Wednesday 5 December 2012

FDI tussle

After the logjam in parliament and yesterday’s debate on FDI, showed it had nothing to do with FDI but it is a tool for show of strength between the UPA and the opposition led by BJP. The UPA is on a fast forward mode on reforms delayed by appeasing the various constituents of UPA, while the BJP is very keen to embarrass the government and Congress leadership. In this tussle, the real issue of FDI takes a back seat with frivolous arguments made by both sides.

A couple of months ago, government changed gear; the UPA government cleared Foreign Direct Investment (FDI) in retail. Since then the BJP, Left and Trinamool Congress have expressed serious reservations over this policy. The general opposition view is that it will affect lakhs of small and local Kirana shops. While the debate is intensifying, the supporters of FDI are emphasizing the fears are unfounded and are effectively saying do away with India’s antiquated and unorganized retail trading system that lacks quality-control and that generally benefits the middle-men who control the trade and the pricing of foodgrains, vegetables, fruits and other items. It is this traders and middle-men of this traditional bazaars and mandi system that fears FDI.

FDI in retail, with foreign players will usher in a new system of retailing. This new system will also throw up new players. FDI will also help boost India’s industrialization with modern technology. This will in turn help India to progress at a faster pace. As Sushma Swaraj narrated in the debate, middle-men and traders lend money to farmers to help them. Actually traders also double as money lenders. This parallel banking system that traditional traders and middle-men practice hurts the economy and keeps the poor borrower under the influence and control of the lender who regulate the market.

Speaking of the positive side, the case in point is opening of the automobile industry has helped it flourish, generate employment with people flaunting latest vehicles in cities, urban and semi-urban areas negating all fears that it would gravely harm local Indian industry. On the contrary it has provided an impetus to compete and improve, introducing latest technology and helped launch new models of international standards by Indian manufacturers.

Similarly FDI retail will provide job opportunity in various fields ranging from food experts, refrigeration, management, accounts, etc. New players too will come in. And India will not become modern developed nation with a traditional system of retail which served the country well in the years after independence. To be a developed country, India needs to adopt new and modern methods which FDI will offer.

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