As a person who has as a certain grasp on the macro economic conditions like any other economist who is worth his salt i will find the recent steps taken by the government as necessary ones if only i believe this to be a challenge thrown upon us by the heavens out of no where. In the west Mamata Banerjee has gone nuts and in the down south Mr. Karunanidhi is whining which people seem to have come to an understanding that is for no reason, putting aside the political stunts that have been carried out in the recent times in the name of defending "aam admis rights", who really is to be blamed for this dead end ?, what and who led to a situation like this one, in which our under performing Prime minister turned into an actor of par excellence over night who with a straight face made a mentioning of our countries 1991 economic situation and the actions taken by the government then to infuse credibility into the reasons behind the recent steps taken by the government to bring down the fiscal deficit.
The government started out with blaming the spiraling fuel costs saying that it was eating up our reserves which on the other occasions had whole heartedly given away precious resources like spectrum and coal reserves for a pittance with no worries about spiraling government spending,
The government started out with blaming the spiraling fuel costs saying that it was eating up our reserves which on the other occasions had whole heartedly given away precious resources like spectrum and coal reserves for a pittance with no worries about spiraling government spending,
The government announced certain policy changes and called it reforms, reforms that actually makes people to shell out more from their pockets rather than putting more into their pockets, the newspapers claimed that these were bold steps, market pundits opined that this could lead to a turn around in the economic situation, and our countries chief economic Adviser Raghuram Rajan pressed that FDI is the safest way of financing our infrastructural needs which would also help us in minimizing the spiraling of our fiscal deficit, Now the media talk is all about the strengthening rupee and the stock markets splendid performance and all these are somehow being attributed to the new found Investors confidence in the Indian economy due to the governments efforts to make things happen, Well all said and done what do we have in our hands now, its been a while since the FDI gates have been made a lot wider but how many are there at the door steps, if only reality did carry some value it would have been made known to everybody that the markets around the world have performed reasonably well in the month of September mainly due to efforts taken by European central bank to mop up more government bonds and Federal reserves measures to ease the debt by raising taxes and more so because of the governments of Greece and Spain have tightened their purses by introducing more stringent policies which would keep a check on their future public spending by denying millions their right to a comfortable retired life.
As for our government it had its reasons in efficiency and increased life span of perishable goods to raise the FDI limits in the retail sector, which it swears would ultimately benefit the farmers and consumers, but do we need a Kmart or a carrefour or a Walmart to provide us a solution to a problem which is so within the limits of our own 1.85 trillion $ GDP nation. Isn't it the governments job to provide storage facilities and provide a perfect logistic solution, as well as better prices for its farmers produce which in the long run would pay off itself through better tax returns, isn't the government shying away from its responsibilities by outsourcing its job of governance to companies which are driven by profits, why are we even paying taxes to the government then. If finance, technological and distribution know how's are the only criteria based on which the government has gone ahead and increased the FDI limit in the retail industry then i guess our government happily chose to ignore our very own cash rich companies like Reliance and PSU's, Reliance alone is sitting on a huge cash pile of 70,000 crore rupees, our government could have come out with policies to tap the huge cash reserves of our corporate giants without looking outside to finance its infrastructural needs. And this government for a very long time has been playing a trick of comparing itself with Bangladesh and Pakistan when ever it ponders about increasing the fuel prices and tries to convince the Indian public that the fuel prices in this county are reasonable enough, but all the while in china which has a population more or less equal to our nation and consumes more fuel than any other country on this planet even with more than half of its fuel being imported from abroad a liter of petrol is still less than 64 rupees and here in India it is 72 rupees. A country which imports 80% of its fuel for consumption should have been more coercive in securing energy blocks around the world and should have had a more proactive energy policy (I have mentioned about this elsewhere in my blog).
On the contrary one cannot say no in an outright way to the likes of carrefour entering our markets either, because Walmart or Kmart are just the results of the gluttonous consumer in each one of us who has got so used to having 20 or more different choices at his or her disposal, whether it be for a car he or she wants to buy or a pair of slippers that he or she doesn't need. Walmart is just a by-product and one cannot say no to a by-product because it is an inevitable reality of any process, and Walmart is the by-product of the reality that the whole world seems to have started to believe in "economic growth is all about more consumption and higher GDP", we cannot say no to Walmart while we try to take advantage of the foreign exchange rate by making our skilled workers become modern day white collared and blue collared "dollar coolies" who send billions of dollars in remittances each year to their families here in India. or can we say no to Kmart while we drain our reserves by consuming tons and tons of gold from the international market each year, things become very complicated when one starts to analyze the issues leaving the naivete behind, At the most what we can do now is be aware of the malice called "consumerism" and at the same time expect and force our Indian retail chains to be more efficient enough to challenge the likes of Walmart and carrefour, which might lead to the failure of Walmart and its likes in the indian market, just like how Japanese people made sure that none of the american car manufactures made it big in their country. I am one of those Platonists who still believes that i am surrounded by reasonable people and Tetra Packed tender coconut water sold by Walmart will make it big in fool's only country.
Prasanna Kumar
