You are here: Home » Opinion » People
Business Standard

Q&A: Vandana Shiva

'Retail FDI is not about investment, but market grab'

Sreelatha Menon 

Vandana Shiva

The Cabinet’s decision to allow up to 51 per cent FDI in multi-brand retail was taken without consulting the states, activist Vandana Shiva tells Sreelatha Menon.

Three years ago, you had campaigned against FDI in retail. But, with the Cabinet’s decision to open the sector to foreign chains, it has been made a reality. Do you accept it now? You have been silent on the issue.
It is still wrong, and many times over so. First, the model of FDI in multi-brand retail has completely failed. The failure has been established in the West. Why else do you have the Occupy Wall Street protests? Also, the decision was taken by the government on the third day of the Opposition demanding action on price rise and the economic crisis. The government seems to be saying, “We don’t care about Parliamentary democracy”. As far as I am concerned, I am writing to the states to improve the understanding on implications of the Cabinet’s decision. The media has been silent, too. In fact, it has been celebrating it, as if it was a big achievement.

One of the reasons in its favour is it would cut wastage and create a cold chain.

In the last one year, I wrote foreword to many books; most were on the wastage in the giant retail model. There is 50 per cent wastage. That India records 40 per cent wastage of food is a lie. It is another matter that the Prime Minister is allowing grains to rot by not picking them up.

How can there be wastage in big retail?
About 50 per cent of the wastage is at the farm level. If you order bread from a bakery, the baker has to stock it all day, and throw what is not sold.

But isn’t it supposed to help farmers, since 30 per cent of the procurement is local?

That is another lie. They call small retail ideological. But it is a reality in this country. The entry of Walmart and the likes started only after India inked the knowledge agreement on agriculture with the US.

As for farmers, if Monsanto’s entry led to a quarter million suicides, Walmart would pave the way for more. The model thrives on making everyone reduce margins, till none exist at lower levels. reduce their margins till they go out of business. Besides, the criterion for 30 per cent local procurement qualifies businesses below $100 million. That is not small-scale in India!

Also, their model is to use five companies for two years, and then abandon these for new ones.

What would be the implications on labour? Won’t it create jobs?
Why is Walmart importing 80 per cent of what it sells in the US from China? Walmart can’t exist where there are labour rights. They had to leave Germany. As for jobs, the difference between India and the US is we have surplus labour. However, the irony is displaced farmers would not find jobs in these shops. They get educated kids. The poor migrants here can then resort to crime.

What about cold chains and backend infrastructure, which would come with retail FDI?
Does our country lack backend infrastructure? It is decentralised and distributed across the country. If there is a functional village haat or a local mandi that is backend infrastructure, they want to centralise these.

Walmart, for instance, entered India on cash-and-carry five years ago. What backend infrastructure have they created so far? If they couldn’t in five years, what can any of these companies do now?

But hasn’t China benefited from FDI in retail?
Yes, their domestic retail has doubled. But the truth is there was not a shop there. You are comparing a country with zero retail with India, which has a 400 million strong retail force.

The Cabinet decision is not about investment, but market grab. It is the Macaulay effect: You feel inferior and thus, succumb to anything that comes from outside, even if it is worthless.

Why do you call it market grab?
The whole unemployment crisis in the West is due to the model of centralised procurement by a few big players. If the big retailer is to import all medicines from China, our pharmacists would shut shop. Our electronics shops would shut shop. would go to the big retailer to get cheaper stuff. In the 80s, the difference between retail and wholesale prices was six per cent, which rose to 50 per cent six years ago. With FDI in retail, 98 per cent would go to retail and just two per cent to farmers.

But no state or party has objected so far.
This is because states have not been consulted. It is so undemocratic. And, the Opposition has been tricked when it was not prepared for it. It shows the government refuses to learn a lesson from what happened to Europe and the US. It is an insult to the nation.

Have you been supporting the Anna movement?
I have known Anna since 1984, and his work in Ralegan Siddhi is great. In April, I told him the challenge is to join the energy of existing movements. It is focused on one law. It should be a set of parallel movements, with each member taking up a cause. Maybe, (Arvind) Kejriwal can take up Lok Pal and someone else can take up another issue. Public support can be channelised to many issues to create a nationwide movement for change on many fronts.

Critics have said the Rashtriya Swayamsevak Sangh (RSS) has been driving the movement. Do you agree?
No, that is not true. The RSS has not been able to keep up with issues and is out of touch. If it wanted to do something, it would do it on its own. It is a coming together of many from different movements. I was called for their first meeting in January, but wasn’t able to make it. And, there were people from across the spectrum — from Ramdev to activists.

Would you join them?
No. I don’t jump into any bandwagon.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, November 27 2011. 00:40 IST