Three cheers for Dr MMS! He’s been boxed in so badly so far with all the politics. But they say that the resolve of a quiet and decent man should never be underestimated. As British MP Iain Duncan Smith, a poor orator himself, once said “the quiet man is here to stay, and he’s turning up the volume”! And in the accompaniment of old buddy Chidambaram, the quiet man who is PM has shown his true mettle. The original architect of reforms has decided: enough is enough. Time magazine, Economist, and the whole slate of Indian media that has nagged him to no end better take note!
The cheer in the papers tells the real story. The stock markets tell it too. The story of huge excitement. It is a clear pointer to how wrong the opposition is in opposing economic reforms. It lends support to what I have always said: that Indians crave economic progress more than anything else. People want a better life. People want a better future. The one who reforms is the one they will vote to power. Indians can tolerate misgovernance, even corruption….but they will not tolerate economic slowdown. After more than a year and a half of Anna’s and Ramdev’s movements, after 2G and Coalgate and Adarsh and CWG, the public still considers an economic variable – inflation – to be the biggest problem facing the country. If reforms help curtail inflation, the Congress is back with a bang. If it continues to get bogged down for whatever reasons, its story is over.
Look also at who stands where on reforms. A politically motivated and ignorant media has forever berated the Congress and the PM for the stalled reforms. They have given the impression it is the Congress that doesn’t want reforms. If only they had chosen to see the picture correctly, they would have seen what’s going on here. For arraigned against the government is every single political party with very few exceptions. BJP, Left, Mamata Banerjee, JD(U), AIADMK, DMK, SP, BSP…..most of these are regional parties who don’t even have a national role to play. And yet they want to arrogate to themselves the power to take economic decisions on behalf of the country. The only parties which have a locus are the national parties – the BJP and the Left – and yet every regional party wants to express its unsolicited views!
The Left’s ideological reasons for opposing reforms are well understood. Just mention the word “America” and see their hackles go up. Left leaders are all very smart, very personable, very well educated and very well meaning….but they simply cannot adjust to the new reality. Their patrons in Russia and China have moved ahead by a few light years, but our Left leaders have stayed back in a bygone era. The only time the Left parties find America acceptable is when they have to send their children to study or work!
The BJP’s opposition to FDI in retail is nothing but opportunism. It also reflects the conundrum the party faces now that the Congress has thrown down the gauntlet. On the one hand, the BJP wants to be seen as a reformist party. It believes in FDI. It believes in economic liberalization. In its six years of rule, though it achieved very little, it did indicate its preference towards reforms. And yet, its dilemma on the retail FDI issue is there for all to see. Its core constituency – the urban baniya – is what it is beholden to. That’s the community it wants to protect when it opposes FDI in retail. For this, it is willing to forsake the good of the farmers and the urban middle class. The baniyas are the ones who pocket the huge margins between the farmer and the consumer. The baniya is the BJP’s moneybag….and the BJP is compelled to look at everything from that angle.
The BJP may want to understand the common man’s view on foreign retailers. Today’s TOI quotes a Mumbai resident in its article Consumers cheer FDI, traders protest: “It will come as a welcome relief from the adulteration, cheating tactics and rude behaviour perpetrated by local vendors. If I can walk into a store at any time, day or night, choose a good quality product, pay the right price and be treated well, what more can I ask,” said Kshama Mehta, a homemaker from Kandivli.” Is the BJP listening? The same article quotes the President of a trade association FAM (Federation of Associations of Maharashtra) Mohan Gurnani: “The government has sold national interest despite objection from opposition parties and traders.” What national interest, Mr. Gurnani? Its only your interest you are protecting. The BJP cares for the trader, not for the common man.
But what happens now in a state like Gujarat? The state is one of the most progressive states (no thanks to Modi) and almost every other Gujarati family has a relative or two in the US and UK (remember the Hotel, Motel and Patel stereotype?). Gujaratis love their shopping and they love their malls. Each of them has shopped extensively at the Walmarts and the Carrefours and come back with bagfuls of goodies. They know the price advantages, the variety of goods, the convenient interiors that the global retail chains offer. Is Modi going to tell his people: No, we will not have Walmart in Ahmedabad. If you want to shop at Walmart, go to Delhi or Mumbai. Modi is on a real slippery slope here!
Continuing on reforms, lets look at who is for reforms and who against. The Congress wants more FDI in banking, insurance and pension sectors. It wants more progressive labor laws; a more dynamic manufacturing sector. It wants liberal tax laws (remember the PM’s pioneering efforts?) and it is the one pushing for GST and the Direct Tax Code. It wants land reforms. It is the one that pushed for higher power generation; more infrastructure development (in the process it has got snared in Coalgate). It is the Congress that wisely decided to continue with cheap 2G spectrum (and it again got snared for petty reasons). Opposed to all this is primarily the BJP.
The BJP has learnt to speak with a forked tongue on every issue. It itself allotted coal blocks by an opaque process during its tenure. And yet it accuses the Congress of corruption when in fact, it was the PM who reformed the coal sector. Incidentally, of the first four mines canceled by the Inter Ministerial Group (IMG) yesteday, three were allotted during the NDA tenure. Was there not political favoritism shown there? The BJP gave away 2G spectrum cheap too, and yet it calls the Congress corrupt for continuing with that policy. And now the Congress has fallen into the trap. The high 2G reserve pricing is going to kill the sector. The BJP was in favor of FDI when it was in power; it opposes it now. It supports FDI in banking etc, but it holds itself back. It is in favor of GST, but it wont allow it to become a reality. It claims credit for having freed diesel pricing during its tenure, but it opposes a mere Rs 5 increase in diesel pricing. It complains about huge fiscal deficit, yet it opposes every effort of the government to bridge it. The BJP’s double talk is getting all too obvious now….its time the party focused on positive programs of its own rather than opposing someone else’s. We want an alternative ideology to the Congress, not merely an opposer of the Congress.
Every regional party wants to have a say on national matters. This is a new dimension to federalism that we have started seeing in recent years. A Mamata blocked the Teesta treaty with Bangladesh without even having the intellect to understand diplomatic issues. A Jayalalitha wants to operate her own foreign policy vis-à-vis Sri Lanka. Imagine if Punjab decides to have its own Pakistan policy, Bihar its Nepal policy and the North East, its own China policy. India would disintegrate in no time. But still, all these regional parties want to show how important they are. Anand Sharma said correctly: If a CM doesn’t want foreign retailers in his/her state, that’s fine. But how can he/she stop other CMs from their decision making?
I have argued several times in the past that the retail FDI is the big bold “come back” policy the Congress will deploy. My own estimate was that it would do it six months before the term of this Lok Sabha ended. It appears to have done it sooner. Or maybe, the term of the LS will end earlier than scheduled! The Congress is bound to play up the “farmers benefit” angle and why not. Various farmer associations have lent their support to retail FDI. Even the NDA ruled Punjab has supported FDI in retail. If the margins that the baniyas pocket reduce, the farmer is bound to get more. With more cold chains, the farmer gets protection against rotting. In reality, the baniya also has little to worry. He offers many advantages – personalized relationship; credit terms (at times), home delivery etc. The threat to a baniya comes in that his margins will reduce. No one is going to shut down – no one has after so many years of Indian large format retailers being around. But everyone is going to face a margin crunch. That’s how the urban middle class will benefit. People who shop at Big Bazaar express their surprise at how cheap the products are. The same will only become much more common now.
The urban middle class will see millions of jobs getting created. Young educated people will get gainful employment. Worldwide, the retail sector provides the highest employment in the economy. No surprises then why there is so much cheer all around. The BJP must understand this.
The real truth is that there is a new cheer amongst the common folks. Finally, there is progress. Finally, they can see their hopes of jobs reviving. Finally, they can see the good times returning. For the PM, this is the “nuclear deal” moment. In the weeks to come, he will have to sew up new political partnerships. And if he emerges successful, the Congress will have a real chance at winning 2014. If he fails, he will still have delivered the message: if you want progress, vote Congress!
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