Sunday, December 04, 2011

A matter of choice

By Swapan Dasgupta

One thing that unites both the proponents of foreign investment in multi-brand retailing and their disparate opponents is the conviction that foreign capital will introduce a spectacular degree of efficiency in a largely chaotic sector. It is recognized, and has been recognized since the NDA was first excited by the idea, that bulk buying and a streamlined distribution channel will help lessen the huge 'farm to fork' differential. That a transformation of retail into a part of the modern, organized sector will have a multiplier effect is also not seriously disputed.

But that's where the convergence ends. For the past week, Parliament has been disrupted, the Lokpal Bill and Anna Hazare put on hold and the government confronted with the most serious internal challenge since the Left withdrew support over the nuclear deal in 2008. Most MPs and a majority of chief ministers have chosen to mount a robust defence of inefficiency and opposed the likelihood of discounted grocery bills for three reasons.
First, even after 150 years of its liquidation, India hasn't got over its mental fear of the East India Company. In the language of socialism-which we still carefully preserve in the preamble to the Constitution-all foreign trade is suspect and calculated to puncture our national sovereignty and independence. Last week, a senior BJP leader who was feted as a great champion of economic reforms in his time as minister, was actually heard cautioning about the "strategic" consequences of foreign players in the retail sector. It was reminiscent of the time India was warned that WTO membership would involve a ban on chewing neem twigs.

Second, when it comes to shopping at home, we would rather buy from a Haldiram rather than a Heineman. It is a different matter that no trip to London is complete without the mandatory shopping at TESCO-a great British company which, some people deem, must never travel to India. It is a bit like Jawaharlal Nehru who preached austere self-sufficiency at home but let it be discreetly known that he wasn't averse to a decent bottle of Burgundy, preferably Grands Echezeaux, during his European tours. Nehru had good taste, as did Indira Gandhi, but they were clear about one thing: what was good enough for the first family wasn't appropriate for the rest of us. That was the essence of India's socialism.

Finally, each side has its own reasons to explain where they stand. The Prime Minister is anxious to refurbish his reformist credentials and, if possible, ensure that the outflow of money from India is reversed. The swadeshi types smell a great opportunity to embarrass the government and, maybe, even engineer its fall. They claim to be speaking for both the middlemen and the petty retailers-groups genuinely apprehensive of the impact of supermarkets on their livelihood. But in all this high economics, low politics and appeasement of special interest groups, one group is missing from the debate: the consumer.

In an erudite article in Economic Times, opposition leader Arun Jaitley made a curious observation: "Domestic retailers source domestically. International retailers operate on the principle of buying internationally at the cheapest cost." The assertion is dubious since the city corner shop today stocks everything for the price-conscious consumer. These include Italian spaghetti, Chinese light bulbs and South African peaches. But that is beside the point. What Jaitley is fearful is that the consumer's buying decision will be dictated by her budget rather than the 'Made in India' label.

The consumer may well be charged with being innately unpatriotic. But, is nationalism, by definition, high cost? What does it say about Indian manufactures if shoes made in Vietnam turn out to be cheaper and more durable than one made in Aligarh? Should the consumer be compelled to buy an inferior, expensive item on swadeshi principles, as used to happen in the past?

International competition can have two possible reactions. It can either generate lethargy or it can spur India to take those measures needed to make the economy truly competitive. The retail reforms could make India shake off its complacency. Or, the nation could wallow in the sense of entitlement that high-cost inefficiency brings. At least we now have a choice.

1 comment:

beluru said...

Dear Shri Swapandas Gupta, Namaskar. I am Beluru Sudarshana, a journalist from Bangalore. I could not find your email ID, so writing this mail. I need to contact you on some important issues. Please provide me your email ID. My email ID is Regards
Beluru Sudarshana