Battered by the coal scam, the government has pushed through some long-overdue reforms in the last fortnight. These include allowing higher FDI equity in multi-brand retail and aviation. FDI creates extreme reactions in the country, and it might as well stand for ‘Forever Debating Indians’.
Two kinds of polarized reactions emerged, both overdone. The first group had gushing praise. Newspaper headlines screamed on how the PM now meant business, and everything is going to be just fine on the policy front. Some even said that the PM could not be bogged down by those whining about the coal scam, thus implying now that he had finally done his job, it absolves him of the charge of mismanaging the country’s natural resources. So low are our expectations from our PM, some feel he almost deserves a standing ovation every time he signs a file.
Anyhow, it’s a good decision, if not monumental or heroic. Having a global mindset is beneficial for the country. We have seen the benefits of the 1991 reforms. The cellphones we carry, TV channels we watch, vehicles we drive, the appliances we use – are all a result of the liberalisation that were initiated two decades ago. Before that, the government felt it was perfectly fine for people to wait years for a landline phone and watch one government-run TV channel. With such a transformation as seen by the middle class, one wonders if there is still need to convince people on the benefits of reforms.
For apart from the praise, there was backlash too. The BJP denounced the new policies, presumably to please the trader community that supports it. The Trinamool Congress is screaming hoarse about the anti-people nature of such reforms. Mamata Banerjee is hoping to target the poor who have not benefited much from the reforms.
Other naysayers are arguing how this will destroy the kirana shops. These people presume Wal-Mart, with its 51% highly-regulated equity in a Indian venture, will be able to do what Reliance Fresh and Big Bazaar could not. The corporate Indian retail stores have been around for years. And yet, kirana shops flourish across the country. When asked how exactly could Wal-Mart do what Indian chains could not, the naysayers have no answer. When asked why Indians don’t deserve the best value and retail shopping experience, they stay silent.
China, Malaysia, Thailand, Philippines are just a few examples of emerging economies that have allowed multi-brand retail and have had no major upheavals or large-scale unemployment.
At one level, this isn’t only about multi-brand retail, which forms just one aspect of the widespread economic reforms required in the country. Are we going to start a polarized debate for every reform?
Can we not have some ground rules when looking at reforms? Can the government, the allies and the opposition have just this one area of consensus -the country must bring in economic reforms if we want to create wealth. Can we accept that reforms do ultimately benefit people?
The opposition has played a major role in this term to bring out various scams and keep the pressure on the government. However, to oppose everything, and for the sake of obstruction and not much else is not right either. The fear of foreigners is an outdated worldview that we should have abandoned in the eighties. Today, India needs to open up for business. India also needs to be able to learn how to compete with world-class competition. For every Costa Coffee that comes to India, we need to be able to create a Cafe Coffee Day and Barista that can hold their own. Not letting foreigners come and do business along with us is a sign of weakness. It is like hosting the Olympics and not allowing the best countries to compete.
The argument that Indian industry needs to be ready for competition is outdated. We have been getting ready for 20 years, if not longer. Let’s have the confidence that kirana shops will reform too, so they can take on any new competition.
However, the support for FDI and some of the PM’s policies in no way implies that the government is off the hook on the various scams. Until now, the government hasn’t demonstrated seriousness about taking the right action on graft. In fact, it denies the scams even occurred. Liberalization is not only about better economic policies, but also about better moral values. Widespread corruption will hurt us much more than a few stores of Wal-Mart ever will. So if we have to debate forever, let us at least do it on the right issues. FDI and Wal-Mart, welcome to India!