Finally, the Central government has got approval from both Houses of Parliament for its policy to allow 51 percent FDI in retail. This success has come with the covert and overt support from the Samajwadi Party and the BSP. Despite opposing FDI in retail vehemently, SP and BSP staged walkout from Lok Sabha making it easier for the government to sail through the Lok Sabha and again in the Rajya Sabha, the BSP members voted in favour of the government to defeat the motion seeking rollback of the government’s decision to allow FDI in retail. Stands of the SP and the BSP have raised some important questions on the functioning of Parliamentary democracy in the country. Nothing can be stranger than a party’s decision to stage walkout from Parliament or deny to uses its vote against a government’s decision to which it was opposing tooth and nail in the public. Whatever might be the arguments of the SP and the BSP to justify their stands in the Parliament over FDI, but their role in the Houses has exposed their double standards.

BSP said that it staged walkout in the Lower House as it didn’t want to be seen backing BJP against the government and in the Upper House it backed the government in the name of protesting BJP’s remarks against it. Nobody would agree with the logics put by the BSP that it would have been seen backing the BJP in the Parliament, had it supported opposition’s motion on FDI. Similarly, the SP too will find it tough to convince the people that why it didn’t vote against FDI in retail which it termed as dangerous for farmers and small traders. Whatever the claims of the SP and the BSP may be, but their acts gave a message to the people that both the parties worked under government’s pressure. It is significant to note that both the parties have time and again been accusing the UPA government of being unsuccessful on all fronts. The two parties, which have always been found criticising the Congress, are supporting the Congress led UPA government at the Centre in the name of fending off communal forces from acquiring power. Now it sees that if they get a chance, they would not have any hesitation to join the UPA government.

Though, the government might have passed the hurdle in the Parliament by winning vote on FDI, its method to manage its victory in both Houses is being questioned widely. It is noteworthy that the government failed to garner even half the number of the total strength of Parliament over such a serious issue. Leader of Opposition in the Rajya Sabha, Arun Jaitley, underlined the fact that this decision is not going to make any immediate impact. Yes, it can be possible that after change of guard at the Centre, a fresh debate could take place over allowing FDI in retail. With allowing FDI, the Centre had made it clear that its implementation in the states will be a discretionary right of the state governments. States ruled by the opposition parties are already opposed to it and the NCP, which is sharing power in Maharashtra with the Congress, also seems to be against implementation in the state. Congress-led government in Kerala is also opposed to it. According to the government’s provisions, FDI in retail will be allowed in only those cities which have over one million population. In the wake of greater political discord over this issue and a condition of over one million population for its implementation in a city, it appears that it will hardly be implemented in 10-12 cities in the country. Clearly, the Centre’s claim of giving an impetus to the dithering economic growth with FDI in retail seems far from reality at present.

Among many views expressed during FDI debate in both houses of Parliament, the views expressed by Arun Jaitley appeared quite strong and logical whereas the views expressed from the government’s side sounded hollow. Jaitley was right with his arguments to reject the arguments that allowing entry of multi-national companies in retail sector is necessary for setting up cold-storage chain in the country. Actually, it would have been a welcome decision if the government had allowed FDI for setting up cold storages in the country. The claim that farmers will not be benefitted from the government’s decision in favour of FDI cannot be termed baseless. The fact that big companies earn benefit by purchasing cheaper stuffs cannot be overlooked. Arun Jaitley rightly said that the MNCs will begin acting like big stockiest at the end of the day.

To vindicate its decision on FDI, the government is putting arguments that this decision will greatly benefit the farmers but in reality, the foreign companies will allow storage of mere fruits, vegetables and pulses purchased from local farmers. These stuffs comprise a very small proportion of the stuffs which are sold by these big companies. Most of the stuffs found to be stored by the mega retailers are- readymade food products, cloths and household items- which are purchased at a very low price. These products will be imported at much cheaper prices by mega retailers which could ruin Indian producers. Indian entrepreneurs should take it as a challenge because such products are already being imported in the country and it is not necessary that only foreign companies which are allowed to invest in Indian retail sector can import cheaper goods. Indian players like Reliance, Tata, Biyani, Bharti and Birla are already engaged in retail sector which means these mega players are already doing the same thing which we expect the foreign companies to do. It means the claims that FDI in retail will hit small retailers hardly bear any significance. In fact, the small retailers will have to tackle similar challenges from both the domestic and foreign companies. When Reliance fresh was launched, it had to face vehement protests from small retailers and local wholesale dealers in states like Uttar Pradesh, Madhya Pradesh and Rajasthan. Such protests had also gained political support too after which Reliance fresh had shut down its business in some of the cities.

One cannot agree with the way the UPA government is trying to glorify its decision to allow FDI in retail. Truth is well known to senior leaders of UPA, but they are making a hype of their decisions to push economic reforms only to mislead the people. FDI in retail will yield a good result only when the foreign companies would agree to sell only those stuffs which are produced in India. For this, Indian entrepreneurs are also required to come forward and the government is expected to frame such policies which could ensure improvement in the quality of the products sold to the consumers. Goods produced in India cannot compete with the similar items produced in foreign countries in terms of price and quality. Indian industries are passing through a very tough phase. Whether it is the high interest-rates or is the long pending labour laws, the present regime’s policies are adding to the woes of the industries. After passing the hurdle in the in the Parliament, the Centre is required to seriously focus on the logics put forward by the opposition so that its commitment to dispel the negative impact of the entry of foreign companies could be fulfilled by improving the condition of infrastructure in the country as well as increasing the productivity of goods and services in the country.

(An original copy of the article published in Hindi on December 9, 2012 translated by the English Editorial. The author is Group Editor of Dainik Jagran)