The politics and economics of FDI !

The INC  would feel a sense of déjà vu because in its first term, the CPM pulled out over the nuclear deal issue and in its second term, the TMC is pulling out over the FDI issue. Both parties from West Bengal, a state which has not grown as well as other states (with Metros).

The big-ticket reforms by UPA 2 have taken everyone by surprise. The corporate world has welcomed the move, the so-called rating agency S and P has stopped short of downgrading India’s credit rating and the stock markets are on an upward movement. All the news channels are going crazy over the positive news as if a magic wand has been taken out by the government to spur India on its growth trajectory.

Somehow we are made to believe that when the corporate world is happy, everything is fine. There is a perception the world over that when stock markets jump, it is good news. There is no thought given to how does it impact the common man. Now I m not being a socialist. We saw it during the 'occupy' Wall street movement in the US. The markets show just the 'sentiment' not reality. The volatility in markets is considered as a positive virtue whereas for me it shows the frail nature of thinking of those involved in influencing the markets. How do the fundamentals of a company change every day?

Is there a thought given to how would FDI in retail help the farmer. Would the farmer directly be able to sell to the manufacturer of food products or sell it directly to the retail megamart. What are the resources to enable him to do that? We indirectly assume that these multinationals such as Walmart, Carrefour or Tesco would take care of the back end of the supply chain. There have been umpteen examples of companies failing when a business model which works in one country is applied in other country. Yet we believe Walmart will be successful in India. Yes, we would get more products from abroad and there would be reduction in prices but it is beneficial only to the middle class and upper class. Not to the producer i.e. the farmer.

There are insinuations that the government acted because there were criticisms in the western media. It may or may not be true. For the western world, FDI or FII in developing countries decides whether the country is moving in the right direction or not. Should we not think ourselves about our people? I may sound as protectionist and anti-globalisation but it isn’t the case.

Yes, our fiscal deficit is increasing with diesel subsidy. Why can we not increase taxes for companies say, for example, over USD 10 billion. If a company makes USD 100 million in profits taking USD 10 million as taxes doesn’t change much in its coffers except for the promoters stake.  We have a leading airline about to go bankrupt although its promoters own a multi-million dollar racing team, million dollar cricket team, owns yachts and flies only corporate jets. They hold the country to ransom since there is systemic risk of losing jobs, PSU banks losing money indirectly affecting the investors.

Politics is affecting the economy adversely. Awaiting the time when we would start thinking in a balanced way and move over materialism.