The government is propagating myths about FDI: D Raja

Photo: Ankit Agrawal

National Secretary of Communist Party of India and Member of Rajya Sabha from Tamil Nadu D Raja talks about why the Left believes FDI in multi-brand retail is a bad idea for India, the debate in the Parliament and unfair comparisons with China.

Excerpts from an interview:

On the left and FDI in India

We are not opposed to FDI per say. FDI is already present in India. If FDI comes into certain sectors and helps India build assets like high technology and generates more employment we welcome it. It is not that the Communists are blindly opposed to FDI. Having cleared this position let me talk about why we are opposed to FDI in multi brand retail sector. The Indian retail sector, though organised in its own way by retail traders, is not organised by the government. In the unorganised sector, retail trade provides the most employment, next to agriculture in India. One data says that almost four crore people are directly employed in retail trade. If we take their family into account then almost 25 to 30 crore people depend upon retail trade. It is a major employment provider.

On the impact of FDI in multi-brand sector and the three myths

The government claims FDI in multi-brand sector will help India in three ways. I believe that the government is creating three myths. The first myth is that it will generate employment. But, it is not so. In a speech in Parliament I have compared the employment opportunities in Indian retail trade and Walmart. If it creates one job it can lead to a loss of 15 to 20 jobs. These are approximate numbers that I am using for explanation and are not the exact figures. At the global level there are five multi-brand retail giants. None of them have been able to generate more employment anywhere.

The second myth propagated by the government is that it will help the farming community. The fact is that it will have serious adverse impacts on the farming community, particularly the small and marginal farmers. The government says that it will eliminate middle men and the farmers will have direct access to retail giants. FDI in multi brand retail may eliminate the traditional middleman only to replace it with a new middle man. Further, initially an impression will be created that the farmers are getting good prices. Once they are established they will dictate not only the prices but also what the farmers should cultivate. This has been the experience in Britain, European Union and the United States. In the US the farmers get only 18.5 cents for $1 that the retail brand makes. This has been studied by the US Congress and was quoted by me in my Parliamentary speech. This is why in the US the farmers receive huge subsidies.

FDI in retail may also promote corporate farming that will lead to loss of land for small and marginal farmers.

The government is desperate to get FDI because it has failed to raise indigenous revenue resources, organise the Indian retail trade and build cold storage. Now it wants outsiders to do that for the country. That is the irony of the situation.

The third myth is related to consumers. There is a tiny section that has enough money in its hands. The vast majority of the Indian population has a subsistence level of less than half a dollar a day. The government is deceiving people in saying that FDI in multi-brand retail will help consumers.

On economy

The economy is in a very bad shape. The finance minister claims that the current account deficit is USD 70 billion. The government thinks that the way to overcome this is through FDI, FII and external and internal borrowings. A country like India cannot have prescriptions like this for its economic development. The government will have to rethink.

FDI is a macro policy matter

FDI as a macro policy matter is the responsibility of the Union government. Setting up shops and finding land is where the Shops Act comes in which is the jurisdiction of the state government. Majority of the states are yet to give consent.

The Parliament and its dichotomy on the issue

The Parliament has given approval to FDI in multi-brand retail by numbers. But if you look at the tone, tenor and content of the debate there is an overwhelming disagreement. At the time of the debate even the parties that are opposed to FDI in retail voted for it. The BSP and SP expressed a number of reservations against the issue. During the voting, SP MPs walked out of the Rajya Sabha, and BSP MPs voted for the government in the Lok Sabha. Even a party like DMK, which called FDI “Foreign Direct Invasion”, voted for the government. It is a dichotomy. On one hand they expressed their opposition but on the other they helped the government get the numbers. The margin was slim. Hence one can say that both Houses stood divided. The government should understand the votes in this light. One has to wait and see how the government is going to act in the coming days.

On lobbying by Walmart

Walmart is known for its notoriety and its nefarious activities. Wherever Walmart goes it tries to subvert the domestic class, resorts to illegalities and corrupt practices. Even in India they have spent Rs.125 crores. That was the issue in Parliament on Monday 10 December. In America, lobbying is legal but in India it has not been legalised. Here lobbying is a kind of bribing to create public opinion or support for the entry of Walmart.

On comparisons with China

China’s indigenous retail trade is a very strong sector. This is why though they allowed Walmart and other multi-brand retail firms into the country and their indigenous retail remains unaffected. The other thing is that China is a manufacturing country. It is strong in manufacturing low technology and medium technology. As a result you get Chinese goods everywhere. It is of no use to compare Indian retail trade with Chinese retail trade. Our manufacturing sector is very weak and not showing any growth. We should look at these facts critically.

On why the Left didn’t support the no-confidence motion

The Trinamool Congress tabled the no-confidence motion. The entire Left, CPI, CPI(M), Revolutionary Socialist Party and Forward Block put together are only 24. For a no-confidence motion to be successful 50 members must support it. We don’t have the numbers. There is widespread protest on the issue of FDI in multi-brand retail outside the Parliament and inside as well. We thought we could force the government to revert its stand on this issue. There are Parliamentary rules to move a motion which demand voting. That is the route we have chosen. We thought we could mobilise public opinion as well as the Parliament’s opinion against this. If we go by numbers there are several considerations as to why SP, BSP, DMK acted the way they did and why TDP was absent. As far as opinion is concerned, I strongly believe that it is against FDI in multi-brand retail.



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