First there is 2G and then Coalgate and multiple other scandals UPA 2’s world was falling apart. Policy inaction, faltering growth along with unbending food inflation was putting pressure on the government. To wriggle out the prime minister has played the only card he has left – reform card. It is not about reforms actually it is about getting out of the pressure created by the ongoing scandals. Deflect attention and create a debate within the country so that the focus is elsewhere. Dr. Singh has already achieved that and he can breathe easy. He also manages to retain his reformer economist title.
The opposition is in playing to the script and “opposing” FDI. Do they know if money is not pumped into the aviation sector (read private) our airlines will be dead. With unrealistically high fuel tax and landing charges in major metros airline business is only for the chivalrous. Of course the government instead of taking responsibility for creating a positive policy environment for domestic aviation has opted for the easy way out of opening up FDI in aviation. Anyway no foreign airline is in a hurry to put money in the Indian aviation sector. It will be a while before a billion dollars is invested in the Indian aviation sector by outsiders. So one need to worry about FDI in aviation.
FDI in retail – no one knows what is the end result of such foreign investments. There are studies which suggest both ways (good and bad). The focus is on farmers and small traders. Farmers are anyway not doing well in this country from the times we know. They continue to be tools in the hands of politicians who promise them heaven in the name of gram swaraj ( basically our villages are caste and sect divided with pathetic infrastrcuture and no hope, their existence is hell even now. So will FDI make their existence even worser, I am not sure. But I know one data point that 40% of the produce in the country is wasted due to lack of proper infrastructure ( cold storage, transportation etc), so if someone else is ready to help us why not ? if we had the wherewithal to do it why have we not done it till now ?
Small traders –mom and pop stores I guess will be impacted as per data (Walmart has been driven out of New york recently). Walmart is not hugely successful out of the US anyway. By that logic can they occupy India – if that is the fear. I think after the initial euphoria dies down it will be just another shopping place. They will wind up and go back since their “Every day low price” will not be low enough for most Indians, we will still throng to our weekly trade bazaars to buy stuff.
So open up and let the money come in.
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