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FDI in retail: Bad politics

It is ingrained in the DNA of the opposition that it should be seen as opposing everything the government does.

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In a partisan democracy, it is ingrained in the DNA of the opposition that it should be seen as opposing everything the government does. Or else, it loses its raison d’etre.

So, when in the middle of the winter session of parliament, the masters of the UPA-2 decided to permit 51 per cent Foreign Direct Investment (FDI) in multi-brand retail sector, there was nothing surprising in the hostile reception the proposal got from the Opposition. So, what if the BJP was among the first ones to even moot the idea of FDI in the retail sector, when it was dreaming of strengthening its hold on a Shining India in the summer of 2004?

The moment the FDI issue came up, the BJP recalled that for long it has been the party of the traders — the Bania, Jain party. Quite naturally, the issue got lost and the government promised in the House to keep the implementation of the decision on hold till a broad consensus is evolved. So, is it RIP FDI in multi-brand retail?

Far from it, the plain truth is that the much maligned foreigners are already here, and if not actually thriving they are excited enough to take the big leap. A fact sheet put out by Bharti-Walmart as early as August 2011 showed that it has more than 3,000 associates, and it was running its ‘Easy day” stores in places as diverse as Jalandhar, Indore, Raipur, Guntur, Vijaywada, Lucknow, Meerut, Agra and even Jammu.

Of course, there is the euphemism of this being just a business-to-business operation, but nothing disguises the fact that upwardly mobile middle class couples enjoy shopping for their monthly kirana at these stores spread over 50,000 to one lakh square feet. That these stores are operating in the BJP or non-Congress ruled states, is just a small political point.

Foreign investors might have gone bearish on the idea right now, but then this is just the pause button in the typical Indian mode of functioning, which believes in simply muddling from one crisis to crisis to another.

There can be no quarrel with all the right reasons for permitting foreign investors in this sector, and in the shorter term itself the political landscape would change in such a way to tilt the balance in favour of this decision.

In terms of practical politics, it was not the pressure from the Opposition, but the compulsions of coalition politics that made the UPA-2 hit the pause button. There would be the process of building a broad consensus. The other rationale is that having boarded the train to globalisation  of its economy, India simply cannot get off mid-way without facing disasters. An opening-up of the retail sector to global investors is only a logical step in this journey. 

Wise men tell us that the neighbourhood trader, whose extinction is predicted by the doomsday prophets when they warn us against FDI in retail, has seen it all. They also make a generic argument. The old thrives and survives along with the new.

Look at newspapers, television, radio and Internet. Then they tell us that we should go to Jalandhar and Raipur to see if Bharti Walmart has meant the death of the much loved next door kiranawala. We shall get our answers.

The simple thing is that couples all over India are simply waiting with bated breath for their Walmart shopping experience.

Their friends and family members from the US have told them that they have a return policy that will make their eyes pop-up. As year 2012 dawns, this experience will unfold for the resident Indians too.

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