It is a good thing that the Prime Minister stepped in and called an all-party meet to discuss the logjam in Parliament over the decision to permit 51 per cent foreign direct investment (FDI) in multi-brand retail. The commerce minister has also written to leaders of all political parties explaining why FDI is necessary in this sector to help build cold chain infrastructure, logistics and transportation. It may be too little too late but even the government’s allies, like the Trinamul Congress and the DMK, are incensed that the decision was taken without proper consultations with them and strongly oppose it.
Other chief ministers, like Ms Jayalalithaa in Tamil Nadu, Ms Mayawati in Uttar Pradesh and Bihar’s Nitish Kumar, have said they won’t allow the Wal-Marts of the world into their states and that the states are the final licensing authorities. Strangely, the BJP’s poster boy, Mr Narendra Modi, has welcomed FDI in Gujarat, as has Karnataka. It would be interesting to see what ultimately happens since the national leadership of the trader-based BJP opposes FDI in retail.
It would have been fair of the ruling party to have consulted the Opposition parties, but, more importantly, there should have been a nationwide debate on this transformational move which will affect the lives of 94 to 96 per cent of the small shopkeepers who make up the unorganised sector in the multi-billion retail industry. They contribute 14 per cent to GDP and account for seven per cent of the employment quotient in GDP. Besides, countries like Thailand, Malaysia, Indonesia, and even China, have not had happy experiences with these MNC retail giants. They reportedly had to put curbs on them and help out small retailers through loans etc. There are also several areas in the US that do not allow giants like Wal-Mart to set up store. It is not all as hunky-dory as the commerce minister makes out. He even talked of millions of jobs being generated if 51 per cent FDI is allowed in multi-brand retail but omitted to mention the number of small shops with dependent families that would go under because of the predatory pricing practices that the deep pockets of these MNC retailers allow.
Undoubtedly there are some safeguards to mollify opponents. But even in these the point about sourcing 30 per cent of their needs from small and medium enterprises does not specify if it is so domestically or globally. But, as the retailers’ forum says, FDI will only help about 150 business groups in India that are in retail and are now facing a cash crunch. They are hanging on to the hope of partnering these MNCs or selling out to them. The economic issues are more significant and need to be discussed threadbare because the livelihoods of millions are at stake.