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A bold decision Condemnable
act |
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3 yrs
after Mumbai attack
The
Afghan cauldron
The
heart of the matter
WHO
GAINS FROM FDI IN RETAIL?
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Condemnable act
It is deeply regrettable that Union Agriculture Minister Sharad Pawar was slapped in public on Thursday in New Delhi by a youth who claimed he was agitated over rising prices and corruption. Such atrocious behaviour has no place in any civilized society and must be roundly condemned by one and all. While this is a reflection of the cult of violence that is sweeping across the country, it is also a reminder to politicians that there is growing anger among the youth at the all-pervasive corruption in day-to-day life. Though it is now being said that the attacker, Harvinder Singh, is mentally unstable, here was a man who had made a similar though unsuccessful attempt less than a week prior on former Telecom Minister Sukh Ram after the latter’s sentence in a bribery case. It speaks poorly of both the intelligence and the security apparatus that the miscreant could manage to come so close to Mr Pawar despite having shown how dangerous and wayward he could be. It is not inconceivable that lumpen elements like Harvinder Singh get encouraged by the excessive coverage of such events especially in the electronic media. The slap was shown repeatedly on practically every news channel. The lack of deterrent against such attacks is also a matter of record. How else can one explain the fact that after assaulting Sukh Ram, this miscreant assaulted a senior minister like Mr Pawar in public five days later. Earlier, Team Anna member Prashant Bhushan was roughed up in his chamber in the Supreme Court and another activist Arvind Kejriwal had a chappal hurled at him at a public meeting. It is indeed time that deterrent action be taken against Mr Pawar’s attacker. At the same time, it would be wrong on Mr Pawar’s agitated supporters in Pune or elsewhere to resort to a bandh as a mark of protest. The blame game between political parties and the unruly behaviour of some politicians in Parliament must also remain within limits. With assembly elections in five states now round the corner, the political temperature must cool off and the vigil against wayward forces must be stepped up. |
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3 yrs after Mumbai attack
Another
year has gone without anyone getting punished for the gruesome killing of 166 persons in the Mumbai terrorist attack on November 26, 2008. Even the sole surviving terrorist, Ajmal Kasab, who has been given death sentence, is yet to be hanged. The seven masterminds in Pakistan against whom court proceedings are on are roaming free as if they did nothing to deserve punishment. Among the seven accused is Hafeez Sayeed, founder head of the banned Lashkar-e-Toiba, who keeps making inflammatory speeches against India. On Friday, the Jamat-ud-Dawa, headed by Sayeed, organised protest rallies against the Pakistan government’s decision to grant India the Most Favoured Nation status. This might have been aimed at demonstrating that any action against him would lead to massive public reaction. Even otherwise, the authorities in Pakistan are not inclined to punish Sayeed and the other accused for their role in 26/11. There is no dearth of evidence against all the accused to get them convicted by the court handling their cases. The dossiers provided by India have enough proof about their involvement in the heinous act. The interrogation of David Headley, a Pakistani-origin US citizen, by the American authorities has also brought out enough details showing how the Mumbai attack was planned and executed and who were the people behind it. That the plan was prepared by the LeT is a well-established reality. Yet the Pakistan government is not pursuing the case in a manner so that the guilty are adequately punished. Now the question arises: What are we as a nation doing to prevent terrorist attacks? Have we really learnt any lessons from 26/11? The Pakistan-based terrorist masterminds implemented their Mumbai project by using the sea route, which did not have sufficient security arrangements then. Are we in a position to thwart terrorist designs now? The authorities are not prepared to say with confidence that another Mumbai-type attack is not possible today. Different kinds of alibis are offered to make people believe that terrorist attacks cannot be prevented unless Pakistan eliminates the terrorist elements based there. How shameful it is that we are depending on Pakistan to do what is India’s problem! We must learn from the Americans. They have made it almost impossible for terrorist outfits based anywhere in the world to enact another dance of death as it happened on 9/11. Their track record is worthy of emulation. |
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Hatred injures the hater as well as the hated. Love blesses the lover as well as the loved. This is hard economics as well as good common sense. — Kenneth Boulding
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The Afghan cauldron
Historically, Afghanistan has been the most difficult country for military campaigns and equally difficult to govern. The nature of terrain, the climate and the tribes that inhabit the land make an amalgam of harshness and lawlessness. The “Great Game” of the British ended in a woeful failure. Then the Russians had to beat a humiliating retreat. And now, after a decade-long struggle, the US and its allies, too, are preparing to bid goodbye without leaving behind any trace of peace and stability. The recently concluded strategic accord between India and Afghanistan covers wide-ranging areas of trade, infrastructure, creation of facilities to exploit minerals and hydrocarbons, education, etc. More importantly, India will now be involved in training and equipping the Afghan national security forces. There will also be regular political contacts and cooperation at the United Nations. This agreement has vastly enlarged the scope of cooperation between India and Afghanistan and, understandably, raised eyebrows in Pakistan. India training the Afghan security forces and the use of the term “strategic alliance” conjure up Pakistan’s worst fears, more than all the other provisions in the agreement. The Pakistan military has always dreamt of exercising control over Kabul, albeit through its proxies, and of acquiring “strategic depth” against its perceived enemy. The possibility of this perceived enemy gaining considerable influence in Kabul is an anathema to Pakistan. Speaking to David Bradlay of the Atlantic Media Company, Gen Pervez Musharraf reflected the Pakistan military’s view when he said, “In Afghanistan, there has been a kind of proxy conflict going on between Pakistan and India. India is trying to create an anti-Pakistan Afghanistan and has the vision to dominate the region and weaken Pakistan.” President Hamid Karzai’s writ does not run in most parts of Afghanistan. He has failed to persuade the Taliban to agree to participate in a peace dialogue. The recent killing of ex-President Burhanuddin Rabbani, who was appointed by Karzai as an interlocutor with the Taliban, is an indication that the latter are not willing to accommodate Karzai in any future political dispensation. Pakistan’s own designs and its backing of the Haqqani group is a factor that will inevitably play its full course after the US-led NATO troops leave Afghanistan. Pakistan’s obsession with “strategic depth”, flawed as it may be, is the very raison d’etre of its Afghan policy. It would not like India to fish in what Pakistan considers its backwaters. Pakistan has had an inalienable relationship with the Taliban and other extremist organisations. It has travelled too far down the terrorist highway to pull back. American frustration with Pakistan’s continued support to the Haqqani network finally came into the open when Admiral Mike Mullen accused Islamabad of playing a “double game” of running with the hare and hunting with the hounds. President Obama and former President Clinton, too, have warned Pakistan against this duality in its stance. At some point America will distance itself from Pakistan and cut down its aid which will impact Rawalpindi, but may not be able to dissuade it to delink itself from the Taliban. On the other hand, it will drive it more and more into the arms of China. Establishing a Taliban regime in Kabul gives Pakistan the added advantage in that Afghanistan would have neither the influence nor power to aggressively assert its historical claims to territories seized from the defeated Afghan rulers by the Imperial British power, which termed this new boundary as the Durand Line. While Pakistan is likely to view the Indian alliance with Afghanistan as an attempt to squeeze it from two sides, China may feel that its plan for the exploitation of Afghan mineral wealth will be in jeopardy. China has already got a contract for copper mines in Afghanistan and is now extracting this valuable mineral. It is also exploring the possibility of more such contracts. Moreover, China will be loathe at the prospect of spread of Indian influence in this important region. China’s relentless quest for hydrocarbons and minerals would seek to negate Indian influence in the region for obvious reasons. On its part, India does not have the capacity and the will to carry through this strategic alliance with Afghanistan, especially when Pakistan, in cahoots with China, militates against it. For India there is no air or land link with Afghanistan except through Iran. The geography itself is a major roadblock against this alliance with Kabul. It will also bring to naught Dr Manmohan Singh’s persistent efforts aimed at befriending Pakistan. Flip-flop in its policy on the issue of granting the Most Favoured Nation status to India is the result of uncertainty in the direction Pakistan wants to take though it does realise the tremendous economic advantage Pakistan will draw from this trade agreement with India. In any case, India is well acquainted with the duality of Pakistan’s politics. President Karzai has been making friendly overtures to Pakistan, calling it Afghanistan’s “twin brother”, but he does know, well enough, that amends are not possible and Pakistan has a different game plan in mind. With the deadline of 2014, when the bulk of the foreign troops will have left Afghanistan, approaching fast and Pakistan’s intentions being known, he has tried to latch on to the only country he could find willing to help him out. On India’s part, the contours of this alliance and their likely fallout on Pakistan have simply not been fully thought through. Given the constraints of geography and India’s own limitations to go the whole hog with Kabul, the deal should have been purely trade-oriented. Peace in this region is in the best interests of all — Afghanistan, Pakistan and India. New Delhi can think of trans-border trade with Central Asian republics and revival of something akin to the old Silk Route only by fully involving Pakistan in this grandiose scheme. That is the reality India must come to terms with. On the other hand, China is well on its way to building trade corridors with Pakistan and the Middle East and, finally, a land bridge linking the Pacific coastline with the Atlantic. Given the ground reality, this hopping across Pakistan and working out a strategic tie-up with Kabul is not without its own pitfalls. This alliance with Kabul will bring added pressures from China on our borders, and terrorist violence in Jammu and Kashmir may increase. Such are the dynamics of the geo-political realities of the region. Pakistan is quite unmindful of its disastrous policy of building the jihadi network and the inevitable fallout of this on itself. When Maharaja Ranjit Singh was shown the map of India, he wanted to know what the area marked in red indicated. When he was told that it indicated the spread of the British, moving his hand on the rest of the map prophetically he said, “All of it will become red.” This was when his empire was at the very pinnacle of its glory. It would be no prophesy to predict that once the Americans leave Afghanistan, the Taliban, duly supported by Pakistan, will come back with a vengeance and India will be able to do little to thwart
it.
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The heart of the matter LIKE disheartened John Keats in “Ode to the Nightingale”, my heart too “aches, and a drowsy numbness pains”. It is beginning to bleed, though no signs of external injury are visible. It has, in fact, been hurt internally. The raison d'être is simple but contemptuous. The “dil-e-nadaan”, hailed as the reservoir of pure love, is mockingly being dubbed as a mere mechanical refinery of blood, for paltry financial gains. What a cardiac trauma! The “holiness of the heart's affection” has been stained by none other than a former Law Minister, Shanti Bhushan, by branding it penny-pinching machinery, just to claim a deduction of Rs1.74 lakh from the Income Tax Department, incurred on his bypass surgery in 1982. Consolably, however, the analogy that a lawyer should also be extended similar taxation benefit for coronary surgery, as is doled out to a cricketer for the operation of his bowling arm or a vocalist for his vocal chord did not find favour with the Delhi High Court last month. A high-flier legal eagle as he is, he triggered all interpretational salvos stacked beneath his wings, to equate the heart of a professional with a “plant” and compute the coronary expenses as the cost of its normal repair. No sooner did the mercantile octopus expand its sucking tentacles to puncture, the little heart lost its rhythm and started missing its beat. How scornful it sounds to compare a bubbling heart with an ear-splitting metallic “plant” while, in reality, it offers an exclusive oasis where seedling of love sprouts and allures the lover to “hold my hand and hear my heart”, as enchants Anna Kasilag, echoing Byron’s “what's in your mind may escape, but what's in your heart will remain forever”. Oh, behold and bemoan, the heart is now being devalued by a writ-man of affluence. All my cardiac ventricles and auricles were filled with remorse while an old melody “pyaar ki jis may hoti hai pooja, ye preetam ka ghar hai, dil ek mandir hai” gushed through my arteries. “Who is this heartless octogenarian challenging the autonomy of the temporal seat of love?” thundered the resident chief deity, Cupid. No consideration is big enough for a “Prem Pujari” to barter the chaste feelings brewing in what is called an emotional igloo. Those who wear the heart on their sleeve are the real “dabang”, continued the rhetoric. History bears testimony to several kings who did not blink even once to jettison their majestic empire to keep their heart-beat ticking. The lawyer should understand that no law could ever seize a cascading heart, whatever was the consequence. By not venturing into the mesmerising realm of irrepressible heart, known to have only entry doors with no exits, the judiciary has also authenticated its ultimate sovereignty. Stop, think and imbibe Lord Byron’s eventual wisdom, “accursed be the city where the laws would stifle nature's”, unfolded in “The Two Foscari”. Age was no bar for rolling in love, warned the Greek god. Taking a cue from veiled caveat, I wonder, the lawman could graduate into next love-man, shot by its sensual arrow. Get ready to extend a hearty welcome to your father’s new heart-throb,
Prashant.?
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WHO GAINS FROM FDI IN RETAIL?
With the Union Cabinet deciding to allow 51 per cent foreign direct investment (FDI) in multi-brand retail on Thursday the way has been cleared for the entry of global supermarket giants in India. There are doubts and fears amid hopes for long-term gains
One
of the conditions for 51% FDI in multi-brand retail proposed is that the players will source at least 60% of their farm produce requirements from small farmers. A small farmer is defined as one with up to 10 hectares. It is important to understand implications of FDI in food retail for various stakeholders. The more important questions to be asked on the issue of FDI in retail are: Does it really help farmers or small farmers? Does it improve efficiency of food supply chains and help lower food inflation which India is grappling with? And of course, how does it impact traditional food retailers’ livelihood?
Small farmers may not gain The operations of domestic fresh food supermarkets in India have not made any difference to the producer’s share in the consumer’s rupee so far (one of the arguments of the DIPP discussion paper for permitting FDI in retail) other than lowering the cost of marketing of the producers as supermarkets have collection centres in producing areas unlike the Agricultural Produce Market Committee (APMC) markets (mandis) which are in distant cities. But these supermarkets will buy only ‘A ‘grade produce, that too on open market-based prices, and only a part of the output of farmers, who end up going to an APMC mandi to dispose of the remaining/rejected produce. The chains procure from “contact” farmers without any commitment to buy regularly as they do not want to share the risk of growers. Thus, the involvement of supermarket chains with producers is low and there is no delivery of supply chain efficiency as many of them have already wound up e.g in Gujarat.
The noise about benefits to small-holders in high-value crops (read fruits and vegetables) due to supermarket linkages is exaggerated as these crops account for only 2% of the gross cropped area, and the direct linkage is either absent or pretty weak. This is not likely to change even with FDI in retail. Further, due to the sheer size and buying power of foreign supermarkets, the producer prices may be depressed. In the UK there was a negative relation between the relative market share of a supermarket and the price paid to the suppliers in relation to the average price. The UK supermarket chain Tesco paid its suppliers 4% below the average price paid by retailers. There have been a large number of supermarket malpractices across the globe which include payments to be on the supplier list (listing fees), threats of delisting if the supplier price is not low enough, payments and discounts from suppliers for promoting/opening new stores, rebate from producers as a percentage of their supermarket sales, minus margins whereby suppliers are not allowed to supply at prices higher than the competitor price, delayed payments, lowering prices at the last minute when the supplier has no alternative, changing quantity/quality standards without notice, just-in-time systems to avoid storage/inventory costs, removing suppliers from the list without good reason, charging high interest on credit, using tough contracts and penalties for any failure to supply. If it is not misreported, the limit of 10 hectares is laughable as there are hardly 1% farmers who have more than 10 hectares of land. Thus, putting this condition is no good as it is too broad and covers 99% of farmers and, therefore, does not differentiate among farmers at all. Even if it is assumed that it is 10 acres (4 hectares), it will be more than 94% of all farmers (2005-06). How does this conditionality help really small-holders in whose name the permission is being granted? The retail players may work with the top layer (5%) of these farmers and still meet the conditions. Small retailers to be hit The supermarket expansion also leads to employment loss in the value chain as compared to 18 jobs created by a street vendor, 10 by a traditional retailer and eight by a shop vendor in Vietnam, a supermarket like Big C needed just four persons for the same volume of produce handled. Metro Cash & Carry employed 1.2 workers per tonne of tomatoes sold in Vietnam compared with 2.9 persons employed by traditional wholesale channel for the same quantity sold. The spread of supermarkets led to 14% reduction in the share of “mom and pop” stores in Thailand within four years of FDI permission. In India 33-60% of the traditional fruit and vegetable retailers reported 15-30% decline in footfalls, 10-30% decline in sales and 20-30% decline in incomes across the cities of Bangalore, Ahmedabad and Chandigarh, the largest impact being in Bangalore, which is one of the most supermarket penetrated cities in India. Another proposed condition is that FDI in retail will be permitted in all cities with a population of more than one million. The question to be asked is: How many cites in India are really below one million population and how long? Further, given the size of the supermarket retail stores, they may be located in one city but their coverage in terms of potential clientele will extend to neighbouring towns as well. Impact on food inflation So far as the role of FDI-driven food supermarkets in containing food inflation is concerned, the evidence from Latin American (Mexico, Nicaragua, Argentina), African (Kenya, Madagascar) and Asian countries (Thailand, Vietnam, India) shows that the supermarket prices for fruits and vegetables and other basic foods were higher than those in traditional markets. Also, the lower procurement prices through direct procurement from farmers need not lead to lower consumer prices in supermarket chains as procurement prices are more about the bargaining power of buyers and suppliers. Even if it is accepted that supermarkets are able to offer lower prices, the low-income households may face higher food prices because of reasons of distance from supermarkets, and higher prices charged by supermarkets in low-income areas. Thus, there is no direct correspondence between modern retail and lower food prices and, thus, better food security of the poor consumers. Therefore, the inflation containment logic for FDI in food retail does not stand ground given the empirical evidence from across the globe. Thus, supermarkets would lead to the concentration of market power, with upstream suppliers facing buyer power in terms of lower prices and consumers (buyers) facing higher prices due to lower competition, besides traditional retailers suffering a decline in their business. Need for regulation The biggest fear in India is not that FDI in retail per se is worse than domestic corporate investment for farmers or traditional retailers; it is that there may not be adequate institutions and effective governance mechanisms to regulate and monitor operations of the global retailers. If the monitoring of wholesale ‘cash n carry’ stores so far is anything to go by, there is no regulation and the norms are flouted openly at the store level by the existing players. They are found to do retail sales in the grab of wholesale as the size of a single purchase (minimum ticket size) was just Rs. 500 or Rs. 1,000 which does not seem to be governed by any regulation. Given the global and Indian experience of supermarkets so far, it is important to slow down food supermarket expansion by mechanisms like zoning, business licences and trading restrictions. Further, there is need to limit buying power of the supermarkets by strengthening the competition laws like the legal protection given to subcontracting industries in Japan in their relations with large firms. These provisions are monitored by the Fair Trade Commission. If contract or “contact” farming is only another name for subcontracting prevalent in industry, then it is only logical to extend such legal provisions with necessary modifications to farming contracts. Also, provisions for legally binding and clearly worded rules for a fair treatment of suppliers and an independent authority like a retail commission to supervise and regulate supermarkets are required. This authority should ban the buying of products below cost and selling below cost, improve local traditional markets for small growers, delay the pace of supermarket expansion, establish multi-stakeholder initiatives in the chains and provide support to small producers and traditional food retailers. Producers’ organisations and NGOs need to monitor and negotiate more equitable contracts with supermarkets. The government should play an enabling role through legal provisions and institutional mechanisms like helping farmer co-operatives, producer companies and producer groups to facilitate the smooth functioning of supermarket linkages and avoid ill-effects. The writer is a Professor, Institute of Economic Growth (IEG), Delhi. Email: sukhpal@iegindia.org
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