My column in MINT on Tuesday dealt with the issue of allowing foreign direct investment (FDI) in retail in India. At least, one friend confided to me that he did not know that FDI in retail was not banned until 1996.
One of the points my column made was that we should be open to experimentation in public policy since we will never know all the answers, all the impacts and consequences a priori.
Professor Vaidyanathan of IIM, Bengaluru had a apocalyptic title on his piece in www.centreright.in. He wrote that FDI in retail would pauperize millions.
One of his observations is this:
The retail trade suffers from two major handicaps. One is the non-availability of credit at reasonable rates from institutions; the other is the bribe one has to pay to the government babus to leave him in peace.
Let me ask this question:
If a kirana shop-owner takes payments in cash and issues no receipt, never bothers to get his accounts prepared and approved by a chartered accountant, etc., how on earth could be even walk into a bank for a loan? Probably, he does not even have a electricity meter installed in his shop.
How many of those who are so viscerally opposed to FDI in retail bothered to find out the business practices of the kirana shop-owners?
At least the farmers interviewed by Rasheeda Bhagat for ‘Business Line’ were far more open-minded than India’s self-styled intellectuals who think that they know what is good for Indians and that they can make those choices for them.
One of the few politicians who dared to say the right thing in public was Dr. Jayaprakash Narayan of the Lok Satta Party. He welcomed FDI in retail. Here is the link.
His party’s website has this banner quote from Martin Luther King: ‘The silence of good men is more dangerous than the brutality of bad men’.
We can modify it for the internet and information-deluge era: ‘The silence of good men is more dangerous than the noises of the rest’.
My friend sent me this quote from R.C. Bhargava of Maruti:
In the early eighties, the government had already zeroed in on Volkswagen to partner with Maruti in India and VW Golf was the chosen small car for India. But we knew Golf was pricey for the Indian market. They even came close to picking an 1800cc car of Renault. These were decisions taken without conducting market research. We asked for more time and went first to Europe and then to Japan scouting for partners. In Japan we had talks with Nissan, Mitsubishi, Daihatsu and lastly with Suzuki. None of these companies was willing to bring 40 per cent equity into India.
For them it was a risky business. Only Suzuki was willing to bring in 26 per cent equity with an option to raise it to 40 per cent. And Suzuki’s 550 cc Fronte was the winner. Which became the precursor to the Maruti 800.”-R.C.Bhargava
Both India and Suzuki were and are winners.
India is now being colonized by its defunct intellectuals.