FDI in Retail – the rot lies within us

The 100% FDI approval by government had seen intense opposition from almost all quarters.  The nationalist intellectuals & Economists, like Gurumurthy ji, and Vaidyanathanji had been the intellectual forefront of this FDI opposition and their tweets had been the most fiery one.

I am sharing some of my random thoughts on this aspect here.

Economy, Administration and Social Structure:

Economy doesnt exists independantly on its own.   It needs a society, and a governance & administrative structure to thrive.  So depending on the kind of government, and the kind of society, the economy will take its shape.

Today, in india, two kinds of economies exist.

1. The economy that exists in the rural areas, that functions in traditional way, and is a continuation of our civilization.  This economy is people oriented, and people based.  This economy is also Need based.

2. The Economy that exists in Urban Centers like Metros, Cities, and towns.  This is market based, and Population based.  (there is difference b/w people based and population based).

In villages, due to the traditional jathi based societies, everyone had been doing their kula profession.  So there is no competition for capturing any other’s market.  Trading here is largely about exchange of products, for their respective profession.

On the other hand, in urban centers, we have only population and NOT society.  The buying power of these population constitute the market potential of that town.  This market potential varies depending on the size of the town or city.

Next, how can a city function?  The indian government had been enforcing its urbanisation policy, since independance.  But till liberalisation of 1990s, the size of each of the urban centres did not expand much.  The reason is because, these cities were depending on Rural society.  Cities served just as integrating point for villages.

However, after liberalisation, almost all cities witnessed a cancerous growth.  Particularly the metros, like chennai and Mumbai, and recent ones like Bangalore. These growths were largely because of Export Money, and artificial free flowing of indian currency.  Because of this, the indian cities, once a trading and integrating point of indian villages, had now become, centres of business, serving foreign clients, and foreign corporates.  BPOs, Software Companies, Industrial estates, all served foreign corporates, and their exhorbitantly high income is due to Currency difference.  One dollar begets them 50 indian rupees, and thus creating extreme disparities.  Due to this foreign based export oriented industry and business, the life style in these cities were shaped based on western model.  Malls, parks, over-bridge, theatres, and you name it..  everything is built on western model.  As a result, the economy in these cities,  also evolved resembling western economies, rather than indian rural ones.

When big Foreign Retail Corporates like Walmart wants to enter india, they exactly target these urban economy, and NOT the rural economy.   No corporate can compete or prosper in our rural economy, because it is decentralised, and based on people and relation.

What is use of shouting against government, when we ourselves destroy rural economies and create westernised ones?

Imagine, how many villages had been destroyed to create a chennai metro.  Which means, how many village economies, how many local markets, and how many farming based families collapsed?

And till today, many cities are expanded by dismantling the village panchayats, all across the country, and our Nationalist Intellectuals, are totally silent on this.  No one had so far questioned the Urbanisation policy of the government in these 60 years.

And i find no meaning in their current opposition to FDI in retail.  Are they trying to convey, that only indian urbanites had the right to destroy rural economy and NOT the foreign corporates?

The solution lies in strengthening our traditional local economy, and developing our national economy on top of it.  And if we can do that, we can boldy challenge Wal-Mart to come and try their luck in our country.  I bet, they cannot compete even an inch in our traditional people based economy.

To quote an example, can any corporate replace mumbai dabbawalas?  That is the power of people based, and jathi based economies (And for your info, most members in the dabbawalas belong to a single caste.  I think their caste name is malwa )

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30 Responses to FDI in Retail – the rot lies within us

  1. R Venkataramani says:

    If our rural population is united, there will not be any threat to Indian business because of entry of multinationals in retail.

    As you rightly said, Indian rural community must get united and create an environment where total exports value from every village should be more than the total imports into the village.

  2. Swami says:

    I was expecting a blog from you senthil on the current burning issue.

    i can understand that walmarts cannot penetrate the local village market. Village people might prefer buying vegetables from the one’s they know rather than going to walmart. But if they have a walmart, wont they aspire to buy iphones at low cost too?

    At the same time wont walmart destroy the lives of people who do small business in cities? All those who were owners will now turn employees in such companies. What will happen to the distributors in the supply chain? Is walmart planning to buy vegetables directly from farmer by passing the distributor? May be this is a good one for a farmer and thats good that they get better price for what they work.

    Another drawback that i see is, till now when we buy something the money was going to an indian businessman. now it would go to a foreigner end of the day making him rich not an indian.. Can indians come and set up business like this in US? I dont know how easy or tough it is. I heard that one of the movie theater chains (BIG cinemas) is owned by reliance. Thats a 2 or 3 $ per ticket theater that shows old movies. I dont think americans would allow other countires to come and do business. They have allowed us to be employees not as a business owner.. on the other hand its funny that india is housing an italian as a proxy PM.

    • senthil says:

      Swami,

      I think, you did not understand my core point.. i was about to convey that by urbanisation, we have destroyed the rural economy ourselves, for the past 60 years.. and even now doing the same..

      So, what is this protest about? Is it about saving only the urban shop keepers? Or is it a message, that only indians can loot his own people and NOT foreigners..

      Is it ok for you, for an indian middle men to exploit the rural farmers ?

      Come out of the self-centered perspective, and think from the common plane..

    • senthil says:

      Just compare and contrast the traditional economy and social structure, and the current urban setup and its economy.. Is their anything indigenous in the urban centers? When we ourselves are following and living a western life style, what is the thing that you call as Indian here?

      • Swami says:

        yes. i agree and i understand your core point. there is nothing indian in our lifestyle and thought process and nothing can be done in next 50 years. we cannot switch back to vedic life all in a night.. but we can definitely aspire towards that and march towards that. but it will take its own time for people to understand it and start establishing it.

        FDI has got its own advantages and disadvantages. it might turn out to be a boon for farmers if walmart decides to buy things directly with good price. but if walmart starts claiming rights for the seeds then we are becoming their slaves in turn in long run..

        So whats your take on FDI? You are approving FDI or not? yes or no.

      • Swami says:

        to me there is no need to bring in FDI. what ever can be achieved through walmart can be acheived by our own system and governement itself if proper and clean process is laid out and clean governance is put forth to ensure the process is being follwed.

      • senthil says:

        @swami,

        A single walmart company (of fer retail companies) procuring at higher price from farmers may appear to be highly beneficial to farmers.. but in reality its not.. suppose, if i give you everything you need and you find it useful, what will happen in the long run? You lose your independance, and finallly end up depending on me for everything.. that is hi-tech slavery..

        The same will happen with your assumed benefit for farmers.. Walmart may invest heavily, with their financial power, to procure from farmers at high price.. but once they get established, and root out all other alternatives, the farmers virtually become slave to them..
        Allowing MNCs in India, will be the same mistake of allowing East India Company 500 years back..
        Hope, you are clear with my stand..

        However, my point is NOT that.. its about destroying our native economy..

      • senthil says:

        @swamy,

        Please go through this 2ndlook article on FDI.. it give even more detailed picture.

        http://quicktake.wordpress.com/2011/12/04/retail-fdi-the-real-dangers

  3. sleeping8 says:

    hello senthil,
    (1) Hindu – Indian shopping is a cultural affair – It is moronic if I can’t bargain with my shop keeper? We both know the what value the stuff has for me. My relation with my marwari is that he knows all members of my family and gives us stuff on “a/c” me daal do – basis. His son comes to my house when workers are all away? He values me – I am not a number to him. He respects me, my money and most importantly my age – always has a namaste – ,,, ji

    (2) Congress govt’s bringing this into India now is obvious – It’s leaders have loot stored away many places abroad. And the abroad has gone bust – The leaders are looking for ways to get their loot back to safe place – India.

    I say let FDI come in – morons can do what they want at malls – Those that love shopping shop in the Hindu marwadi shop.

    • senthil says:

      I agree with you fully.. there is healthy personalised relationship b/w traditional vaishyas and our society.. No wonder, the marwaris till now prosper anywhere they go, because they are rooted in their vaishya dharma..

  4. Hilda Raja says:

    Sethil I did sent my comment but I do not see it on your blog!How did it disappear?HR

  5. Hilda Raja says:

    You have rightly made a distinction between people and population.Though people in large numbers become population yet there is a difference because people oriented and population oriented-one is humane and the other is automatic and faceless.Yet we must admit the fact that urbanization is a gradual growth-a panchayat becomes a town panchayat and a town panchayat becomes a municipality and then a Corportaion,.When the size of population and the income increases then these changes also take place.Infra structure too then increases and the economy changes.Whether we like it or not urbanisation has come to stay-because as a process it is on and one cannot put the clock back but FDI is a purposeful intervention to demonize the rural face.The rural economy will change because the big will eat up the small-the resources and the produce will be mopped up by the big enterprises for its malls.The small agriculturists will not be able to withstand the competition and the pressure.Instead of employment there be be unemployment because these big enterprises depend on computer and high tech .It will not be labor intensified.So to say that FDI will not affect the rural is wrong.It is the rural people who are going to suffer the most.Just watch out and see.Urbanization is bad enough why now make it worse?Take any one produce and follow its trail…the Multinationals will gain and the rich surely-They will not see the difference.Small is beautiful is lost.Now it is vulgar,big giants which enter the field.
    Another dimension is -the black money stash is being rerouted through the FDI.This is why MMSingh and Mrs Sonia are adamant.What is the compulsion,Why is the PM saying that it is difficult to roll back.Who is pressurizing the GOI and Why
    Hilda Raja

    • senthil says:

      Thanks for your comment Madam,

      The urbanisation doesnt happen automatically.. it is being forcefully thrusted upon people by the government.. It is highly unsustainable, and is NOT a model to cherish..

      • Hilda Raja says:

        Urbanization is not a model but it has come to stay because the world has become a global village.In fact what RG wants is to make all villages urban!Whether we like it not-whether it was thrust or a automatic growth it has come to stay and now we need to make it humane and not thro FDI rob the villages of their produce and their culture and their way of life.If FDI comes a reality then what we will have -we may not have potatoes but Lays potatoe chips.No molasses and gur but artificial sweetners-we will have village children been told that there is no water to drink but Colas in the bottle.One can get only distilled water but potable water in the taps.It will be story of deprivation and the richer getting richer and the poor getting poorer.If there is no rice why not eat cake!No chappati so what-there will be pasta and noodles.Sad story of India’s development.
        Thank you Sentil for your insightful inputs.
        Hilda Raja

      • Swami says:

        What is Anna Hazare and his team doing? now i dont see any activity from them. Have they been threatened ? Did Sonia buy him for a good price?

        If government shows intrest in bringing the money in swiz back for welfare schemes in india, that would be more benificial in bringing walmart. If they are so desperate then why not just take the concept of walmart and implement it in the indian way?

  6. Mitchell says:

    Its fasanting to learn about the different Systems in India, wondering is it possible to have both or a system that takes the best of both and assimilate them together so it can say be more fairer and build the bridge between the Urban and Rural.

    In Australia we have a similar situation with over population as well as housing prices in Sydney alone it has become to expensive to buy a house with more people moving into Western Sydney which if any of you been to Sydney know its not the nicest area with say rough people etc but it has improved latley as more and more housing being built up and I think the goverment here is pushing of the rough, undersiable people more west into housing etc

    But there are great solution that our Goverment wont take is Build faster trains in Rural areas so we can expand out there and take a train trip that would take 45 minutes when it now take 2 hours.

    Instead they just expand all over the place and build more Housing and realy thow money at problems hoping that would help

    As I can see here it seems India has the Rural areas are vital for farming, and other Agricultre as well as supply Dairy products.

    Lets hope which Im not sure that your Goverment support your Farmers much better than ours does here where they allow free trade for Imported Fruits and Vegtables from over seas when it is inferior and dosent keep the money in our country etc.

    Soon in Australia we be buying cheap inferior milk from China and our Farmers would be out of Business

    • senthil says:

      @Mitchell,

      /** Its fasanting to learn about the different Systems in India, wondering is it possible to have both or a system that takes the best of both and assimilate them together so it can say be more fairer and build the bridge between the Urban and Rural.
      **/

      Its like asking communists and capitalists to co-opt and live peacefully :) :)

      Well.. it can be possible, when local autonomy is given to villages.. the self-governance of villages has been usurped by the government.. the indian villages were self-sustainable with all kinds of people like farmers, washermen, carpenters, blacksmith, and labour communities.. pre-british indian empires were built on top of it.. ie, they preserved village autonomy and then got a share of produce from that village.. But present government is hell bent on destroying it..

  7. Mitchell says:

    Also worse in Australia is the Goverment allowing Mining Companies buy premium Agricultre Land for Mines instead of being used for Farms to supply all our needs now where beeing sold to the Chinese from our Communist loving Labour Party who has lost and spent Billions on Bungle operations as well as in one year spent over a Billion Dollars on Refugees and Non Legitamte Refugess who riot and burn there accomindation while people and flood stricken Queensland are homeless and now wana tax Carbon Emitors here when Australia is hardly any where near the largest polluters in the world Tax and are trying to tax mining.

    And the most stupid thing is with these idiots is that they wont sell Uranium to India as they belive your country will turn them into Nueclar Missles but sell it China when they have stockpile of them and most of there arsenal is pointed at Taiwan.

    This is the sort of stupidity my country deals with and I hope your Farmers are treated better and not sold out to the Chinese or any other country because by supporting the Farmers it will keep money in India and keep the economy stable etc

    • senthil says:

      Thanks Mitchell for your insights.. here, in india, the government had embarked on a policy to drive farmers away from farming.. the reason cited by them is that in US only 1 % of population are farmers, and that’s why they are advanced.. and their conclusion is that india is backward because 70% of people are in farming & rural, and hence they have to be moved out.. and for that they have embarked on urbanisation policy for the past 60 years, since independance.

      Btw, i think, australia is taking care of its farmers better than india.. i heard, that when any one wants to do farming in australia, it provides them all kinds of equipments and support.. i just heard it from my friends..

      On the question of Uranium, it is more of a political decision to contain india..

      • Mitchell says:

        Yea its the Left Wing Faction of Labour who dosent want to sell Uranium to India because India wont sign the non-proliferation treaty but from what I heard neither did China unless they signed some thing else?

        The main problem is Money and money makes corruption happen and what you will see soon is what Anuraag said Corporations using the wealth and influence to buy or bully competiton, and any threat to there Empire and most of all it happening in Australia with the countries 2 biggest Grocery Stores Woolworths and Coles who are fighting it out but get rent far cheaper than any body, and are able to make prices low and other way to crush the Little Guy running say a Fruit and Vegtable Shop and the goverment does nothing.

        The worse thing with Walmart entering India yes it will provide Jobs etc but it will crush any Indian like chain from Happening and most of the Money will be going over seas, I am not sure but does India has its own Corporations like Walmart Etc

      • senthil says:

        @Mitchel,

        You had rightly put it up.. Money is the main problem.. Money as a source of living, has now become, a source of domination, political power, and what else?

        And atlast, a hero from your country Australia had emerged to expose all those secret corporate governments, and the corporate companies, which they collide with.. I wish, Julian Assange comes out of the present legal threat, and expose more.

        In india, already there are retail stores on the likes of walmart.. reliance fresh, More Market are some.. but their reach is limited, and confined to big cities..

  8. All major existing retailers in India have not been able to lower prices to the consumers in any manner, whatsoever.

    Why assume foreign companies can do it?

    Foreign retail has not benefitted the consumer or the farmer in the West.

    Why assume that this miracle will happen in India?

    Giant Retail will wipe out 50 million entrepreneurs and convert them to obedient employees – the dream that the Desert Bloc has. The change from entrepreneur-to-employee is something that will help the creation of Big Business and the Big State.

    As it has happened in the West.

    As consumers we may get a few years of lower prices – financed by RBI /US Fed, but finally we will pay the price. We, the Indian farmers and the Indian consumers.

    Make no mistake about that.

    via Retail FDI – The Real Dangers « Quick Take – As It Happens.

  9. Suresh says:

    Some thoughts for consideration.
    One report says the reason for FDI in retail has nothing to do with retail – rather organised retail of the Walmart/Carrefour type requires massive retail space and this will give a fillip to real estate especially urban and semi-urban areas. Naturally since much of political black money is in real estate this will give another venue to launder ill begotten wealth.
    Without saying whether its good or bad, the fact is more than FDI in retail we need to free the farmer from the tyranny of the APMCs and free the retailer from needing APMC receipts. Also options and futures on basic foodgrain creates an artificial price form a non end user. No prizes for guessing who controls most of these processes – its Sharad Pawar and his cronies in a firm called Financial Technologies. Anna Hazare rightly said – only one slap?Foodgrains rot in FCI godowns and poor people starve to death.
    Lastly , like all other administrative matters, it boils down to how large the admin unit should be and who controls it? Whether urban or rural – unless the local community has access to administrative control on local matters, especially common utilites like public land, water etc, the majority of Indians will always be slave to the ruling elite – and the elite here is found everywhere – executive, judiciary, legislature, police, media – everywhere.
    We need to continue to educate fellow citizens to seize power and force local administration.

  10. Suresh says:

    Just read Anuraag’s post on Quicktake and Senthil’s response on the charity subject. A thought popped up.
    One way to use FDI in retail is to mandate setting up storage and distribution chains from farmer to consumer – BUT more importantly allowing this logistics to be used by small kirana shops for a fee. This way infra improves and the small kirana shops can also compete?
    Another thought is to ensure basic grains are sold at same price as fair price shops(ration shops) to ensure ‘social responsibility’ towards the poor. Of course if the Congress wishes they can also ‘reserve’ grains for the ‘backward classes and minorities.
    I am sure the MNC’s will love to contribute towards the ‘aam aadmi’ which the Congress and its media friends like Swaminathan Aiyer are so worried about.

  11. Swami says:

    There is so much discussion happening at all channels and blogs about FDI. Will it really have any impact? With all these problems like this in india, i am wondering what can we do as we are in the bottom most level. Promonant people who are in politics for a long time (say CHO ramaswamy, Subramanya Swamy, Narendra Modi) are there who cannot influence any big change. I am confused on what can be done from our end to make a big impact.

    During freedom struggle, people came out and raised their concern. Now with this modern era, we can only silently protest and raise concerns through blogs and are not prepared to come out and fight. So scared to come on streets to fight. Looking at what could happen to baba ramdev, anna hazare, i look like an ant and the government would easily crush me out.. Where is india going? What can be done as an individual to make a difference? I am lost………. Dont we have 25 good and influential people in india ?

  12. seadog4227 says:

    Good to read all comments here and your blog.
    1) The anonymity and facelessness of urban areas gives govt. and big business the edge in doing whatever they want for immediate monetary and political reasons..
    2) One point that really irritates me is the Indian govt. bending over backwards to please MNCs, when there is no reciprocal gesture.Even when the giant malls were being built in Pune, speculation was rife that they were primarily prepared as real estate ventures for immediate sale to MNCs. (3) Comments in the Indian media indicate that all local retail chains were actually preparing to hand over business to MNCs before massive opposition broke out in parliament.
    (4) ELM restricts and distorts every debate and FDI in retail is no exception. (5) Govt. borrowings and interest payments to the IMF and the WB remain shrouded in secrecy. The BOP crisis of 1991 created by the Kkangress has brought us to this pass.

    • senthil says:

      thanks.. the indian govt is actually run by corporates, and they will behave only like that.. earlier the king has the power to regulate.. today with absense of any such protector, it is the tight grip of these corporate companies, which is manipulating economy through government policies

  13. seadog4227 says:

    Another major fear is GM foods, which the MNC chains are sure to promote.

  14. Andrew says:

    Do you have any idea what you’re talking about?

    /* Malls, parks, over-bridge, theatres, and you name it.. everything is built on western model */

    Over-bridge built on western model??? Really, can you show me other type of over-bridges that exist in the world? All I know is over-bridge. It’s the same in Los Angeles or New York or London or Tokyo or Singapore.

  15. vyas says:

    Finally the govt cleared FDI in retail today. It’s a clear card played by America and it’s agents in India to destroy this nation. Only God can save this country now.

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