Retail FDI by the back door?
Recently at a real estate conference in Mumbai a speaker explained that an economic downturn is the best time for slum redevelopment as the process becomes easier. If you are wondering how the two are connected, the Speaker had a perfect ploy. In Mumbai, just as in any other metro cities, slum dwellers face the heat of inflation more than anyone else. The odds are ranged against them as the cost of living is comparatively high even while their incomes shrink due to layoffs in manual labour market, especially in the construction sector. During these tough times if a real estate developer presents the idea of redevelopment the slum dwellers lap it up as they get lump sum money to tide over their day-to-day cost of living.
In a Marathi TV channel a few slum dwellers from Chunabhatti in north Mumbai even went to the extent of saying that they have curtailed their daily meals as they cannot afford to make so many rotis as they had earlier. The cost of living for the poor has gone through the roof and there is no fallback. It is in this background the outrageous comments by Union Home Minister P Chidambaram gain significance. The only category of community unperturbed by inflationary pressures is the ultra-rich with Swiss Bank accounts which seems to be UPA government’s only constituency left.
Many of the industry observers are keenly watching the situation arising out of the soaring inflation. Are inflationary pressures being deliberately used to bring foreign direct investments (FDI) through the back door? Because one of the main arguments of the government is that organised retail can bridge the gap between the farmer and the marketplace and hence the traders and middlemen will lose out if the Walmarts and Tescos of the world set their feet on Indian soil. The retail chains will buy directly from the farmers and hence the ’procurement price’ will go up as a result. Also, the retail chains will bring down the selling price as they will make do without all the middlemen. Be that as it may, why should the poor or the middle-class today become a guinea pig for government’s ploy to bring in foreign investments into retail sector? During the 90s, Mumbai city suddenly suffered a series of power outages to prove the government point of view that there is a severe shortage of power. That was only a ploy to bring in the scandalous Enron to India.
To mock at the poor by saying that people can afford buying ice-cream costing Rs20 but cannot afford the steep hike in food prices is as ridiculous as it can get. Even for a moment if we consider P Chidambaram’s statement to be justified, will the Union Home Minister start saying that eating fruits is a luxury (which it has actually become these days) and poor people don’t deserve fruits? Or is it that the Union Home Minister wants poor people to give up ice creams so that they pay a bomb for foodgrain?
Chidambaram’s statement not only reveals the government’s insensitivity to the pain of inflation and how poor households are cutting down on consumption of rotis to make their ends meet, it borders on sadism to watch with glee how poor people pay for food grain, vegetables, fruits or ice cream. If Chidambaram was trying to create a wedge between the middle class and poor people who try to eke out a living in the government-created disastrous economic situation, then all we can say is that he is too clever by half. The grim inflationary pressures on food grain and essential commodities have hit the poor people more than it has affected the middle-class. The middle class has given up on their monthly family visits to restaurants and restricted birthday celebrations to home-made food and desserts. But the poor has given up on their staple diet as prices of grain, vegetable, fruits and pulses have tripled in their last one year. If the statement was targeted at the Swiss Bank account holders and corrupt minister in the Union cabinet it would have been more apt.
After the furore that Chidambaram’s statements created, probably the Congress high command thought it fit that a clarification was in order. But Chidambaram’s clarification was even more hare-brained. He said that his statements were only a matter-of-fact! There has been no evidence of government procurement prices going up that have resulted in prices of farm produce tripling in the last one year so much so that the poor have to give up a meal a day. Second, most of the food grain and vegetables that end up in the market has no bearing on government procurement prices as the dealings are done directly between the farmers and the middlemen. Third, and most importantly, has the inflation in food prices resulted in any decline in farmer suicides, if one were to believe Chidambaram’s spin? Anywhere in the country today farmers are in a desperate situation. Most of the subsistence farmers are counting their days. And then comes along the Union minister’s spin.