Surajkund (Haryana), Sept. 27: The BJP today marshalled arguments to explain its unqualified opposition to FDI in retail while seeking to prove it was not an economic dinosaur by distinguishing between reforms in the “national interest” and those counter to it.
The economic resolution adopted by the BJP’s national council on the first day of its two-day session hit out against the Centre without providing an alternative vision of what the party would do to a “bruised and battered” economy if it came to power.
This at a time BJP president Nitin Gadkari had asked the gathering to get the party out of the straitjacket of an Opposition entity and show itself a party of “good economic governance”.
The resolution criticised the government for its various “failures”, scams and alleged anti-people measures and even the Prime Minister’s recent address to the nation, which it dubbed “uninspiring”.
It read like a routine release, pressing five demands that included a reversal of the retail FDI decision and an “impartial” probe into the coal-block allocation controversy.
The BJP’s case is that big-ticket reforms are needed to eliminate agricultural subsidies, restraints on outsourcing and “unreasonable” visa restrictions, and to dismantle the “unfair” trade barriers on products made by the smaller economies.
Rajya Sabha Opposition leader Arun Jaitley, who opened the discussions on the resolution, outlined the BJP’s version of reforms.
“Every change is not a reform. Some changes may end up hurting national economic interests. What goes against the grain of the country is a counter-reform and we reject it,” he said.
He provided the following arguments against FDI in multi-brand retail:
It will erode manufacturing jobs because indigenous retail primarily sources its goods locally, thus sustaining indigenous manufacturing. International structured retail will be sourced internationally and hurt domestic manufacturing, especially in the background of India’s failure to carry out “significant” manufacturing reforms in the recent past.
The retail trade constitutes a big chunk of self-employment: 51 per cent of India’s working population is self-employed and only 18 per cent is in structured jobs.
Fragmented markets serve the interests of a larger segment of the population compared with consolidated markets. Jaitley cited the example of Thailand to say that in the first 12 years after the country opened its retail sector to FDI, 38 per cent of its consumer market consolidated in favour of three large retail chains.
He argued that China could not be held up as an example of the benefits of retail FDI because China, as a low-cost economy, was the largest supplier of all goods to the big retailers.
International retailers work on the “buy cheap and sell costlier” principle. Their “deep pockets” allow them to initially price their wares low to eliminate competition. Once that is accomplished and they attain a degree of market monopoly, they jack up prices.
Jaitley quoted data from America’s International Farm Companies Network to argue that if middlemen are done away with, the gains go to the retailers and not to the farmers or producers.
Jaitley denied that back-end operations such as cold chains and rural transportation and roads would get a fillip from global retailers. “Building cold chains is not rocket science. Why can’t cold chains and rural farm roads co-exist with MNREGA (the rural job scheme)?” he asked.
He described the states’ option of not allowing retail FDI within their borders — as cited by the Centre — as a “myth” to hoodwink people. Jaitley’s contention was that FDI investment was a “central” and not a “state subject”, because it was based on an international treaty that required a “national treatment”.
The “deception”, he said, was meant to entangle the states opposing retail FDI in interminable litigations.
The resolution was drafted by former finance minister Yashwant Sinha and Rajya Sabha MP Prakash Javadekar.