India doesn't need FDI in retail to grow : Joseph Stiglitz

Inequality is bad for economy, democracy and society. Much of the inequality in the US arises out of rent-seeking -monopoly, exploitive practices by banks and corporate exploitation of public resources. In the Indian context, you will call it corruption but we call it corruption American-style, where you give away natural resources below market prices. India is doing it now but America has a long history of doing this.

There is a clear association between inequality and instability. People at the top don't spend too much, they save a lot but people at the bottom spend everything. So you redistribute income from the bottom to the top and demand goes down. That makes an economy weak. That is what happened in the US. We would have had a weaker economy, but the Feds stepped in by creating a bubble that created more demand to offset the demand that was going down. Of course, creating a bubble was creating instability.

The advocates of FDI have probably put too much emphasis on it. India is in a different position than a small, developing country. You have a large pool of entrepreneurs. They are globally savvy, have access to global technology and they have a lot of wealth. So, if there were large returns to large-scale supermarkets, the domestic industry would have supplied it. Not having access to FDI is not an impediment in India. Wal-Mart is able to procure many goods at lower prices than others because of the huge buying power they have and will use that power to bring Chinese goods to India to displace Indian production. So the worry is not so much about the displacement of the small retail store but displacement further down the supply chain. 

Joseph Stiglitz in The Times of India Here

Mamata Bannerjee steals the thunder from UPA-II

First time ever, Mamata Banerjee could transfer her characteristic unpredictable gambit to a larger uncertainty of political economy. Using what matters in Bengal politics, which is a pro-people, pro-minority and anti-Centre stance, she succeeded in showing the UPA-2 its footloose practices to the point of breaking it. In the eye of the storm is the opening of the retail trading for FDI and withdrawal of subsidy for gas and hiking of diesel prices, all a recipe for marginalization of the poor and the minorities in a corporate dominated economy of India.

Politics of reforms, here again, exhibits its hazy means-ends relationship. No government, howsoever powerful it may be, can assume an overriding decision-making power in matters of bringing foreign funds, as it erodes domestic legitimacy. Bereft of popular acceptance, reform measures that create an inevitable insecurity and crisis in livelihood of ordinary citizen eat into the credibility of the Government. Even if it is a government in majority, or it is in minority, either way, reforms sacrifice both the government and the people. In this sense, reforms make the most achieving government hostage to its antics and throw the stakes of its citizenry into the winds. Mamata decided not to be a part of such a process of gambling with the people and pulled the plug.

In her twenty odd minutes of press conference to declare the withdrawal of support from the Central Government, she established an uncanny but real linkage between Centre’s economic follies with communal riots in Assam. She sounded like a practical politician in linking up the tragedy of commons at the hands of UPA government with its Assam counterpart which could not prevent a preventable riot. That Mamata’s well known acceptance of victims and provisions for sheltering them in relief camps is not just a mere public show off came out in her serious concern about Assam riots, which she didn’t dither to call ‘communal’. Indeed Mamata could see the invisible link between economic reforms and communal politics as it is played out at a stone’s throw by the Congress. Her announcement that her ministers will resign after Jumma Namaz on Friday makes her a darling of the masses in Bengal. Indeed there are many dimensions to her apparently inexplicable act of connecting Assam riots to FDI in retail and the overall policy drift of the UPA.

It is increasingly clear that in the course of riots, Bengali speaking Muslims of the East Bengal origin has been the only target, large number of whom have to cross over to neighbouring state of West Bengal for shelter.

Except making whatever public announcements, Congress as the ruling party, both at the centre and the State didn’t have any qualms to take them back home. Just as the Congress party unilaterally passed a cabinet decision to allow entry of FDI in retail in great peril to the existence of small traders in the very sector, in the same way, they have left scores of displaced victim at the mercy of Bodoland Territorial Council (BTC) administration. The criterion of land record to decide whether someone is an Indian or not in Bodoland not only violates the principle of no harm to the already harmed, but it contributes to turning genuine Indian citizens into stateless persons. The ruling party is dancing to the tune of BTC and failing to uphold constitutional principles.

In such an hour of crisis, Mamata not only withdrew support from UPA, but by raking up the issue of communal riots in Assam, she brought the truth out of claustrophobic interpretations given to Bodoland riots. Although she didn’t elaborate, but anyone can relate mention of protesting against Assam communal riots to the actually existing reality. As a glaring example of how UPA’s policies are skewed towards the marginalized and minority-ized sections of society, Assam riot stands out as one example of neglect and injustice by the Central Government.

As a statesman of a very different kind who can listen to the ground, her decision to send minister’s resignation to the Prime Minister after Friday prayer carries a lot of meaning both nationally and internationally. Nationally it marks a strong anti-Hindutva stance. It also communicates a message of peace, brotherhood and love for the Muslims that a country polarized tends to forget. It also is a re-affirmation of solemnity of Islam in the face of deliberate attempts to the film-ic mischief. Mamata establishes the right chord of concern for the helpless victims of communal clashes in Assam by connecting her FDI protest with deeply emotional pronouncements about Friday resignations. She couched the idiom of protest in terms of practical Islam that overcomes the otherwise meaninglessness of political acts such as entry and exit.

Mamata’s exit has thrown up challenges to other secular and anti-communal forces and parties to evolve a common strategy. Far from being clear about the impact of these reforms, parties like Samajwadi Party and Bahujan Samaj Party are calculating each other’s response and playing a zero sum game. In such a situation there could again be a kind of reconsolidation of parties within UPA just for the sake of avoiding an early election. Such a mutual bickering is going to affect the polity in a negative way as continuation of UPA is going to bring a policy regime that does not care for the minorities and the marginalized.

Prasenjit Biswas in Two Circles. Here

Obama, FDI, Manmohan Singh and lies

For U.S. President Barack Obama there could be nothing more cheering. The ‘underachiever’ now goes to the presidential polls with a lot of confidence — India’s decision to open up FDI in multi-brand retail comes as a shot in the arm for the beleaguered American economy and will obviously boost his poll prospects. 

Mr. Obama certainly knows what is good for the U.S. economy; Prime Minister Manmohan Singh also knows what is in America’s interest. Mr. Obama, for instance, wanted to stop outsourcing to protect U.S. jobs. No amount of persuasion from India changed his mind. Similarly, knowing how important FDI in retail is for him, he had pitched for a new wave of economic reforms. It was surprising to see Mr. Obama telling India what is good for us.

Aided and abetted by TIME magazine and credit rating agencies like Standard&Poor’s, Fitch and Moody’s, India finally buckled under global pressure. What is little known is that India was also under a G-20 obligation to remove all hurdles to the growth of multi-brand retail.

But is FDI in retail really good for India? Will it improve rural infrastructure, reduce wastage of agricultural produce, and enable farmers to get a better price for their crops? While a lot has been said and written about the virtues of big retail, let me make an attempt to answer some of the big claims. 

Agriculture: The Prime Minister has repeatedly projected FDI in retail as a boon for agriculture. Unfortunately, this is not true. Even in the U.S., big retail has not helped farmers — it is federal support that makes agriculture profitable. In its last Farm Bill in 2008, the U.S. made a provision of $307 billion for agriculture for the next five years.

Where is the justification for such massive support if big retail was providing farmers better prices? And let us not forget, despite these subsidies studies have shown that one farmer in Europe quits agriculture every minute.

The second argument is that big retail will squeeze out middleman and therefore provide a better price to farmers. This is again not borne by facts. In the U.S., some studies have shown that the net income of farmers has come down from 70 per cent in the early 20th century to less than four per cent in 2005.

This is because big retail actually brings in a new battery of middlemen — quality controller, standardiser, certification agency, processor, packaging consultants etc. It is these middlemen who walk away with the profits and the farmer is left to survive on the subsidy dole.

Monopolistic power enables these companies to go in for predatory pricing. Empirical studies have shown that consumer prices in supermarkets in Latin America, Africa and Asia have remained higher than the open market by 20 to 30 per cent.

And finally, the argument that multi-brand retail will provide adequate scientific storage and thereby save millions of tonnes of food grains from rotting. I don’t know where in the world big retail has provided backend grain storage facilities?

FDI is already allowed in storage, and no investment has come in. Let it also be known that even the 30-per-cent local sourcing clause for single-brand retail has already been challenged and quietly put in cold storage by the Ministry of Commerce. 

Employment: The Indian retail market is estimated to be around $400 billion with more than 12 million retailers employing 40 million people. Ironically, Wal-Mart’s turnover is also around $420 billion, but it employs only 2.1 million people. If Wal-Mart can achieve the same turnover with hardly a fraction of the workforce employed by the Indian retail sector, how do we expect big retail to create jobs? It is the Indian retail sector which is a much bigger employer, and big retail will only destroy millions of livelihoods

State government’s prerogative: Very cleverly, the Central government has allowed the State governments the final say in allowing FDI in retail. This may to some extent pacify those State governments opposed to big retail. However, the industry is upbeat and knows well that as per international trade norms, member countries have to provide national treatment. Being a signatory to Bilateral Investment promotion and Protection Agreements (BIPAs), India has to provide national treatment to the investors. Agreements with more than 70 countries have already been signed. State governments will, therefore, have to open up for big retail. Industries will use the legal option to force the States to comply.

And more importantly, let us look at how the virus of big retail spreads, even if the promise is to keep it confined to major cities. Recently, a New York Times expose showed how Wal-Mart had captured nearly 50 per cent of Mexico’s retail market in 10 years. What is important here is that as per the NYT disclosure “the Mexican subsidiary of Wal-Mart, which opened 431 stores in 2011, had paid bribes and an internal enquiry into the matter has been suppressed at corporate headquarters in Arkansas”.

In India, we are aware that Wal-Mart alone had spent Rs.52 crore in two years to lobby, as per a disclosure statement made in the U.S. It has certainly paid off.

Devinder Sharma in Ground Reality and The Hindu

Obama, Manmohan Singh and the innocence of Muslims

Of all the comments made on the dirty film, the comment made by Vaiko stands tall. He has said உலகெங்கும் வாழும் அனைத்து மக்களின் நெஞ்சிலும் நெருப்பை கொட்டிவிட்ட சி‌னிமா (A film which has showered fire in the hearts of all throughout the world). He is right. Even Hillary Clinton has expressed her anguish and has condemned the film. Who is Hillary? She is not a Muslim. She is just a politician. One can imagine the toxicity of the film by her anguish.

The film reminds me of another mischievious, outrageous book written by Salman Rushdie. When The Satanic Verses was released in late eighties, similar reactions were seen throughout the world. The Indian Government acted swiftly then and promptly banned the book. But now it is not the case. It has not yet banned the movie. It has not yet blocked the URLs from the web.

How to vent our feelings? How to condemn this ugly, dirty and vulgar film? How to condemn this wretched movie?

Should we target the US embassies worldwide? Should we demonstrate in front of the embassies of USA? Is it the only way? I think we Indians are blessed with another option too. We could go in procession to the Raj Bhavans in the State capitals and submit a memorundum to the Governors there. We live in an age when there is not an iota of a difference between the Indian Government and Obama's government. What is the big deal there. The Manmohan Goverment has opened up the retail trade to American companies in the name of economic reforms. This move clearly demonstrates the slavery attitude of the UPA government.


உலகெங்கும் வாழும் அனைத்து மக்களின் நெஞ்சிலும் நெருப்பை கொட்டிவிட்ட சி‌னிமா என்று வைகோ சொல்லியிருப்பது மிக்க பொருத்தம்.
எண்பதுகளில் சல்மான் ருஷ்டியின் சாத்தானியக் கவிதைகளை விடவும் அதிகமான பாதிப்பை அமெரிக்கப் படம் செய்துவிட்டுள்ளதகத் தோன்றுகிறது. இந்திய அரசாங்கம் அந்தப் புத்தகத்தை  உடனடியாக தடைச் செய்துவிட்டது. ஆனால் அமெரிக்கப் படம் இன்று வரை தடை செய்யப்படவில்லை.

இந்த அழுக்குப் படத்துக்கு எதிரான நம்முடைய உணர்வுகளை எப்படி வெளிப்படுத்துவது? இந்த கேடுகெட்ட படத்தை எப்படி தான் கண்டிப்பது?

அமெரிக்கத் தூதரங்களுக்கு முன் ஆர்ப்பாட்டம் செய்வதுதான் ஒரே வழியா? ராஜ் பவன் வரை ஊர்வலமாகச் சென்று ஆளுநரிடம் கோரிக்கை மனு தரலாமே? இன்றையக் காலத்தில் இந்திய அரசுக்கும் ஒபாமாவின் அரசுக்கும் என்ன பெரிய வித்தியாசம் இருக்கிறது? சில்லறை வணிகத்திலும் அந்நிய முதலீட்டை FDI  அனுமதித்துள்ள மன்மோகன் அரசு ஒபாமாவின் கூலியாளாகத் தானேச் செயல்பட்டுக் கொண்டிருக்கிறது?