‘Nobody can say that we didn’t reach out (on FDI in retail). States that do not want it,it’s their decision’

With the government’s decision on FDI in multi-brand retail setting off a political storm,Union Minister of Commerce and Industry Anand Sharma speaks to The Indian Express Editor-in-Chief Shekhar Gupta on NDTV 24x7’s Walk the Talk about why the country needs to go ahead with the policy

Written by Shekhar Gupta | Published: September 25, 2012 12:51 am

With the government’s decision on FDI in multi-brand retail setting off a political storm,Union Minister of Commerce and Industry Anand Sharma speaks to The Indian Express Editor-in-Chief Shekhar Gupta on NDTV 24×7’s Walk the Talk about why the country needs to go ahead with the policy

My guest this week is somebody who has been one of the most silent ministers in this government,but not so silent lately,Anand Sharma. So you are the one who has created this crisis and you are smiling.

We have not created a crisis. We have taken a decision which we should have taken last year but it was trapped in partisan politics. But this country needs investments,this country needs creation of integrated infrastructure,something which will benefit the rural economy,particularly farmers,and reduce the burden on the consumers,and,in the process,generate millions of jobs. India is a country where 55-60 per cent of the people are still dependent on agriculture for their sustenance. But things are going to change because agriculture cannot go beyond 4 per cent—and that’s a historical experience. Jobs have to be created.

In fact,there are very few phases in modern history where agriculture has grown at 4 per cent for 10 years anywhere.

True,but what is important is that you will have tens of millions of young Indians joining the workforce. That has to take priority attention,particularly in policy formulation. We are the second largest producer of food grains in the world but we lose 15 per cent post harvest. In milk,we are the largest (producers) by far.

In Maharashtra now,they are throwing away milk and milk powder which can’t be exported because you guys in some frenzy banned milk exports.

We have corrected it. It (the ban) was when there was a shortage.

But these funny things keep happening in India.

It’s cyclical. Sometimes if the monsoons are weak and the fodder is not there,the milk production goes down.

You have to answer the challenges of these cyclical changes.

Take fruits and vegetables. We produce about 230 million tonnes and our post-harvest losses are 35 to 40 per cent. That’s unacceptably high. Now,should we allow this situation to continue—that what the farmer produces never reaches the market,no shop-shelf,no kitchen? Or should that be processed and stored in cold storage? That’s where modern technologies come in—in sorting,grading,warehouses and the entire refrigeration chain. So if anybody is saying that farmers should not be able to sell at their doorstep and what can be saved,in the form of juices,pickles and jams,but which rots and consumers end up paying four to five times the amount… If you go by the World Bank report,the price realisation for the Indian farmer is one of the lowest in the world—12 to 14 per cent.

I am persuaded and so is our paper but how come you have not been able to convince such a large section of the political class?

There are two reasons. One is the blinkered ideology of the Left. They do not look at what’s happening even in our neighbourhood,elsewhere in the world. They are still opposing a policy which has a distinct India signature,an India imprint. We have factored in our diversity,our socio-economic complexities. Accordingly,India’s policy is different from that of other countries. China allowed multi-brand FDI without any conditions. Similarly,Thailand,Indonesia and you go right up to South America,where they created a retail revolution. But we have put in conditions which will address the real challenges when it comes to the agrarian economy and also ensure that the interests of those gainfully employed in the retail trade are protected. But that’s the Left. The issue is of the BJP. Does it have an ideology to oppose it? The answer is no. I would like to know whom they represent when they oppose it. When they were in government,they were working on it and it cannot be denied that they had the draft Cabinet note ready. Now it is with us and I have been saying that if they allow Parliament to function,I am going to table it in Parliament.

So you have a draft Cabinet note produced by the NDA government?

Yes,permitting 100 per cent FDI in multi-brand retail. The draft note is very interesting. It also argues that earlier when organised retail came,it was said that the small retail will collapse but that has not happened. Then,interestingly,there are the examples of Haldiram’s and Bikanervala,that when McDonald’s or Pizza Hut came,everybody said they would be destroyed,but they have grown. It’s all there in the note. Because of the change of seat—from being the ruling coalition to the Opposition—there has been a change of philosophy. It is an opportunistic and partisan agenda.

The argument is that it was before the financial crisis of 2008,which has shown up the limitations or the perils of global capital.

I don’t think India has suffered from that. They should do their homework because even during the downturn,India remained an attractive destination for foreign investors. If you say that this has happened in the world,do you erect barriers around yourself and insulate India? We live in an interconnected world.

Have you gone to the Opposition,to the BJP,particularly your predecessor Arun Jaitley?

I have met them and written to every chief minister. We also had reservations from some of our allies,particularly the Trinamool Congress’s Mamata Banerjee. I did go to Kolkata to meet her. I met her here more than once. She had a view,which we accommodated,that this is a decision that is best left to the States. We have a situation in our country where we have 28 states plus Union Territories. You have 9-10 states,some big agrarian ones,some states which are landlocked and which have enormous strengths in horticulture. They are asking for it,they are demanding it. The policy was there,it was paused only because of the shrill discourse in the Opposition last year and they stalled Parliament,which has become a pastime for the BJP. When it happened,a decision was taken at the all-party meeting that the implementation shall be suspended till the government has another round of consultations,which we did. Nobody can say that we didn’t reach out. We have recognised the rights of all the states. States that do not want it,it’s their decision. It is the prerogative of Mamata Banerjee’s Trinamool,or for that matter Nitish Kumar,and others who do not want it. People will see merit in it. It happened with VAT. It started with a couple of states and look where we are.

In fact,it started with Haryana. Mr Chautala started it and his tax collections went up.

Exactly. And others saw the benefit. That will happen with this also. The Constitution gives equal rights to all States of the Union. Those that do not want it can make the decision,but can they decide for other states? Can the states who want it be deprived?

When you had this conversation with Arun Jaitley—I presume this draft Cabinet note was prepared under his watch—what response did you get from him?

He said we have a party position. Interestingly,except for one of their chief ministers,of Madhya Pradesh,and one of their allies,the CM of Bihar,none of them replied to my letters. There was one communication which I received from the CM of Orissa,but he is not part of the NDA.

Did these two CMs who wrote to you strongly oppose it?

There is not much merit or force of logic. They are opposing it because it is partisan politics. They say when we are in the government,we will do it; when we are not in the government,we will oppose it.

What did Naveen Patnaik say?

Last year,when reports came out that Orissa supported (the policy),he said that we were not. He wrote to the PM,he wrote to me. We respect that.

What did Mr Badal tell you?

Senior Badal said we are part of the NDA. He sees the benefit to the farmers because the Bharat Krishak Samaj and farmers’ unions in Punjab and Haryana all support this. Farmers see how exploitative their present agrarian economy is.

You are fellow lawyers,so tell me what did Arun Jaitley say?

He said we are discussing it and that the BJP as a party is not in favour of this at this stage. But they were not clear as to what they wanted the government to do.

Tell us about your conversation with Mamata.

It was very cordial. It has to be,we were together in the Youth Congress.

She is still a youth leader.

She is full of energy and very gutsy. She said that in Bengal,she is finding it difficult and does not want to implement it. I said,we respect that and we will ensure that we make it clear that the implementation is left to the states. I did explain to her that under the Shops and Establishments Act,the licence to open a shop is given by the local authority; the Government of India does not give it. Even the trade licence is given by the local authority.

Describe to me in a couple of sentences the nub of her opposition.

She said it is in her manifesto and she thinks that small retail or unorganised retail may get affected.

Is it in her manifesto?

I have read the Trinamool’s assembly election manifesto. It is not there. I don’t know if it is in their parliamentary election manifesto. I explained to her that look at our situation as a Central government. We have to respect every state. Can we deny the states who want it?

What did she say?

I did not get a direct answer but she said she cannot do it. But there is one thing I remember mentioning. Bengal has the Spencer’s store,Tesco stores. Organised retail came to India more than 10 years ago and that happened during the BJP-NDA government. Now these retailers have 1,200 stores,some have 600 stores. How many of those stores are there in the states that have opposed FDI? Close to 40 per cent,in some cases close to 50 per cent and more.

Have they affected the small retailers?

Small retailers have also grown. When you are talking about cash-and-carry,the wholesale points,the BJP-NDA government had allowed it in the back-end. But back-end was not attractive until the investors see that there is a possibility of the front end opening up.

So this will affect states that are not implementing it. For example,states like Bihar. If it is a large agricultural state and two of its neighbours implement it,then what happens?

They will lose out and they are worried. They say that we don’t want to do it but if you do it in neighbouring states,then they will benefit and we will be affected.

Has anybody said this in writing to you?

Yes,Nitish. My letter to him said that please consider this aspect that we are leaving the decision to the states. But then,he says no,I don’t even agree to that. I will not implement it but if my neighbouring state does,and there are benefits,that will adversely impact my state. So I will not do it and you will not do it and I will not allow the one who wants to do it.

It’s like a dog in the manger. You said earlier that when Parliament convenes,you will place on record the draft Cabinet note prepared by the NDA?

I will. The country must know.

What does the note say?

It actually opens up FDI in multi-brand retail 100 per cent without any conditions.

100 per cent,not 51 per cent? And not these really,pardon my saying so,almost idiotic conditions that you have put in? Our editorial view is if you put so many strings,this also becomes a source of rent-seeking and the inspector raj.

If you are referring to the 30 per cent local sourcing,it was very important because there were concerns.

So what was the NDA saying that was ahead of your policy?

They saw merit in FDI and technology coming in this sector. And they should be honest to themselves. They should say well,we have changed our philosophy because we are no more in the government.

I change my mind as facts change. Now the fact is that I am with the Opposition,not with the government.

But we have been in the Opposition too. Our generation has seen many changes in India and globally.

Tell us about yourself,how you came to politics. People thought you were a backroom functionary of the high command.

I’ve been a political activist.

An activist in Africa. But how did you come to the mainstream to reemerge as a reformer?

I started like many of my generation—from the students’ movement. I was born in Shimla and studied there. There was a lot of activism in the early 70s. From there,I moved to the Indian Youth Congress. Then I moved to Delhi as general secretary of the Youth Congress and then as national president. That was when Rajiv Gandhi took over as president of the Congress and I was the first person to be selected as president of the Youth Congress.

So in today’s political system,there is nobody who knows Mamata Banerjee as well as you do because you’ve worked shoulder to shoulder. What drives her and will she change her mind?

I am sure when Mamata will see that something is benefiting the farmers and the young people,that some policy which is generating employment…The other day,she said,‘Please help us. I want to bring in investment and industry’. And I said,yes,you give us the climate and you give us an assurance and we will bring industry to you. In fact,she wanted Kolkata to hold a partnership summit.

What’s your advice to Mamata?

Mamata has to support the manufacturing revolution of India. We came out with a National Manufacturing Policy,which aims at creating integrated planned industrial townships through National and Investment Manufacturing Zones. We have already notified nine. These will be developed by the Centre and State in partnership.

Is that the new item on the menu?

It is already done,we are moving towards implementation. Nine have been identified. Japan is a major partner in that. The trunk infrastructure is being funded by the Government of India. And the Cabinet has sanctioned Rs 18,500 crore. Japan has come in with their contribution through the two investment arms of $4.5 billion. A trust fund has been created. We are now moving fast. Since Independence,only one (township)—Jamshedpur—was established with the vision of Jamshedji Tata. Now we are talking of at least 12. China did it,Germany did it,Japan did it. Now we have brought in some Singapore companies also.

Before you move there,you will have to do something with your Land Acquisition Bill. Because if this Bill comes through,all this is history.

I did talk to CMs in advance,informing them that we were working on this policy and that you should start looking at land banks. Without any speculation and noise,these states created their land banks. Except Andhra and they too are in the process. So what I am saying is,what is the definition of public purpose? Construction of a freight corridor: is it public purpose? The answer would be yes.

The current draft would say no.

Yes. The integrated industrial townships,these are going to be greenfield townships which will create 100 million jobs. How can the definition of public purpose be devoid of manufacturing and job creation?

And do you see yourself finding more success with your colleagues than you have had with the Opposition on retail?

We never give up. We have acted out of conviction. We have looked at what this country requires. And even when we are talking of industrial townships or zones,we are looking at the future of this country. You make India the workshop of the world. We are going to invest in innovation. There is a technology acquisition fund,which is being created for these National Investment & Manufacturing Zones.

This is a new term for you in public life,if I may say so,the reinvention of Anand Sharma. What does it matter if you encounter a few Bharat bandhs on the way because you must have engineered a few in your time in the Opposition?

If a Bharat bandh can bring down global petroleum prices,if it can create a 100 million jobs,then I will also join them. But a Bharat bandh destroys opportunities and causes enormous losses. So what contribution are they making to the country?

Transcribed by Biswa Yonzon

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