I was on my block leave and for the first time I watched the Indian News channel for so long time. The melodrama sparked furious debate, and one that could remap India’s economic future; Barfi or Wasseypur, who should have gone to the Oscars? (The correct answer is of course “I don’t care but can we please put Madhur Bhandarkar in a rocket and send him to space forever? frankly speaking I have no idea.
The last 10 days has seen series of announcements from Government of India. The government’s decision to allow FDI in multi-brand retail and aviation has led to much discussion in some of India’s biggest states like Maharashtra, Uttar Pradesh and Vijay Mallya.
But let’s not get ahead of ourselves. The first question that comes to mind when dealing with FDI is “No seriously, why not leave Bhandarkar up there forever, so he can never hurt us again?” The second question is “What exactly IS FDI?” According to a senior analyst FDI is the direct investment into a country by a company that is originally located in another country. Let’s use a hypothetical (latin for “actually true, but let’s use this word so we don’t get sued”) example. Say, hypothetically, you have a company called the UPA, and it’s based in India, and it takes all its money and invests it in say, hypothetically, Switzerland, then that is FDI.
Those interetsed in technicals can see the last article written couple of weeks back.(FDI) Foreign direct Investment & (FII) Foreign Institutional Investors :
“Is FDI good or bad?” This is where things get complicated. The pro-FDI argument is that it will help farmers, because it’ll cut out the middle-man and get them better prices for their produce. This argument is suspicious for three reasons:
1.This is India, middle-men are like fingernails. You cut them off, and they just grow back. We will never lose middle-men. Just like love, some intrepid babu will find a way.
2. This news is about farmers. The Indian government cares for farmers roughly as much as Anurag Basu cares about originality.
3. This argument has been made by the UPA, who are about as trustworthy as Prem Chopra in the third act of an 80s film.
Those analogies are not re-assuring. But if the system works, FDI will get farmers better rates for their crops, which in turn will allow them to plant better crops, which in turn will let them make more money, and this will improve the lives of several people, all named Ajit Pawar.
One of the biggest arguments against FDI is that it’ll kill the local kiraana store, with people choosing to shop once a week at Walmart or Tesco instead. It’s a depressing thought, losing Ramnik bhai from down the road to a soulless warehouse I shop at once a week. But (speaking from a consumer’s POV strictly) I don’t think that’ll happen. Because Walmart won’t come to my doorstep at 7 pm for one chocolate. I can’t leave Walmart with 1,983 bucks worth of stuff and tell them I’ll send someone over with the cash tomorrow. But mostly because Walmart will never remember my name, ask how my parents are doing, and send me those amazing little Diwali boxes with badaam, pista and kaaju in them (Ramnik bhai, this year salted please!)
The UPA has, rather conveniently allowed states to chose whether they want FDI or not. Uttar Pradesh is skeptical, Punjab says no (“We already have Black Label, that’s all the foreign stuff we need”), West Bengal says “Your mother is maoist” and Maharashtra, which has a whopping 50 per cent of all major cities that could benefit from FDI-funded retail, has said “YAY SHARAD KAKA! MORE MONEY FOR US!”