Monday, December 5, 2011

FDI in Retail vs. Reduce Reuse Recycle

Everybody and their aunt is now an expert on the Venn diagram of economics, foreign direct investment in India, and the Indian retail industry. In the wake of the recent controversy regarding the Government's proposed policy changes that will open up the retail sector in India to more foreign investment, there's been a bunch of op-eds and blog posts by self-styled pundits on why India "needs" FDI in retail. 

Yes, opening up of markets is always a good thing. Yes, a more efficient supply chain for consumer goods in India would be a good thing. And yes, professionalism in managing the workforce engaged in logistics and distribution, which remains an unorganized sector even today, would be a good thing. Surely, FDI in retail will positively impact the Indian scenario in all those areas. But does this mean we should blindly push our already fairly strong consumerist culture (and our typical middle-class hunger for more "things", arising from many years of scarcity) into overdrive? 

Take the issue of infrastructure, which some of our distinguished pundits just about recognize as a concern. The opening up of the automobile industry has given us a wide variety of cars to choose from (which is great) but did we spare a thought for road space or quality of roads or parking space or any other infrastructural prerequisites before we opened it out? Nope, we just plunged into it, probably thinking that growth in traffic would bring pressure on the concerned authorities to improve infrastructure. Clearly, that logic has not worked, and we don't seem to have learned this very important lesson.

We continue to struggle with strong urbanization trends, but we are clueless about how to handle the problems that come with them. Meanwhile, given the poverty in rural India, large scale migration to metros and larger cities continues to grow, resulting in more squatters and pavement dwellers, more shanty-towns and slums. Our cities and towns continue to be plagued by poor waste management and sanitation, not to mention pilferage and contamination. We are yet to integrate good practices of waste management into a culture which has gradually replaced civic sense with instant gratification and narrow self-interest. How are we going to cope with a dramatic increase in consumption levels, which FDI in retail is sure to bring about? I shudder to think how high a mountain that small but stubborn pile of garbage heaped outside my housing complex will grow into, after the "Big Boxes" of global retail arrive.

None of our erudite pundits makes even a passing mention of concerns related to sustainable development and responsible consumption. Which, according to me, should be our most important concerns. Not whether the local bania's business is threatened (which it may well be) or whether transnational giants will siphon profits out of India (which they certainly will). These are the same old arguments, tired and worn-out from repetition in the post-cold war socialism-versus-free-market debates. Many of our pundits, however, are still fighting those cliched battles of the old world.

The polemics of the new world are not going to be about leftism and rightism; they will be about how to deal with ecological imbalance and social disharmony, about how to plan for sustainable growth. In the mad frenzy for downloading -- to borrow Niall Ferguson's metaphor -- the 6 "killer apps" of the West (of which, incidentally, the culture of consumerism is killer app #5), we are rushing headlong towards irresponsible consumerism that has raised alarm bells in the West. India is lucky to be presented with an opportunity to circumvent the pitfalls of hyper-consumption, and lead other developing economies on the path to sustainability. But will India seize the moment? Or is this too much to ask for by way of a vision for India? Perhaps it is, I find myself compelled to say in spite of my generally optimistic disposition. 

Is it also too much to ask of Indian intelligentsia that the debate on FDI in retail be informed by sustainability considerations? Certainly not! 

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