People's Democracy

Editorial

FDI IN RETAIL TRADE

‘Manufacturing Majority’

AS we go to press, the UPA-2 government was forced to announce in both the houses of parliament that it would set-up an inquiry into the media reports concerning the submission made by the global retail giant Walmart to the US senate that it had spent around Rs 125 crores during the last four years on its lobbying activities, including the issues related to “enhance market access for investment in India”.  The Indian retail market is estimated by them to be worth $ 500 billion currently and is pegged to cross $ 1 trillion mark by 2020.  Both the houses were adjourned the earlier day demanding that the government announce an independent and a time-bound probe.  The CPI(M) has demanded that the inquiry findings must be completed before the beginning of the budget session.

This inquiry comes on the heel of the commerce ministry asking the Reserve Bank of India to investigate allegations that Walmart had “clandestinely and illegally invested” $ 100 million in an Indian chain of convenience stores owned by Bharti Enterprises, Walmart’s partner.  According to media reports, this investment by Walmart would give it a 49 per cent stake in the joint company.  Currently Bharti retail operates 186 multi-brand retail stores in 12 states in India.  As early as March 2010, Walmart had invested $ 100 million (Rs 455 crores at the then exchange rate).  This investment was made when FDI in multi-brand retail was legally banned.  Such an illegal infusion of capital by Walmart permitted Bharti retail to increase its number of stores from 43 on December 31, 2009 to 173 on December 31, 2011.  Likewise its turnover jumped eight-fold from Rs 132 crores to Rs 1,023 crores during the same period. 

As the government was announcing its decision to conduct an inquiry came the news (Indian Express, December 12, 2012) that Patton Boggs, one of the lobbying firms which represented global retail chain Walmart, was hired by the Indian embassy in the US in 2008 to help clinch the India-US nuclear deal.
 

Patton Boggs’s website says, “We championed the US-India civilian nuclear advocacy initiative for the US India Business Council (USIBC), which resulted in US Congressional passage of the Henry Hyde Peaceful Atomic Energy Act of 2006 and the signing of the landmark US-India Civilian Nuclear Cooperation Agreement in 2008”.

Patton Boggs’ India practice, the firm says, “maintains relationships at the highest levels of the Indian government with whom we work closely and discreetly to advocate and resolve our clients’ interests strategically and effectively”.

“We represent other commercial interests on issues where their business needs intersect directly with the government of India. For example, our activities have included: spearheading advocacy efforts aimed at reducing or eliminating Indian import tariffs, facilitating the receipt of licenses through Indian national and state governments, and assisting new entrants in developing resources/relationships and in tapping the increasingly attractive Indian commercial and retail/consumer markets,” the website said in an entry under the sub-head ‘India practice’.

Interestingly, in March 2009, former US ambassador to India Frank Wisner joined the firm as foreign affairs advisor. It is well known that high level US corporate executives have been meeting high level Indian officials including political leaders and have called on the prime minister and other important ministers in the past. It is necessary to go to the bottom of such activities by global corporate giants who are keen to prise open the Indian market further for their profit maximisation.  This is particularly significant at a time when the continuing global economic crisis and recession is limiting the opportunities for profit maximisation by international finance capital.  It is estimated that the European Union economy would grow by zero per cent in 2013 and the US economy will barely manage to grow over one per cent.

This probe in India comes amid intense scrutiny over Walmart’s international operations.  The New York Times recently reported that Walmart had been made aware eight years ago that Walmart Mexico had paid millions of dollars of bribes to local officials to expedite permits for its operations in that country. 

Likewise, Walmart has been criticised in a plethora of countries for a series of anti-worker policies.  With close to 22.2 million employees worldwide, Walmart faces a torrent of lawsuits with regard to its workforce on issues such as low wages, poor working conditions, inadequate healthcare, anti-union policies etc.  Only 1.2 per cent of the Walmart workers make a living above the poverty level in respective countries.  Unfortunately, all this was well-known to the Indian parliament, yet some parties aided the UPA-2 government in the recent parliamentary vote. 

The Congress party-led coalitions have, indeed, mastered the technique of converting a minority into a majority on the floor of the parliament.  Such expertise in `manufacturing majority’ (with due apologies to Noam Chomsky, Walter Lippmann et al who spoke of `manufacturing of consent’) has, in the past, exposed the JMM bribery case (1993) and the `cash for vote’ scam (2008).  On this instance, the parties who openly opposed FDI in retail in the discussions had an absolute majority in both the houses in terms of numbers.  Lo and Behold, during voting the situation reversed.  Time will, surely, expose this mystery. 

Given all these, it is incumbent that the UPA-2 government wait till the enquiry into Walmart’s lobbying and other activities are completed before operationalising its decision to allow FDI in multi-brand retail trade. In any case, the government will have to wait till the parliament disposes off amendments to the FEMA amendments made by the Reserve Bank of India which have been tabled in the Lok Sabha. Strangely, they have not been tabled in the Rajya Sabha till date despite the FEMA Act explicitly mandating the government to table any amendment to rules and regulations in both houses of parliament. The government cannot escape from doing so.  Hence, the disposing off of any amendment can only take place in the next budget session of the parliament.  Thus, the government cannot legally operationalise this decision before these matters are settled during the budget session. 

In the meanwhile, the growing popular protests against this decision  continue  to gain further momentum across the country. In the final analysis, it is the strength of such popular mobilisations which must force the government to reverse this decision in the interest of our country and people. 

(December 12, 2012)