Jul 19, 2012

Indian PM Manmohan Singh knows what is good for America. He will soon allow FDI in retail, Mr Obama.

There is something in India's decision making that I can never understand. For over a year, intense discussions have followed the proposals under the upcoming National Food Security Act. The Plan A included provisions of 35 kg of subsidised foodgrains per family for the below the poverty line (BPL) category and allowing those above the poverty line (APL) an entitlement of 15 kg at a relatively higher prices. 

Feeding the hungry by providing them legal entitlements comes at a time when policy makers remained glued to opening up for FDI in retail. Amidst the continuing debate whether FDI in retail is good for India or not, US President Barack Obama throws his weight pitching for a new wave of economic reforms. After the TIME magazine came out with a cover story calling Prime Minister Manmohan Singh 'underachiever' (which ostensibly was to provoke the PM to go in for FDI in retail), it was surprising to see President Obama telling India what is good for us.

But then, President Obama knows what is in America's interests. He stopped outsourcing (even if it hit Indian companies) of jobs because he wanted to protect US jobs. And now since he goes into elections with nothing to show, he is actually banking upon India to bail him out of the terrible economic crisis that he is faced with back home. Manmohan Singh has therefore deputed Commerce Minister Anand Sharma to go around and build up a political climate in favour of FDI in retail. No one is surprised when Anand Sharma says that the opposition to multi-brand retail is less intense now (See the lead story in Economic Times, July 16, 2012 http://articles.economictimes.indiatimes.com/2012-07-18/news/32730673_1_russian-economic-entities-russia-s-sistema-investments).

Any sensible economist, and for that matter any nationalist, would ensure that the hungry in India are first well fed. What may appear to be a welfare activity, and is supported by government subsidies, also makes terrible economic sense. Feeding the hungry millions, on a war footing, is a sure recipe to an inclusive growth. I had thus expected the Indian PM to pitch in for an early implementation (and not wait for the 2014 elections) of the National Food Security Act. A news report in Indian Express (Food Bill: Govt looking at flexible plan, may exclude 33 % population; link - http://www.indianexpress.com/news/food-bill-govt-looking-at-flexible-plan-may-exclude-33-population/976392/) tells us that an alternative proposal is now being drafted, which will lower the food entitlement from 35 kg to 25 kg per family, and also do away with the two categories -- BPL (priority) and APL (general).

I don't understand how can the Plan B (as it is called) envisage an additional expenditure of only Rs 7,000 crore over and above the Rs 1.11 lakh crore of legally binding food subsidy. It should be much lower considering that 33 per cent of the population stands excluded, and the legal entitlement has been reduced for bulk of the hungry population. Nevertheless, jugglery with figures is something that the government regularly indulges in to keep the nation misinformed for all times to come. We as a nation rarely question the figures that are doled out to us.

I thought the Prime Minister would know what is crucial for India. Feeding the nation, and that too after we failed for 65 years, should be the sole priority. However, he doesn't mind excluding the percentage of population to be fed, by 33 per cent but has focused all his energies to bail out President Obama instead. he knows that by allowing FDI in retail he is actually going to add on to hunger by displacing lakhs of people working in the local stores. Such a magnitude of displacement will only add on to growing hunger.

But then, we are aware that Manmohan Singh knows what is good for America.  

Feeding the hungry is not the only area where Indian Prime Minister is least interested. He would have given a damn to food security if it were not for the UPA President Sonia Gandhi's insistence. Earlier too, if you recall, when MNREGA was launched, Manmohan Singh, and the then Finance Minister P Chidambaram, had strongly opposed the move. If it were not for Sonia Gandhi, the poor unemployed wouldn't have got any relief in the form of a guaranteed employment even if it is only for 100 days.

Manmohan Singh is not the only bureaucrat-turned-politician who feels, and works for the American interests. Besides the ambitious-looking bureaucrats (who crave to join MNCs after they exit government service), economists and management consultants are of course on the payrolls. But what about the Indian media? Why is the Indian media playing to the American tune? Well, I don't have to explain it to you. You know it much better. It is all about money, my dear. Who cares for the hungry?


Neeraj Pratap said...

You are right Devinder ji, wondering how our Well educated PM and other minister to justify FDI in retail.

They are trying to create environment for FDI in the name of economic reform. TIME and British newspaper is part of game.

Rahul Paliwal said...

I disagree with you sir first time..MNREGA killing SMEs, businesses, farming n making people lazy..Yes there may be some help too, to few people in myramid..But I can clearly see that Even if One pays 300 rs per day, nobody wants to work..What they do with money is, recharge mobile..is this the way, we want to consume more??
Yes, nothing wrong if people do not work but until ROBOTs comes..What if one fine day, MNREGA ii stop and then how would you address Addicts of ease money? So PM was right while opposing MNREGA and I personally see that food security only need to review correctly in this manner as MNREGA .

abner fernandez said...

Love it!
To the point, articulate and very interesting,

Manya Sharma said...

Very interesting analysis and uncovering of facts, just amazed that what is actually going on behind the scenes.
We have to stop bolstering America's economy and think about our's.

Karan Manral said...

What surprises me most about the pessimistic views on Indian agriculture (which seem the premise for this move), is the fact that despite the lack of investment and idiotic policy making we are actually a an agricultural superpower - the production numbers across categories (milk, vegetables, pulses, rice, fruits and even grain)are world class.

Sure there is a lot to do in the area of productivity - but thats a great position to be in. The knowledge capital that we have is amazing. I think Down to Earth mentioned that 1m of the 1.6 million organic farmers are in India too.

As someone who is embarking on building a small business around agriculture, it seems idiotic that we would give this opportunity and income opportunity away. How can income equity improve if farmers can't become better (and competitive) businessmen?