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Business News/ Opinion / Online Views/  Of potatoes and the politics of swadeshi

It is good to see parliamentarians back at work, debating policy rather than disrupting the winter session.

The big issue has been foreign direct investment (FDI) in retail. The Bharatiya Janata Party (BJP) leader Sushma Swaraj, a persuasive debater at her best, slipped into a pile of spuds on Tuesday. In trying to argue that foreign capital in organized retailing would harm India, she claimed that the Indian operations of McDonald’s Corp. was buying its potatoes from abroad rather than from local farmers, a claim that the company promptly refuted.

Not all potatoes can be used to make the French fries that McDonald’s serves. Farmers need to be trained to grow the correct variety. The company website says that it, along with supplier partner McCain (Foods) Pvt. Ltd, spent six years and 450 crore to set up a food chain in India even before the first restaurant was opened in India. It works with farmers in Gujarat, a state ruled by the BJP.

Earlier, companies had failed to produce potatoes in India that were suitable for processing into fries as Indian common varieties are too small and watery. Farmers also leached too much fertilizer into the soil, and used practices such as flood irrigation that wasted water and encouraged pests that cause blight. McCain encouraged local farmers to use a combination of drip and sprinkler irrigation.

Similarly, PepsiCo has worked closely with tomato farmers in Punjab since 1989. It assures a fixed price to more than 12,000 farmers across six states, contracts that insulate them from fluctuating market prices. PepsiCo also arranges for weather insurance for farmers and soft loans through tie-ups with various banks, thereby freeing them from the clutches of money lenders.

Potatoes have been a bugbear for other party leaders as well. Murli Manohar Joshi had famously stated that India needs foreign investment to make microchips rather than potato chips, based on the erroneous argument that farming does not involve technology transfer. This was a period when the Swadeshi Jagran Manch was an important voice in the party. It required the wisdom of Atal Bihari Vajpayee for the BJP to change course after it took power in 1999.

As Yashwant Sinha said in a speech after he became finance minister: “Now, India must be a powerful economic nation to match its military might, and the only way you can become an economic power is by being able to test your strengths against others. Which means going out into the world and competing—or letting the world come in and compete… I understand swadeshi basically as a concept which will make India great… I personally think that globalization is the best way of being swadeshi."

The Jana Sangh and the BJP have been torn between two conflicting impulses through their combined history. On the one hand, they clearly saw the damage being done by Nehruvian economic policies but on the other hand they reflected the fear of the world that is often found in their traditional supporters among the trading classes. The FDI-in-retail battle has landed the party into the same old confusion. Policy change in retailing affects three interest groups—farmers, consumers and small traders. The BJP may talk about the first two groups, but its main interest is in protecting its traditional base of small traders.

In an essay written for Chatham House, a London-based policy institute, David P. Arulanantham points out that the rhetoric of swadeshi before 1998 elections was a ploy to energize the base, while differentiating itself from and obstructing the ruling government. Once in power, the pragmatists exerted their influence to continue liberalization and to satisfy the urban middle class.

Not much has seemingly changed since then.

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Updated: 05 Dec 2012, 07:22 PM IST
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