BAN THE “FDI” – WHOLESALE I Say!!!

FDiHearing the cacophony of noises in India’s ‘temple of democracy’ last week on FDI (Foreign Direct Investment) in multibrand retail, one couldn’t help conclude that FDI is back again to haunt us. I am referring to the “Famous Desi Insecurity” among the ‘pujaris’ of the parliament temple.  In the annals of Independent India, this FDI has a long history and raises its head with alarming frequency!

  • 1988:  The topic for a group discussion in a B-School where I went for admission was “Is computerization a boon or bane for modern India?”  Today it looks like such an obvious topic to have any discussion about or have any debate at all – with computing being omnipresent on the ground, on the move and even in the Cloud! However, those days the case for computers had not been wrested. Trade Unions in many establishments across the country were up in arms against computerization which was supposed to leave millions jobless. The “INTEL” inside a PC will leak our country’s secrets and is a threat to our sovereignty was even one of the naïve apprehensions, I remember.  3 decades hence, as I create this piece in my laptop, if I attempt to explain what actually the consequence of computerization is, I will be only accused of stating the obvious.
  • 1991: The year in which liberalization and reforms were undertaken by the Government when the country was in the brink of an economic collapse. The Naysayers that time accused the Govt. of
    • walking into the trap laid by the IMF,
    • attempting to kill the domestic industry by de-licensing, by cutting import duty, by bringing goods under an “Open General license regime”,…,,…

         Nothing of that sort happened and on the contrary, India graduated from a   much contended ‘Hindu rate of Growth’ of 3 % on an average in the previous 2 decades to average ‘Indian rate of Growth of 7.5% in the next 2 decades.  We became part of the famous BRIC story that was being built globally.

  • 2001 : All around the country there was a symphony of voices about the threat of domestic manufacturing industry getting wiped out in several sectors including many small scale industries like Locks, Toys,. The government was about to remove the Quantitative Restrictions for imports across many sectors as per WTO.   The Quantitative Restrictions were hitherto acting as a protection to the flurry of imported goods except in “Burma Bazaars”.  The local manufacturing of FMCG (Fast moving consumer goods) will face a slow and steady death as the Indian consumer will be bombarded with imported “Charlies” and “Camays” – was the war cry.  10 years hence, has the local mfg. industry been wiped out?  Has the imported Camay overtaken the local Cinthol? The answer is Yes and No.  In small-scale sectors like lock manufacturing,.. due to no investments in technology, the units have been facing a serious lock out. (Eg: Lock mfrs. in Aligarh). The Chinese locks today protect most households. However in sectors where mfrs. have looked at ‘opening up’ as an opportunity rather than a threat, have upgraded their works, have got into strategic collaborations, got in investments and have eventually flourished.  Camay is produced in India now by a Contract mfr. for P&G. 

VAT introduction in India in 2005, Opening up of the Insurance sector to FDI in 2006, the Indo-US civil nuclear treaty in 2008 and now the opposition to allow FDI in multi brand retail. 

I can go on and on on the list of issues where our politicians pontificated doom and created kerfuffle.

In all these, the common thread is the Insecurity among the politicians about our own country and the lack of self-confidence or the “Can-do” spirit which today’s youth in the street display day in and day out. In spite of the fact that in all the above instances the Indian enterprise has repeatedly demonstrated that “India today” is not the one to cowed down by outside influences but is one that looks at all possibilities to collaborate and prosper.

I for one am delighted to see the opposition to FDI in retail and finally government of the day pushing it through by Hook or Crook I mean Mayawati or Mulayam!!! Going by past history and instances whenever our politicians oppose something vociferously and foretell that doomsday is here – we know what will happen.  So I believe, thanks to FDI in multibrand retail,

  • Kiranas are not going to get wiped out so soon
  • Farmers are not going to be exploited
  • Millions of Indians are not going to lose jobs

Or for that matter

  • “Will not make our children sales boys and girls”

as being apprehended.

For, advent of computers in the 80s in India didn’t leave millions of Indians jobless but created a fledgling US$100bn IT Industry that creates an estimated 230,000 jobs or round about annually thereby employing 11 million people directly and indirectly. So like computerization, retail could be a game changer. However whether this FDI policy of the Government will be a Game changer? That will keep it for my next post.

So let’s not stop the FDI (Foreign Direct Investment) in retail but ban the FDI (Famous Desi Insecurity) – wholesale which seems to have engulfed many of our politicians!!!

Postscript: The joke used to be that in the 70’s if some Govt. babu was seen wearing a denim, he was suspected to be a CIA implant and R&AW was let after him!!!

The Politics of Reforms!!!

Gurcharan Das, the erstwhile head honcho of Procter & Gamble, India is not a politician.  If he was one, I wouldn’t have to struggle so much to come up with a name of one politician who has been steadfastly and consistently pro “economic reforms” in India.  The last few days, since the UPA government announced some bold economic decisions, the debating society is back and busy discussing ‘Reforms’.   We had the normally reticent Prime Minister Dr. Manmohan Singh addressing the nation with an aim to take the public into confidence on some of the tough decisions his Govt. finally took.    There he was, espousing the need for such decisions if economy has to get back to the high growth path of the recent past years.

The question is why it took so long for the Govt. to wake up when the writing was on the wall.   In India it is an ironical fact that our leaders were and are always reformers under duress.  And Governments pursue reform path only when push comes to shove.  Since 1991, the year in which liberalisation of the economy was flagged off, successive governments in the centre and the major political fronts have always flip-flopped on the question of reforms.   Switch ‘On’ the reforms when pushed to a crisis and Switch ‘Off’ if there is none – has been the approach.

During UPA-I, the economy was on a roll due to the global economic situation overheated by excessive liquidity which helped India as well.  So UPA-I was not under pressure to perform oops ‘reform’.  As the global slowdown and the effects of “no reform” hit the shores now, It is not surprising that the government (UPA-II) decided to unleash its ‘Animal spirits’ on reviving the economy.  And it is also not surprising that you have the opposition led by BJP, opposing initiatives like FDI in Multi Brand Retail or dragging its feet on GST implementation which it had championed when it was part of the ruling front.  And this seems to be the emerging pattern for any political formation – “Reform while in power when in trouble and Oppose Reform while in opposition!!!”

 Already there is a pervasive anti UPA mood in the country as depicted by surveys of late thanks to the corruption scams, high Inflation and the rudderless economy in the last 2 years.   The few decisions taken by the Govt. in the death overs ( not calling it reforms ) like diesel price hike and the opening up of Multi brand retail to foreign chains though welcome – may not yield immediate tangible results. The impact of such decisions is always felt long-term.  They will certainly help to talk up and lift the moods of the markets which are also important.  So come 2014, it is quite possible that UPA loses power and an alternate dispensation – most likely the NDA comes to power.

When that happens – we are most likely to see a ‘Deja vu’ of the UPA –II rule.  Picture this:

  • Under the false impression that UPA –II was rejected as it pursued tough economic decisions, the NDA train will chug along in the 1st 2-3 years with “no economic reform”.  The economy then goes through turmoil due to no growth impetus.  And in the 4th year the Govt. is shaken up from its dogmatic position on reforms and announces reluctantly a few reforms.
  • The Opposition – now the Congress smarting under the defeat opposes the very initiatives it took!

So the “Start – Stop” saga of economic reforms continue and we never get to experience the benefits of uninterrupted economic reforms.  A Start – Stop system may be helpful in automobile technology to save fuel but not in economic reforms.  This means that our economy will see growth in phases and then dipping into crisis for a while before picking up again. And this may potentially stop India from becoming a “Strong Developed” nation which we all aspire to see.

How do we come out of this?  Well, here is a Utopian 5 point programme:

  • Under the leadership and initiative of the President a 5 year/ 10 year/ 15 year/ 20 year milestone document for the country should be prepared.  The President should take all the major party and their leaders into confidence while arriving at these milestones. (This can be something like the formation of the constituent assembly which worked on drafting the Constitution of India post-Independence)  These milestones obviously will be related to ( preferably limit to Top 5 issues )
  1.     Poverty Alleviation
  2.     Infrastructure development
  3.     Job creation
  4.     Health
  5.     Sanitation
  6.     ,..
  7.     ,..

(I do hope that parties and their leaders will not have major disagreements in coming to a consensus on this – atleast in public)

  • Once the milestones are decided by consensus, the government of the day along with the major opposition leaders, key bureaucrats and civil society must arrive at a doable plan to achieve the milestones.   While arriving at the action plan debates and discussions can happen and a consensus must be arrived.  It is obvious that ‘for reaching’ certain milestones like infrastructure development, job creation,… ‘far-reaching’ economic reforms are essential.
  • And once a consensus is arrived on the action plan, the government of the day should be empowered to either take the legislative route or executive route to implement those decisions.
  • A regular review of the milestones and the action plans and their progress must be carried out by the incumbent President (My mantra – What gets reviewed gets done)
  • A regular and continuous report to the Aam admi by powerful communicators in the Government on the progress of the milestones.(Regular and forthright dialogue with people – a must to assuage any misconceptions)

 Important point: These milestones are by and large supposed to survive any change in the Government or even the President.  These action plans arrived at by consensus are also supposed to survive any change in the Government or the number equations in the parliament.

By this, the reforms will be given a longer rope and chances are that they will succeed without falling into the trap of the “Politics of Reforms”.    (The side benefit is that the President will no longer be playing just a ceremonial role)

For the “Politics of Reforms” to stop we need a major “Reform of Politics”.  Can this happen?

Also pls. read my earlier post : “Blame it on India Shining” on the subject of Reforms.

I look forward to hearing your comments and feedback.

Bring in the “FDI” !!!

For the short-term (1999-2001) industrialist A.C.Muthiah served BCCI as its President, he made one stellar contribution to Indian Cricket. That was the time when Indian cricket was besieged with problems a plenty. Match fixing allegations, pathetic track record in “Away” tests, no significant ODI tournament wins and so on. Raj Singh Dungarpur a very passionate Indian cricketer turned administrator mooted the idea of a “Foreign” coach for the 1st time for the Indian team and in the year 2000, John Wright was appointed coach of the Indian cricket team – a position which was reserved for Ex-Indian stalwart players till then. The rest they say is history. Under Wright, India made the right journey – apart from continuing to be “tigers at home”, they went on to draw a test series in Australia, defeated Pakistan in Pakistan in tests, reached the finals in the 2003 World cup, to name a few milestones. This set the trend for hiring only foreign coaches subsequently for the cricket team so much so that these days I see that even most of the IPL teams have only foreign coaches !!!

The recent turnaround of the fortunes of the Indian hockey team is attributed to (among other things) the role of Michael Nobbs, an Aussie and again a foreign coach!

If you look at Indian cinema of late, even the forgetful “Ra one” or Shankar/Rajinikant’s Super hit “Robot” boasted of technology which was at par with Hollywood. Recently they say that even in an average movie, the technique in Bollywood is comparable to Hollywood cinema. This has not happened by magic or by Rajini’s wish! A quick glance at the “credits” scroll in any Hindi movie will show you many names of foreign technicians. Though the contribution of the Indian technicians in movies like Ra one or Robot cannot be underestimated, the makers admit that they accessed the best talent available worldwide and that has indeed made the difference.

Godrej group’s Chairman Adi Godrej candidly admits that though they broke off ties with P&G and GE at one point of time due to strategic issues, the group strengthened its balance sheet with intangible assets like acquiring knowledge of new management systems, marketing processes, quality control processes,.. from GE and P & G. When Mukesh Ambani puts his feet into organised retail, the 1st thing he does is to tap talent from global retail giants like TESCO,.. to roll out the retail venture in India.

So there has been a lot of “Foreign Direct Investments” in India perse and its nothing new!

Where I’m coming from is if Foreign hands can value add significantly to our nation’s cause in Industry, Sports, Cinema and many other fields which I’ve not touched upon due to lack of space, why not try some foreign hands to shape up the “Governance” of our country ? Can’t we not hire experts with great track record in economics, administration, and governance in other countries to look at governance issues we have? My premise is that people from outside bring in a completely different perspective and come without a baggage and may pitchfork great ideas which can plug some of our country’s problems.

To our netas and may be public at large, this may seem to be an outrageous proposition and one that is fraught with dangers related to nation’s security and other sensitivities. And this could seem to be a very specious argument. After all is nation’s security or economic position same as a game of cricket or a SRK’s flick? Certainly not. If we can’t bring in people of foreign origin to work with us in governance matters, can we do the next best thing? Which is – at least tap the enormous PIO (Persons of Indian Origin) talent which is available outside the country to contribute in solving some of the plaguing governance issues. One sterling example in this context is how Rajiv Gandhi brought in Sam Pitroda in the 80’s I guess as technology advisor and he heralded the telecom revolution in the country! Similarly why can’t we tap Nobel laureate Amartya Sen to consult on policy making and economy? or a Vinod Khosla to bring in an “Innovation culture” in our education system? Shashi Tharoor is another good example of a bureaucrat who is trying to make a difference in the Indian political scene with a different perspective on governance. He has been a PIO for a long while and the time he spent outside I’m sure is shaping his approach to his job as a MP in India. It’s another matter that his too “social” attitude and functioning cost his job  as a minister too early in his political career.

It’s not to say that we don’t have talented people within the country at present or that people here are not capable. It’s just that some of these people who have a successful track record outside by their experience in other countries could bring in a fresh perspective to solve problems.

So my clarion call for bringing in 100% “Foreign Direct Indians” to Delhi for contributing to our country’s Governance!!!

Tailpiece:

Journalist: Why are you opposed to “FDI” in retail?

Mamata: How can they propose FDI in retail? If they had proposed “FDIDI” in retail, I would have supported it!!!