Wednesday, December 28, 2011

Editorial, 'On Foreign Direct Investment', in LAW ANIMATED WORLD, Vol. 7, Part 2, No. 23, 15 December 2011 issue


Manmohan Singh’s Government tripped but in the last minute saved itself from a fall by coming to a temporary truce with its opponents in and out of government on its recently announced measure to allow 51% equity in retail sector to Foreign Direct Investment. The need and relevance of FDI in the economy itself is not seriously questioned nowadays. Only miniscule numbers of some extreme left and right political circles stubbornly oppose any sort of FDI as a covert route to neo-colonialism but otherwise public consensus favors it in the present days of capitalist globalization as also human socialization through social networking, etc. It is generally accepted that FDI can give the much-needed boost to the economy of a country provided its sovereignty and democratic control are jealously cherished. USA itself stands out as the country with the maximum FDI in the world ($228 billion) giving big spurt to its economy, and China, our large neighbor, has speedily taken the second place ($185 billion in 2010). The FDI in our country has grown from less than $1 billion in 1990 to some $36 billion [FDI stock 2009-10] and so far it has not made any serious dent in our sovereignty/political independence, nor did it cause any grave socio-economic adversities. I very much remember a similar outburst of opposition a decade or two back to the entry of the corporate sector in India into retail trade with all sorts of apprehensions about great loss to, virtual wipe out of, small retailers but nothing of the sort happened. Also in China, which allows 100% FDI in both single/multi brand retailing, even the indigenous retailers are reported to have grown by 30%. Notably, several farmers’ organizations too, in addition to IndiaInc, have come in support of the FDI in retail sector. So it is a question more of allaying the fears and apprehensions in the minds of the people and to begin in the right way – I mean, to start with initiative to the states first, instead of announcing it as a centralized national policy. Then I think Modi’s Gujarat, despite BJP’s current opposition for temporary political gains, will be a frontrunner in inviting FDI into its retail sector and gradually, by phases, the entire country will opt for and benefit from it. §§§