Why the government's FDI argument is ridiculous

The ongoing debate about liberalising rules for FDI in retail marketing has highlighted many aspects of policy mismanagement in the current government.

First, this important and controversial decision was taken by the Government while Parliament is actually in session, but without even the most superficial attempt to consult or even inform this elected body (or even, apparently, its own allies in government) before the widespread public outcry left it with no other alternative.

Second, this decision, which will have huge implications for employment across the country and therefore affect the state governments directly, was taken without any consultation with the states.

Third, the announcement of the policy reflects the UPA government's continuous tendency to avoid taking measures that will address the real issues of concern to people (such as rising food prices, inadequate employment opportunities, growing inequalities). The government has instead been diverting attention to policies that may actually worsen the situation.

Much has already been written about the adverse net employment implications of allowing more large retail chains with more capital intensive techniques.

Several analysts have already noted that this move is unlikely to benefit farmers and direct producers, as the greater market power of these large intermediaries has been associated in many other countries with higher profit margins and exploitation of small producers.

In this article, I would like to concentrate on two aspects of large multinational retail that relate directly to food marketing and consumption.

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