Money does grow on trees, Prime Minister
The Hindu
There is no way we can take lightly the Prime
Minister’s recent address to the nation. It was, unarguably, an exceptional step
for him to take, renowned as he is neither for his loquacity, nor for his
oratorial skills. Why then did he mount his Rocinante of ‘91 vintage and
futilely lance opponents of his policies by alleging that they were “spreading
canards”? Also, which Sancho Panza on his staff persuaded him to use this
insulting noun? But for this, his otherwise rather nondescript address would
have been best left to its inevitable fate of oblivion. Not, however, now.
Telephone call
First: this rather admonitory “money does not grow
on trees”. Just a day after this astonishing, also so unneeded, reprimand, I
received a telephone call from a retired soldier colleague, who had served with
me as my tank driver, sharing with me for many years my tank lean-to shelter at
night. I save his name lest he be nagged by the otherwise inefficient
Intelligence Bureau. “Sahib”, he said in his thick Shekhawati dialect and
accent, “please educate the PM that money does actually grow on trees and
plants; we get all our fruits, vegetables and animal feed and also firewood from
a ‘tree’. So tell him to think of the farmers, not of the ‘foreigners’, who over
two centuries back came as a company and took away our land. Not one ‘biswa’ [a
measure of land] was left to us”. I promised him I would do so, but advised him
not to disturb his retired life over such depressing thoughts, for just as our
‘dhabas’ defeated a rather cocky Colonel from Kentucky, US of A, India will
defeat this, too. And not one word of this anecdote is made up.
Therefore, next to the fabled merits of multiple
retail shops of (in)famous names.
Please reflect first on the merits of India’s
unorganised and widely dispersed retail trade, explained with admirable clarity
and succinctness by S. Gurumurthy (“‘Reform’ at Nation’s Cost,” New Indian
Express , September 20) : “The unorganised retail trade in India represents
the traditional, community-centric, low-cost … employment intense retailing that
includes, but is not limited to, kirana shops, owner-run-general stores,
paan-beedi shops, convenience stores, and hand-cart and pavement vending. In
this model a whole family works in one shop and a whole community is engaged in
the trade in a defined area. Most advocates of corporate … and retail firms …
ignore [this] critical contribution of the [existing system] to the Indian
economy and society (emphasis added). This “multi-layer retailing is the
most decentralised economic activity in India after agriculture. Second, it
constitutes almost 98 percent of the total trade with an estimated 12 million
outlets. In contrast, organised trade accounts for just 2 percent. Third, it is
the largest employment provider after agriculture, employing an estimated 40
million people”. In contrast, the world’s largest retail chain, Wal-Mart,
employs just about five lakhs. Fourth, being “self-employed … with their
families”, this activity comprises “120 million people”.
It is “retailing that continuously generates … huge
community-based entrepreneurship”. And then “it contributes over 14 percent of
India’s GDP, while all [the] companies in the BSE 500 Index, put together is
some 4 percent”. Also that the “unorganised retail segment has been growing at
an average rate of over 8 percent a year for the last eight years (1999-00 to
2006-07). … second only to construction …” Let us consider seriously that “if
[this] social capital link to retail trade is unsettled, the entire distant and
remote supply chain will suffer over a period, disturbing the social equilibrium
and the organic social links that have evolved over … centuries”.
There is then a further ‘canard’ spread by our dear
PM and his ilk, suggesting that concerns like ‘Walmart’, and others of that
variety, overflow with the milk of human kindness and act only out of empathy
and compassion for India’s farmers and poor. Gurumurthy very effectively comes
to our assistance here, too, the evidence, even in the U.S. being to the
contrary: “Walmart entered in Austin neighbourhood of Chicago in 2006. And by
2008, some 82 of the 306 small shops had closed down.” Further, “the Economic
Development Quarterly study found the closure rate around Walmart location at
35-60 per cent.” Such studies in the U.S. reject the UPA’s assertion that FDI in
retail does not hurt small shops. On job creation, a January 2010 report titled
‘Walmart’s Economic Footprint’, prepared for the New York City Public Advocate,
says that “Walmart kills three local jobs for every two it creates”. Jayati
Ghosh, an eminent Indian economist cited by Karan Thapar, asserts that “one
Walmart store in India will displace 1400 small retail stores costing 5000
jobs”. This, too, is dismissed by the government as “meaningless”.
Misplaced view
As for Walmart offering better prices, please
recognise it does not buy or pay for goods over the counter. It purchases the
nation’s next harvest in futures market and fixes farm prices. It also “imports
cheap goods and destroys local production like it has done in the U.S.” And an
outstanding example of this is provided by President George W. Bush, who
gratuitously observed “that [rice] prices had gone up because newly prosperous
Indians had begun eating more”. In truth, as detailed by USA Today (April
23, 2008) and CNN (April 24, 2008) the “California Rice Commission and USA Rice
Federation” denied there was a “shortage of rice”, explaining that it was
because ‘Sams Club’ (Walmart’s wholesale division) was holding ‘huge stocks’,
and ‘pushing up the prices’.
Two UPA government reports — of the Planning
Commission Working Group on Agriculture for the XI Plan (2007-2012), and the
19th report of the Standing Committee of Parliament on Food (2006-2007), to
Parliament — “themselves nail the lie that Walmart will link farm-gate to its
gate and make Indian farmers rich”.
There is then that absurd assumption that this
variety of capital inflow is the answer to our present trade and current account
deficits. First, this is neither true nor tenable. Secondly, whose
misgovernance/absence of governance has brought about this situation? Please do
not place all blame on the ‘global situation’ when you do not hesitate to pat
your back about crossing the 2008 fiscal obstacle course. “The trade account
deficit of about US$150 billion and the current account deficit exceeding 3 per
cent of GDP is very alarming and may lead to a balance of payments crisis of
much graver nature than the 1990 position”. It is this continuous pressure on
the “trade account and the sudden withdrawal of funds by FIIs from the stock
market that has weakened the Indian Rupee”, (Rs. 16 in 1991 to as low as Rs.50
per U.S. dollar) during the UPA-2’s Rule, resulting in a “devaluation of more
than 300 per cent”. (Thus becoming) one of “the major causes of imported
inflation in the country during the past two decades”. Should our domestic
savings, contributing almost 90 per cent of investments in the country, go down,
which without fiscal and monetary incentives could well happen, and should the
Investment to GDP ratio fall below 30 per cent, then surely we will revert to a
‘sub-Hindu rate’ of growth. That is why prime ministerial favours to foreign
investors and step-motherly treatment to our dear desi s is so difficult
to grasp.
Finally, a brief word about the totally wrong
phraseology, to which all have by now succumbed. The measures recently
undertaken are not in any sense ‘reforms’, and I am very glad our distinguished
Deputy Chairman of the Planning Commission has candidly and correctly said so.
These, at best, are ‘administrative’ measures which the government has now, with
much fanfare, announced. Misplaced again, for the first reform needed, the very
first is ‘reform of government’, and reforming governance is vital so that
corruption is minimised and efficiency in administration maximised. I am doing
what I promised my soldier colleague I would do. Are the knights of “El
ingenioso hidalgo …” listening?
(The writer is Member of Parliament.)
The U.S. experience proves
that big retailers like Walmart are destructive for the community and will not
generate the benefits that India has been
promised
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