Cracks In Wal-Mart’s Wall!
In this column, about two months back, I opposed the entry of FDI in retail with one of the reasons that given the rot in the country’s traditional approach, middlemen were bound to emerge even during the regime of the foreign retail giants such as Wal-Mart, depriving the farmers of their true claims. If the government feels that middlemen play a major role and the foreign retail giants will directly trade with the farmers and minimise the role of middlemen, then why, on the contrary, does it not think that retail giants like Wal-Mart can also play the same negative role in Indian farmer’s life? And this has been substantiated with the Wal-Mart lobbying disclosure report before the US Senate that said it had spent money to acquire the right for direct investment in the Indian retail market. It is noteworthy that Wal-Mart’s disclosure that it had paid Rs 125 crore in the past four years and $3 million this year to acquire legal rights to enter the Indian market is all the more surprising after the government had denied pressure of any kind. The Wal-Mart’s disclosure raises a question mark over the entry of FDI in India. The Opposition parties in the Rajya Sabha also alleged that their suspicions about an underhand deal on the FDI issue was vindicated, and demanded an independent inquiry and a reply from Prime Minister Manmohan Singh. Even Parliamentary Affairs Minister Kamal Nath accepted: “We have learnt from press reports of the reported disclosure by Wal-Mart under the US laws of amounts spent by them on lobbying in various countries including India.” Wal-Mart is allegedly involved in corruption cases in Brazil and Mexico. The US Department of Justice and the Securities and Exchange Commission are already investigating Wal-Mart’s systematic bribery of Mexican officials for opening its stores in that country, which is also being done in India. Federal and local government agencies in Mexico are also carrying out investigations into those matters. It is evident that this company has been charged with corruption cases in many countries, then why is the government rooting for it? One day a Congress leader says that they will not conduct any inquiry into this matter, the next day Kamal Nath says that the government is ready to probe the Wal-Mart’s lobbying report. Why is this 360-degree turn-around?
Against this backdrop, it is worth mentioning Mr. Obama’s statement made in July this year that India prohibited foreign investment in too many sectors such as retail. It seems that he has succumbed to the pressure from multinational retail giants like Wal-Mart. It is nothing but naked lobbying for the cause of the retail giants, who are eager to enter the growing retail trade in India. As a result of the saturation of their home markets, the multinational retail giants are waiting in the wings to enter India and other emerging markets. Of course, there is very powerful lobbying by these multinational retail giants to open up the Indian retail market, which is vindicated by the Indian government’s recent decision to allow 51 per cent FDI in retail. There are other ways to revive and sustain the economy than going the whole hog for the reform way. Reform in this context means allowing 51 per cent stake to retail giant Wal-Mart. This when countries like Brazil and Mexico are up against this company’s business strategy of selling commodities cheaper compelling employees to work 24 hours at a stretch without any extra allowance—driving small retailers out of business and depriving permanent and temporary employees of their dues in healthcare. Human rights organisations there are reportedly fighting a prolonged legal battle for employees’ legitimate dues. It is unbelievable that our government and India Inc. are unaware of this. It is tantamount to inviting a present-day East India Company in the name of reform. I have generally seen in all the reactions of Indian media and politicians to the FDI in retail centring their effect on small retailers. I feel that its impact will be disastrous for Indian manufacturing sector as nearly 70 per cent of non-food items sold by Wal-Mart are made in China. It will definitely benefit China who is watching from across the border. The problem is not opening up of economy. Of course, we should open up the economy, but on terms that favour us. The international corporate houses are all about evading taxes, manipulating government regulations and ultimately squeezing the working class to the last bit. We need to set our policy infrastructure to avoid such problems in place before we let anybody get in. Because, once they come in, and we have major loopholes in our policy, then we are in a fix. We will be bound by international treaties, fair trade rules and WTO diktats. Thereafter, it’s not our representatives who decide things. It’s international bureaucrats. And one more thing, is one aware of the trade barriers and unfair trade practices that are put in practice by the United States to protect its corporate behemoth and agriculture? Just give you food for thought!