Why I am against FDI in retail

So a lot of hue and cry is currently being raised about the entry of foreign players like Walmart in the Indian multi-brand retail sector. This would become possible by allowing 51%FDI(Foreign Direct Investment)which is at the moment limited to 25%.

I would, in this post describe my reservations against this move. Before I go on, let me assure you that I think my economic views are quite moderate. That said, I am still strongly against this FDI in retail for the following reasons:

Here are the arguments presented by the proponents and their critique

1) FDI will help farmers by creation of back end infrastructure like supply chains and cold storage: While it is true that big retail would invest a lot of money in supply chain etc. but the question is for the benefit of who? In the west(or at least in Canada) that supply chain is mostly used to import bananas from Ecuador, apples from New Zealand and so forth) Essentially the supply chain is used to import goods from ultra cheap industrial scale farms all over the world (since it's so damn efficient and causes such a huge carbon footprint). To buy local food one needs to go to China town or other locally owned stores so obviously am not able to see the benefits this supply chain will have for local farmers in India. Essentially if a region has a bad crop and farmer is expecting to get compensated by higher prices this will not happen since the 'efficient' supply chain will enable stores to import cheaper produce from elsewhere.

2) Consumerism: It is often touted by businessmen that they are simply feeding the demand of the population. We know from observation that this is simply not true. Businesses create demand, Advertising makes us want to buy things. India is a growing economy and needs to decide what kind of development it really wants. We are already witness to the effect of consumerism on rural India a stark example of which is farmer suicides. Distinguished historian Ramachandra Guha points out the psychological impact consumerism has had on the rural farmer which looks upon himself as a loser in this quest for glamour. He points out that farmers in India have always been on the brink but they were not killing themselves in the past.

I know that disparity is inevitable, especially in a high growth economy. It will grow before it comes down. But we don't have to make it so in your face that a large part of the population feels like a loser.

The point I am trying to make is that the social engineering capability of a 400 billion dollar company like Walmart is many times more than Kishore Biyani. The socio economic impact it may have on an already volatile society where a large number of population is extremely frustrated can be disastrous.


3) Efficiency may not always be good: Economists would know that while efficiency will definitely increase GDP it also creates a more efficient way to deliver the profits to the top. The argument that big retail will create more jobs is simply absurd. How is it supposed to be efficient if you say you will employ even more people per square feet (one economist pointed out) than the corner stores.

4) What economics misses: Economists count well being by the number of good you buy, they are not concerned whether you actually needed that product or not. For an economist a $10 box of cigarette is better than a $4 cup of coffee but common sense tells us this defies logic. So why promote an industry which will make Indians buy things they do not need albeit at a lower price. I am all for lowering import tariffs, let Starbucks in India, let us not pay 300% duty on french wine. In fact single brand retail is just fine, but we simply do not need Walmart in India.

The job to create supply chains, efficient taxation to facilitate interstate movement of trucks, devolution of better technology to farmers cannot be outsourced.

Let there be FDI in infrastructure, technology, manufacturing but eating MTR ready to eat packages (because you can get 10 for a cheap price at Walmart and the packaging is attractive) instead of home made dal is not going to help anybody's cause even as it enhances our GDP.

The change that big retail creates in consumption habits of people is simply not healthy regardless of efficiency.

The arrogance of a Neo-liberal regime.

Here are some of my thoughts on the "Anna" phenomenon:

I start with a quote from PM's 'statement' on Anna's arrest. He said ,"there are forces who do not want India to have the rightful place in the commonwealth of nations" The statement while being absurd in the first place, shows how irritated politicians become at the slightest thought of people power.

The statement was also not surprising since MMS spends more time in Washington than in Delhi. The leadership of India seems so hopelessly unaware that millions of Indians living in abject poverty, millions of Indian looking for jobs, even millions of Indians working night shifts at call centers don't give a damn about this 'commonwealth of nations' All they want is a country where they have respect, dignity and peace. In fact, I don't even think the poor are expecting to get rich given the hopelessness drilled into their heads through centuries of discrimination. All they hope for is the someone to listen to them.

What this government has done is gotten away with scams on a grand scale. It is ironic that this very PM who is so concerned about India's image abroad could not deliver a successful Commonwealth Games. They have ended up pissing of the middle classes with such massive scams and the pooris pissed off that none of the growth is helping them due to a failed government machinery.

The government ministers are so filthy rich that they have forgotten basics of politics, they seem to have taken voluntary retirement of sorts. But what's with this weak governance? All over the world we are hearing the same cry, the governments are ineffective. Why is this so? well you can read Chomsky for that.

However, the corporates made one mistake. India is not America or Latin America. Gandhi is still printed on every currency note and forever Indians will have greater respect for him than Warren Buffet. No matter how you package capitalism, the ideas of democracy, of self determination are so ingrained in the Indian psyche that the whole 'customer is always right' bullshit is never gonna work here.

The leadership of India today seems frankly ill-trained to handle people. Yes they would be awesome at receiving Bill Gates and negotiating deals with the World Bank but they have forgotten how to practice politics. It is astounding how little coverage any government official has got since Anna went on fast. Astounding it may be, but it is not surprising.

August 2

Food at Cafe Mexico. Great Food! Awesome Service

Things to do with Chopsticks when not eating Sushi

1. Make holes
2. Poke people
3. Eat Cereal
4. Use as stirrer
5. Eat ice cream

Have more?

No longer afraid to travel.

When I graduated grade 12... I wasn't really sure of the world. I wasn't really sure of my friends. I didn't know who I could depend on and who I couldn't..

That was a time I did not like moving a lot. I didn't want to change my school even though I knew it was better for me because I was scared to adjust in a new environment. I reconciled with Status Quo for most things.

However, that is not who I am inherently.. I remember in grade 3 walking up to the principal to complain about a teacher who was beating up kids for no reason. This was not normal, at least I didn't think any other grade 3 kid in my school could do such a thing and it didn't even seem like a big deal to me.

Coming back to grade 12, I decided to come to Canada after school. Somehow I felt more comfortable coming here than going to engineering college in India; For whatever reason. But even here I was 'comfortable' in Victoria. I didn't want to move even If I could, I have friends who I value and didn't want to go somewhere I wasn't sure about.

However, this has changed in the past year and I have been wondering why..

I am not afraid to go anywhere today; this is not because I have suddenly reached a new level of confidence rather it's because over the years I have worked hard to forge strong relations with family and friends. I feel If I get into trouble, a lot of people will be there for me. Some of them would falter and I am taking no one for granted, but still there is a lot of support and it makes me feel pretty good.

In many traveler books I have read or movies I have watched, people seem to make travel a way to 'free' themselves, especially the original concept of travel like a pilgrimage to Jerusalem or the Haj was based on detaching oneself from what was comfortable and venturing out.

However, for me the strength and willingness to travel or try new things is because I feel attached and not detached.

Get what I am saying? Does that make sense for you?

What gives you the strength or desire to travel?

By the end of this summer..

I'll know basic guitar and basic French

Shanghai: One City, Many thoughts

I am writing this post from Shanghai prior to boarding my flight to Delhi, before the myriad of thoughts that have transpired in my brain get overwritten by the confusion of India that awaits.

So Many reflections!

I DID NOT expect everything to be so organized in the city. They have done well. I felt welcome, safe, comfortable. In the metro, taxis and streets.

Bombay vs Shanghai: There is no comparison. I read articles in how you have to pass miles of slums after exiting Mumbai int’l Airport and the writers somehow derived from this very cosmetic approach that China is ahead and India’s democracy is making a laggard with respect to Infrastructure, financial reform and so forth. But let me tell You Shanghai is advanced in more ways than looks. Streets, police, security , you couldn’t tell it from Singapore. And Mumbai? Struggling with multitude of problems: Inlfux of immigrants, lack of hygiene( China is 10 times as much cleaner as India) right wing politics, basic infrastructure like roads, transport? I would sign up for Communism any day after what I have seen in Shanghai. While Shanghai and the rest of China are moving ahead at breakneck speed, Mumbai is gripped by issues like Marathi Manoos (outsiders vs local debate) 60 years after independence we cannot seem to focus our minds on relevant problems!. Sure there is debate it in India but most of it is over irrelevant issues. While China united to host the Olympics and expos we threaten to block commonwealth games for Gujjar(backward community) reservation in govt jobs or some crap like that.

On Chinese growth

Human rights? Ok fine you don’t get free news. But where the fuck is news free anyway? In India, we had top reporters acting as lobbyists. US news is uber partisan. If control can create so many opportunities for China and its people so be it. China and India didn’t have the liberty to loot the world for half a millennia so they need an alternative approach to development. Billions of dollars got robbed, people lost their homes in the States because of speculation and where was the legal system to protect them? To be honest is there a better model for development? I think China shows the way and makes every other struggling developing economy look like a loser because they can’t figure it out.

I saw a couple on a bicycle, they were in their 30s, the wife was holding on to the husband and both were smiling. If after a hard days work, they can go home, eat well and educate their children then poverty has ended for them. And I think it has, for many a Chinese, better than the UN, the World bank, the IMF could have helped achieved. Yes, it’s not really communism they followed as model for growth but if you ask me to summarize my thoughts I’d say neither Lenin nor Marx but the average Chinese is the true winner in this development story.