Friday, December 16, 2011

United we vote, divided let's shop

By Swapan Dasgupta

In one of the few meaningful interventions on the state of the economy in this disrupted Winter Session of Parliament, Leader of Opposition (Rajya Sabha) Arun Jaitley imagined he put Prime Minister Manmohan Singh in a spot by referring to his expressed opposition to foreign direct investment (FDI) in multi-brand retail in 2002, when the Atal Behari Vajpayee government was in power.
In stressing that Dr Singh is as governed by expediency as any lesser being, Mr Jaitley was undoubtedly making a powerful debating point. Yet, in his speech he deftly avoided a more obvious question: Why do politicians across the board behave one way in government and the opposite way in Opposition?
The question is relevant in the context of both the Congress and the BJP. The idea of opening up India’s protected retail sector to some form of foreign competition was an idea that was first mooted by the DMK’s Murasoli Maran when he was minister of commerce in the NDA government.
It wasn’t an idea that found enthusiastic support from everyone: the Bharatiya Mazdoor Sangh led by the uncompromising RSS leader Dattopant Thengdi was vocal in its public opposition, as were politicians belonging to the “swadeshi” camp in the BJP.
But the idea was sufficiently attractive to be included in the 2004 election manifesto of the NDA — although not in the BJP’s vision document. If it was the coalitional imperative that scuttled the scheme this month, it was coalitional enthusiasm that put the scheme in the NDA manifesto.
The inconsistencies don’t stop here. Mamata Banerjee was viscerally opposed to FDI in retail and was even willing to vote against the government in Parliament if it came to the crunch. The Congress in Kerala was similarly discomforted by the government’s initiative.
At the same time, the Shiromani Akali Dal, which has experienced the benefit to farmers from organised retail, was enthusiastic in its support. So apparently was Gujarat chief minister Narendra Modi who, however, bowed to the party line and put his preferences on hold.
It also seems that many BJP MPs were dismayed by the party’s unequivocal opposition and preferred a more nuanced position. They were struck by the absence of any discussion within the parliamentary party before the BJP firmed up its position. Congress MPs would doubtless have the same complaint about its government’s unilateralism.
The point I am emphasising has, however, less to do with the lamentable secrecy and lack of consultations that surround most executive decisions — the retail liberalisation may well have gone through had it not happened in the midst of a Parliament session.
What I find interesting is that, political considerations apart, the government’s decision had supporters and opponents cutting across the political divide. More significant, the broad support for corporatising retail trade appears to have come from states which are either relatively better placed in the GDP — states such as Punjab, Haryana, Delhi, Gujarat and Maharashtra — or smelt gains from an efficient cold chain — as, say, Himachal Pradesh, Sikkim and Arunachal Pradesh.
For West Bengal, Ms Banerjee’s unrelenting opposition was quite understandable. Having lost its manufacturing base during the 34 years of Left Front rule, the unorganised retail sector is one of the largest sources of livelihood for a large range of people from the very lowest strata of the middle class to the rural poor.
The relative lack of other opportunities has made retailing the only possible source of livelihood for many people. A shrewd politician, Ms Banerjee would not meekly have handed over such a large and vocal community to the Left. For her, opposition to organised big retail made a lot of economic and political sense.
The real problem that the government faced was a conceptual one. There was just no way in which a momentous decision over retail trade would have a uniform effect throughout India. In certain states the benefits to both farmers and consumers would far outweigh the threats to the local kirana shop or middlemen. In other states, however, there would be disruption of local communities which had the potential of triggering social unrest.
The question that needs to be asked is: should, say, Gujarat or Punjab be denied the opportunity of becoming more integrated with the world market for the sake of West Bengal and eastern Uttar Pradesh? The concentration of power in the Centre makes this inevitable and forces absolutely local considerations to become pan-Indian impediments. Logically speaking, it seems absurd that the decision to allow a Tesco to operate a chain of supermarkets in Delhi should invite a veto from a Tamil Nadu-based regional party.
But that is how India has organised its politics and separation of powers. In a genuinely federal state, such decisions should be taken at the state level and be governed by mundane considerations such as municipal planning permission. Instead, it became a test of the Union government’s credibility.
The simple truth is that the idea of a redistributive Centre which was at the heart of the socialist planning process has run its course. In today’s India, it is the centralisation of power on crucial issues such as labour, power, infrastructure and environment that constitute obstacles to growth.
Uneven development is a fact of life that cannot be controlled by bureaucrats and politicians. There is often talk of a twin-track Europe. In India, we need to acknowledge the necessity of a multi-track, federal India.

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