Volume 28 - Issue 26 :: Dec. 17-30, 2011
INDIA'S NATIONAL MAGAZINE
from the publishers of THE HINDU
Finance Minister Pranab Mukherjee comes out after attending the all-party meeting on the issue of FDI in retail trade in Parliament House on December 7.
KARL MARX's famous quotation on history repeating itself, first as tragedy and second as farce, is cited often, both in and out of context, but it clearly fits the mess created by the United Progressive Alliance (UPA) government through its hasty announcement and the not-so-calibrated suspension of the decision to bring in foreign direct investment (FDI) in multi-brand retail trading. The government and its constituents, particularly the Congress, the leader of the ruling coalition, went through a number of contradictory and farcical political and policy contortions in the 13 days between the Cabinet decision on November 24 and its suspension on December 7, but that was not the only thing that underscored the comparison.
The message that emerged from the Congress hierarchy immediately after the announcement of the November 24 decision was that Prime Minister Manmohan Singh was firmly committed to FDI in retail trade, just as he had been committed to the India-United States nuclear agreement in 2008. It was pointed out that he did not brook any pressure from political allies and opponents and was even ready to forsake his government for the nuclear deal. The Congress refrain was that his commitment to FDI in retail trade was just as strong. It was asserted that the objections raised by parties across the political spectrum – the Bharatiya Janata Party (BJP), the Left parties led by the Communist Party of India (Marxist), or the CPI(M), the Bahujan Samaj Party (BSP), the Samajwadi Party (S.P.), and even UPA partners such as the Dravida Munnetra Kazhagam (DMK) and the Trinamool Congress – would all be struck down forcefully with the help of political, administrative and legislative measures. Nothing of that sort happened, and the government's resolution was torn to shreds in Parliament on December 7.
The statement made by Pranab Kumar Mukherjee, Union Finance Minister and the perennial troubleshooter for the Congress, affirmed in the Lok Sabha on that day that "the decision to permit 51 per cent FDI in multi-brand retail is suspended till a consensus is developed among various stakeholders". He also went on to add that he was "seeking permission to provide the clarification that the stakeholders include Chief Ministers of State governments and political parties, because without the involvement of Chief Ministers this can never be implemented". Evidently, this was an open admission that the consultations that were undertaken before the November 24 announcement were insufficient. This openly challenged Union Commerce Minister Anand Sharma's assertion throughout the 13-day imbroglio that the decision had been taken after "a year-long debate and consultations with all stakeholders in the most transparent and democratic manner".
Mukherjee's admission made it clear that not only had many Chief Ministers and political parties been kept out of the process, but even direct stakeholders such as organisations of farmers and traders had not found a place in the "consultations". Even the minutes of the discussions had not been received by many Central Ministries and Departments during the 13 days between the announcement of the decision and its suspension.
Leaders of two major farmer organisations, the Bharatiya Kisan Union (BKU) based in Uttar Pradesh and the Swabhimani Shetkari Sanghatana (SSS) based in Maharashtra, told Frontline that no consultations had been conducted with their organisations. BKU leader Ramesh Tikait said that the organisation had not even been contacted. "All that we have seen is a discussion paper posted on the Ministry's website. But this paper is in English. How many farmers' organisations have the ability to engage somebody to present their point of view in English?" he said.
SSS leader Raju Shetty's position, interestingly, is of qualified support or qualified opposition to FDI in retail trade. But neither he nor any other representative of his organisation was contacted for any discussions before the announcement. As for the discussion paper posted on the Ministry's website, it has notified responses from approximately 200 entities, including institutions and individuals. Among them are a variety of organisations ranging from the Confederation of Indian Industry (CII), the Federation of Indian Chamber of Commerce and Industry (FICCI) and Carrefour to the Kisan Jagriti Manch, a collective of farmers and academics, the BJP-affiliate Bharatiya Mazdoor Sangh, and local outfits such as Sivakasi Paper Merchants' Association and the Pollachi Dry Chillies Merchants' Association. Interestingly, a quantitative tabulation of these responses also reflects a significant opposition to FDI in retail trade.
Mukherjee's December 7 statement in Parliament may indicate the government's intention to hold extensive consultations, but it is not clear as to how it proposes to go about this. In fact, there is a view in the UPA, and even in sections of the Congress, that the Commerce Minister and his supporters may try to raise technical questions on the suspension of the decision and go forward with its implementation of FDI without completing the consultations. Another section of the Congress is of the view that recalcitrant allies such as the DMK and the Trinamool, and regional parties such as the S.P. and the BSP can, with some effort, be brought around to a slightly modified government position. This section feels that each of these parties can be won over with a price: an economic package for West Bengal to pacify the Trinamool and some administrative sops for the DMK, the BSP and the S.P.
It also believes that the BJP's opposition is more an act of political expediency than a matter of principle and that the saffron party will also come around in due course because it shares the ruling party's commitment to the reform agenda. These, interestingly, were the factors on which the Congress leadership had banked before the November 24 decision.
The general perception is that the Congress has been humbled by the FDI mess. But there is another opinion that sees the whole business as deliberately orchestrated to divert attention from issues like the Lokpal Bill and the growing murmurs about the possible role of the Prime Minister and Home Minister P. Chidambaram in the 2-G spectrum allocation scam. "The timing of the announcement belies all logic. That is why it is clear that the purpose of the imbroglio was to divert attention and prevent the raising of these issues in Parliament," said the Lucknow-based political analyst I.B. Singh.
Whatever the ruling party's intention might have been in proposing FDI in retail trade, the BJP and the Left are gearing up to take forward their opposition on the issue. The BJP's Arun Jaitley made it clear that his party would continue to oppose reforms that may hurt domestic interests, calling such measures "counter-reforms".
The time for allowing FDI in retail trade in India had not come, he said, pointing out that the character of the economy was service-sector oriented. The latest National Sample Survey Organisation (NSSO) survey shows a fall in employment. Self-employment continues to be the largest single source of family incomes, with agriculture and retail trade being the largest job providers.
"Will international retail trade generate more jobs or will it destroy the existing jobs? If purchasing power increases with the expansion of the economy, it will reflect in the coexistence of structured organised domestic retail and small retail. International retailers with deeper pockets will displace existing jobs in the retail sector rather than creating additional jobs," he said.
CPI leader Atul Kumar Anjan said that the FDI move was prompted by the Congress' perception that its political masters in the U.S. were unhappy with its current track record on economic liberalisation. "They have been forced to backtrack on account of people's resistance. But they may still bring it at the behest of their masters," he said. The CPI(M)'s Basudeb Acharya said that if the government was serious about introducing FDI in retail through consensus, it would never be able to do it because that consensus would never develop.
Activists such as Professor Sudhir Kumar Panwar of the Kisan Jagriti Manch feels any such policy needs to address long-term issues like futures trading, rise of contract farming driven by retail corporates, and the consequent pressure to change tenancy laws. "It would be suicidal to go on talking about short-term gains without addressing these really grave issues," he told Frontline.
Sanjeev Vasudev, whose organisation Conserveagri has a special focus on small holdings-rain-fed farming, said that this segment of the agricultural community was "once again offering itself as a cause celebre, this time to meet the needs of FDI in retail, evoking much discussion of little relevance".
He added: "FDI in retail seems to want to make sense for its ability to address the needs of poor farmers who have been neglected… and will remain neglected, FDI or no FDI. While we are being made to believe that FDI in retail will help the cause of the small farmer, the reality is that such farmers need support on cultivation and farm management before the subject of markets merits any discussion. This, because food needs to be first grown to achieve food security before surpluses can be found to reach the market. Thus, to begin with, we as a country need to be sensitised to needs of a small rain-fed farmer who has to pay the price of sitting out of the PDS [public distribution system] procurement system that easily commands the attention of government after government." He was certain that such concerns would not come up in the new consensus initiative indicated by the Finance Minister.
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