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October 30, 2012 FDI Reforms: Applauded by intellectuals, criticized by lowbrows

It also shows guts and grits of Congress to come out of compulsions of coalition politics and stand to what a political party should do in the larger interest of people.

However, it is very sad to find that BJP and many other are opposing this. No doubt each party has a right to have its own view and has a privilege to oppose government. But, these views and opposition must stand the test of rationalism and the determining factor of larger good of people. Understanding FDI and its policies may not be everyone’s cup of tea. But it surely requires patient brainstorming.

Shouting brigades of different parties are out criticizing and condemning congress in the worst imaginable manner on the issue of FDI in multi brand retail. Gujarat Chief Minister Narendra Modi who is out to use everything for Congress bashing is out to provoke people that this move will render small traders jobless. There can’t be anything more ridiculous and anyone who has read news of FDI can easily make out the dirty design of Gujarat Chief Minister Narendra Modi and his BJP of arousing people through misleading campaign.

This also shows how propagandists of Goebbels scale can play havoc with the perception of common man. It is very clear that the states are free to implement the FDI policy. This simply means that any state government is free not to have this measure. Why Modi and many others do not clearly and explicitly say that they would not allow foreign super markets in their states? This is just because they know pretty well that the measure will benefit them.

It is ironic that Modi invites outside investment through vibrant summits and waives off condition of employment to local people. At that time he does not think of poor people of his state. But FDI major has taken care of small traders and manufacturers by keeping 30% clause.

Another argument is that it would affect farmers and people in rural areas. How can a city of population of more than one million can fall in the category of a rural areas is difficult to understand. And when a man like Modi talks this it is quite shocking. He wants to make entire Gujarat urban and uses borrowed expression ‘rurban’ to father a century old concept.

Three benefits are very obvious and direct. Investment flowing into the country will strengthen economy of farmers because they will get direct market. Thousands of young people will get employment and small traders will get quality products at cheaper rates through cash and carry system. Above all competition will bring best of money to the end user interms of both price and quality of the product.

FDI is just not a numerical exercise. Lot of reasoning of development and welfare state has gone into it. For multi-brand retailing, a minimum investment of $100 million has been fixed, half of which has to be used in creating storage and warehousing facilities. At least 50% of total FDI brought in shall be invested in `back-end infrastructure` within three years of the induction of FDI, where ‘back-end infrastructure’ will include capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of back-end infrastructure.

Farmers stand to benefit from the significant reduction in post-harvest losses, expected to result from the strengthening of the back-end infrastructure and enable the farmers to obtain a remunerative price for their produce. Small manufacturers will benefit from the conditionality requiring at least 30% procurement from Indian small industries, as this would enable them to get integrated with global retail chains. This, in turn, will enhance their capacity to export products from India.

As far as small retailers are concerned, it is evident that organized retail already co-exists with small traders and the unorganized retail sector. Studies indicate that there has been a strong competitive response from the traditional retailers to these organized retailers, through improved business practices and technological upgradation. Global experience also indicates that organized and unorganized retail co-exist and grow. The young people joining the workforce will benefit from the creation of employment opportunities. Consumers stand to gain the most, firstly, from the lowering of prices that would result from supply chain efficiencies and secondly, through improvement in product quality, which would come about as a combined result of technological upgradation; efficient grading, sorting and packaging; testing and quality control and product standardization.

Gujarat has good experience of dirty market practices. For examples, farmers do not get good price for groundnut when it is in field. However, traders hoard groundnut and jack up prices of groundnut oil and make money. Oil tin of Rs 1200 is sold in Rs 2200. A good storage and ware housing facility and direct purchase would help farmers get remunerative price for their product. Vested interests are spreading fear of losses to farmers. If we take example of Amul, GCMMF has created a kind of corporate structure where cattle breeders get best price and value of their milk and today it is a Rs 12,000 crore business. Amul products are available with small traders also.

BJP has made it a point to oppose anything initiated by the Congress led government just to politicize every issue because it is driven by parochial politics for cheap gains even if it damages interests of the country and its people. But people are intelligent to see through the BJP game.

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