As we see political parties outdoing themselves in the opportunism dept, there are a few interesting questions one needs to ask about FDI in retail.
1. Why the rush and lack of debate , considering how unprepared the congress itself was with its 30% flip-flop…
A. Does the Congress want to stall the house with this decision so that they can blame the opposition, that too when dmk and tinamul are against it, and numbers dont stack up. Strangely it was DMKs Mharan who was all for 100% fdi in retail.
B. Is the Sonia congress preparing its war chest for the next General Elections or the Rahul babas attempt at the PMs post in the next elections? How can we rationally not expect a quid pro quo? Such decisions cannot be taken for free.
C. Is this a lollypop dangled by a desperate govt which has been called as comatose in terms of liberalization and policy decisions by top industrialists in public.
D. Is this an attempt to shift focus from corruption and inflation and sidestep Annas Lokpal and anti corruption movement?
E. Is it a desperate bid for fdi inflows that will allow it to go ahead with its Food security bill and other election freebees without which there is a risk of a run on the rupee?
2. Can we enforce sufficient controls checks and balances in the long run ?
A Would the Tesco, Walmarts etc not want to influence the rules that when the largest market in the world is at stake ?
B. Isnt buying an Indian MP a cheap transaction for a multinational giant ?.. that when they have the lobby power to buy politicians in the US congress. Don`t forget big food has the wherewithal to make US Congress declare sauce on a pizza is a vegetable .
C. Big pharma has shown the speed with which prices of medicine and cost of healthcare is rising YoY.
3. Will cost of everything go down and take food inflation 4%
A. When Kaushik basu, Chief Economic Adviser says: If we don’t open up FDI in retail, food inflation won’t decline. Is that meant to be taken seriously? Everything he has said has either been ambiguous or has proven to be false especially his inflation predictions.
B. Would the middlemen ever allow them a free run? As things stand in Maharashtra the APMCs are controlled by a few people who are all linked mainly to politicians of the Congress and NCP and other parties. They extract a massive cost for a 2 minute auction. The cost of onions jump from Rs2 per kg to retails at Rs20 per kg in Mumbai and 30 in Delhi . The vested interests wont take this lying down, and their politician friends will eventually back them.
C. Will they have super efficient supply chain management, that will bring in the fabled efficiency of scale? How will cold storage run when the rural areas lack regular dependable electric supply and most SEBs are in massive debt? How will food articles be transported efficiently when the road network is bad and the corruption at the toll naka is all pervasive and increases costs. Do we expect them to build roads and captive electric power plants? Branded apparel, mdf furniture and house articles might get cheaper but why will they bother in a low margin business such as agri commodities?
D. Reliance and Big bazaar has shown that food costs less in the mandis than at their stores. Will foreigners be any different and how?
4. What will be the impact on long term fiscal policy and Rupee ?
They will have to take profits home and that is a place outside India … So how will it impact our currency and our deficits?
5. Jobs ? Consumer protection?
Efficiency by definition means reduction , so it will take lesser people to do the job than it takes now so how will the million man workforce mark be crossed?
Most of the big guns will subcontract. India has no social security, epf or heath benefits for contract labor. Neither does the mathadi worker or the unorganized laborer. So this is an interesting question.
India does not have a good solid enforcement of Consumer protection law, and the CFs are bogged down.We dont have means to a Class Action Suit law either. The small cause courts are utterly corrupt and corruption exists even in the High courts and above.
Im all for FDI in retail especially if it helps the farmer and the consumer but until we know what the avatar of the final bill is we can only contemplate and discuss the matter because vested interests of middlemen and mandi operators in the APMC are very powerful and very well connected with the same bunch that are promoting this bill…