Enter, the foreign middleman
MJ Akbar
09 December 2012, 01:24 AM IST
Kapil Sibal plays many roles, some of them quite well. But he is inimitable when he turns caustic. Sarcasm descended from his heavy eyebrows with the full force of a waterfall when he taunted the Indian middleman during his advocacy for foreign retailers in the Lok Sabha debate on FDI. Shakespeare was never so bitter about Shylock as Sibal was about the "bichauli".
That left one a trifle perplexed. What else is Walmart other than a middleman? Capital resources and management skills have added a dimension: it is both middleman and salesman. Does this make Walmart a compassionate, caring company that should win a Nobel Prize for shopkeeping? Unlikely. Last week the New York Times - not a Marxist newspaper - reported how American onion farmers had been squeezed into despair by Walmart, which was selling their product at nine times the purchase price. (Onions have a devastating electoral history in India.) This week we discover that Walmart was among those responsible for the devastating fire at Bangladesh's Tazreen Fashions factory in which 112 were killed a fortnight ago. According to minutes of company meetings, Walmart's director of ethical sourcing, Sridevi Kalavakolanu, insisted that a low cost of shirts was preferable to the higher cost of workers' safety. Neither patriotism nor altruism is an asset on Walmart's balance sheet.
Top this up with the news that Walmart is under investigation in America, but not in India, for bribing Indian officials. So the debate is not really about the morality of middlemen. Nor is it about the presence of international retailers in India. They are already here, but as partners of Indians. What they wanted, and have now got, is the right to run their companies as they wish, without the implicit fetters of alliance.
This is not about economic reforms either. FDI policy was announced as part of a package, including permission for foreign investment in civil aviation and sections of media. Even the Left did not object. There was a time in the post-reforms era when Tata had to abandon a proposed domestic airline because it wanted Singapore Airlines as a partner. Our skies were considered sacrosanct. But things have moved on, as they have in so many other sectors.
It is not opposition for opposition's sake, or Congress' partners Mulayam Singh Yadav, DMK and NCP would not have either protested or introduced variations - NCP wants this boon anywhere but in Maharashtra. It is certainly not about communalism; if Mayawati thinks BJP is contagious she could have rallied behind Marxists. Mayawati should check with Justice Rajinder Sachar, author of the last major study on the economic plight of Indian Muslims. His commission concluded, as he repeated in a conversation with this columnist, that UP Muslims would be especially vulnerable to FDI in retail, because of multinational sourcing and selling practices.
Retail is a multi-faceted industry held together by a people-centric axis. There are different tiers for separate income levels. Multinationals, driven by a perfectly explicable focus on profit maximisation, squeeze all levels into a common business plan. This sacrifices traditional, generic relationships between source, supply and shop at the altar of an algebra determined by the lowest common denominator in costs, and highest common denominator in prices. They possess the muscle and skill to drive out competition. When the vulnerable are hit, the social cost is high.
Fourteen parties out of the 18 that spoke in the Lok Sabha debate were critical of FDI because they felt the need for some - the stress is on some -protectionism within the farm-retail chain. The new will replace the old; that is a law of time. But sensible nations fashion change through evolution, in phases, not sudden dislocation and displacement. Trust me: the labourer who pushes a sweat-soaked vegetable handcart in the summer of Delhi or Mumbai would much prefer to work in air-conditioned halls. He perspires for very modest returns only because it is better than nothing. He needs a place in another food chain before he is summarily evicted from his present one.
FDI is not about wages or wastage or farmers or prices. Multinationals are not committed to their host countries; they work for their shareholders, and do not hide this fact. It is simply that our government has decided to trust the foreign middleman more than the Indian one.
In 1973, Indira Gandhi was under pressure from inflation and popular anger. She was advised by the Left to recover lost political ground by nationalising the wheat trade. The Left was fashionable then. Nationalisation used to win votes, as it did for Mrs Gandhi in 1971. Mrs Gandhi said no. She understood the possible damage at village level and stopped. When the Left stepped into excess, she applied the brakes. The Right has is on a rampage now.
http://blogs.timesofindia.indiatimes.com/TheSiegeWithin/entry/enter-the-foreign-middleman
