Is (retail) FDI really necessary for India’s Growth?

Summary: FDI in retail is not the solution to the policy paralysis that we are seeing in this country. On contrary, it is symptomatic of the fact that we believe that we have the biggest rug in the world under which we will shove all our dirt and that we will never have to smell the consequences of that action. 

In the last few days, the elected leaders of this country have repeatedly made their case for bringing FDI into the retail sector. We, the people of this country, have been repeatedly told that we cannot go back to the Nehruvian socialism era or roll back the years of progress we have made on or economic front. Depending on who is debating with them on this issue, the government has given one of the three arguments:

  1. Indian customer too deserves the best that the world has to offer
  2. As things stand now, additional FDI is critical for the growth of this country.
  3. Bringing FDI in retail will help our Indian producers integrate with the global supply chain across the world. It is a wining deal for them too.

To support the government’s view, the industry analysts and those who matter have been constantly talking about the policy paralysis in the present government, and how opening up the retail sector to FDI is the key way to address that problem.

Personally, I believe that the first point was valid a decade and a half ago but in today’s India it is an emotive issue and not an economic issue. The consumers in India, at least to me, are now already well served and have the variety of options depending on the experience they seek. If there are some gaps, our existing Indian retailers are already capable to address them.

The key points are the second and third points. Basically, by saying that if we have to grow we have to have FDI our leaders are telling us that internally our country has exhausted all the avenues of growth and has reached its maximum level of efficiency, and so any improvement can happen only when we import the best practices from across the world. Also, they are telling that there is absolutely no other way India can integrate its produce with the world.

Below are the questions which I am trying to address in this article

Why am I arguing against FDI in retail?

Let me take the example of Walmart, the favorite punching bag of socialists and nationalists the world over. I believe their opposition is more jingoistic in nature. Our country, is actually not an exception.

In my MBA, Walmart was a great case study. We were taught that here was a company that was all about efficiency and no non-sense. In my job I had opportunities to closely observe Walmart. I have worked with the leadership of the teams that have implemented IT projects for Walmart and I have studied what sort of initiatives Walmart wants and how that integrates with its profitability. What I have learnt is that what they taught me in MBA is true. To the T.

Walmart stands for everything that is good in world retail. It has a single point aim of removing each inefficiency in each area of each link in its overall value chain. Whenever it removes any inefficiency it saves money and then it passes a part of that savings to customer making the eventual product cheaper. The core of its strategy is local sourcing through local vendors. If it believes that any product can be produced by its vendor in 100 Rs., then it will not pay 101 Rs. to the vendor. It will have all the data points for its vendor on how a price of 100 Rs. is justified and how the vendor can improve its own processes to meet that price point. If it has to refuse a thousand vendors, it will do so in the hope of finding one that fits the bill. More often than not, the same vendor that is refused earlier comes down to the same price point by improving its own processes.

Once Walmart buys from a small vendor, the vendor has 100% visibility of how much of its product is being consumed and how much is needed in the coming days and how it should plan its production. That is a message from heaven, ask any small entrepreneur. The payments are guaranteed and there is no issue. All you have to do is play fairly.

So where is the problem?

I humbly fold my hands and bow in admission that I believe India is not ready for this level of efficiency. Personally, I find a certain degree of romance in the fact that we celebrate our inefficiencies and our inadequacies. Even if one is not willing to buy my notions of romance here, one cannot shy away from the fact that we are hopelessly unprepared with respect to providing employment to our people. Blame it on corruption, blame it on lack of quality education, blame it on lack of manufacturing capability or blame it on any combination of any no of factors. The fact is that we are unprepared. And due to that unpreparedness, for every one success story of a small investor with Walmart, we will have a thousand failures. With every rupee that Walmart saves for its customers, a lot many more rupees will be lost for many more small retailers.

I earn well and am willing to pay extra for the same quality of product if I am paying to a small vendor. Alternatively, I am willing to pay the lesser cost for a sub standard product, if I am paying to a small vendor. My concern is that despite my magnanimity, I will not have a small vendor to pay to!

This is where my opposition to FDI in retail in India lies. Philosophically I don’t believe that pursuit of excellence is the only aim left for all of us as individuals, managers, investors and business owners. Economically it does not make any sense in talking opening the core of our economy to a foreign player when there are hundreds of lower hanging fruits that we can address.

Have we exhausted all the avenues of growth?

Growth is a function of the amount of money reinvested in the business and the quality of that investment.  In our personal lives, when we get a job this translates to how much of our free time and free earnings do we invest in improving our skills how relevant those skills are to our own jobs. The better this combination, the better are our own growth prospects.

Similarly, in case of a company, at its core the amount of growth in company’s earnings is directly proportional to the amount of money the company reinvests in the areas it believes are important to it and the quality of that investment. For e.g., in case of a Pharma company dealing in non-generics, this means that the growth in earnings is dependent on how much the company invests in R&D and what is the quality of that investment. With no reinvestment, there will be no growth. At the same time, for every rupee invested, the growth will be better if the quality of R&D is better as compared to when it is not. For a manufacturing company, this translates to the combination of amount of money invested in capacity building and the quality of that eventual facility that is thus built. Basically,

Growth in free cash flows = Amount of money retained for reinvestment needs * Return on equity

The above equation is the core growth equation that defines how a company’s free cash flows will continue to grow in the future. Depending on whether the company is a stable company or a growing company the above equation changes with some additional variables that can be brought on. However, the principle remains the same.

If one thinks of India as a large growing company, then it becomes clear that the amount of growth this country can obtain is directly dependent on the amount of reinvestments we need to do in areas that matter and the quality of those investments. So what are these specifics?

The things that matter for growth in any country are infrastructure and governance. In India, we have made a policy decision that the government will only be the agency to enable various industries achieve excellence, and not be a part of those industries themselves. That is well and good and perfectly logical. However, that also means that as a key enabler the government has to continuously invest into infrastructure projects and that is where we have been lacking. If we are serious about growth in this country, we have to be serious about investing in infrastructure. Without that we won’t be able to enable various industries, and hence won’t help them achieve excellence. Is that happening? Unfortunately no!

Secondly, the issue is about the return on equity. That translates to how good the quality of investment is. For an ordinary entrepreneur, it is the question of how good is the quality of investment that is made, how good is the road, how easily and how continuously the energy is available etc. That is where we get to the whole idea of corruption and mis-governance due to gross incompetence. In India, due to the corruption in each activity that government has laid its hands in, the quality of outcome that we have seen as citizen is dismal. In other words, we out to have seen better results on the same investments we are asking if we had lesser corruption and if we had relatively more competent folks governing us. Did that happen? Is that happening? Will that happen give what we know today? Unfortunately, NO, NO and NO.

I am not an expert on anti corruption and on better governance. That is a case more competent folks are fighting in the public domain. However, I believe I have successfully made a case for improving the growth prospects of India by attacking the joint issues of investing in infrastructure and removing corruption. If that happens, an ordinary entrepreneur will be able to really focus on the challenges of his business and not on how to fight the battle of no power/bad roads/corruption on a daily basis and that will mean a good life for his/her business as well.

So to answer the question I posed earlier:

NO, IF WE HAVE TO IMPROVE GROWTH PROSPECTS OF INDIAN ECONOMY, WE HAVE TO INVEST IN INFRASTRUCTURE AND REDUCE CORRUPTION. BRINGING IN FDI IS NOT THE ONLY WAY.

Is bringing FDI the only way to incorporate the global best practices in the Indian retail market?

It is not. Another way is to bring in talent. We have a situation where we live in a country that comprises a little over one sixth’s of humanity living in an area that is one of the poorest and despite that has had one of the highest growth rate consistently over the last few years. No matter how you slice it or dice it, we have to accept that we have a HUGE bargaining power on our hands. If any one else was in our situation, he/she would have taken advantage of that.

An alternative to bringing FDI to improve the business efficiency is to bring in managers who can implement improvements in our markets. When Japanese manufacturing was battling quality issues they did not bring in companies from all over the world to set up shop in their land. They brought in Deming who implemented the quality processed in Japanese manufacturing and today TQM/JIT/Kanban are worldwide best practices. Why can we not do that? We can Indianize anything… absolutely everything…  By that logic, we should be able to internalize and subsequently Indianize each best practice that is getting followed in any part of the world. We can open our managements to FDI and have global citizens governing Indian companies. If that does not help, we have Gartners of th world who do a very decent job of documenting what is working and what is not. We can read that and implement that.

 Allowing foreign players on the pretext of bringing the world experience to the Indian customer is akin to saying there is no way we could have done that ourselves. I am sorry, but that is incorrect and an insult to the intelligence of common man, let alone to that of the managers governing the Indian companies.

Is there no other way for our producers to integrate with the global supply chains?

Absolutely there is! Even though there is an apples to oranges comparison here, but let us see how the Indian IT has integrated itself to the global IT supply chain. We have had folks who relied on Indian education, went abroad and learnt the global best practices and then came back to India to serve global customers. We can do the same in retail.

Here is what I propose. We invest in education in even a bigger way and emphasize on the spirit of engineering. That has to be especially done in agriculture. This also ties directly to the idea of investment as related to growth that I mentioned earlier. We increase the no. of touch points our educational institutions have with the small entrepreneur (incl. farmer). We develop a proper ecosystem where a small entrepreneur is able to take risks and get rewarded. That is not hard to do. After all, some of that is already happening. For e.g., We hardly educated our producers on what is trending in the world of retail. But already the folks who have travelled abroad know that no matter how high-end an apparel chain is, the clothes are nearly always made in India/Bangladesh.

Once we are able to do above, we go big on showcasing the Indian produce to the rest of the world. Again, when one sixth of humanity will want to sell one half of world’s food produce to the remaining five sixth of humanity at best prices and better quality, it will be an easy sell. Our farmers and small vendors will be handily rewarded.

If we want, we can do it.

Was there a policy paralysis?

Yes, we have had policy paralysis in this country. But unfortunately the government does not understand what the exact type of that paralysis is. We have had policy decisions on manufacturing/services/IT/Minerals/Telecom in the past and all of them have yielded varying degrees of success. Our present paralysis is that we are not willing to look in the mirror and say that the reason we have not had the success we deserve because we have either been corrupt in implementing the decisions (for e.g. mining) or have been incompetent in taking the right decisions on the areas that matter (for e.g. ignorance of manufacturing/infrastructure). If we address those problems, we will automatically be the best performing economy in the world.

The way I see it, we are operating the patient for the wrong problem. That is only going to create complications later.

  • http://www.newvointeriors.com John Reuter

    I think what you are leading to is there is a social economic value to the country by self help. In doing so you will lead more locals to prosperity and thus lower the future entitlement cost to the country by following your plan. This should long term be a better solution for the people of India

    • Anshul Mishra

      Thanks John. Yes, that is what i believe will work in economies like India. We are uniquely placed with respect to our acceptance of democracy and our education that promises more better decisions than bad. I believe we have the capability to judge what works for us and what does not! Unfortunately, that common sense is a rarity among the political class… And that is true in each country of this planet!

  • http://www.newvointeriors.com John Reuter

    Read in local Paper that India went the other way. Keep trying to improve

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  • Vishnu

    Sir ,

    I want to contact you can i pls have your email id , pls sir its necessary . i got to know about you from KBC

    Thanks

    • Anshul Mishra

      Hi Vishnu,

      Thanks for visiting my site. I am not sure how i can help with KBC. Getting there is a matter of luck more than anything else. Process is already documented well on the Sony website and through some other blogs. If you have got an invite and needed some help, pls let me know. I will be glad to be of assistance in whatever way I can.

      Regards
      Anshul

  • Deepesh

    hello sir,
    saw your episode on kbc today was very nice and also your website & your views on economics and policy. since i also share the same interests I read ur article on FDI in which you say that Fdi is not the only practice through which we can improve our retail sector to which I also agree, but some points that I would like to make are-

    1- I live in a city with million plus population in which we have several retail stores like big bazaar and several other stores but the point is that none of them provides decent enough service to make it a point that i visit them again.

    2. also none of the stores in India or the city in which i live in provide rock bottom prices for which Walmart is famous, in a recent visit to local big bazaar i found prices more than my near by shop i.e. the same sale price as mentioned mrp.

    3. also as far as i observe no Indian retailer is opposed to fdi in retail almost all have welcomed it and none of them really try to improve supply chain bottlenecks or bring the cost price down of consumer goods and encourage mass consumption.

    kindly share your views sir,thanks in advance.

    Deepesh

    • Anshul Mishra

      Hi Deepesh,

      Thanks a ton for you kind words and for visiting my website.

      It is absolutely right that our retail industry is in dumps. What you have said is felt by nearly all of us on a daily basis. The way I see it, because of the problems you and I are facing as consumers we are also aware to a large extent on what we can do to improve the situation.

      The key to improvements is to invest in areas that cause us Pain. In the IT industry I am working in, my colleagues and my Indian competitors have have worked on process improvements for top companies in the world, WHILE SITTING IN INDIA. We have enough knowledge, experience, resources and foresight to know what is wrong with our industries. Tell me, will you and I not set up a business to improve those situations in Indian retail IF IT WAS AS EASY TO SET UP A BUSINESS AS IT IS IN US/WESTERN EUROPE? When it is becoming increasingly difficult for a small scale Indian enterprise to make its way in the economic environment, then why should it be equally easy for a large organization to set up business? It is no wonder that our business is in complete unanimity over the decisions. They know like the rest of us: what is wrong… and they have what the rest of us don’t have: a policy that supports them.

      I am from Bhopal and live in hyd. 2 of the best local retailers in these 2 cities are: Kabliwala in Bhopal and Ratnadeep in Hyderabad. Both are locally owned and operated and have proven themselves to be much better than Big Bazaar’s of the world. That has happened because these folks were natural kirana store operators where as Big Bazaar/Food World/Reliance Heritage ARE NOT THE NATURAL BUSINESS FOR THEIR OWNERS.

      Our big retailers are under huge debt as they had set up the businesses through investments and not through instinct/knowledge. They thought “lets throw money to make money”. That is what is biting them now and FDI is going to take over those businesses from them and relieve them of the pressure. That’s why they are welcoming it.

      I hope this helps. Pls let me know if you think otherwise.

      Anshul

      • Deepesh

        Hello sir,
        thanks for your reply I agree with your points that you made above, specially that most of the big retailers do not have the same expertise or know the nuances of the business as the hereditary kirana wala’s do they just invest in the business.

        1.But the main fear that the people have is that the 5crore or more people associated with the business will get unemployed and there business will get shut down. I don’t really think so because Walmart or other retail companies will open there stores in million plus population cities that narrows down to 50-60 cities of India how can it effect crores of people so adversely .

        2.A point that I don’t have much knowledge on is that will it really benefit farmers or producers I urge u to throw some light on it, as far as I know Walmart wholesale cash and carry business is already operative in India in 17 cities and how much it has benefited farmers and producers i don’t know. I think this should make a valid point.

        3.also one point is that to the best of my knowledge china allows 100% fdi in retail and it opened its doors in 1991 almost 20 years ago correct me if i’am wrong, as I listen to some analyst’s in business news channels they say that china is ahead of india for at least 20-25 years in terms of reforms and infrastructure and fdi in retail in china, Thailand etc increased manufacturing and made china a manufacturing hub of the world.

        4.well I dont really know is it possible in the way I’am thinking but one major idea I gathered after listening to so much of discussion is that if most of the people in the country are so opposed to fdi than why not try it as a pilot project in the country i.e. implement it in only 2-3 states that can be rajasthan , Delhi , Maharashtra, and see what impact it has on all the concerned people( consumers,farmers,kirana etc)for at least 5 years. than implement it nationally if it turns out favorable.

        kindly share your views.

        • Deepesh

          also sir felt very good to discuss with you a issue of such a big national importance.I am doing my P.G. in economics the problem with me or for that matter other students like me studying in avg. universities is that they do not get the platform to express there opinion like you guys of the iit and iim’s have.

          the biggest problem of the country which is not with all but most or majority of the people is that as soon as u start discussing a national issue or any important societal issue is that

          1.people of my age group start yawning or expressly show there disinterest.

          2.and people above my age group don’t have the knowledge of the issue of what i’am talking about and what the problem is basically.

          as is the case with fdi most of the people as soon as the topic of fdi comes bring a abstract picture into there mind of a monster store which will open in neighborhood and give products at throw away prices and end there business the same day , instead of thinking of coping up with unavoidable competition whether it be foreign or local

          • Anshul Mishra

            Hi Deepesh,

            I agree with you that there are short term benefits of FDI. But I believe that is because it is directly contrasting with the absolute lack of expertise among the existing indian players.

            Walmart will employ a lot of people and will ask a lot of small businessmen to supply to it. But for each successful business serving walmart, there will be many more unsuccessful in each town it operates it. I saw that with my own eyes when I was in US. Moreover, managing labor costs is one very important business driver for companies like Walmart. They will invest more and more into technology and addition of workforce per addition of revenue. For a population surplus country like ours, that is not right.

            Walmart wholesale cash and carry is helping farmers. My concern is that we could have had the same model with the same farmers even without Walmart. But somehow we have developed a supply chain where the farmer is squeezed the most in the place it is supposed to be benefited the most: The Mandi. Personally, Mandi Reform is the biggest benefit we can give to farmers in this country, instead of bringing in Walmart.

            China opened up retail, but was already a manufacturing powerhouse by then. It was very ok for Walmart China to stock Chinese products in store, as it Walmart USA was already doing it. We are doing the reverse.. Instead of making our manufacturing competitive, we are making our retail competitive.

            One cannot operate only in one state in the country. This state clause in FDI is absolutely divisive and is devoid of any economic logic. Walmart cannot sell Rice in Walmart Punjab if it does not get into agreement with farmers in rice bowls of India i.e. West Bengal and Andhra Pradesh. All these companies know it.. They will agree to operate until the time they can lobby with other state governments to operate in their states. That’s how they came in India!

            Again. i don’t see that FDI is he biggest Evil in this country. To me the biggest concern is that we are discounting every strength we possess in favor of external help! That is not sound economics!

            Do keep up the good work! I am very happy to hear your arguments and these questions brought a lot of clarity to my mind as well!

            Anshul

  • Kapil Dev Soni

    Hi Anshul,

    First of all, It was nice to see an IIT-IIM guy from Bhopal (I belong to Gwalior, M.P.)on the stage of KBC. So, congratulations to share the stage with Amitji on KBC….But, I wanted to see you winning bigger amount. Alas! I think KBC Quizzing Team was little apprehensive about you that you can win much bigger amount.

    As far as your blog is concerned, I have scanned few of the articles (not gone through fully yet) written by you. I found them interesting. Even I love to follow stock markets and keep a watch on economy. I would definitely be following your site Hapapaply (frequently)…..

    Regards,
    Kapil

    P.S.-> Hapapap reminds me one of the slang my friends used to use – “Gatagat” meaning “quickly and continuously without any break”….

    • Anshul Mishra

      Hi Kapil,

      Thanks a ton for the extremely encouraging words. You’r right, I too was hoping to do a bit better. But I cannot complain about the question paper after scoring low marks!

      The entire experience was one to cherish for me and my parents. That’s the biggest takeaway for me.

      I am extremely encouraged that you visited my site an found it useful. I’d love to know your feedback on my articles. Getting into conversations about topics that matter is the only motive I have of writing my articles.

      Lol on Gatagat! I’ve always known it to be a type of Hajmola “Quickly and continuously without any break” takes a different meaning now 🙂

      Regards
      Anshul

  • vibha khajanchi

    hello Anshul
    greetings!!!!!!!!!!!!!
    ijust wish to inform u that u were fabulous in kbc. and i believe u answered some of the toughest questions asked in kbc.
    regards
    vibha

    • Anshul Mishra

      Dear Vibha,

      You have been very kind with your words. I just tried to perform to the best of my abilities and let luck take care of the rest.

      Thank you for your wishes and for visiting my blog.

      Anshul

  • http://www.blueczar.blogspot.com Indian

    Dear Anshul,

    2012 is proving what this article written in 2011 beleived in.

    true, we have the largest rug and the largest and the largest muck to hide under. So enjoy that FDI is here—–its a panacea for many many things dirty for this gov.

    • Anshul Mishra

      Dear fellow Indian,

      I thank you for going through the article and sharing your feedback on the same. My biggest worry is that none in our leadership is willing to take any hard decisions which will really help all in our country and in that respect our economic future looks ominous to me.

      However, I am hopeful for one thing! Our institutions like CAG/CVC/Supreme Court have never been as independent as now and they have started realizing their worth now. That is the only reason why all this muck is coming up in public knowledge. I hope the future will become brighter if they continue to perform like this.

      Anshul

  • pankaj mishra

    nic thouths

    • Anshul Mishra

      Thanks a ton Pankaj!

  • Randhir

    Me too as an engineering student was pleased to see u on kbc…congrats u played well…as far as economics is concerned i dont have much intrest but i found some of your points intresting..

    • Anshul Mishra

      Dear Randhir,

      Thanks a ton for your kind wishes and for visiting my site. Its always nice to hear from fellow engineers. 🙂

      Anshul

  • Deepesh

    thanks sir felt very good to read your knowledgeable views would like to read your other articles and views also and discuss, specially stock market since i am also an investor.hope i don’t disturb you.

    thanks

    • Anshul Mishra

      Hi Deepesh,
      Any fellow investor is welcome. Do share your thoughts any time you want.. I will try to do the best I can.

      Anshul

  • Chandan

    Hey hi Anshul…… I saw your yesterdays kbc episode and it. was nice .thoe I did MBA in finance….I also like economics…..and about this artical it is very nice…..personelly what I think about this matter of fdi that til 49% it is ok but their is no need of 51% fdi in retail sector….insted of supporting fdi why our government not supporting our businessmen, our entrepreneurs…?

    • Anshul Mishra

      Hi Chandan,

      Thanks for your kind wishes.

      I think that the government is not taking hard decisions because it is more concentrated on short term goals/benefits and is devioid of long term vision/strategic thinking. I live in hyderabad and we are having a beautification drive in the city due to an upcoming international event. Now the way I see it, we could have done all these things here (like road widening/maintenance) irrespective of any external event happening, but now we are doing these to create an impression and the quality of work is such that it won’t take long for roads to go bad again!

      Anshul

      Anshul

  • Kanchan

    Hello Anshul,

    Nice article. Gud to c u on kbc. Have read ur article jus wanted ti give my thoughts on it…Since I dont agree fully with the reasoning behind not inviting FDI ,I want to give u an analogy of our body system with the country system.
    Our body has its immune system so whenever anything disturbs the system it keep abreast of it ready itself to throw it out from the body and if the body is not fully sufficient we need to take some external help like a surgery To keep it functioning properly. Theory goes on here answel ..

    1) India’s system has got too much rotten in 65years due to corruption, moral and ethical hazards, lack of vision that we definitely want some external help to find a recourse.
    2) It’s not about the Incapability in our own self but rather the time wasted so far and taking too much time to be on our own feets.
    3) Some of the major chunk of money still goes in subsidies and unproductive expenditures.We need money to cater this burging population and at this time it can’t be jus ‘DIY’ .

    So it is much of an essential that we do allow fdi in retail (especially in cities with high population )so that we can rearrange our systems be on right track and make up to the lost time. with the country of second highest population I believe there is enough room to grow in both ways. Infact the competition will be good for the producers and the consumers themselves to produce and consume the best ones .

    • Anshul Mishra

      Hi Kanchan,

      Thank you for the wonderful analogy. It really made a lot of sense.

      As i said in my article, FDI is not wrong.. It is just not the smartest thing to do. From your analogy above, I liken the issues of corruption etc. to cancer in our body and it is our own body cells that are revolting against us! And we have seen the same story repeat over the last 2 decades.. others invest, we make use of opportunity and then become more sick.. Initially external investment was necesary but we need to ask ourselves if that is more necessary or is it better to treat ourslves.

      I see India as not a country that is devoid of wealth/talent/foresight. We are only devoid of ethics.. That needs to change.. More easy money will only damage us further.. From my experience in some other western countries I have travelled to, I believe what we have now is something they never imagined to begin with but still they have developed more than us.

      Finally.. i do not think that we are at a bad situation. It is only now that some of our own institutions like CAG/CVC/Supreme Court have started realizing the true worth of their independence and their power and it is precisely because of that all these scams are coming up. Just by proper enforcement of a proper anti corruption law/treaties with the rest of the world, we will be able to make up for all deficit we have got!

      In terms of timeline.. FDI is supposed to give a benefir from 2 years hence.. From my view it will do so for about a decade (if we are lucky).. If we focus on removing our cancer, we will have benefit from 2-3 years hence but for 3-4 decades on a trot (if we are unlucky)

      I hope this makes sense!
      Anshul

  • Kanchan

    Thanks for your views….that made sense 🙂
    Ok let’s start with why FDI is the last resort or not only the resort we are left with”?
    1) we are capable and have lots of talent and wealth .
    Yes we have loads of talent and wealth . Politicians and big business houses have lots of money. Sitting on stash and stash of black money and virtually siphoned off major bulk of it. If they are making money sitting and doing nothing let some external wealthier companies come and be more wealthier. At least they will give something in return as they have to invest some chunk of money here and give the needed employment in return.

    2) we have good institution for enforcement of good practices like CAG etc….
    Ok may be we have such organisation ..but is there any effect on politicians and so called visionaries attitude towards the common people. They are the same . More scams happen than its uncovered in reality. That’s why situation is bad.

    3 ) fdi will give benefit in another say 5 to 10 years.
    Better at least will get some results . And it’s ok to wait 5years for a country which is crippled for decades.

    4 )it will uproot small manufactureres.
    I don’t think this will happen due to the conditions implied by the govt with retail fdi.
    We can find rather opportunity to work in interdependence and that will eventually lead to growth of small manufacturer if they see it thru a different lens.
    Mcdonaldization of our society has never dampen our spirit to have street food ( vada pao, gol gappe etc) it’s there and will grow .infact I have found street sellers have become more hygienic ( these days they are wearing gloves 🙂
    I am living in Singapore . This small country has 100 plus malls but equal no of hawker centres. So there is no dearth of opportunity.

    Above said does not mean that we do need to work on education , health and infrastructure . It has to happen consistently and simultaneously .They are the core of necessity and require more focussed approach so that country grow organically.

    Our situation is like a dessert. We have some oasis but we need rains and not drizzle to dampen the ground.

    I hope this too make some sense 🙂
    Kanchan

    • Anshul Mishra

      Thanks again Kanchan! Your response actually ticked nearly all the check boxes at my end that i consider good for economics: liberalization, independence, empowered industry, low government.. No wonder with people like you there Singapore may be the most developed country by 2050 or so (as per CNN).

      I do hope you are right.. but if you’re wrong, then the situation for our country will be catastrophic and options limited. My only concern is: population.. In our country, the propensity for violent political dissent is high (for e.g. Maruti Manesar plant) and so i want to have as peaceful a transition as possible. As i Said earlier.. FDI is not the best.. but is the most risky and hence, to me, the least smart option!

      Anshul

      • http://gmail shefali

        hello sir…m shefali…n engineering studnt…ur participation in kbc was fab…n i fnd ur site quite interestin…

        n i too beliv dis walmart segmnt wont work… bt i din undrstnd the foreign invstmnt too plays a major role in IT sector…although it improvd ….den may b dis too works….

        • Anshul Mishra

          Hi Shefali,

          Thanks a ton for the kind words and for visiting my site.

          I agree that IT worked in India due to the involvement i foreign sector. But this was one where a) there was no involvement of our government and b) where Indian entrepreneurs were allowed to flourish and prosper. We got the technical know how from developed nations and then grew on top of that. I have no doubt that we do not need any similar help in any other sector as we have all the resources to prosper. All we need is a conducive environment for our entrepreneurs. Net-net, this FDI thing is one of the many ways in which we can create a difference, but from my point of view it is neither the smartest nor the most benefiting in long term.

          Sorry for the long words and long sentences above! I am not that used to the SMS lingo 🙂

          Anshul

          • http://gmail shefali

            thank u…sir i agree we too have enough resources to prosper….then why we require foreign entreprenuers to invest…n flourish their pockets…thankss a lot….this time no sms format..:))))

          • Anshul Mishra

            Thank you Shefali jee.. Both for your feedback and for making it simple for me by not using the SMS format. 🙂