Arun Kumar’s ominous prediction of India’s future (“Reading the future in Mexico’s malls,” Dec. 8), in the context of the UPA government’s decision to open up the multi-brand retail sector to foreign direct investment, after travelling to Mexico is way off the mark. The article read like a travel memoir. I am sorry to say it did not help me one bit to understand why FDI will harm India.
If Mexico’s FDI policy is a big reason for its economic ills, could it also be the reason for its much higher wealth vis-à-vis India? Many Indians will actually be quite happy to trade places with Mexico given its much higher per capita income and the lower rates of street destitution — evident to a traveller. The unemployment rate the writer mentions for Mexico is something India has lived with for most of its history.
The economic situation of a country is the result of complex historical and social factors. Mexico has suffered a colonial history of violence and displacement, which is quite different from India. The writer has cherry-picked anecdotes and hearsay to weave together a narrative that is unconvincing.
I am not sure what India will look like after 20 years. But I can say with certainty that whatever the writer says will happen in 20 years is a reality even today. Take the time taken to cover a 20-minute distance. It takes hours to cover it during peak hours in Chennai. I don’t think other Indian metros are any better. The sight of young mall employees eating at pavement shops is common in Indian cities. No ordinary mall worker can afford to eat at KFC.
Coming to unemployment and low wages for educated youth, I will give myself as an example. As a dental graduate fresh out of college in 2005, I worked as a lecturer in a private college for Rs. 3,500 a month. A fresh postgraduate in the field is offered just Rs. 18,000 a month. The condition of engineers is no better. So, there is no need to wait for 20 years.
The analysis is impressionistic, based on nostalgia. The writer says, on the basis of his conversation with a few, that conditions are so bad in Mexico that many young people are leaving the country, and unemployment is a ghastly 5.2 per cent (a figure that would be celebrated anywhere in OECD today).
Sure, Mexico faces many difficulties. There is a legitimate debate on the role played by FDI in exacerbating those problems. But let us have a debate based on solid facts and a robust analysis.
It was the pro-American NAFTA policy rather than FDI which created huge job losses in Mexico. India must go for FDI in retail with strict licensing and regulations. That will help eliminate middlemen, and benefit farmers and consumers. It will lower inflation and bring competitive pricing at the retail level.