PR discussions: Re: [prpoint] Retail FDI Needs Political Public Affairs

hi all

I have received a response for our discussions from Mr Desikan, President of Consumers Association of India. He is also one of the pioneers in the consumer movement in India. Pl read his response below.

srinivasan

Moderator

---------- Forwarded message ----------
From: Raghavachari Desikan <raghavachari.desikan@gmail.com>
Date: Sat, Dec 3, 2011 at 6:41 AM

Dear Srinivasan,

I hope you will not join the "committed", crowd to support the FDI in retail.

If 10 million jobs are created as claimed by the supporters of FDI, nearly 40 million jobs will be gone as small vendors through out the country will be wiped out, making them unemployed. Similar thing happened in 16th century in our country when the foreigners took away our native INDIGO, blue which was synthesised by the Europeans and introduced in our own market with finished blue colour imported cloth when 10 lakhs Indian lost their jobs and their craft.That is why gandhi campaigned for boycott of foreign cloth.

Do you know that some of these supporters are also the Indian persuaders of the Government; they are current retailers and owners of the current retail chains, who have huge debts; By palming off their 51% equity, they will be rescued but 40 millions will lose their bread winning ability, may well become destitutes dependant on the State for their survival.

Imagine a situation when our producers ( especially agriculturists) initially will get good prices for a few years and then these FDIs will come down heavily on procurement prices, reducing our farmers to become beggars to sell their products to get SOME return. When that happens, our Agri production will go down drastically. This in turn will force the FDI Retails chains, seek suppliers of products to go to China for the produce. Instead of equalling or bettering China in production capacities, we will lose our economic power.

Would that not be the most painful day?
Desikan

On Fri, Dec 2, 2011 at 9:37 PM, V Jagannathan <v_jagannathan@yahoo.com> wrote:

When the economy was opened up it was said the trickle down effect would benefit the poor. I wonder whether the benefits trickled down given the farmer suicides in several states. What has rushed down is the anti labour practices - non availability of collective bargaining rights for workers, contract employment etc.

The insurance sector was opened up with the sweet talk that long term funds would be available for infrastructure. Now what we see is ULIP policies and there is no long term funds for the infrastructure sector. The life insurance sector is so mismanaged that nobody knows what to do now. The insurance regulator is prone to knee jerk reactions.

As the government was not able to allow increased FDI limits in the insurance sector as it needs the law to be amended, it decided to put the FDI cap for the pension sector in the rules governing the law.

India is second largest producer of fruits and vegetables and large quantities of that go waste is known for the government. In every budget there will be announcements about building cold storages. I wonder what has happened to those announcements.

Now the government wants the FDI funded retailers to invest in back-end infrastructure like cold storages etc.

It seems now people do not believe what the government says which is termed as trust deficit.

From: S. Narendra <sunarendra@gmail.com>
To: Prpoint Group <prpoint@yahoogroups.com>
Sent: Friday, December 2, 2011 9:05 PM
Subject: [prpoint] Retail FDI Needs Political Public Affairs

Dear Srinivasan: Our group may be interested in the following:

FDI in Retail-Politically not argued well

The central government has cleared FDI in multi-brand retail. This decision was pending since 2005, the year when domestic retailers rushed to occupy retail space before deep pocket foreign retailers enter India. Now they hope to leverage their big and small foot print in metros and Tier I and II cities and towns.

The Government decision has evoked political opposition from UPA allies, opposition and state governments. Besides opposition for gaining political advantage, there is articulation of apprehension some genuine and others not justified.

Worse Timing

As usual UPA has shot itself in the foot even while announcing a highly beneficial opening up. The decision package is well rounded to address vital concerns on farm, marketing infrastructure, job creation fronts and transition period in which the traditional retail or 'Kirana' constituency needs protection. A bold and good decision has to be timed well, too. Yet, UPA could not have chosen a worse one. Inflation is raging and the opposition thinks it can to ride to power on this people's misery.FDI decision looks like a post -dated cheque issued by a habitual defaulter for households who want immediate cash to meet the price rise. The government, mired in corruption scandals, appears divided and adrift. The overhang of trust deficit renders every government decision suspect. Had this decision come during the less boom time of 2005-06,perhaps it could have had a smooth sailing.

UPA was guilty of not engaging in political communication to very large constituencies that would reap the rewards of this decision. Take the case of the farmers. When FDI from PEPSi in 1992-03 and began investing in farmers in Punjab to grow long shelf life potato,tomatoes,chillies and paid them remunerative prices, they silenced the critics in Parliament by arguing the government"s case. Today Punjab was the first and perhaps only state to welcome Delhi's FDI in retail decision. Again to recall the protest against PEPSi the then Punjab government and PEPSi partnered in enabling MPs, media and opinion makers to visit state farmers and see for themselves the benefits accruing to cultivators.

If the country wants a second hi-tech green revolution and address the wide-spread distress in the farm sector, it cannot come from meager official interventions alone. ITC's e-Choupal that has organized thousands of small and medium land holders and the mutually beneficial partnerships that have developed in s several states between large food processors and farmers show the advantages which could accrue to agriculture sector from business-led initiatives. And no politician worth his rural or urban vote can claim that these have not created new jobs all along the value chain.

The fears about Retail FDI can easily countered by showing to the critics how MTR,Haldiram,Bikanerwala, and many domestic brandsgrew out of the misplaced apprehensions entertained after PEPSi introduced Lehar bhujia and branded chips.Indian have forgotten that Modern Bakeries started by the government to process wheat as bread and potato into chips had evoked such fears.This unit introduced wheat bread to rice eating households but did not replace local bakers.

Post Harvest Losses

India is the 2nd largest producer of food and vegetable and third largest fruit producer in the world; ranks second only to Japan in inland fish production. All this quantity fails to reach the consume.About 15 million tonnes of food grain are lost due to poor post harvest storage and in- efficient marketing chain. This quantity could feed a population the size of Bihar+. And this critical gap costs the farm sector as whole Rs50, 000 crores every year, according to the Food Processing ministry. Post-harvest technology for primary (rice hulling etc) and secondary processing of produce has the potential to create rural industries and jobs. All-round development of agriculture is a state subject yet it is in distress. This should have been politicized by the center and shown that retail FDI could rescue states and their farm and rural constituency.

The limited number of consumers who have had access to organized multi-brand retailers or verticals like Reliance Fresh would vouch for their gains. The fact that in some places such stores have become targets for attacks clearly establish the vested interest of the middle-man and what the ordinary consumer is losing. If India ever wants to assure people that what they buy and eat is not impairing their health and promote product eco-friendliness, organized retail is the only way. Enforcement of food standards Act, consumer protection Act and compliance with international standards is well nigh impossible so long as millions of kiranas service the consumers. It is a surprise that the government is not presenting such facts to people and seeking the help of consumer organizations to counter the protest.

Most glaring is the silence of the business chambers, organized retail and real estate players who stand to gain the most now. The government has failed to enlist their support for arguing its case. Several players entered the field only to claim first mover advantage, waiting for this opportunity. This could be used against a few big players who might be engaged in building opinion against FDI.

The government and the ruling party does not have collective memory to draw upon. When India had to drastically amend the Copy Right Act to make it comply with WTO requirements.BJP,Janata party and left were opposed to it, since they were opposed to a new Patents bill.They had spread the canard that the common person, or a student would lose access to global knowledge base. Obviously the parties opposed did not care for protecting Indian IPRs like films,songs,authors,poets. The government had to pass this new copy right law soon. We approached this constituency spread across the country and suggested to them to organized themselves and protect their own IPRs against piracy.After discussions among themselves about the pros and cons, these persons felt that the new copy right law was in their interest. They sent appeals to the parties opposed to the new law explaining their view and seeking support. This worked and a new copy right law was in place.And this preparation was before a government decision.

India joining WTO again was politically opposed.BJP affiliate d outfits were running a grapevine campaign of disinformation with cassettes tapes, videos generating all kinds of fears. The ruling party was professionally guided to counter this grass root level disinformation with facts, allaying fears and the promise of new benefits. And a truce was sought by the opposition. There were no full page print or TV advertisements that have doubtful attention..

UPA leadership knew the opposition but did not prepare long before announcing the decision. Even while making the announcement, the present Commerce Minister, instead of taking credit , should have acknowledged the farsightedness of BJP/NDA for considering Retail FDI nearly ten years before. In May 1998, when Prime Minister Vajpayee announced the second nuclear explosion, he readily acknowledged the contribution of the previous Congress governments to the development of the capabilities for the N-bomb. The Congress could not have denied its role in the new situation.

In trying to change the perception that the government decision making machinery was stuck in its tracks, UPA leadership has rendered implementation of a good decision more difficult. The retail FDI announcement should have been preceded and succeeded by political public affairs campaign.