The vote on FDI- the knaves have it!

The vote on FDI in retail in Parliament only showed us what we always knew – the knaves have it, the knaves have it!

By the time it went to vote in the Lok Sabha, it had become clear that the public discourse on the issue of FDI in multi-brand retail was compromised to such an extent that logic, facts and corresponding evidence would have no role left to play in the vote to follow. As events have played out before us, the issue has once again become an example of how democratic procedures and representation of people can be subverted even within the hallowed portals of the Parliament. The eventual arithmetic of the voting behaviour summed it up best – a win without the numbers.

Be that as it may, the vote showed up a fault line which is important to address in that a policy of national impact was carried essentially due to a regional, one-state party which was routed in its own bastion in the recent last elections. It is antagonistic to any idea of representation of people that a party discredited in its own state election is allowed to influence a policy matter of national import. Blame it on the overlapping timelines of elections in the country and the crying need for synchronizing state and national elections, the fact of the matter is that a party with no credibility in its own constituency, due to the limitations of Lok Sabha tenures, was instrumental in imposing a piece of legislation which had no sanction of the polity.

At another end, the Congress’s craven willingness to negotiate the criminal records of the BSP supremo in lieu of her support on the vote has to be a stark reminder of the depths of desperation this regime has reached. It is telling that at a time when the country is convulsed with corruption of such gargantuan proportions, the regime accused of it embarks on yet another dubious arrangement to bail out an accused in return for favour. The UPA has notched up a number of achievements for itself in the domain of corruptibility, but now it must be known not only as a willing partner in crime but an agency that excels in perpetuating it. In effect, it must be noted, the vote of FDI was won on the back of the desire of an accused to stay out of jail and the willingness of the Congress led UPA to provide the bond.

It was a matter of disappointment for all followers of the issue that the material of the discourse on FDI was progressively reduced to conjecture, claims, counter claims, hyperbole and plain lies. The argument for opening up the retail sector to large format international brands is weak on most fundamentals, and the reasons are many. The value of FDI investment is negligible in the scheme of things. The sector is uncritical. The promise of employment has been debunked. The figure of volume of loss in fruit and vegetable due to poor transportation and storage has been challenged. Besides, that would call for better transportation and storage by the state, not a third party private intervention. The theory of large scale improvement in back-end infrastructure was always a specious argument – a brand cannot be expected to improve back end infrastructure for the country, it would only serve itself. Large format retail is already in existence in the country and no perceptible improvement in back end infrastructure has occurred. Nobody is dying for access to soap and detergents. Prices cannot come down because they never do. Farmers won’t get better prices because volume buyers get lower prices, not higher. Sale of farm produce is a negligible percentage of a large format retail stores’ revenues.

From the point of national agricultural policy, however, large format stores have the diabolical capacity of altering crop patterns and consumption habits. For a country duelling with rising commodity prices, this is suicidal for the simple reason that when cereals and seasonal vegetable growing gives way to single crop contract farming, it has the potential of converting us from a net exporter of pulses to a net importer of essential food grains, in effect bartering our food security and ending up threatening the lives of those it set out to secure.

There has been much said about the impact on the manufacturing sector and cheap goods flooding the market. A Minister in the Government, who was given the charge of fending off the opposition with his rhetorical skills gaffed that IKEA, a beneficiary company of the new policy, would not buy wood from abroad for its furniture range little knowing that the company imported pre-fabs which used wood from cheaper sources. Similar nonsense was unleashed periodically upon us over the last six months and the absence of credible data and a friendly, invested media which played along disingenuously, made this one of the most poorly understood, or argued, subjects that went to vote.

Politics understands only the equation of balance of power. In that sense and in the sense of a corrosive eventuality, the UPA pulled it off. But the aftertaste is bitter. Gerrymandering a vote and crowing about it is one thing, but the manner of its execution has left nobody in doubt that the Congress did what it does best – use the resources that being in power puts at its disposal – and that includes the treasury, the security apparatus and indeed the judicial process – to manufacture a verdict that could not have been achieved otherwise.

While the debate on the issue was hard won and the loss of the vote was finally quire easily achieved, it has showed up the UPA in worse light that it would like to believe. That a doddering regime crawled before its UP allies to achieve this feat could not be a feather in anybody’s cap and while media is quick to sing paeans to the negotiating skills of the minister of parliamentary affairs, it would do well to remember that the skills involved in this case were more the kind a lout uses to bully or a hustler uses to ply.

The sense of this insult to the parliament and to the people will have a whiplash effect without a doubt. Contrary to the claims that this matter should not have been brought to vote or even to debate because an executive decision is the prerogative of the elected government, the exposition of this debate was vital to strike at the roots of the Congress’ personality and show it up for what it is. The vote went that extra mile to expose the ethical and numerical frailty of this government in its desperation to get this legislation through.

In either case, the UPA is left having to explain why it would risk a government for a paltry investment in a non-critical area of economic activity. While at it, it must also explain why it could not convince any opposition party of its good intentions. Just for that, it must be remembered that it was the Congress that lost and the Speaker would remember for a long time that, that night, contrary to the voice in her throat which said ‘the nays have it’, the voice in her head acknowledged that the Ayes had it.

This post has been reproduced as an op-ed in The Pioneer of Saturday,8th December, 2012

One Response to “The vote on FDI- the knaves have it!”
  1. Krishna says:

    Oh the Indian large format stores! They have absolutely no clue. I spoke to the operations head for one of them, he does not know how simple linear programming can be applied to optimize certain operations. Advanced technology? It’s better we not talk about it.

    Let me come from the opposite point of view. Why is it that there should even be a need for government to protect certain businesses and business models? Companies like Wal-mart have killed mom-and-pop stores. Amazon has killed the likes of Circuit City, while Best Buy and friends are on the brink. Why is that so? What is it that Amazon has and what is it that Circuit City does not? And did the US government go about protecting the likes of Circuit City and friends? No. Why should any government go about protecting any businesses or business models in the first place? If anything, governments should encourage such creative destruction. The job of the government is to put in place the necessary laws, enforcements, regulations, that nurtures a fair system open to innovation, ingenuity. That is it. It should not be the job of the government to regulate which business model is right and which is wrong. Let alone even debate about it. That’s best when left to the markets to decide. If capital is what is required to realize a certain business model, why should it be stopped? If somebody has the technology that can bring in efficiencies, by replacing existing models, why should he/she be deprived of the monetary benefits of such an innovation? TRAI is a case in point. Why is TRAI blocking VoIP based telephony, when it can benefit people at large. It is such protectionism in all areas that has left India backwards. Such protectionism only serves the entrenched players, fuels corruption and kills the spirit of innovation. And it is this last point that hurts the most when it comes to growth.

    Non-critical area of economic activity? Dude, please stop the rhetorical non-sense. Retail markets in India accounts for about 14.7% of GDP.

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