gfiles magazine

July 10, 2012

A Rootless Wonder!

A prosperous agriculture and a thriving manufacturing sector is a sine qua non for the sustenance of the service sector, not the other way round.
When the plight of hungry French peasants due to high prices and scarcity of bread was brought to the notice of Queen Marie Antoinette, she is reported to have condescendingly said: “Qu’ils mangent de la brioche”, literally meaning “Let them eat cake”. The subsequent French Revolution and the fate of Marie Antoinette is history. 
Discoursing on India’s ascending poverty and descending economic growth, Kaushik Basu, Chief Economic Advisor, gave a similar solution: “Bring in the Walmart pronto.” Incidentally, Basu is also Professor of Economics at the Ivy League Cornell University in the US, the land of Walmart! He has no concern for India’s languishing agriculture (primary sector) and stagnating manufacturing (secondary sector). Instead, he pitches for the tertiary services sector: “A couple of big bang reform moves like allowing FDI in multi-brand retail and insurance could lift the investors’ mood even if the economy is showing signs of slowing down.” 
According to him, the largest beneficiary in allowing FDI in multi-brand retail will be the farmers who are waiting with bated breath for this to happen! So too will be the small producers for whom the ‘global market’ will open up when these MNC retail chains set up shop in India! As an ‘economist’, he should know that the relationship of such MNCs with farmers and small producers will be that of an ‘oligopsony’, with a few buyers and a large number of sellers. For consumers, it will be one of ‘oligopoly’, with few sellers and a large number of
buyers. Such a lethal combination will kill entrepreneurship and employment in the small and unorganised sector, numbering over 40 million, besides throwing small farmers out of farming!
Perhaps, this is what Basu and his ilk want and Commerce Minister Anand Sharma has backed it up stating that as soon as the Presidential election is over, he will implement the ‘FDI in retail’ reform that has been approved by the Cabinet, but put on hold due to protests in Parliament! Some Congress Chief Ministers have already started beating the drum!....READMORE

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