded low-cost edible products still unexploited? The cold chain of refrigeration and the logistics support required to make fortunes for farmers out of fruit and vegetables demand heavy investments. If dirty money in domestic market is in plenty, this avenue should have been explored indigenously by now. When US economy is in problem why this love for FDI to help revive Americans more and Indians less ?

Let us face the Employment bullet in India :
The Indian retail market is estimated to be around $400 billion with more than 12 million retailers employing 40 million people. Ironically, Wal-Mart’s turnover is also around $420 billion, but it employs only 2.1 million people. If Wal-Mart can achieve the same turnover with hardly a fraction of the workforce employed by the Indian retail sector, how do we expect big retail to create jobs? It is the Indian retail sector which is a much bigger employer which can generate 20 times more employment foreign retail will only destroy millions of livelihoods.

What India needs is systemic reforms in favour of 99% people in small retail structure as recently done in America. Pockets of 99% are not in favour of 1% supported by Multinationals and their hidden pockets in Tax Havens. Income, audit of profit and Purchasing power of majority needs to be repaired first. Ponty Chaddhas, Robert Vadaras and Gadhkaris need to be booted out at grassroots for better audit Governance and consumer satisfaction.