The stock market and large sections of the media have reacted with predictable euphoria to last week’s bold economic announcements, hoping that the latest reform measures will revive the ‘animal spirits’ of entrepreneurs and reverse the slowdown in growth. There is no doubt that Prime Minister Manmohan Singh is telling global investors he is willing to take decisive action on contentious economic issues. As policy, however, the individual announcements do not amount to much on the macroeconomic plane. For instance, the stiff hike in the retail prices of diesel will inflict severe pain on the economy by driving up inflation, which is already at unacceptably high levels. Households will have to bear the burden of higher fuel charges and prices for other goods. Of course, the justification for the fuel hike is that it will, to an extent, rein in subsidies and help repair government finances. But this kind of shock therapy is not the most effective or rational way of sorting out the fisc, or indeed the financial health of the oil-marketing companies.
Despite widespread opposition, the government has permitted foreign direct investment in multi-brand retail, subject to a cap of 51 per cent on the share of foreign equity. Companies like Walmart and countries like the United States have lobbied aggressively for the doors of the Indian retail sector to be thrown open. By including this policy in the recent slew of liberalisation measures — even at the risk of losing some of its political legitimacy — the Congress is sending a message to international capital. However, since India’s quasi-federal structure complicates matters, the decision on whether to actually allow FDI in retail has been left to the State governments. As expected, many State governments have already said they have no intention of permitting FDI into this sector. Thus, signalling the commitment to reform seems more important than actually ensuring FDI entry into retail. The assumption seems to be that foreign investors would still respond positively, contributing to growth in output and employment somewhere, even if not in retail. However, growth has fallen and organised sector employment stagnated even though most areas are already open to foreign investors. The government’s optimism is, therefore, clearly misplaced.
Even within the retail trade, the government’s claim that FDI is good for the nation is difficult to defend. The success of large retail cannot be based only on the expansion of the retail space, but requires acquiring a share of the existing space occupied by small retailers. NSSO data for 2009-10 indicate that the occupational category consisting largely of the wholesale and retail trade employed 44 million Indians. The displacement of a substantial number of these workers is inevitable. Since the economies of scale and scope that size delivers in organised retailing are expected to reduce costs by raising labour productivity, the expansion of large retail will not compensate for this employment loss. Further, once cost reduction leads to displacement of traditional retailers, big players dominating the space would be in a position to increase retail margins, with implications for prices paid by consumers. Finally, cost reduction is ensured at the expense of the producers as well. When a few buyers dominate the retail trade, the prices paid to competing small suppliers, especially in agriculture, are depressed. The margin above production costs implicit in the retail price shifts in favour of the retailers at the expense of producers and consumers. Of course, such adverse outcomes would follow from increased domestic investment in organised retail as well. But the entry of foreign firms with deep pockets would hasten the rise to dominance of large retail and amplify the adverse consequences.
Turning to the other big headline, the decision to permit foreign airlines to take a 49 per cent stake in a domestic carrier may not benefit those who need such investment the most. Investment in tottering airlines can come only on very onerous terms to existing shareholders or, as was seen during the early days of private airlines in India, from murky sources. Whether in airlines or retail, then, the expectation of large, stable dollar inflows through foreign direct investment in these sectors may not materialise fast enough to make a difference to the economy’s near- or even medium-term growth prospects. It is evident, therefore, that the immediate hopes of the government are being pinned on the renewed push towards public sector disinvestment. The Congress is hoping that the sale of PSU shares will bring in revenue, boost the equity market and signal ‘reform’ to a corporate sector whose faith in the party is slowly flagging. Here too, the danger is that bright and cheerful signals may not be enough to turn things around. What the economy needs today is not the red herring of reform in retail but actual economic governance on the ground. Poor roads and ports and erratic power supply hurt the competitiveness of Indian manufacturing and are the main reason why the sector has slowed down. The ability for companies to earn easy resource rents from spectrum, gas, coal and iron ore is another. Tackling these problems requires strong, decisive leadership; unless the UPA is prepared to provide some, the applause it is getting from the investor community today will not add up to anything durable.
Keywords: FDI in retail, multi-brand retail, UPA government, India retail sector
It is claimed(elsewhere) by many that we have severe deficit of reserves and that credit companies are going to down our ranking to junk which will further cause inflation and hence it is important to let in FDI in retail. I have a simple question to this , if this is the case, had the coal, 2g and several other autions been proper would this have not more than companseted for the deficit ? Why should people on retail who are goign to lose their job , should pay for the mistakes commited by government?
It is an over-hyped reponse by the stock market. Who will implement the new measures relating to FDI in multi-brand retail? Almost all non- congress-ruled states will not implement. These states include many populous states such as U.P., M.P., Bihar, West Bengal, Tamil Nadu and Karnataka. Thus population-wise, more than half of India is out of it. If we consider major cities of India, Kolkata, Chennai, Ahmedabad, Bengluru are not likely implement. This leaves out cities such as Delhi, Mumbai, Hyderabad. Further, this may throw out organizational issues. A company which can operate in Delhi will not be able to do it in Noida. Why would any big-bang investment will come? The Congress wants to somehow wriggle out of the Coalgate imbroglio and is thus creating an over-hyped scenario, let us not get misled by it.
Anguish and not exuberance will be the more logical response to the desperate manouvering
by the captain of the sinking ship, that is the UPA government, to save his reputation as an
economic reformer before the ship goes under.
The capital cost and the cost of raw materials and other inputs continuously rising and the
buying power of consumers steadily reducing because of the steadily rising inflation,
manufacturing and real estate sectors are not likely to see any appreciable growth. In a
situation like that, can the growth of the retail sector make any difference to the growth
prospects of the economy as a whole? Definitely it will not. It is difficult to believe that our
economist Prime Minister does not know this. Then why is he staking the life of his
government to get Wall Mart stores opened all over the place?
The reason the Indian economy has been resilient for thousands of years is because it is self-organized, sustainable and decentralized. India has the largest number of small businesses that the elitists like to term "unorganized" sector - but that is the core of our stability. There are no companies that are "too-big-to-fail" and hardly only a handful that are foreign controlled. Yes the retail sector has issues but FDI is not going to resolve them; sane govt policies will. Wastage for instance is far lesser with local production and distribution. Farmers need to be subsidized and farming needs to be encouraged. With the influx of foreign retailers Indian culture, food-supply, food-security and self-reliance is under threat.
Off track! The diesel price moving up is not justifiable as a large portion of it is used by the already-stressed farmers. But it is definitely justifiable if we see the gap between the prices of diesel and petrol. So, Govt needs just to devise a mechanism to regulate diesel distribution at two prices - one for farmers and the other for the rest. FDI in retail is justified, as the current retailers with their predating middlemen have pushed the prices beyond reach and exploited the farmers. It was not justified when the prices were within reach. Proposed formula for cooking gas too is OK. But it would have been better to identify the low-income houses and continue giving them upto 12 cylinders at subsidised rate. Current cooking gas subsidised rate itself is not low.
Bringing FDI in multibrand retail will suck the potential of the local players .Now the middlemen with a very high motive intervene in the market and bring huge differences in pricing policies prevailing in the market.The other thing that it will not invite job opportunity rather than eat up the labor market with an intention of profit.So,it is immature and blind notion to adjust with the system despite questioning it.
The government before ratifying any such move must conduct multimodal study to understand the stance of the Indian public in multibrand retail.Easing of diesel prices via subsidies would be a relieve to a limited population ,but bringing changes in social indicator will not only boost social development vis a vis economic development also .
The decision to allow 51 percent FDI in multi-brand retail is interpreted by some as a major signal from the government of its intention to go ahead with key reforms negating an image of policy paralysis, many others have construed it as step towards economic dependence and serfdom, besides ruining millions of retail vendors. The decision has created a stand-off between the Congress Party on one side and its allies and the opposition on the other side. Many believe that the government has succumbed to pressure exerted by the Western governments and lobbying by the multinational corporations. The traders associations say that bringing FDI in multi-brand retail in India is “akin to bringing back the East India Company under a different name.” Moreover, the general feeling is that government has succumbed to lobbying by multinational retail giants. Others feel that it is a clever move to sidetrack the scams and scandals, especially coal-gate.
_________
The Emperor is naked... many congratulations for seeing through the sham that is being
woven by a cornered government, which has few options to address the problems foisted
upon it by a one-track political party. Once the euphoria of the Emperor's new clothes has
died down, we will once again confront the realities of spiraling fiscal and current account
deficits, runaway inflation, a banking sector weighed by non-performing assets, the absence
of any clarity on critical issues such as energy availability and infrastructure investments,
GDP growth that can only be described as recessionary, ... not to mention the really
fundamental problems of this country such as over-population, sustainable food security, a
fractured polity, attempts to dismantle critical institutions such as the CAG et al.
We seem to be hurtling down the path of self destruction as a country and need responsible
voices such as this newspaper to act as our collective conscience. Keep it up!
There is threat from FDI for small retailers but changing circumstances require innovative solutions. Exuberance may be irrational but so is fear associated with new circumstances. Why cannot small retailers join their forces? Why 4-5 retailers or more can not pool their resources and start attacking the new environment. The situation may be difficult but that shouldnt stop us from trying. Indian retailers have better knowledge of market than any foreigner. They wont have to work under binding conditions that a big MNC will have to face. Threat may be there but opportunities can be found out. Who knows how many Walmarts are there in indian market? Doubting Indian enterpreneurship will be wrong at such a critical juncture.
India is one of the largest producer of food, fruits and vegetables. We have a huge
scope for export. Why don't we look more opportunities opening with FDI? We have
tried everything else that has not worked.
Indian government succumb to US pressure and introduced FDI in various sectors assuming that it will give a fillip to the already downgrading Indian economy but the move was suicidal for the middle class.Even though the markets will be flooded with more items to choose from but lesser players in retail market will burden them more thereby making deeper holes in their pockets.But looking at the brighter side of the story,it was an inevitable step and will boost the economy thus creating more jobs for an ever increasing number of graduates graduating every year.The picture is rosy and loomy both,for it depends on a person's perspective as to how he or she takes this bold move from Indian government.
I think the decision taken to allow FDI in MB retail is welcoming move
at the juncture of such a global crisis which spread like contagion in
India too. This will surely help govt.to tackle fiscal deficit problem
and in turn with increased forex help in improving it's credit rating
leading to easy credit available for indian cos. in global market as
well as investor's confidence will be boosted.Though every policy has
some negative implications it need to be factored out on the basis of
resucitation it provides to our ailing economy.surely,it's not a
panacea but badly needed at the moment.The inflow of expertise in
reatil chain management and backend infra development of such like
wall mart, tesco will benefit the people as a whole as wastage due to
storage inacapabilities can be weeded out.The middlemen's profit can
be eliminated and this money can be poured into an organised
workforce,alongwith profit earned by efficiency and better management
can be hoped to trickle down to farmers.
I think the mention of applause from the investor community for UPAs action of rather in-actions is not required as they have not really managed or contributed anything related to making investment in the economy feasible. Rather with muddled and policy being questioned by public and courts and CAG has rather left investors aghast - who first paid under table to get the false approvals in order and then were kicked out by the same corrupt class (off-course due to strong pressure from public). Leadership requires strong self-belief, however when intention is to subvert the rules for a chosen few then one cannot expect thing like Leadership and Progress.
Most discussions of "FDI in retail", including this one in The Hindu, miss the main point, probably the ONLY point: the objection is not to big business houses entering the retail trade, but to FOREIGN investors, especially rapacious ones like Walmart. There is every possibility that they will play the game of "bait and switch", and the initial euphoria will ultimately end up by our becoming a Walmart colony. It can be a repetition of the East India Company.
There is simply no depth in the analysis. No understanding of how the price paid by a consumer is shared across the value chain and how much is contributed by wastage, pilferage etc.
I WISH Hindu does a meaningful analysis before writing such rubbsh.
The term 'irrational exuberance' correctly describes what is happening in the markets right now. Clearly, the UPA government was slowly being asphyxiated by its lack of direction and meaningful reforms. The FDI in retail is certain to harm us in the long run ( bigger is not necessarily better). FDI in power, ports, roads, water etc. are what should be occupying ur PM's mind. Unless sweeping changes are made on these fronts' India cannot hope to progress.
By opeining up the retail sector, the UPA is hoping to create nothing but smoke screen and give the 'right signals' to the Western powers that they seek to appease.!
The public will given them a resounding reply in 2014.
I do not understand how the large scale food wastage will be wiped out, if FDI in retail is allowed. The food grains are wasted by the Govt and FCI having inadequate storage. Were you all thinking that the wastage is in your local kirana shops.
Do you think, with the onset of FDI in retail, the Govt will close the FCI and privatise it to Walmart or someone. If not, the thought that wastage would be avoided is irrational. Secondly, the Govt is hand in glove with the middleman and hence it will not allow the foodgrains to come into the market because then the prices will nosedive and the "so called" economic growth story will go burst.
It is not the point whether FDI is good or bad . In any condition, with the totally corrupt Politicians and bureaucrats, the greedy and opportunistic crony capitalists and traders the poor and middle class will always suffer , either with Indian exploiters or later with the collaborative foreign and indian exploiters. Unless the total system is purged and honesty and sincereity are brought in among all, the Indian nation and the Inidan people will continue to suffer and pay for the exploitation by the combines.
The stock market is only one indicator of the state of the economy and one of the
most fickle one at that.
Moreover, we always have to ask ourselves which economy the stock market is
aligned to. There's the primary economy (good/services), the secondary
(stocks/bonds), the tertiary (CDS, financial market).
Unless the primary economy is doing well, there is no point in being euphoric.
However, the primary economy moves slowly and does not generate spectacular
fireworks on the stock market on a daily basis. If it does well, then more jobs,
more purchasing power and more tax revenue are generated. Everything else is
financial spam!
We have seen how the stocks in the EU and the US have gone up and down the last
few years with no real change in the health of the real economies (jobs). It would
be wiser for the media to realize this and tone down the reporting on the stock
markets.
Does this author understand basic economics? There is a very inefficient food distribution problem in India with close to 40% of produce rotting due to poor refrigeration and storage techniques. Allowing FDI will result in more efficient infrastructure with both farmers and consumers gaining (lower prices to consumers and higher produce prices to farmers). Only inefficient middle men will lose out. Also, many states have expressed a clear preference for allowing FDI in retail. These are states like Gujarat and Tamil Nadu which are growing at 9% GDP rates, clearly indicating that free market capitalism is working well in those states.
It is good to see that the Government is waking up from a prolonged policy paralysis even if it looks like America has got what it has been pushing for . FDI in retail should not be seen as evil . We should have faith in our competitiveness of our establishments against giants like Walmart .
I have been expecting this kind of reaction from centre-leftist newspaper like The Hindu. The editorial gives an impression that everything is working well with the present system and there is no need for any change. It seems to be advocating the status quo in wholesale retail and FDI restrictions by foreign carries in civil aviation. Instead of bashing the reform measures taken by the government, The Hindu would have done great service if it had outlined its solutions to the problem of persistent food inflation, rising air fares, fiscal imbalances etc..,
It has been pointed out the real problem for the slowdown lies in lack of or inadequate investment in infrastructure. According to one estimate, India requires $1 trillion of investment in the infrasturcture alone. Where do you think such massive investments are going to come from? It is time we shed our conservative, statusquoist attitude and take a few calibrated, bold and decisive actions even if it meant taking some risk..
As a student of economics, the arguments do not make sense to me. a) Increase in diesel prices would increase inflation indicators in short term but actually decrease them further down as the burden for payment goes to those who are actually using the resource. Government resources can be more advantageously employed in building roads, ports, urban and rural infrastructure rather than paying for diesel that people use (including owners of cars). b) India's main advantages are in lower labour cost - competetiveness of supply through FDI (not just in retail) would mean a boost to Indian exports which may help the economy in a lot of ways. c) The fears of multi-brand retail may be misplaced. I don't see FDI in single brand retail doing much to decrease employment. Even today multibrand retail operates with presence of almost every major Indian company - Bharti, Reliance, Big Bazaar, Tatas. These are the firms that should be scared of FDI in multibrand retail, not the local kiranawalas IMO
I am a layman and my thinking does not go beyond the
following. Saleable goods are produced in our country
and not in foreign countries; there are thousands of
native people to buy and sell these products in our
traditional way. This kind of business did not cause great
inconvenience to us for hundreds of years. What is the
sanctity of permitting FDI and that too the cap being
insidious 51%. Hopefully our business community will
not be idle until this policy is retracted. It would do well
to remember that our country was enslaved only by those
who sneaked into our country as East India Trading
Company. Let us not forget that eternal vigilance is the
price of freedom.
What do we expect of this incumbent Govt. when prodded by the current Secretary of State ? How many of us know that Hillary Clinton served as a Director in Walmart for 6 long years ? Her 'lien' in the company's interest has continued since then. Wikipedia describes her as being "silent about the company's famously anti-labor union practices". So what if Indian retail industry dies ? So what if unemployment increases? So what... so long as SMS can cling on to the chair? As usual the common man in the loser.
Atlast your paper realised what I have been writing to you in the last two months from USA. Today I am reading in US papers that both candidates for Presidency of USA. Romney and Obama are fighting over jobs lost to China in Auto parts mannufacturing which has come down by 50 per cent in 10 years and China is subsidising Auto exports while levying heavy duties on imported cars to protect local companies. This they say is against WTO mandates. Same will happen there in India with more than 50 per cent of goods sold by Walmart etc will be from China creating atleast 2 crore unemployed in India and UPA government or its succesor in 2014 will face the music but Manmohan and Anand Sarma will not be there at helm and that Govt will not be as tough as US to even think of taking action.
1) Is calling for Foreign Investments the only way to sustain and uplift an ailing sector ?
On One hand corporate giants from India invest in Countries like Sri Lanka, Mynmar , Africa's , on other hand we are looking upto giants from other countries to invest in our own lands.
I think government should promote our own Corporates to enter into our retail market. This would ensure that the big margin profits of such companies remains in India only.
2) Secondly, such Indian corportates should be given go ahead licence only after they have fulfilled some basic pre requisites like investing in Efficient cold storage , which would benifit the farmers.
Unless they do for the farmers and small scale manufactures, such government policy may not receive the required public support.
3) Also, Any sort of monopoly should be avoided.
Excessive dependency on Foregin companies is only going to weaken our spirit of self reliance.
The editorial of the Hindu dated 17th sept
2012,has impartially analysed the good and bad side of the economic
reforms and what is lacking and needs to be done to sustain growth .
Reform steps in peace meal will not have quick impact on the
economy.Even when Government is allowing FDI in whole sale and retail,
it will have serious consequences and results in dislocation of small
retailers who cannot compete with gaints like Walnut of USA and
another side of the economy will suffer.UPA government is now under
threat from its coalition partners as major partners are in
disagreement with the opening of retal business to foreign companies.
After a long slumber, UPA II is rising up to show its existence in the
area of economic reforms.Without alternative arrangements for small
retail sector operating in India now, drastic changes like the one
announced looks unacceptable to many political parties. Let us wait
and see.
@Ashu..While only future can tell whether this move of the govt. is right or wrong, but your comment "Not to worry, patriotic Indians will destroy their property and assault their staff, so they will soon pack up and leave. This will send an important message to the world." was childish. What if similar "patriotic" Americans decide to attack our techies in U.S.?
I don't know on what ground writer is making these claims..these all things may be
right in short term...but in order to have long term growth and higher level of output
a country have to invest in improving its productivity...wish writer would have taken
a refresher in Economic 101 before making such ungrounded claims!
yes....Manmohanji did it again......not for Indians but for Americans...first he pursued the Nuclear Deal for Mr.Bush and now opened the retail sector for FDI....
[Companies like Walmart and countries like the United States have lobbied aggressively for the doors of the Indian retail sector to be thrown open.] Not to worry, patriotic Indians will destroy their property and assault their staff, so they will soon pack up and leave. This will send an important message to the world.
I congratulate you on your excellent article. There is too much hype over multi-brand retail FDI - help farmers get a great price, reduce wastage, give consumers low price and wide choice, build supply chains, pay taxes and still earn a solid ROI. Walmarts or Tescos have not been an unmixed blessing anywhere. Retail FDI though can still have enough reach even if states like Gujarat, Karnataka, Tamil Nadu, Punjab, UP, W. Bengal stay out. A small fraction of such retail stores' turnover comes from fresh or processed grains,furits and vegetables, when compared to personal care products, electronics and garments. You should also comment on the loss of food diversity. It is already clear that the high real estate prices around rich buying centres will limit the size of the outlets well below the US levels.
The other reforms are of lesser significance; in any case, how is disinvestment of some PSUs is anything but a budget balancing act to look good before foreign investors and S&P.
one of the greatest editorials of The Hindu and this should clear many confused minds .
Your Editorial “Irrational exuberance” has rightly assessed the
scenario and has expressed in unambiguous terms that “The
government’s optimism is, therefore, clearly misplaced.”
The assessment by the foreign media as “Underachiever” and now to
'tragic figure' has already eroded the well-cultivated international
image as the “reformer” Prime Minister. Sri. Manmohan Singh.
Probably, to overcome this and also to please the pressurising
foreign countries, investment in retail sector and entry into
aviation sector are declared exuberantly, against stiff and genuine
opposition from all around, including some Congress Chief Ministers.
It is the considered view of the “aam aadmi” that both the Prime
minister as well as the Dy. Chairman, Planning commission, review
and reserve the decisions.
As rightly said poor roads,ports and erratic power supply greatly
affect the competitiveness of Indian manufacturing.These sectors
require massive investments in terms of money and material.The central
and state governments are interested only in taking political
decisions for their survival unmindful of economic consequences of
development in the long run.Much of the revenue they earn is spent on
undesirable subsidies which are pocketed elsewhere and not enjoyed by
the target groups.In the end it is robbing Peter and paying Paul.
Neither the aam admi gets economic opportunities nor the country
develops. What the successive governments have failed to learn and
correct their planning has resulted in lopsided development ignoring
priority sector.Unless there is a political will and the governments
take stringent measures to prevent corruption and put an end to
drifting for political survival we cannot expect massive investments
forthcoming from any source.
Why is the government silent on the Tax Reforms ( GST) and bringing back the treasures
hidden in Swiss vaults or a major portion of which must have fled from Swiss banks to other
safer places in different corners of the world ? That money if got back into India can take
care of all our development needs, inflation,obviate the need to jacl up oil prices with
impunity at will, and above all wipe out the deficits in one go. Will the government take the
risk and show its animal spirit in this area?
FDI in retail is dangerous and should have been capped at 26%
instead of 51%.
1. Wall Mart likes will destroy / displace large number of small
shopkeepers and producers in unorganised sector.
2. These displaced people will have to seek work in Wall Mart like
as workers.
3. Wall Mart call its staff Associates and avoid paying all benefits
which Employment Laws provides.
4. Advanced country like Singapore has no Wall Mart and Carrefouir
is closing in December 2012.
5. Instead of allowing Wall Mart likes, government should invite
Indian companies to set up Wholesale facilities for Storage and
processing. Real retails should be left to Mom & Pop shops and small
vendors who can provide goods, credit and services without involving
expensive Technologies and hyper paid Executives.
The risk taking policy of the UPA government, in economic scenario
may be regretful for it in the near future.Time demands strong
economic administration by the UPA in the last 18 months before the
elections,BOTH FOR THE Indian economy and for the own interests of
the government.The UPA needs to have a far sighted policy for its
own interests in the future.
By allowing 51% FDI in retail sector ,after the diesel and LPG shock
to the country,it has actually created an all around commotion.The
foreign and economic policies of the UPA SHOULD primarily govern
the economic and foreign interests of India in the long run.
The article rightly pointed out there are no near term benefits. Hence, these reforms are not intended to benefit common man. But to appease foreign investors and domestic corporates. A good attempt to divert the attention of the people away from coal scam.
If FDI in retail increases efficiency at the expense of employment loss, it is a good thing. India needs efficiency. Computerization and Mechanization resulted in increase of efficiency. These people should be drawn towards manufacturing sector. It is expected that organized retail won't occupy more than 25 percent by the end of 2025.
If you visit a kirana shop especially in small cities and towns you may have seen that the shopkeeper charges more than the MRP and treats the customer with hate. There is choice for the people either to go to this shop or go to a big store if FDI is allowed. The Hindu please be pro people.
Regarding the fuel price hike the Govt should take off the subsidy and the taxes. They are putting tax in one end and subsidy on the other end which is a double game.
The irrational exuberance of Stock Market is momentary.
Any second, the political development ignited by the
immature steps will see a steep fall of the market.
The polices announced are a good start and that is why the markets are cheering. We
have to decide if we want to be a global player or we want to have leftist ideology
and not allow global competition. In every field, Indians have proven themselves to
be able to compete. Why are we concerned to open up? Outside India, Indians are
regarded as the best of the best. Indians head many Multinational organizations,
have created many companies. Yet, when in India we are not able to perform. Why?
It is decision time; either we continue down the path of appeasing the local
politicians whims and fancies or take a well informed risk and go global. Ask the
youth who are more than 50% of the population.
This government is trying to portray the traitors of the nation dealing with black money stashed in foreign lands into patriots!
It is surprising that a publication known for its well researched opinions should title the editorial "irrational exhuberance". It is a well known fact that economic governance needs to be addressed seriously in the country. However given systemic malaise of speculative investments in resources likely to provide windfalls in future like real estate,coal,gold,shares etc. changes in the nation's psyche cannot be brought about overnight. Till the quality of governance improves should food grains,vegetables and fruits continue to rot? Should unscrupulous hoarders and traders continue to black market taking advantage of artificial shortages? should petty retailers continue to evade taxes with impunity? should petty traders continue to poison the health of the consumers at large with contaminated produce and expired goods stocks? Any attempt to introduce reforms in the economy always seem to invite parochial pessimistic and perverse reactions from those not holding the reins of power.
Excellent Piece!
Kudos to the Hindu for calling a spade a spade. This self-praise by the UPA is not going to befool the people of the country how this regime is handing over the nation to foreigners and domestic corporates to loot either through tax sops or FDI's. I have lived in the US for 9 years and have seen first hand how the big corporates have vanished the local economies and monoplized the market over time, leaving the consumers hopeless. I hope other media houses will take a tough stand against these policies rather than falling in line of these neo-libral policies. The common populace doesn't necessarily understand the details. The media has a much larger and important role to play to educate the layman. I hope good sense also prevails among the politicans and they think of national interests first instead of buckling to international pressures and lobbying.
Do you not see the contradiction in your arguments. First, you mention that inflation is at unacceptably high levels. A few paragraphs later, you say that organized retail will increase labor productivity and reduce inflation, but not compensate for employment losses. So high inflation is unacceptable but low inflation is also not acceptable either (because a couple of middlemen will lose out?) Organized retail has the most amazingly clear benefit of lower prices due to easing of supply side constraints. Do not make higher productivity/lower inflation seem like a bad thing to protect the employment of middlemen who make money off both the farmers and the consumers.
And u fail to recognize that there is a large scale wastage of food
and other products due to improper storage means. You fail to
understand that more efficient means will be introduced into the
market which will save and bring down the prices of commodities. This
article is so biased that it feels like Mamata Banerjee has herself
written it!!!
If u think the steps the PM has taken is wrong then what other steps
would have recommended. The hindu should not publish articles which
are purely accusatory in nature. They ought to ensure that u have
counter measures suggested as well. I would really like to know what u
would do in this failing economy. Communism has failed. You need to
understand that we cannot continue subsidizing commodites forever
while compromising on infra development. there will come a time when
we will run out of money. What do you have planned for then???
Please Email the Editor