The Congress should have 'done an Anna' over FDI in retail

By Senthil Chengalvarayan

So you aren’t going to be driving to your local Wal-Mart any time soon. But then did you really expect FDI in retail to be pushed through as easily as the Cabinet thought they could on 24 November, especially after it transpired that the Congress hadn’t sold the idea to its allies in government? All I can say is “Thanks for trying, but now build a consensus and get on with the business of governance.”

The debate on FDI in retail has now been on for almost a decade and a half, and the major political parties have taken turns to either enthusiastically support or violently oppose it depending on whether they were in power or not. Corporate India has often weighed in on the “I oppose side” of the motion. Yes the last time around, some of the most vociferous arguments against allowing the Beast of Bentonville (Bentonville, Arkansas is Wal-Mart’s headquarters)into the country came from the men and women behind India’s new retail chains. Wal-Mart they had then argued would come in and gobble them up. Their concern it later turned out was that they didn’t mind being gobbled up, but at the right price!

[caption id=“attachment_149853” align=“alignleft” width=“380” caption=“The Congress might have been surprised by the media an public support it would have received if it had fought for FDI in Retail. PTI”] [/caption]

In the debate this time, it is the Opposition and Congress’ allies who are opposing the motion asking us to spare a thought for the local mom-and-pop store, the Kirana-Dukan in the North and the Maligai-Kadai in the South. That whole families will see their means of livelihood wiped out if Foreigners are allowed to set up shops in our local markets is the crux of the BJP argument as it stalls business in this session of Parliament. It is the role of the Opposition to oppose unpopular policy decisions, it says.

This then is the time for the Government to take a leaf out of Anna’s book. It whined when the media said that Anna’s was a popular movement and played up the story. But the media is trained to spot a popular story and Anna clearly showed us that his was a popular movement, his crowds weren’t bought at Rs 300 a head. So it’s time then that the Government goes out and breaks the myth that the decision to allow FDI is an unpopular decision, rally up support, get their leaders to hold meetings, go on to the streets, go online, get the crowds and they’d be surprised at the coverage they’ll get in the media.

But they’ll have to work hard to bust the myths being spread against big money in retail.

Our local Mom and Pop stores are well and thriving five years after we were told that Reliance Fresh and Big Bazaar would kill them. Walk down a street in a residential area of Coimbatore or Cuttack and you will see the local stores packed with shoppers, just as the newly opened Reliance and Birla stores next door are. The only difference is that they invariably offer the local customers better deals than they did before the big boys became their neighbours. So who were the opponents of Corporate Money in Retail crying for in 2007?

Anecdotal and “street” evidence aside, there are a number of studies and white papers that have come out in the last decade, since the debate on FDI in Retail started that fairly conclusively prove that well regulated corporate investment has immense benefits on the whole retail chain. Studies by both the National Council of Applied Economic Research and Indian Council for Research on International Economic Relations say that there is no empirical evidence to prove that the Foreign money in Retail will be evil, the opposite in fact.

I won’t go into the details but in short the ICRIER and NCAER studies show that local retail jobs will not be lost, consumers will have more choice at lower prices, in other words inflation will come down and farmers will benefit significantly.

But convincing first its allies and then the rest of the country that the cabinet decision of November 24th is popular will take time. It was inevitable then, especially after the Trinamool turned against the idea that a law on FDI in Retail would have to be put on hold if the government wanted to salvage what is left of this session of Parliament.

And salvage it, it must. The FDI move was a bold gamble and if it had worked the government would have got some of it’s investment-gloss back, but it hasn’t so it is now time to pay attention to the remainder of the less glamorous but perhaps more crucial bills scheduled to be discussed in this session. We need the Pension Bill, the Insurance Bill raising Foreign holdings in Insurance companies to 49 per cent needs to go through if we want insurance companies to make use of the new IPO laws and go public. There is the manufacturing policy to be pushed, a deadline on the introduction of GST to be met and Education Reform to be implemented. It would have been lovely to see FDI in retail in this session, but if it’s not to be let’s get on with the rest. But do show something more than intent next time.

Senthil Chengalvarayan isPresident & Editorial Director of TV18 Business Media.

Disclosure: Network18 owns Firstpost.