Foreign Direct Investment (FDI) – A Necessity in India !!

There are arguments and counter-arguments on FDI or Foreign Direct Investment in India in the Parliament, in election rallies, in TV-debates, in newspaper articles, in general strikes in the country or Bharat Bandhs… There are obvious fears by the farmers, retailers, small-scale manufacturers, and the common man on the effect of FDI in India. Some say that FDI in India will bring major Multi National Companies (MNCs) in India which will abolish small-scale retailers and businessman. There are arguments saying that the MNCs will have a monopoly in the market resulting in a sharp rise in price of items in India. Further, there is also a fear that the country’s security – both internal and external, will be at stake due to the involvement of MNCs in Telecom, Internet, Aviation, Infrastructure, Retail, Healthcare, Insurance, etc.

Not that all the above arguments against FDI are invalid. However, with a positive mindset, we can certainly overcome such apprehensions. This can certainly be done by bringing reforms in our Judicial system, and by resetting a stronger regulator like the Competition Commission in the line of Election Commission of India or Auditor General of India. Moreover, Vigilance Commission has to be more responsive and aggressive in its activities. Along with these, the concept of Lokpal needs to be operational in India and the nature of functioning of the Central Bureau of Investigation (CBI) needs to be completely autonomous in this regard. And of course, the public (consumers) must be aware, prompt and pursuant with regard to issues and their solutions ! With a proper check-and-balance policy implemented, we can  certainly reap benefits from FDI in India. In the current economic scenario – stiff rise in corruption, lack of accountability and transparency – FDI seems to be the right answer and is a dire necessity in India.

Here are some reasons favouring FDI in India…

It is really surprising to know that only 2-3% Indians pay Income tax. Does this figure say that the income of 97-98% Indians are less than the taxable limit (INR 2 Lakh/year) ?? A serious doubt. There are many reasons to it. The first and foremost is the lack of transparency and lack of accountability in our financial transactions – be it in income or expenditure. People prefer cash transaction over card or cheque while buying any item in India. Starting from a kirana shop (local general store) to a jewellery shop, everybody prefers cash transaction and giving and taking a bill /receipt is mostly discouraged. Some feel it is a taboo to ask for a bill, and some think ‘why to pay tax and take a bill’ ? But have you ever wondered that in not asking for a bill /receipt, who is getting benefited – the customers or the aamjunta ?!? ‘No’ – they are the losers only !!!

With direct and organized marketing which will mainly result out of FDI, the financial transactions will be mostly transparent and will be accounted for. Payments will be mostly in online mode. This will not only improve the tax scenario in India but also curtail huge corruption in India. Poor customers will not be cheated… and even if they are cheated, with a valid bill /receipt, necessary complaints can be conveniently filed in the Consumer Court. The investigation process will also become  easy and quick as everything would be duly accounted.

In India, we have the wide concept of “Middle-Man” or “Agent” or “Broker”, who always demands his/her share in every deal; sometimes even more than the actual cost of the product or service, without actually doing any thing or adding any value to it. The concept of direct marketing is hardly available in India, especially in Agriculture, Medicine, Grocery and Household items, etc. Surprisingly, there are many middle-men involved in the process – from the farmer to the consumer, from the factory-worker to the customer, from the laboratory-technician to the patient, and from the poor manufacturer (workmen) to the average consumers. This not only increases the price of the items but also encourages hoarding, corruption, unethical practices in business, unfair trade dealings, and above all the big bug i.e. inflation.

As per a study commissioned by the World Bank, farmers in India hardly get anything more than 12-15% of the price consumers pay at the retail outlet for Agricultural products. The reasons being –  (i) lack of education or awareness (ii) poor infrastructure (machinery) (iii) poor storage system (more than 25% food-grains are wasted in India today due to poor storage system) (iv) poor transport (e.g. non-urbanized roads leading from the agricultural fields to the towns) (v) middle-man (market-domination). With direct marketing as expected because of FDI in agriculture, the involvement of middle-man will be minimized in the process. Both the farmer and the consumer will be benefited largely – quantitatively and qualitatively. Direct sell by the farmers to organized retailers can render them a profit about 60% higher than that via ‘mandi‘ (a big un-organized wholesale /retail market in India) or the middle-man ! This will also check inflation of food items. Moreover, FDI will also ensure adequate storage facilities for food items, improve infrastructure scientifically and transportation facilities.

Like Agriculture, Retailing in India also requires FDI and organized marketing. The quality of the products will be improved and at the same time the price of the retail items will reduce severely. Moreover, it will also generate employment in India. With India’s traditional family system, culture, population and needs, the small retailers will also remain fully functional… but with enhanced accountability – in services and products. It will create a healthy atmosphere for a sustained competitive market.

Other than Agriculture and Retail, FDI will also benefit India to improve its Telecom penetration, Internet affordability, etc. At present, Broadband Services are mainly available in cities only. With better infrastructure and technology, it can be expanded to villages or rural areas at a lesser cost. Growth of Telecom and Internet in India will lead to better Governance, Healthcare, Insurance, Education, etc. This will ensure more and more participation of the common man in day-to-day services or the Public Services of the government. All services can be improved and a better lifestyle can be provided to the common man.

With FDI in Healthcare and Insurance, better care facilities can be provided at a lesser cost in the villages and expert advices can also be effectively delivered through e-health programs. Cost of Medicines will also come down drastically, if the system of generic medicines is adopted in India. In any case, with no middle-man involved, the prices of medicines can be brought down at least by 15-20%. Awareness for insurance schemes – be it life insurance or crop insurance or health insurance – will also greatly benefit the people in general.

What we need is very simple – accountable and transparent services at a better price with growth-oriented policies; create more jobs and provide better services. Political parties – ruling or opposition – must explore maturity levels in understanding the various issues by discussing and debating these in the Parliament, and not on the streets and election rallies ! Nation-wide or state-level strikes must be discouraged outrightly as these activities often spread the wrong message to the unaware folks. Parliament can introduce or change Laws and Institutions such that things can be improved to a larger extent in the interest of the common man.

Many may differ regarding the implementation, policy and the limits of FDI in various sectors. But if FDI brings organized market, with accountability and transparency, then it should be definitely welcomed in India, without any politics.

Recently (May,2013), the Supreme Court of India has aptly remarked that ‘Consumer is King‘ !!!

So, let the consumer decide…

Aamjunta – what do you say ?

Yes to Telangana – Opening of the Pandora’s Box or another European Union !!

With the formation of 29th state of India – “Telangana” (carved out of 10 districts of earlier Andhra Pradesh, with some decisions pending regarding allocation of 2 more districts and the status of Hyderabad)… the political parties, the intellectuals, the political commentators are making calculated comments. Though there is a sense of pride and victory by some people of Telangana, the general mood of the people of remaining Andhra Pradesh (AP) and people of other parts of India is not happy about the way this particular issue was handled and the states are being created. One simple question always arises time and again – on what basis new states are being created in India – on political ground or, on language or, on religion or, on ethnicity or, on some growth-model or, on some kind of compulsion ?

It is certain that the creation of Telangana is more due to political reasons than that of administrative or governance or people centric ones. With 2014 General Election in mind, the UPA-II government in general, and the Congress in particular, have played a game to win more seats in both Andhra Pradesh and Telangana, to counter the growing popularity of YSR-Congress and/or to take Telangana Rashtra Samithi (TRS) into their coalition. This political will is yet to be ratified by the people in 2014 – time will be the best judge of course !!

Though it is being argued by TRS (in particular) that the creation of Telangana is to handle the (under) development of that region, it is not difficult to understand the political motives of TRS leaders. It is certainly a mix equation of power – hunger of power and abuse of power; hunger of power is more destructive than the the abuse of power though.  This also results in mistrust between common citizens or aamjunta, business men, companies, politicians in various degrees. The mistrust being created with the formation and demand of new states also have long lasting impact on the development of the states in particular and India as a whole nation. This is a very sensitive issue and needs to be handled carefully.

The impact of creation of Telangana is definitely not limited to Andhra Pradesh; its impact is being felt in Odisha in the form of Kosala, in Maharashtra in the form of Vidarbha, in Uttar Pradesh  in the form of Harit Pradesh, in central India in the form of Bundelkhand and in the East/North-East in the form of Gorkha Land… ! It may not stop there; it did not stop with Chhattisgarh, Jharkhand, Uttarakhand, Haryana, Goa before. The Pandora’s Box is opened now with many political compulsions, intentions and possibilities !!!

If we analyse the impact of creation of smaller states, we can certainly find two major points – (i) smaller states boost regional parties, which are definitely not a healthy sign for a democracy like India and (ii) smaller states bring political instability as in Jharkhand and Goa – 8 Chief Minsters in last 10 years (9  governments in last 13 years) in Jharkhand, and 14 governments in 15 years between 1990 and 2005 in Goa !! The instability can be frequently created by regional parties, especially in a coalition type of government.

Other than the above major points, smaller states give rise to intolerance, regionalism and selfish motives, which some times hinder the growth of India as a whole, and complicates the inter-state relations – water, mining, dams, power, etc. This also complicates the internal security as observed in New Delhi with many neighbours. Many fear that the anti-Maoist movement being carried out jointly by Odisha, Andhra Pradesh, Chhattishgarh, etc.  may also get diluted resulting in more and more kidnaps, bomb-blasts, killing and loots in different parts of the country.

Other than the above points, what bothers aamjunta is the possible political instability towards which India is heading with the current developments. It is almost certain that in the next General Election, no single political party will get simple majority at the centre; a coalition government led by Congress or a possible Third-Front government led by smaller parties are definitely not ruled out, and hence the fear of scams, corruptions, horse-trading will definitely rise. Even a possible BJP-led government at the centre will have many compulsions too ! Someone has rightly remarked – this will bring demons with crisis in democracy !!

The way we are creating smaller states with the above motives, an European Union model is not ruled out in India in the future – with one or two major partners (states) and many smaller partners (states) with political and financial instability.

Chanakya’s  (370–283 BC) “akhanda Bharat” (undivided India) is becoming “khanda Bharat” (divided India) !!

Aamjunta needs to awake, arise and take the centre-stage as a voter, implementer, jurist, businessman, student, teacher, social activist and others – for, by and of India.

Uttistha Bharata” (Arise India) !!!

Aamjunta – what do you say and how do you react ?

Jai Hind…

Another article on Regional Politics in India: Regional Political Parties – danger to Democracy and India?

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