Economy Nov 19, 2012
In death, as in life, Bal Thackeray overshadowed all political agendas this weekend. But, homage paid and eulogies sung, political parties are back to playing their pressure games in the build-up to the Winter Session beginning on 22 November. The Opposition has already dared the government to implement the latter's decision to allow FDI in retail and a no-confidence motion is apparently in the works.
Consider the concerns of the political parties that are opposed to FDI in retail. First, investors with deep pockets will elbow domestic players, mostly small retailers, out of business. Second, direct procurement will throw middlemen out of the equation. Third, the price benefit of such eliminations will not reach farmers. Fourth, the influx of cheap foreign products will harm the domestic manufacturing sector.
So, the Opposition has threatened a cautiously smug government that yet another Parliamentary session may just go down the drain unless the issue is put to vote in the House. This shrill face-off has dominated media listings since September and is now threatening to monopolise the news space for weeks to come.
The concerns of the Opposition, of course, are no less real than the arguments of the government. FDI in retail deserves a heated, loud debate. But so does the National Investment Board (NIB), which is to be set up by the PMO in the next couple of weeks. If you do not know much about this brainchild of the Union finance minister, it is because the NIB has not made news except briefly when a "ministerial turf war broke out" over it. No Opposition leader has considered the NIB worth commenting on or protesting against.
The NIB was conceived by P Chidambaram as a super committee under his ministry to ensure blanket clearances for projects involving investment of Rs 1000 crore or more. Following Environment minister Jayanthi Natarajan's protestations that the NIB's mandate infringed on the powers of her ministry, it is now being set up as a cabinet committee under the PMO. While a cabinet committee prevails over individual ministries, it is unclear how it will override authorities such as the Forest Advisory Committee or National Board for Wildlife, constituted by Acts of Parliament.
The reforms machinery of the government is alarmed that 26 mega projects worth nearly R1.25 lakh crore are stuck due to delayed or denied clearances and shortage of coal. An investment report prepared by a private bank this April quantified the investment grounded chiefly due to environmental roadblocks as more than R 7 lakh crore. So, the PMO wants the Environment ministry to allow coal mines to increase production by 25% and renew their licences without asking for fresh green clearances or conducting public hearings.
Not everyone in favour of FDI in retail, one assumes, is likely to back the idea of doing away with environmental scrutiny or bulldozing landowners' rights for infrastructure development. But those who claim to be against the government on FDI have to be, by the same logic, opposed to the NIB too. It is not difficult to see why.
If FDI in retail leads to loss of livelihood, mass displacement of people for mega projects backed by the NIB will inflict much more misery. Forget the human and environmental costs for a moment, the massive loss caused to the economy by plundering of grossly undervalued non-renewable resources such as minerals will far outweigh the damage FDI can cause to the manufacturing sector.
If it is about big money -- as the Left never tires of screaming -- further lining its own pockets, remember that even the most optimist consultancy firms, such as Tecnova, do not expect FDI of more than R11,000-17000 crore (USD 2-3 billion) in retail in the first two years. The NIB is about looking after investment of lakhs of crores.
But the constituencies, so to say, affected by mega projects are neither vocal nor visible. Nobody quantifies the water guzzled by factories till the rivers and aquifers actually run dry. The decimation of forests does not register till drought becomes routine. Few people, and certainly fewer politicians, even understand what biodiversity is to factor its loss. But let's avoid the environmental rant for now.
As the provider of blanket clearances to projects worth lakhs of crores, the NIB will also claim thousands and lakhs of human victims across the vast hinterland of India. These are people who have been fighting for and losing land, livelihood and often lives over many centuries. Today, the sacrifice is in the name of growth and reforms. So why doesn't the opposition take up their fight against the NIB while opposing FDI in retail tooth and nail?
They do not because even the human victims of the NIB are invisible. They are not educated enough to be retailers in towns. They certainly don't qualify for jobs in the manufacturing sector. They do not even know the privileges of a middleman because no agent ever bought any of their vegetables. Most of them walk miles to the nearest market to sell so little that they can usually carry it on their heads.
Unlike the potential victims of FDI in retail, the proposed NIB's casualties are not middle-class, not even rural middle-class. They are the poor, mostly tribals, whom few urban, educated Indians have ever met unless as tourists. They do have votes but are easily taken for granted and cheaply bought off before elections. In between, they are nowhere in the reckoning even when parties seek out excuses for political posturing.
When the principal opposition party that had promised FDI in retail in its 2004 election manifesto and the principal ruling party that had resisted the same when in opposition opt for role reversals, they need a convenient theatre. The broad range of the middle-class most politicians belong and relate to has always been their best audience. For them, the NIB is somebody else's problem.
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