The Same Old Cacophony

Ever since bank employees' associations raised protests over proposed computerization of banking operations some 30 years ago, there prevails a mindset in India that is agnostic to any change. 

The case in point is a recent government of India’s decision allowing foreign direct investment in multi brand retail.  There has been huge hue and cry and high decibel protests over this decision by political parties.  The BJP is opposing it because it has to being in the opposition and because it is aware of the fact that the benefits the decision is likely to bring for the people of India will be credited to Congress.  Otherwise there is no reason why BJP, which is more pro-reform than Congress, should oppose it.  Other political parties are opposing it because most of these parties have geriatric leaders at the helm who are stuck in the time zone of some 50 years ago.  They have expressed fear that the entry of multi-national retail chains will have devastating effect on small grocery shops and millions of workers employed by them.  This is far from being true and such apprehensions are totally misplaced.  

Any evidence? Yes. Did anyone lose jobs when other sectors such as auto, telecom, IT, FMCG and consumer goods, food and beverages were opened up for foreign players? Instead, it actually created new jobs.  It benefited consumers who got wider choices of quality products and services at lower prices. Did local companies shut down with entry of foreign companies? None to my knowledge.  Instead, the local companies got exposure to and adopted international best practices in production and management efficiencies that resulted in lower cost of production.  The Indian auto companies like Maruti, Tata Motors, Mahindra and Bajaj not only survived but thrived and still enjoy sizable market share and have made forays into global market.  The Haldiram, Bikanerwala, Narula’s and their ilk are still around and growing despite entry of international fast food chains like KFC and MacDonald in Indian market.  The ubiquitous pavbhaji, vada pav, chaat masala and other fast food stalls still dot the streets of India’s villages, towns and cities.  The liberalization of telecom, IT, television and airwaves has brought world closer into homes of the remotest part of India.  A farmer can now have timely information about weather, cropping pattern, market price on his handset which has helped him with better yield and right price for his produce.  It has given access to telephone and internet connectivity to millions of Indians who previously were deprived of it because of lack of infrastructure and affordability. The local companies like Bharti Telecom has gone on to acquire telecom companies in other countries.  The telecom connectivity and modernization of banking operations promise to provide access to banks to a large section of unbanked population through mobile banking.  These reforms in past has helped India achieve incredible growth, provided access to affordable quality products and services and alleviate poverty.

Look at China.  Ever since it opened its doors to foreign investments, it quickly emerged as economic powerhouse of the world and has done remarkably well on all social parameters.

Allowing FDI in retail will result in job loss for millions of those employed by small grocery shop is what we continuously hear from naysayers.  One senior BJP leader said that employees in small grocery shops will end up being sales girls and boys in European retail chain.  So what? If that happens, is it bad or good for those workers who are mostly exploited lot?  The shift to formal from informal employment, from unorganized to organized labour force will be a great life changer for them.

Thus our own past experience show that the fear spread by political parties over allowing FDI in retail is baseless.  They are not working at your or the nation’s best interest.  They are working to protect interests of those few in the chain between farmers and consumers.  Those few are highly organized and influential lot who can impact electoral prospects of political parties.  Just like teachers’ unions which no political parties dare to rub shoulders with the wrong way.             

This din of protests and ensuing cacophony is nothing but a ploy so that the common man cannot hear the underneath sweet melodies of prosperity flowing out from instruments of reforms.