The Congress’ FDI in retail policy has fatal flaws. To make the most of it the BJP must recall its old pro-poor line
Resisting FDI in retail is the only smart thing the BJP has done in a long time. But one hopes the conviction is based on knowledge rather than rhetoric. The irresistibility to compound the problems of the Congress at the present time is understandable, but if this is the only reason, as a straw poll conducted by his writer among BJP leaders shows, then it would be better to prepare right now an exit route from this opposition-for-its-own sake trap.
The problem with the BJP is that it lacks a CP Chandrasekhar, or a Jayati Ghosh, or even a reliable economics backroom which could sharpen its leaders’ articulation on an issue so loaded with consumer implications. At no time in its post-2004 history has the BJP looked so helplessly devoid of intellectual fodder. There are huge environmental implications of having giant hypermarkets in a country with abnormally low levels of ecology consciousness. But then, the BJP, like all its peers in the 21st century Indian political landscape, lacks an environment cell. The cultural angle is terrifyingly complex, with hidden “possibilities” for the BJP. But the party has kicked out its ideologues a long time ago and there is nobody to comment on the mortal combat between home grown Indian values and those preached by St. Market at the nearest Walmart church – by the way Walmart’s founder Sam Walton was an aggressive Christian evangelist whose business credo had a quasi-religious ring which found much favour with former US Vice-President Dick Cheney. But ignorant of all that, what seems to be driving the BJP is some vague consensus a terrific political issue has landed on its lap, which could translate into another honeymoon with the urban middle class. But after that what?
The BJP should understand that the question -” Do you support FDI in retail?” – demands that a non-partisan respondent immediately conjure up a likely context. That’s easy for the government to supply since it has at its command myriad channels of popularising its stance which the Opposition doesn’t. The seductive power of hyper-markets, with its Styrofoam packaged visions of deep discounts, quality and safety and, above all, phoney consumer sovereignty, is more likely to sway the vast masses of politically indifferent citizen-consumers than some vague defense for the neighbourhood bania. By the way, the straw poll mentioned earlier also reveals that hardly anybody cares if the local bania survives or perishes. Unemployment, yes, used to be a big issue, but who is the BJP, hardly an opponent of the Washington Consensus, to babble on employment oriented growth?
The redeeming feature is that the opposition to retail in FDI marks a definite break from the BJP’s hopeless post-2000 record of failing to merge with middle-class aspirations. The rudest lesson was learnt in 2004 when “India Shining” was comprehensively rejected by urban voters. The last original thinker in the RSS, Dattopant Thengadi, who enjoyed respect even in Left circles, had predicted the BJP’s doom as early as 2001 when its ministers took to wearing tuxedos to the CII’s luncheons, and stripped the middle class Indian of his job, savings, investments and finally, self-esteem through public sector disinvestment. Today, however, the BJP today seems to have learnt to make a fine distinction its middle class supporters on the blogosphere and middle class supporters who are willing to suffer the hot sun on election day to stand in long queues and vote for it. Intellectually speaking, that’s a mighty leap sideways, but helpful. So too is the determination to tell champagne circuit intellectuals to stuff their approving editorials. It’s cool, in 2011, to recall the socialist roots of its movement – without, of course, using the ‘S’ word. The world is being swept by revulsion for capitalism and the BJP should not be embarrassed by its rediscovery of the Sangh’s original, pro-welfare State model.
The attack on retail FDI must focus on the history of Walmart, a corporate entity larger in scope and logistical complexity than any other in human history. It’s 9,700 stores, says Orville Schell in the latest issue of The Atlantic, is supplied by a network of 100,000 sources in 60 countries, are staffed by some 2.1 million employees serving 200 million customers. Walmart’s annual revenue equals the GDP of the top quartile of nation. In many ways, Walmart is a country, says Schell. Its CEO, when abroad, is treated like a visiting head of state. Senior executives in charge of overseas operations function like diplomats, signing agreements with governments.
In the West, Walmart has the reputation of a rapacious, anti-labour, un-environmental “big box” which destroys small towns and independent businesses. People are unable to resist its seductive bargains. In 2005, a documentary film by Robert Greenwald, Walmart: The High Cost of Low Price, exposed the unscrupulous tactics played against small firms and medium-to-large farms (after killing the small ones) to extract their produce at low rates. A deeper look brings out the absurdity of the Manmohan Singh government’s argument that mega retail firms help farmers get just prices. Actually the opposite happens and in India there is a real threat of distortion of the existing government efforts to raise farm incomes. It’s indeed tragic that after ignoring agriculture all these years, the UPA should outsource problem solving to retailers.
The inundation by Chinese low-priced products is not a misplaced threat perception. Nobody should underestimate how vital China has been to Walmart’s success story. Though its $ 7.5 billion Chinese turnover (2010) makes up only 2 per cent of Walmart’s global revenues, its sales in China have been growing substantially. But more important than that is that some 20,000 Chinese suppliers, or “partners”, provide Walmart with about 70 per cent of the nearly $ 420 billion worth of goods that it sells globally. China has become so critical to Walmart’s supply chain that in 2002, the retail giant moved its global sourcing headquarters from Hongkong to Shenzhen in southern China.
Has the UPA government uttered even one word to allay fears of a Chinese small product invasion through Walmart? Who has bothered to ask if Walmart and its competitors will maintain here in India the same environment standards it enforces under duress in totalitarian China where additional help comes in the form of State-fudged currency values which erect the fiction of ‘low cost production’? If yes, then obviously there already exists a secret agreement to subsidise Walmart’s investments in high-cost India which the Opposition hould drag to the public space before the sweetheart deal is clinched.
The UPA government is accused of wrong timing. Actually, any serious Opposition party should recognise the awful mixup because an economic issue stands best on social legs. And that’s exactly what Mukul Wasnik, Minister for Social Justice and Empowerment, handed to the Opposition two weeks back when he announced a plan to reserve for manufactories owned by SC-ST entrepreneurs 358 items for government purchase. His conscious decision to save the private sector the bother goes against the grain of the UPA’s original ‘inclusive’ development paradigm. The BJP should combine its middle class oriented retail policy with this oversight because, after all, it’s the party with the largest block of elected SC-ST representatives. A ballast and economic sovereignty makes for a potent strike in electoral politics.
The writer is Senior Editor, The Pioneer