FDI in retail is not an ummitigated good. In the Indian context, where the livelihoods of millions are tied to farming, the question has to be handled with sensitivity and care, says eminent agriculture scientist M. S. Swaminathan in a chat with B&E’s K. S. Narayanan.
B&E: What do you make of the current debate on FDI in retail?
Dr. M. S. Swaminathan (MS): There is no serious debate. There ought to be serious discussion. It is all becoming very partisan. In a democracy, views of political parties are important. The discussion on issues such as FDI in retail should have been pan-Indian. Unfortunately we do not have a method by which we can formulate a pan-India approach on issues. From the Panchayat level onwards, elections are fought along party lines. Gradually we have politicised everything. Instead of being united after more than 64 years, the country is getting divided on parochial grounds. That worries me as I think of the future. I hope the younger generation will create a new culture of ‘Indianness’. As a scientist I feel that the country needs to do serious introspection.
B&E: Do you think the UPA government took the decision to ease FDI cap in retail without much discussion?
MS: I think there has been an error of judgement on the government’s part. Also, I think the government feels it has the right to take decisions on the ‘reform agenda’ as they call it. But issues like FDI in retail, which affect the poorer sections of society – as millions of people are involved in the small retail business and the small scale farmers – need to be seriously examined. People in distress have to be insulated. Of course, arguments in favour of FDI are that it will boost investments, generate employment, improve infrastructure such as cold chains, shopping et al.
B&E: It’s being made out that FDI in retail will benefit farmers and our agriculture.
MS: Agriculture is looked upon by urban people from their own point of view of food security. Even the government thinks that by producing 50 million tonnes of wheat and rice the problem of agriculture is solved. Agriculture problems are not limited to the production of wheat and rice alone. Agriculture is basically the livelihood of 60% of the population in the country. We have overlooked the agriculture need for capital, which has resulted in a decline in farm production and caused agrarian distress. Recently, farmers in the East Godavari districts of Andhra Pradesh announced a crop holiday. Farmers’ land are being acquired for building roads, malls et al. So how are we going to feed our population, which is 1.2 billion today and will be 1.5 billion by 2030. With diminishing land resources, disenchantment of the farming community with the agriculture economy, the decision on FDI in retail should be taken after thorough discussions.
B&E: How do you react to Chief Economic Advisor Dr. Kaushik Basu’s assertion that FDI in retail will tame inflation?
MS: Most of the predictions on inflation have not come true in spite of all the steps taken – RBI has adjusted interest rates about 13 times. The government keeps announcing that inflation will come down in six months time. I would not put too much faith in what one individual says.
B&E: What are your own views on FDI in retail? Is it good or bad for India?
MS: I have always said it can be a curse or it can be a blessing. How you handle it is the important thing. If companies don’t make serious investments in infrastructure et al, it would be a curse. If they assure fair and remunerative prices to farmers it would be a blessing. We need to understand that the FDI culture in retail operates differently for different socio-economic conditions and circumstances. Farming in the developed countries is not an issue of livelihood as it is more of agribusiness.
B&E: What has been the experience from other developing nations?
MS: I have heard that countries like Indonesia and Malaysia have benefitted from FDI in retail. But I have not studied any such reports. I have been a member of the Malaysian Rubber Research and Development Board and I can say that their situation and problems are different from ours. They are engaged in estate management – coco, coconut, palm oil, rubber, coffee and cardamom. I had participated in a meeting on food security in Malaysia in which it was decided that the country should have 20% food self sufficiency and that it can buy the rest of the rice from its neighbour Thailand and export cash crops. So they decided to retain the rice farms and did not convert it for commercial crops. Socio-economic condition of farming in Malaysia is quite different from ours.
B&E: Are there not any global learnings for us in FDI in retail?
MS: The Commerce Minister Anand Sharma has said that FDI in retail will be implemented with Indian characteristics. He should spell out what these characteristics are. According to me, it should have three essential ‘Es’ – economy of farming, ethical aspect of transactions and the impact of FDI in retail on employment. Initially, I think it will be rosy for customers and farmers the first time round. Problems will emerge when competitors are gone and one or two players dictate terms to the market. We need to address the issue with an Indian perspective.
B&E: You were Chairman of the National Farmers Commission. Is it fine in your view to go ahead with FDI in retail even as the Commission’s report gathers dust?
MS: That is the problem. This has been pointed out by many MPs in Parliament. Even the Standing Committee of Parliament had examined issues facing Indian agriculture. I can only quote what Shakespeare said: ‘In the affairs of men there is a time and place’.
B&E: What are the steps do you think should have been taken before embarking on liberalising FDI in retail?
MS: The National Commission on Farmers had recommended major investments in infrastructure. I had made the same point in my report in 1980 when Indira Gandhi came back to power. Sharad Joshi had organised a Rasta Roko on the Pune-Nashik road as prices of onion fell drastically. Mohammad Fazal and I – both members of Planning Commission – along with then member secretary Dr.Manmohan Singh (Prime Minister) were asked to submit a report. We told her (Indira Gandhi) that we need to develop a method for efficient management of vegetables, fruits et al on the lines of what Dr.V. Kurien had done for milk. We recommended that on the lines of the National Dairy Development Board, we should establish a National Horticulture Board for post-harvest management, what the Americans call farm to fork practice. The report was not acted on.
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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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