Foreign Investment in India

A threat to our nature and sustenance economy and culture

The government has okayed foreign investment in multi- brand retail in September, 2012 though the same had continued in single brand for a long time. It has resulted in a heated debate amongst politicians, entrepreneurs, economists, policy makers, small and medium traders, members of agrarian structures and above all the common people or the consumers of products. Everybody is perceiving the move as per his or her own vested interests ignoring the utility of the same for the country as a whole.

The financial turmoil faced by western countries that has affected the whole world and has brought a significant threat to the global economy is a result of liberalisation in trade allowed by developing countries in the name of growth and progress ignoring their nature economy and sustenance economy. In this profit making market economy it’s the big corporates who are the beneficiaries and share a larger chunk of the world’s wealth that gets accumulated in a few pockets while creating a dearth like and turbulent condition for most nations of the world and the majority of these corporates are governing American polity directly and the politics of the entire world indirectly.

A country like India is fast emerging a ground for consumerist monoculture of corporates that sell pizzas, burgers, ice-creams, French fries, non-vegetarian items all packed and branded and threaten the rich culture and tradition highly aromatic in its cuisine and acclaimed for festivities associated with crop output and food.

The present paper is an attempt to study how this foreign investment allowed liberally with dreams of technology, quality, employment, growth and capital is a threat to our economy and culture. The paper will take into account a few items used as quick food fast popular due to foreign investment and their impact on various sections of Indian society. Though there is ample scope for such an analysis in other items as shoes, apparel and other products (not much useful but projected needs of future India with an international lifestyle) that will be available in stores with multi-brand retail.

There has been a financial turmoil in western economies since 2008 that has worse hit many developing countries as these countries receive financial aids from agencies like IMF and World Bank and continue to be in debt because they either ignore or are made incapable of strengthening their sustenance economies. Recently Brazil, Russia, India, China and South Africa expressed concern over the slow pace of reform due to Washington based multilateral lender that is responsible for currency war and poor handling of global economy in favour of advanced economy (Financial Times). The governments of these countries have fallen an easy prey to the globalisation move or better liberalisation of trade that was lighted as a guiding spark but is engulfing them like wild fire. In old times, papacy donated lands freely that didn’t even belong to it with a mission to spread Christianity and now ‘the duty to incorporate savages into Christianity has been replaced by the duty to incorporate local and national economies into global market place’ (Shiva, Biopiracy). Indeed it’s a beginning of second East India company era though it must be remembered that in the first one the company had to create basic infrastructure and in the second one, they are flowing money in the form of soft loans to add to the existing base but sliding the bigger and long term profit to their countries.

The corporations have taken up the mission of this incorporation though not for charity but for profit making. They celebrate when any government invites them to enter its portals. The same has been done by Carrefour—the French retailer with over 1,395 hypermarkets at the end of 2009 and the third largest in profit after Wal-Mart and Tesco. ‘The assets of these multinational giants exceed the gross national products of most nations: their economic and political power surpasses that of many national governments, threatening national sovereignty and world monetary stability’ (Capra). He argues that corporate power has permeated every facet of public life like legislation, media, educational system and academic research in the western world and especially America where 76% of all corporate securities are owned by 1% of the stockholders.

Turbulence in global economy has resulted in devaluation of rupee, constant inflation, increase in poverty with a large section devoid of minimum essentials to sustain life, frustration and anger in middle class leading to suicides or shift from agrarian economy to seeking odd jobs with the corporates in India and abroad and rise in fancy for shopping in upper middle and elite class with a show off for international goods and lifestyle widening class disparity and causing ethical degradation. Amy Chua considers it the reason of cultural conflicts and generation of negative identities leading to hatred amongst ethnic groups.

There is a four- fold effect of this turmoil on India. First, it has adversely affected the production and procurement of food grains and other edible raw material. The corporates go for contract farming, pick up the best produce from most fertile lands and refuse to procure if the crop doesn’t yield optimum output or fails to meet required standards due to some natural calamity or biological activity. For example, the milk is procured at around Rs. 18/- per litre but is sold somewhere between Rs. 40/- to 120/- after processing. And the providers of innovative cold chains fill wallets with much more. The best produce, had it been retained in the domestic market would have meant money and better exports.

Secondly the turmoil has led to poor employment. With the government’s failure to effectively implement RTE, the youth is reduced to take up as unskilled labourers in western countries and have degrades from even blue collared jobs whereas their western counterparts enjoy highly paid white collared jobs in homeland and abroad. Third, the government by supporting these MNCs and deregulating land ceiling act has pressurised small and medium level Indian investors so much with its policies ( charging more and requiring more documentation) that they limit their ventures. Lastly, with the inflationand subsequent rise in poverty many Indians no longer celebrate their age old rituals and festivals with the same fervour and the values have receeded too low in the mad race of profit making.

In Punjab, the one city that boasts of this international culture, Ludhiana that also qualifies for the recent multi-brand retail for having a population of more than ten lacs is a testimony to this. The poor don’t find suitable jobs and as consumers afford substandard Chinese goods or take items of daily use on credit from local kiryana shops and most of them are labourers or artisans having migrated from other poor states, the lower middle class of farmers has migrated to the west in search of jobs that do not require much technical knowhow and the urban rich and elite frequent malls and eating joints boasting of their lifestyle. It’s only they who say that FDI in retail has ensured better quality and services.

A few ecologists like Vandana Shiva visualise that ‘the primary threat to nature and people today comes from centralising and monopolising power and control’.  It becomes remarkable when with the fall of one economy; all other partially dependent nations also fall. She strongly asserts that when exclusive attention is given to the growth of the market, living processes become invisible externalities. This focus on the market hides the existence of nature’s economy and the sustenance economy (Earth Democracy).  Here nature’s economy means the production of goods like soil, water etc. or more properly the natural resources of a country which have continuously been exploited by the west and that exploitation has continued beyond repair and the sustenance economy is that which provides for the biological survival of the marginalised poor and the reproduction of society. Many people chiefly women are now doing multiple jobs for the corporates and that too for longer hours.

In January 2012, government of India approved reforms by allowing innovation by foreign investors in single brand stores though it put up a few conditions like the retailer would source atleast 30% goods from India, will invest a minimum of 100 million US dollars, will bring advanced technology in cold chains, refrigeration, packing and transportation and will ensure better prices to the farmers. September in the same year was a step forward with 100% investment approved for single-brand and cold chain and 51% for multi-brand retail.

As per a study by Rupali Gupta, the foreign investors lure with fresh and exotic fruits, offer access to international global foods and support farmers to ensure raw materials. She also ascertains that indigenous stores like Reliance fresh, More, Subhiksha etcetera that initially offered steep discounts and bulk prices got closed at most places because after initial novelty faded off, most shoppers preferred the convenience and access of local kiryana shops.

The western countries have pushed poor countries to eliminate trade barriers, but kept up their own barriers, preventing developing countries from exporting their agricultural products and so depriving them of desperately needed export income. This includes severe norms on agricultural produce which in turn disturbs ecological balance as farmers tend to grow those varieties of food grains the seed, fertiliser and tools for production of which are imported though under some subsidies and reject old, tried, acclimatised and disease resistant indigenous varieties. This also checks regional and national diversity in favour of a few global/ western varieties. American multinational giants like Monsanto and Cargill have played major role in this. While the former threatens bio-diversity and law of nature by providing genetically modified organisms, food and seeds the latter remains in the news reports by distributing contaminated beef and seeds (things rejected in home country) to the world and withdrawing it from circulation later on under the impact of international trade unions. It is also responsible for large scale depletion of natural resources as it has brought about massive deforestation for production of soya.

As far as exotic fruits and vegetables are concerned, they don’t taste better but become a luxury for many. The cold stores are providing packaged processed food that now adorns many Indian homes though the natives of this country don’t have a busy life style like their western counterparts that disallows cooking of fresh food from raw material freshly procured from the market. This all is eventually hitting our culture.

Bharti- Walmart tie up operates easy day stores in India and at one store about 3-4 people are employed who work from 8 in the morning to a few hours after the closure at 10 pm and thus nobody stays at a store for more than three months or so. Whereas on traditional kiryana shops work of a single easy day store equals that of 100 small shops where about 300 people get employment and 4 people of easy day snatch jobs of 296 others (more than 98%) and still are dissatisfied with their employers.

Coming to single brand retail in quick food sector, the Indian gourmet now largely consists of ice-creams, pizzas, burgers French fries etc. With so many ice-cream parlours  and other eateries as Baskin Robbins, Igloo, Mc Donald’s, KFC, Pizza Hut, Domino’s, Bangs the urban middle class is fast consuming these items at a much higher cost than what is required for any delicious Indian cuisine. Again these food products have substituted natural Indian tastes and a cup of ice-cream with rich cream extracted from the machine over a nice looking cone with choco and wafer bits or sticks inserted is available at a price of about rupees 80 for nearly 70 grams and is fast replacing Indian style Kulfis or fluda creams, is unaffordable regularly for middle classes and shifts the consumers from hustle-bustle of bazaars to secluded tables at the parlours. Such a costly stuff is shifting Indian money to foreign markets. The urban people lack values and therefore tradition and culture hold nothing to them and they are misled by glamorous hoardings which mean high society for them. It also throws many small and medium dealers out of business like those producing any other raw material or agro-product.

Earlier there was free land available in the form of bazaars where commoners used to trade and the same provided space for cultural festivals and economic transactions (Earth Democracy). Now the same has been replaced by stores and eateries where disintegrated family units (nuclear families) seek entertainment or relief from boredom of daily life. Even throwing parties to relatives and dear ones at small or big achievements has been replaced by feasting at these food joints. Most of the above commoners who sold their wares at Indian bazaars now have become consumers and not producers. The same life style also adds up to health issues as people tend to eat quick food ignoring routine eating habits or consuming home delivered or packaged food neatly packed in substances totally non- biodegradable and decorating outskirts of metros with heaps of this packaging material ruining the rustic splendour of many areas and threatening ecosystems.

 Indeed the government has failed in strengthening the public distribution system or supporting the local co-operatives that mediate between the farmers or producers and the government. With a new stress on technology the small and medium farmers, have been rendered unable for cultivation for want of investment to buy advanced technology and are laid in debt trap. Even the big foreign retailers own many farms where they get their required items cultivated with a cheap labour and emerge as ‘new zamindars’.
Foreign investment is beneficial for growth and bringing advanced technology but it also creates hegemony of a few big international traders, pressurises natural resources of a country, checks independence of local governments by restricting their sustenance and creates monetary instability.  It is exploiting manpower, land resources, political will and money above everything else. There should be strong political will to increase exports and achieve self-sufficiency in maximum number of goods.

Works Cited
Capra, Fritjof. The Dark Side of Growth. Musings on Vital Issues. Ed. PJ. George. Hyderabad: Orient Blackswan, 2010. 1-6.
Global Economy. Web. 12 Nov. 2012.  
Gupta, Rupali. Analysis of Competition in Agri-food Sector. 14 Nov. 2012. Web.
Shiva, Vandana. Biopiracy : The Plunder of Nature and Knowledge. Web. 14 Nov. 2012. 
Earth Democracy: Justice, Sustainability and Peace. Web. 14 Nov. 2012.


More by :  Sarika Goyal

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