Loving and hating FDI in retail

Rival sides of the debate on FDI in retail are unnecessarily adopting extreme positions
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First Published: Sun, Nov 18 2012. 02 55 PM IST
A file photo of Congress’s rally held in New Delhi on 4 November. Photo: Ramesh Pathania/Mint
A file photo of Congress’s rally held in New Delhi on 4 November. Photo: Ramesh Pathania/Mint
Updated: Mon, Nov 19 2012. 08 05 PM IST
A fortnight ago, the Congress party organized a massive turnout in the capital in support of the controversial move by the government to allow more foreign direct investment (FDI) in domestic retail. Immediately afterwards, the political knives were out, with almost every political rival of the Congress swearing to take on the government.
The Left parties have set the stage for a formal confrontation with the Congress-led United Progressive Alliance (UPA) by announcing last week that they will introduce a resolution challenging the policy move when Parliament convenes for the winter session later this week. The government, on its part, is on the face of it unfazed, but moving behind the scenes to protect its fragile majority in the Lok Sabha.
As always, several allies—both within and outside the government—of the UPA have used the moment to strike an ambiguous stance, forcing the seemingly rattled government to engage in dinner diplomacy—which so far has not been able to extract any guarantees from its outside supporters, the Samajwadi Party and the Bahujan Samaj Party. All of a sudden, FDI in retail has become the lightning rod around which the political opposition is converging.
If neither side is willing to compromise on its stance, then the winter session of Parliament, like the monsoon session, is expected to be a washout. At the least though, for the next week or so, the political class of this country, whether through design or accident, has managed to focus the nation’s attention on the contentious issue of allowing FDI in retail.
The news that Wal-Mart, one of the beneficiaries of the liberal FDI regime, is undertaking an internal investigation into bribery allegations in Brazil, China and India, will only add fuel this debate afresh.
Coincidentally or otherwise, this face-off will peak just when another political rival, Arvind Kejriwal, is proposing to launch his political party on 26 November—also the anniversary of the adoption of the Indian Constitution by the constituent assembly in 1949—an Act that most importantly guaranteed the right of individual liberty (something that Kejriwal constantly emphasizes).
Given this constellation of circumstances and rapidly diminishing credibility of the political class, conspiracy theorists would argue that the timing of the FDI face-off is rather too convenient. Not only will it divert attention from the Kejriwal show, but also focus on an issue other than corruption—the claim to fame of the activist-turned-politician.
Because it is a fact that rival sides of the debate on FDI in retail are unnecessarily adopting extreme positions. There is no clear evidence to suggest that either is right. More importantly, it will take at least 10-15 years for the entire policy fallout to take root, whether it be in the creation of the promised supply chain that will connect farm to the home or in spelling the destruction of the ubiquitous kirana stores. Therefore, the debate will remain largely rhetorical, which is not a bad thing from the point of view of the political class as it will drown out everything else, though it is not convincing as to why the government would stake so much on it, especially at a time when corruption in public office continues to occupy the nation’s mind space.
The recent survey conducted by the Hindustan Times-Hansa Research only affirms this. It shows that two out of three people who were surveyed blamed politicians for corruption in the country and a similar proportion were impressed by Anna Hazare’s campaign—though they were not so overwhelmingly in appreciation of his protege, Kejriwal—against graft.
Since for now neither of the two main national parties, the Congress and the Bharatiya Janata Party, have abdicated the moral right to partake in the discourse, any distraction would be welcome relief.
But the question, regardless of whether conspiracy theorists are right or wrong, is that will the distraction be good enough? We will know soon. It is a fact though that such an effort, contrived or otherwise, has a tendency to ignore the script and balloon out of control. It is not without reason then that most political parties are keeping all options open going into the winter session of Parliament.
Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics.
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First Published: Sun, Nov 18 2012. 02 55 PM IST
More Topics: FDI | retail | Congress | Capital Calculus | UPA |