All reforms that were introduced in independent India have always faced stiff criticism from the political parties holding opposition benches but all such reforms proved to be fruitful to India in the long run. Before talking about FDI in multi brand retail, let’s look at some of the major reforms that were introduced in the past and their positive impact on the Indian society as well as the Indian economy.

By 1960s, Indian banking industry had become an important tool to facilitate the development of Indian economy. But despite several provisions, controls and regulations implemented by Reserve Bank of India, all banks in India except SBI were owned and operated by private persons. Indian government felt the need for nationalization because privately operated banks were not fulfilling the social development goals for industrializing the country. In order to bring those huge bank deposits (85% of country’s total bank deposits) in the public domain, the government of that time nationalized 14 major banks in the country and faced criticism like beginning of state capitalism, scope of inefficiency, setback to industry and trade. But if Nationalization would not have happened then most of the social development from 60s up until early 90s might not had been possible.

In the 1980s, computers were introduced in India with the objective of grooming the Indian society to be more technologically advanced and more efficient. Government of India faced stiff criticism from opposition parties and was blamed that bringing computers in India would cause huge job loss (guess, Machine will replace Humans) but we all have seen how greatly computers influenced India, and how Information Technology in India became one of the largest employers spreading from Software development, banking, administration, media, communication, education to core technology areas such as Space exploration and medicinal research. Computers not only generated jobs but they also made services more efficient like making online reservations, applying online for different services, online banking, paying  online bills, online social media, video and voice chatting, emails etc.

After independence, India tried to liberalize the national economy for the sake of development of the country, but both the attempts to liberalize the economy in 1966 and 1985 failed miserably due to stiff criticism of opposition parties. A third attempt (this time successfully) was made in 1991 when India faced a balance of payment crisis and India’s financial reserves were diminishing, and the country was heading towards the path to Bankruptcy. Government of India came up with liberalization of Economy which included abolishing License Raj, allowing private equity to flow into several sectors, opening for international trade & investments and initiation of privatization. Government was heavily criticized and was blamed for opening the country for competition between weaker Indian businesses and stronger foreign businesses and selling the country to foreign investment, but it in fact turned to be extremely favorable to both people and the economy. Also, it was favorable to Indian businesses as they became much stronger in several sectors since 1991, and country has seen revolutionary improvements in social and industrial development.

Privatization is another major reform that is always criticized whenever any sector is opened to it. Parliament proceedings get suspended, country wide shut downs are declared bringing the daily life to a standstill, but all privatizations brought huge relief in the long run. Take example of how privatization in insurance sector improved the efficiency of that sector and made it customer friendly. If your car has an accident, you just need to take it to the car manufacturer’s service center and they will take care of everything including arranging for insurance inspector to analyze damages, getting claim from insurance company and repairing your car, you only have to visit them on the promised delivery date just to drive your repaired car back home. Take another example of privatization in telecommunication sector, when there was no competition in this sector it used to take months/years to get the telephone connection in your home. When private players setup their shops, they started providing telephone/Internet connections almost same day of ordering and that too with superb customer service, seamless performance and least possible rates. Today, India is one of the few countries in the world that have cheapest call rates. This has only become possible by introducing competition which brought in new players as well as improving the efficiency of existing players. Even with FDI in Telecommunications sector, it still generated lot of employment and also allowed Indian companies to dominate the market.  There are several other examples of privatization which have helped India in the long run.

Coming back to FDI in Multi brand Retail, opposition parties are all out against it. I was recently watching a talk show on one of the national channels and to my utmost surprise I saw a politician teaching economics to a renowned economist of a renowned economic institution. I feel it would be better if we let the Subject Matter Expert speak on the subject. FDI may not do all good but if a state or a local municipality finds anything bad in FDI in multi brand retail according to their region’s conditions then they have been given the freedom to not allow it in that region. There are countries around the world in which some cities do not allow the giant retailers to do business within the city limits to save the small retailers, but that does not impact the national policy of those countries.

FDI in multi brand retail will bring more good than bad. It will help building behind the scenes supply chain infrastructure that will substantially reduce the wastage of produce (Vegetables and Fruits) and other commodities. Just by looking at sheer size of infrastructure of this sector anyone can figure out that this sector will generate many more jobs than that it is mistakenly expected to eliminate.  It will also enthuse domestic companies to raise the bar to compete with foreign giants and, like in case of other reforms; it may become possible that domestic companies will dominate the multi brand Retail sector, keeping the revenue in the country. Another important positive of FDI in multi brand retail would be price fluctuation of commodities towards the down side. Currently, irrespective of inflation going up or down the prices of different commodities only increase and never decrease, but with several big players in the market prices will decrease during downward inflation because decreasing the prices will give one retailer an edge over another retailer. Competition is must in this sector and it will be very fruitful for both Indian people and Indian Economy.