Everything does pass, and we can endure and we can survive!! – Rahul Dravid
All of India is talking about FDI in retail. Those for it are harping on about how advantageous it could be for farmers, how fantastic a revival our economy can make, etc. Those against it are reminding us of how the East India Company took over in the guise of traders, how it will ruin our economy, how the Govt is planning to sell our country to foreign companies, etc.
For long, the world has believed in two types of economies, for the major part of its existence. One is the capitalistic kind of economy, which is profit driven and is for the larger part, free from Govt regulations. The other is the socialistic kind of economy, which is welfare driven and is for the larger part, controlled by the Govt. Most countries in today’s world follow a Mixed Economy, which is a combination of what a committee of experts think is best for the state. India has long been operating a mixed economy, with mixed results to show for.
The Indian retail market accounts to close to 15% of our GDP and is largely unorganized. Organized retail trading accounts to only 4% of the market share. It is one of the top 5 markets in the world and is worth approximately $450 Billion. It is one of the fastest growing markets in the world with humongous lurking potential. Naturally, with a falling economy, the US is interested in making some money out of this. Who wouldn’t be?
I am against FDI in retail – although I agree it is definitely beneficial to consumers. This is because I do not believe that India is not capable of bringing in the required investment to mitigate the existing shortcomings of current retail trade. I think that we must use the potential (financially and otherwise) available within our own country to provide all the advantages that FDI in retail can. This will help strengthen our economy.
India’s is what I would like to call a temple economy. Economies were built here around places of worship. In every city, town or village, traders have their lives intertwined with the local place of worship – be it a temple, church or mosque. What without Deepavali, Pongal, Christmas and Ramzan, the whole of retail industry – FDI or otherwise, will see a shutdown. Humpty Dumpty will have a great fall if not for God. I had written about this sometime back as well – https://meenakshisblog.wordpress.com/2012/06/20/the-temples-of-india/.
This kind of economy has seen many peaks across millennia. Whenever we have tried to disassociate the two, we have witnessed slumps as well. Akbar’s regime saw India recording its highest GDP, Aurangazeb’s reign saw it fall! Colonization and divide and rule policy of the British have witnessed further deterioration of our GDP. Aurangazeb razed hundreds of temples; along with it went the livelihood of thousands! It led to the downfall of the empire as well as a steep fall in GDP. Dadabai Nauroji’s papers – Poverty and Un-British rule in India (1867), The Wants and Means of India (1870) and On the Commerce of India (1871) speak specifically about the moral and material drain from India during British rule leading to lower GDP. Gandhi saw economics as a sum of individual human development driven by ethics, patriotism and what else…. spirituality!! 🙂 🙂 Retailers who want to enter into the FDI space do not come from this philosophy; hence my assumption here is that they can’t survive here for very long.
I feel that FDI in retail in India will be a failure. Reasons in Part 2!