Scuttling debate on FDI in retail

The decision, last Thursday, in the Cabinet, to permit 51 per cent foreign direct investment (FDI) in multi-brand retail is not a bolt from the blue. The issue was analysed threadbare by a Parliamentary Standing Committee, wherein premier research bodies on policy and economics were also exhaustively consulted. The Committee's report was tabled in Parliament, late 2009. Without having this discussed, the government prepared a different and brief report for the public to give their inputs.

Later, after a meeting of a Group of Secretaries, a Cabinet note was prepared with figures cherry-picked from around the globe. The government, which sheds crocodile tears that Parliament be allowed to function, has not spoken as to why it rejected, probably not even considered, the Standing Committee's report. For the record, the Standing Committee had unanimously recommended against FDI in multi-brand retail.

DUCKING ISSUES

The decision of the Cabinet, coming as it does when the Parliament is in session, raises more questions than anyone in the government is willing to answer. As it is, the government was not able to resolve the situation arising in Parliament, on the adjournment motions on price rise and black money.

On that Thursday, the third working day in this session of the Parliament, notwithstanding the understanding reached with all parties in the presence of the Leader of the House, Mr Pranab Mukherjee that discussions will indeed begin from 1400 hours, neither the leader nor the Minister for Parliamentary Affairs was present when disruptions started from the treasury benches! This session of the Parliament has seen more dissensions from within the ruling alliance, and each time their floor managers have failed to rein in their side.

The first week of the winter session of the Parliament had caught the ruling alliance in a bind; they have no worthwhile strategy to combat the surging inflation. In the last session, hadn't they persuaded the opposition to agree to a unanimous resolution that the government would take necessary action to contain it? For whatever reason, they don't seem to grasp the severity of the inflationary pressure on the aam aadmi .

They have not even considered the recommendations of the three Working Groups constituted by Mr Pranab Mukherjee himself. The Working Groups consisted of Chief Ministers of different states. They studied areas such as Consumer Affairs, Agriculture and Food distribution, and came up with short, medium and long-term recommendations to ease the inflationary burden. Understandably, discussing inflation in the House is cause for great concern for the government.

And not just that. They also do not wish to debate their plan in handling the issue of black money. Since early 2010, even after being rapped in the knuckles by the Supreme Court, have we heard anything on the list of account holders in the Liechtenstein Bank?

Probably adding to the discomfort of our government, the French government sent us a list of 700 Indian account holders in HSBC, Geneva. Since after the end of the last session and prior to the commencement of the current session, Mr L. K. Advani successfully completed his Jan Chetna yatra , taking to the people the twin issues of corruption and black money.

It is indeed curious that, by its every step, the government is adding more to the prevailing confusion; this, at a time when the government is seen within the country as being directionless. Oddly, the Government's answer to the united Opposition's demand for a rollback of its decision on FDI in multi-brand is: “it would send extremely bad signals globally”.

GOVERNMENT'S U-TURN

Some critics are of the view that unable to resolve on the twin issues dear to the Opposition, (perhaps not intending to) the government may have felt that a call taken on FDI in retail could take the heat away from them. What they did not factor in was the opposition within the UPA alliance. In enabling to take this call, the note prepared for the Cabinet has been selective in highlighting facts and figures. The government went to town through various press briefings (mostly done by the Minister himself) that the opening up of the retail comes with a strong Indian signature to it. Subsequently, a press release of the government also claimed that the retail players will be obligated to have 30 per cent of their procurements from Small and Medium Enterprises (SMEs).

When it was pointed out that such India-specific clauses are unworkable, the embarrassed government did a quiet U-turn. It is now hawking the line that FDI policy is actually only an enabling framework and it will entirely be the prerogative of the States to adopt it, if they so choose to. What the government will not tell us is, in states which do not adopt the framework, the large retailers can legally challenge any restrictions. Let us be warned — the multinational retailers with deep pockets are not going to let legal costs upset their plans for expansion. FDI has to be reviewed sector-wise.

Service sector contributes to more than 51 per cent of our GDP. People in self-employment constitute a very large section of our workforce. Our retail network may be weak and wanting in global class. But they are a very important part of our productive socio-economic fabric. We need to safeguard their interest before we open the floodgates to affluent international operators.

(The author is a spokesperson of the Bharatiya Janata Party. The views are personal.)

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