Cheap
Chinese imports can be good for us
Only in India do opposition parties want to protect
the aam bania against the aam admi. The
worst argument against foreign retailers is that they will flood India with
cheap Chinese goods, squeezing domestic producers and causing mass
unemployment. The existing Wal-Mart-Bharti retail chain imports only 3% of its
goods, sourcing 97% indigenously.
So, the arrival of foreign retailers will not
produce a massive import surge of cheap goods. But even if did, would that be a
tragedy? Not at all.
Many Indian politicians believe that
self-sufficiency is the Holy Grail, and all imports are bad. In fact, India’s
economic success since 1991 has been spurred by steadily reducing the standard
import duty from 300% to 10%. Has this made imported goods cheaper? Of course.
Has it decimated Indian industry? Absolutely not. Has it let to slower economic growth or failing
wages? On the contrary, it has led to record economic and wage growth.
In the import substitution era, computers cost
three times the world price. This held back software and BPO development.
India’s software and BPO exports accelerated only when computer costs came
down, thanks to new technology and lower duties.
Critics have another argument: why allow Wal-Mart
and Carrefour to come in when Indian companies can do just as well? Why allow
foreign investment that will crows out Indian business and make profits at the
expense of Indian consumers? For an answer, look at the auto industry. Till
1991, it was dominated by indigenous Ambassador and Premier Cars. These have
been replaced by a cavalcade of new brands, some Indian but mostly
international. Yet it would be moronic to mourn for the heyday of the
Ambassador and Premier as a golden era when foreigners were kept out and all
profits were retained in India. On the contrary, It was a veritable kalyug.
Extracts of an article by
Ankleshwar Iyer, TOI, 23 Sept. 2012
No trick, FDI is a treat
The government has pushed through some long-overdue
reforms in the last fortnight. These include allowing higher FDI equity in
multi-brand retail and aviation. FDI creates extreme reactions in the country,
and it might as well stand for’ Forever Debating Indians’.
Anyhow, it’s a good decision, if not monumental or
heroic. Having a global mindset is
beneficial for the country. We have seen the benefits of the 1991 reforms.
The cell phones we carry, TV channels we watch, vehicles we drive, the
appliances we use-are all a result of the liberalization that were initiated
two decades ago.
For apart from the praise, there was backlash too.
The BJP denounced the new policies presumably to please the trader community
that supports it. The Trinamool congress is screaming hoarse about the
anti-people nature of such reforms. Mamata Banerjee is hoping to target the poor
who have not benefited much from the reforms.
China, Malaysia, Thailand, Philippines are just a
few examples of emerging economies that have allowed multi-brand retail and
have had no major upheavals or large-scale unemployment.
Can we not have some ground rules when looking at
reforms? Can the government, the allies and the opposition have just this one
area of consensus-the country must bring in economic reforms if we want to
create wealth. Can we accept that reforms do ultimately benefit people?
So if we have to debate forever, let us at least do
it on the right issues: FDI Wal-Mart, welcome to India!
Extracts
of an article by Chetan Bhagat,
Sunday Times of India, New Delhi September 23, 2012
Playing to the Gallery
Mamata Banerjee is yet to make the transition from a combative
politician to a diligent administration. But such is the political vacuum in
Bengal that she may end up as the winner
Your finance minister Amit Mitra who as Federation of India
Chambers of Commerce and Industry (Ficci) secretary general was a strident
votary of market economics, has now done a spectacular U-turn when he cautions
against FDI in retail. In an interview, he told me that his shift was
occasioned by the poverty he saw in his constituency. But how exactly would the
setting up of retail chains affect the poor, or is there a vested interest in
keeping the poor in a state of permanent deprivation?
There is where the politics of the Trinamool conflicts with the
economics of Ficci boardrooms. Our chambers of commerce unapologetically lobby
for FDI because it serves their self-interest. You champion the anti-FDI cause
because you believe that the idea of foreign capital overwhelming the
countryside will strike fear in the minds and hearts of your voters. You prey
on the insecurities of your constituency, they appeal to the interests of their
corporate citizens.
Unfortunately, instead of looking to manage and resolve the
conflicts of a reformist agenda, you seem to relish the idea of permanent
confrontation. Maybe, the antagonisms serve to mask the serious crisis of
governance confronting you in Bengal.
Poriborton’ in 2011 was ultimately not just about ridding Bengal
of the Marxists but also offering an alternative vision of governance. Maybe,
you misread the massive mandate or maybe it
was too much to expect an overnight transition from a combative politician to a
diligent administrator.
Extracts
of an article by Rajdeep
Sardesai is editor-in chief, IBN 18 network Hindustan Times, New Delhi, Friday
21 September 2012
Comments
Many analysts,
including the industry people and even selective BJP leader (Khandari &
Arun Shourie) have spoken favorably, Just the hard core politicians are coming
out critically to save their political constituencies. (Say the Vote Bank)
Arent such people misguiding the innocent Indians?.
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