As a loyal NDA constituent, Shiromani Akali Dal may have voted for the Opposition motion in Lok Sabha against FDI in multi-brand retail. But an influential section of the party’s leadership and its rank and file has welcomed FDI in retail as a move that could potentially help transform the farming scene in the State. Those welcoming the move say FDI in retail could provide better returns including to small and marginal farmers, improve post-harvest storage facilities, and cut down on waste that plagues Punjab agriculture. While the leadership has tried to tone down the discordant voices within the organisation, the party may eventually evolve a nuanced and well thought out position on the issue given the State’s experience with FDI in wholesale.

Last November, breaking ranks with the NDA, Punjab’s Deputy Chief Minister Sukhbir Badal wrote to the then Union Commerce Minister Anand Sharma welcoming FDI in retail.

In the letter, Mr. Badal said: “We strongly believe that FDI in multi-brand retail will bring in the experience and resources of foreign retailers. A major beneficiary of back-end investment will be farmers who will gain substantially through agricultural best practices of international companies, thus improving quality and quantity of their yield and also get better remuneration.”

During the Lok Sabha debate on Wednesday, even as the party’s star MP from Bhatinda and Mr. Badal’s wife, Harsimrat Kaur, was putting up a spirited defence of the NDA position, Congress MPs disrupted her speech by referring to this letter.

Meanwhile, in an attempt to play down the divergence of views in the family and the party, Mr. Badal moderated his views last month, saying that his party would not have been averse to the policy if “stakeholders, including retailers and farmers, had been consulted by the Congress and their fears redressed, before clearing the new policy.”

Ever since the Centre announced its decision to implement 51% FDI a couple of months ago, discordant voices from the Akali camp, supporting the policy, have embarrassed the ruling SAD-BJP alliance, prompting the Akalis to initiate damage control. The junior Badal was only reflecting the support for FDI from the party’s farmer base, which is reeling under an agrarian crisis, when he welcomed the policy.

The most influential voice that backed his stand was that of Ajmer Singh Lakhowal, the president of a major faction of the Bhartiya Kisan Union who is also the chairman of the Punjab Mandi Board. In media interviews, he had said, “Punjab should not miss the opportunity provided by FDI in retail as the State lacks post-harvest facilities and a food processing industry. Nearly 35% of what Punjab produces goes waste. If farmers can get better prices and consumers cheaper food, why should an agrarian State like Punjab not avail the opportunity?”

Despite the stated position on FDI` in retail, the State government has amended the Agricultural Produce Marketing Act that promotes contract farming and provides for setting up private wholesale markets. Partly due to this legislation, the total FDI flow to the Chandigarh region comprising Punjab, Haryana and Himachal Pradesh recorded an 85 percent growth in 2011, reaching $416 million. Punjab alone now accounts for one third of Walmart’s business set up in collaboration with Bharti Retail. Punjab has at least six of the 15 outlets of another global retail chain, Metro, which has entered the wholesale sector.

Anecdotal feedback from the procurement locations has been positive to the entry of private wholesale firms with FDI. Supporting private investment, the State Farmer’s Commission, advised the government in a report last year to “attract large public or private investments to develop post harvest and cold chain infrastructure as well as promote high-tech, professionally managed and business-oriented markets. This will not only augment the farmers’ income but also facilitate in diversification of agriculture by replacing the wheat-paddy cycle that had led to grim environmental issues as well.”

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