FDI in retail can do for the Congress what land reforms did for the Left in West Bengal

I see striking parallels between the opposition to FDI in multi-brand retail and the early resistance, in the mid-1980s, to the introduction of computers. Then, as now, the main opposition came from the ruling party, albeit a different one, in West Bengal.

The IT revolution turned India into an IT superpower and played a big role in changing global perceptions about India. It could have changed West Bengal’s economic fortunes, too. On the face of it, the state had everything – a large educated workforce, a large English-speaking population and a history of engaging financially with the world – to be at the vanguard of the tech revolution.

But a deadly mix of cynical politics, blinkered leadership, ideological dogma and xenophobia ensured that West Bengal was denied the benefits of computerization for another decade and a half.

The argument: one computer would do the work of four people. Hence, mass computerization would lead to massive layoffs.

Two-and-a-half decades later that much feared IT-led devastation of the Indian economy hasn’t happened. Even its strongest opponents, the Left, has come around and realised its potential and every state is falling over itself to woo Indian and foreign IT majors to invest.

So, did Jyoti Basu and his advisors miss a trick?

Difficult to say… Instead of trying to build a fickle middle class constituency, the Left focused on nurturing its peasant base. More than two-third of West Bengal was, and remains, dependant on agriculture. It was clearly a vote bank worth pursuing.

The CPI(M)’s land reforms programme empowered farmers, gave them self respect, cut out middlemen like landlords from the rural value chain and earned it the undying loyalty of two generations of peasantry. Thus, it set up the platform from which it ruled the state virtually unchallenged for 34 years.

Cut to the present.

The government of the day, this time at the Centre and in some progressive states, has once again unveiled a programme that will

* Empower farmers by giving them better returns;
* Cut out middlemen; and
* Ensure lower prices for consumers like you and me.

Yes, a part of the existing farm-to-fork value chain will be disrupted. But as China’s experience shows, the virtuous cycle created by massive investments in back-end infrastructure, improvements in efficiency of small and medium enterprises and growth of the services sector will gainfully absorb most people rendered surplus.

In China, in Brazil and in Mexico, the introduction of Big Retail and FDI in the sector has resulted in the growth of both neighbourhood stores as well as organized retail.

A 2008 study by the Indian Council for Research on International Economic Relations titled “Impact of Organised Retailing on the Unorganised Sector”, which was included in a 2010 discussion paper that influenced the government’s FDI policy, says: “Farmers benefit significantly from the option of direct sales to organised retailers. Average price realisation for cauliflower farmers selling directly to organised retail is about 25 per cent higher than their proceeds from sale to regulated government mandi [agricultural market]. Profit realisation for farmers selling directly to organised retailers is about 60 per cent higher than that received from selling in the mandi.”

Farmers make up more than half the Indian population and the electorate. The retail trade accounts for only about a tenth.

It’s a no-brainer. Any party or coalition that can win over the currently divided farm vote-bank will become unassailable in elections. Yet, politicians are opposing a policy that can win them the ever-lasting (well, almost) gratitude of more than half the electorate. Why?

The BJP’s opposition is cynical. Two of its chief ministers, Narendra Modi and Raman Singh, had initially written to the Centre supporting FDI in multi-brand retail. But the central leadership decided that there were more political benefits to be milked by opposing a policy that had no strong backers.

The Left’s opposition is ideological and Mamata Banerjee’s resistance is populist.

None of these stands is rational.

I can think of three reasons why parties are opposing the retail decision:

* Ideological opposition to business and a deep-seated xenophobia-induced fear of foreign capital: Large sections of the Indian population suffer from this, and many politicians and political parties find it convenient to play the populist card to stay on the right side of voters.
* Then, the retail value chain is very well-entrenched and politically powerful. They are united in opposing FDI in multi-brand retail and so, are able to rally support from political parties.
* And finally, the highly dispersed farm lobby is not yet on board. There is always resistance to change and in a country where education and awareness levels are poor, it is easy to whip up fear and anxiety about transformational policies that can turn age-old power equations on their head.

My feeling is that as the benefits of the decision become visible, more and more states will fall in line – just as the PM and his advisors are hoping. But that could take years, even decades. The opportunity lost won’t come back.

So why isn’t the Congress aggressively selling the FDI-in-retail decision to farmers and the middle class? Your guess is as good as mine. But sold well, it can potentially do for the Congress what land reforms did for the Left in West Bengal.

  • Shakthi Rao_007

    hey..can u give me the citation of the tamil nadu case?

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  • Ram Putre Singh

    WHY, IS MAYAWATI SO PRETTY OR IS SHE SO RAPEABLE, CONSIDERING HER LOOKS OF A PIG, AND HER SIZE OF A ELEPHANT, THAT SHE SHOULD BE OFFERED A CRORE TO BE ACCEPTABLE TO BEING RAPED. SHE HAS RAPED ALL IN UP AND DESERVES TO BE RAPED BY A ORANG UTAN, A DONKEY, A DOG, AND AN ELEPHANT

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  • vic778899 tor

    History shows that Gandhis do not have a Hindu lineage. Gyasudin (Motilal’s father) changed his name to Gangadhar when on the run from the British. Nehru bears no resemblance to Motilal. Nehru was not fathered either by Mobarrak Ali (the lawyer) or Nawab of Oudh. Nehru was circumcised at birth and grew up in the household of Nawab of Oudh. Nehru was educated in Urdu, Farsi and English. That’s why most of his speeches are in English. Indira Gandhi eloped with Feroze Khan and converted to Islam to marry him. Indira became Maimuna Begum. Rajiv was fathered by Feroze and Sanjay was fathered by Mohamad Yunus. After Rajiv’s death, Sonia has with the blessings of congress cronies simply hijacked the party and the nation. Sonia hates Hindus and she has enticed congress men to convert with large sums of money and positions of power. Look what she has done to North East India. Temples are destroyed openly and priests killed with total impunity. Indian media is so controlled by foreigners and congress henchmen that not much gets to most Indians.

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  • annu singh

    Always remember Walmart and its look alike is not doing any good in any of the country stated above. So how will it benefit India. In India we are very cost consious, I purchase mostly from 2 kms away vegetable market than supermarket at 50 mtrs.
    Remember one person going out of job will lead to one member more to the looters club.

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  • KALYAN DHALL

    I beg to differ with Mr. Arnab Mitra on some basic fundamentals viz.
    1) For organised retail which stands to benefit the producer and the consumer, FDI is not mandatory. AMUL – GCMMF model is proof of that.
    2) Elimination of middle-men in today’s Indian society cannot be envisaged till the entire political culture of India undergoes a sea change. Let’s not forget, if the rule of the law is allowed to prevail, then 80% of our so called leaders, irrespective of their political affiliation, will be rotting in jails for the rest of their lives.
    3) China cannot be an example to emulate in any sphere due to Indian socio-economic environment as there are no common traits whatsoever.
    4) Most importantly, whether Congress has the people’s mandate to implement such an important policy decision is hugely questionable.

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  • Abu Ahmed

    We have built-in some safeguards while allowing FDI in retail in, let us build some more in order to make sure that there will be more of beneficial and less or adversarial effects on our economy and people.

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  • ssraja

    Sir let the FDI come .Because these middle men r looting the farmers for centuries in this country .what farmer earns in farming for the work for a year
    a broker makes in a minute.the sad part is that a farmer dosn’t have proper dhoti ,where as a middle man moves in a mercedes .the country’s middle men have made lot of money and they r dictating terms.let the farmer see good days.

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  • T Banerjee

    Why we all are behind FDI in retail is not understandable. Why can’t we think of initiatives where we will have less dependence on foreign hand. Today we will have FDI and tomorrow they will withdraw their investments, stock market falls and we don’t have control. For everything if we look at foreign hand then why there was so much hue and cry for independence? Global economy, open market, GATT, WTO… everything is a known word now and marketed by foreign hands. Dependency will never proof good for anybody and not even for your kid. Self Help is the key. Find out the sectors where we are paying most for imports (minus natural resource like oil) but there are many products e.g. heavy engineering etc and set up plants for these products to save own money. From where the money will come? From the same source from where money of Food security bill will come. Open economy is good but only when you are able think globally but do locally.

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  • kp

    maybe he wants to stay and wants to make a change

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