Shopping for Consensus

Shopping for Consensus

December 5, 2011 (The Timesof India)

The recent retail FDI mayhem in Parliament reminds me of achildhood school memory. Once, in class VII, our strict teacher had given us a challenging assignment as homework. On the due date, most of the class had not done it. However, just prior to the teacher’s arrival, someone had a brainwave. He planted a Diwali bomb on along fuse under a vacant desk. The teacher arrived. Within a minute a deafening noise interrupted class.
Shocked, the teacher rushed out and brought back the head-mistress. The rest of the teacher’s period, both of them tried to figure out who set off the bomb and gave uslectures on our rowdy behaviour. The culprits were never found. The period ended in an hour. We breathed a sigh of relief. Nobody had cared about the homework.
The change in retail FDI norms is a similar Diwali bombexploded by our wonderful government, right in the middle of the winter session, to take attention away from their actual homework – important matters such as the Lokpal Bill, the black money investigations and addressing inflation. The noise and smoke from the retail FDI bomb has galvanised all the MPs who are trying to portray themselves as the saviours of Indian jobs. Often, these MPs have little idea of what is being talked about here, the actual amount of threat versus the opportunity. Playing on the xenophobia that plagues Indians already scared about financial security, all they have to do is scream, “Bad foreigners. Good Indians,” and they find their supporters.
In this cacophony, it is pointless to argue the merits and demerits of the policy change. It is too late. The issue has become emotional. Reason will not work anymore.
But reason suggests we cannot afford to turn up our noses at FDI. The aspirationsof India’s massive populationcannot be met by the capital generated internally. We have opened many sectors to FDI. In every such sector, service quality has improvedand domestic industry has survived. Yes, the FDI investor makes a return, butnot as a handout. The investor does the work and takes the risk (for instance, in dollar terms, foreigners have lost 45% in the last year on the sensex).
Our banks have thrived even after foreign banks came into the country. Telecom, insurance, software– there are innumerable examples of FDI working well in India. Where it hasn’t worked well, it is usually because we made onerous regulations that never actually opened the sector for business.
Even in FDI retail, a more sensitive issue, it is unlikely that it will kill our domestic small-scale retail. Indian mega corporations have already entered the retail sector, but the neighbourhood kirana storesand the streetside vendors still survive quite well. Thesenew Indian chains have provided a superior shopping experience. They have also created jobs and treat their employees better than the kirana storeowners,who have no employee welfare policies to speak of. The Philippines, Thailand, Malaysia and China – all have allowed foreign retail stores and there has been no significant impact on jobs.
Hence, this is one of those rare occasions in recent times where one could actually agree with the UPA government. However, the move may have been well-intentioned, but the way UPA has handled it has been a bit of a disaster.
If this was planned like the bomb in class, as a shrewd political move to distract, it has backfired. If this was done without thinking, it makes it worse. For it exposes the Congress’s inability and unwillingness to build consensus on almost anything. Forget opposition parties and allies, evenCongress members did not like the way the policy was thrust on them. The power of the family brand keeps dissent under wraps but some chinks are evident.
After all, it must be suffocating to be in the Congress for some capable leaders who are completely ignored simply because they are not as close to the family.This internal simmering withinthe Congress is a bigger threat to it than the opposition.
The FDI retail drama exposeda recurring BJP problem as well; its inability to manage outrageous statements. One of their saffron-type leaderswanted to burn Walmart stores down. Great going, madam. Our software programmers work in the US in the tens of thousands. Ourcall centres have taken manyUS jobs. Should they burn us down too? The BJP has manygood orators but no restraint.
FDI retail is a free-for-all right now. However, if and when some sense prevails, three suggestions may deserve some thought. One, do your homework first – theLokpal Bill and many other Bills are stuck. Clear them. Walmart can wait a few weeks. A corruption-free India is more important than asupersaver offer on T-shirts. Two, Parliament should adopt a resolution, that the hours lost due to adjournment have to be covered up within a session – through overtime, working weekends or extending the session dates.