[Politics] FDI in Multi-brand Retail

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Last few days, Government has been trying to pass a bill which raises the FDI limit in  multi-brand retail chains to 49%. However, as usual Left has opposed which comes as no surprise. What really surprises me is the opposition by BJP as they are considered to to be the progressive right wing as far as politics of economics goes. Either ways some of the direct and indirect benefits of raising the limit is given below:

Advantages

• Inflation in India is mainly a supply-side issue. The rising disposable income of middle-class is demanding more with minimal increase in efficiency from the supply-side. Government in its bill is asking the foreign retailer to invest 50% in the back-end process. Improving the efficiency will improve the farm productivity and thus increase supply reducing the inflationary pressure. The cost of important food items will reduce in the long run. This is what BJP, CPM and "common man" actually want.
• Any new retail-chain creates multitude of job-opportunities at the front-end. This is clearly evident in the number of malls that we have. Even in IT/ITES services, the housekeeping and security gives a good chunk of population a regular monthly income. Additionally, the setting up of back-end infrastructure, supply chain logistics will create another set of jobs.
• Currently there is no provision of cold-storage which causes around 40% of the supplies to rot. With superior technology and prior experience of foreign retail chains, this loss will be minimized. As they are partnering with Indian firms, this technology know-how will be transferred to Indian firms too.
• To us consumers, apart from the cheaper food items, we will get to have more choices and thus improve our standard of living.
• Big organizations can set up deals directly with farmers thus giving the farmers better deal. Additionally, big organizations will provide latest technologies and best practices which will ensure more yield per area  of irrigation. The best example here is Amul which leverages farm produce across Gujarat and thus help give the cattle-owners good deal.

Disadvantages

• The major chunk of people losing out here will be the small kirana stores and the middle-men. However, as with other industries, the smartest of them will find ways to survive under changing business scenario.
• The second argument is building up the cold storage and infrastructure is government  business. Do we really need another 2G proportional scam where tax payers as usual are looted of their money or better invite private sector which already has the tech know-how and experience in implementing it?
• Another argument is the Wal-mart and Tesco taking over the entire supply-chain. Well, if the bill is debated in the parliament, I do not see a way, by which government cannot impose certain curbs to prevent taking over of entire supply chain.

So at the most, the loss will be limited only to the kirana store owners and middle-men. So not sure, what the opposition is opposing here. Are they opposing the welfare of the citizens over selected kirana store owners and middle-men?

PS: I have given a bit simplistic view here. Getting hard core numbers would have resulted in similar conclusion. However, in interest of sleep and a bout of laziness has prevented me from doing so. 


P.PS: Extensive analysis available here

Is Lokpal Bill enough to tackle corruption in India?

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Over the past couple of weeks, India as a nation has witnessed the powers of one determined Gandhian. Joining with him in his quest for stronger Lokpal bill, were thousands of Indians which included both netizens and citizens whom the aristocratic political class term as "Aam admi". Government or rather PM Manmohan Singh did a good job in defusing the entire agitation by giving in to the demands as any further delay would have caused a revolution leading to his government's downfall. At the heart of the issue is the Lokpal Bill aimed to fight corruption in India which was first conceived in 1969 but still waiting to be passed in the parliament.

Though I completely respect Anna Hazare's effort to bring this issue to the fore, I am more inclined to agree with Kapil Sibal's view that the bill's scope in tackling corruption is limited. The main reason is that at the end of the day, it is only a bill. And a bill like many others can only go so far in addressing the tackling corruption. Moreover, loopholes always exist in any law and most scamsters are intelligent enough to exploit these or at least drag the case till they are old and frail when it would eventually not matter. I believe a similar story would be play out with the Lokpal Bill. Of course, it can be argued this is an important step forward. No doubt on that. The point I am trying to make is corruption exists mainly due to the systemic inefficiencies and creating laws or acts can only deter corruption as much.

These systemic inefficiencies create an incentive to be corrupt. Or in other words it rewards the corrupt and punishes the honest. Thus to remove corruption, these systemic inefficiencies have to be removed which can only be achieved through better governance and not by creating more laws. One of the most proven weapons in improving governance is the use of technology. The other two weapons would be the people in the government and Aam Admi.

Technology
Yes I am in technology and technology rocks when you want transparency and accountability. System takes care of that. Many state governments have invested in technology at various fronts to improve the governance. Even the central government, has tried to implement wherever, it sees limited opposition. Examples which I am aware of are e-filings of tax return, the generation of PAN card and the most ambitious project taken up so far is UID (Unique Identification System). The most important aspect of technology is that it reduces human intervention. For example for PAN card, anyone with an internet connection can go and lookup the site for information on how to fill the form and then fill, print and post it to the concerned department. The entire process can take at most 3-4 hours which can be done from the comfort of your home. (Discounting the trip to the post office :) ). Moreover, you can track the application status online and rectify the form if needed. This has removed the need of bribing 

• someone to learn how to fill the form
  
• to track the status
• to move the application if it gets stuck anywhere.

The second example where technology can be greatly useful is ensuring traffic rules compliance. Any reason why traffic policemen encourage bribes? Some of them are given below:

• He does not have to create a receipt for the offense.
  
• He does not have to listen to the offender's defense stories and his constraints which caused him to break the rule.
  
• A traffic chaos may happen during the time he was creating a receipt and thus have to work harder.
  

So how can technology reduce corruption?  Jumping of signals, riding in the wrong lane or over-speeding can all be captured through a camera which captures the registration number and send the ticket to the offender's home. At the same time, an entry can be made against the driver's license card, to ensure tracking of the number of offense and also auto-debit the fine amount from the offender's bank or credit card account. Believe this is already implemented in some countries. Additionally, if a policeman catches an offender, he can simply swipe the driver's license card and the system will do the rest for him. Although this looks like a pipe-dream, they are inherently doable. Believe some developed countries have this system already in place.


People in the Government
Consider a clichéd government employee's job profile. He is assigned a task which he has to do for years. Only if the person above him retires or dies, does he have any chance of growth. Naturally boredom sets in and the absence of future growth makes him neglect his current duties. The only incentive for him to work is the bribes from people who want to get things done a bit quicker as there is no enforceable SLA for the government employee to work. The situation can only be improved if there is change in this culture. 
The peer pressure tactic is the best option to effect a culture change. A strong leader who can influence 10 % of his direct reports can bring about this change. By making this 10 % influence another 10 % and so on, can radically change the DNA of the government office. The change will be gradual but will be effective. Ricardo Semler's effort at Semco SA can be taken as an example for this. 
Thus if as a team, they decide to get things done within the SLA and without taking bribe, even the most lazy person would have to work. In a way it can be be looked at as an HR issue. In the end, the government needs leaders who can bring about the change in the minds of the people within departments. 


Aam Admi
How can a "Aam Admi" say no to corruption? He is under pressure virtually from everywhere. Pollution, oppressive heat, potholed laden roads, and public commute make the daily trudging to the office a bigger ordeal than it already is. Apart from this he has to work under abusive bosses, handle intrusive neighbors and demanding relatives. In all this, if a government process takes too long, he cannot afford to keep his life aside till the government process is completed. He has to complete that as well in the melee that his life is in.  Yet not taking the easier path may not make it easier to get it done. This happened to my friend who needed to get a No Objection Certificate (NoC) to transfer his bike from Mumbai to Bangalore. He chose the easier route. He called up an agent who asked him Rs. 1500 to get everything done in 3 days. Fortunately the agent failed to turn up when my friend went to get the NoC done. Out of desperation he tried to get it done the right way. Eventually he got it done within 2 days itself and the cost - Rs. 200.


Probably our demand to get it done easier is far more than the demand to get it done by the correct process. Due to this sometimes the time saved by the shortcut method may be actually time lost in the overall equation. A bit of patience and a bit of effort in understanding the process may just well be the solution to reduce the corruption. Additionally an emphatic NO can also do the trick to a large extent.

Presented some of my thoughts based on the drama that has been unfolding around LokPal for past few weeks now. Do post your valuable feedback and solutions in the comments section.

PS: Just thought of focusing on the bigger picture rather than just the Lokpal Bill. Also on a personal front too have bribed my way out quite a few times. Thats a change that I need to bring in within myself :P 

Why India should not agree on carbon emissions?

Though this post was planned as the continuation of my earlier posts, the real inspiration to write this post came on reading this article from The Economist. Some of the facts on climate change -

1. India is the fourth largest carbon emitter in the world. See link
2. That is India account for 5% of the total world carbon emission. Whereas US and China accounts for a total of 40% of the world's total emission. Adding Russia and European Union's contribution the total comes to whopping 61%.
3. If we consider the carbon emissions per head then India lies at 139th position. See link

Well this sums up the entire post. :)

All the countries especially the US, Russia and the European Union have exploited the environment without giving a thought to the environment. Even China had started growing from the 1970s period. India on the other hand has started the last in terms of sustained economic development. Thus when India starts developing, world especially developed countries wants India to curb its growth by putting cap on its emissions.

All the world literature surrounding the Copenhagen conference in December, 2009 is pushing India to a corner and making it a villain in the whole scheme of things. In this endeavor, at the forefront is the US which still has not signed the Kyoto protocol. It has come up with a declaration to cut its emission by 80% by 2050. But here it expects the world to follow suit by cutting the emissions by 50%. On the other hand countries like Russia, Japan, Canada and European Union members have agreed to cut their emissions to 15-21% below the 1990 levels. This again excludes US & China who contributes 40% of the total emissions. See link.

So the argument that India should follow suit denies opportunity to India or the other developing countries to grow.

Another bone of contention is the transfer of clean technology. Here again, the developed countries are not promising free transfer of clean technology to the developing countries. This despite the fact the current world's climate is the entire making of the western economies who ruthlessly exploited Mother Nature.

Again I do not deny that India should not cut its emission. (Check out my previous post.)India needs to cut its emission but that cannot be imposed by the world's richest countries. More Indians are aware about the impact of GHG than most people of other democracies. Additionally, India has a vibrant democracy - the nature of which it will ensure imposition of carbon-emission cuts.

Still this leaves out the current scenario. Are the developed countries pledging to help the developing countries to tackle the current problems that have arisen due to their past activities?? The answer is a big "NO". So in any case the pressure on India is completely unjust and it does looks like bullying by developed countries.

For example, most of India depends on agriculture. Any climate change will impact agriculture. So the issue of climate change will feature in every Indian’s mind. Already there is a talk of inclusive growth - inclusive meaning the climate as well and this as come from none other than India's Prime Minister Dr. Manmohan Singh.

So the western countries instead putting pressure needs to first tackle US which still won't curb its emission until India agrees to cap its emission (meaning growth). In a nutshell, India does not need the western powers to tell of its responsibilities. It is fully aware of it. What they can do is help India in getting access to cleaner technologies so that would help India in preserving its and the world’s environment.

Ending the post on another old saying –

Those living in houses of glass should not throw stones at other people’s houses.

PS: - Message to US - First implement and then preach. At least members of European Union have implemented some of the decisions.

PPS: The image is for the year 2006. At present India has surpassed Japan in its emission.

Why India should cut its emissions?

The answer is very simple. India depends on mother nature far more than any other country. The dependence of India's agricultural ouput is the best example. A drought or a flood has a major impact on the amount of foodgrains that country is able to produce. Another major reason is that India is essentially started to feel the imacts of global warming already.

1. The Himalayan glaciers are shrinking at a rate of 10 to 15 metres every year. This means water shortages for about 500 mn people.See link.
2. Sea levels - As the global warming sinks in the sea levels are bound to rise. This would cause the low-lying areas to be submerged in sea. The danger can clearly be seen with the last week's high tide warning on mumbai. If high tide would have happened, many parts of Mumbai - the financial capital of india would have been under water for quite some time. See link
3. Due to very limited scientific approach to agriculture, most of the Indian farmer rely on rain for a good yield. However, with the increasing global warming, the weather pattern has become more erratic directly impacting the yield of the farm. See link
4. Finally, looking at the place where I live - Pune. A simple observation here - The winter was warmer in 2008-09 compared to the one in 2007-08. Similarly the summer was hotter than normal. There was a delay in the onset of monsoon. This resulted in water shortages and cut in daily water supply.

Sceptics can say that I am taking a sample data of one year and India most part of in its history have faced such situations. Yet, scores of studies on climate change across the world and india has come up with the same result. Global warming is for real and its impact life-threatening.

Thus it is imperative for India to look at global warming as a problem it has to solve rather than put the ownership on the international community. Ending this post on an english translation of sanskrit subhashita learned during school

"It is not wise to start building a well when a house is on fire"

PS: In my last post, I had said that India rightly has rejected caps on its emission. Why I said? More on that in my next post.

Is Obama good for India?

Don’t think so if you are looking at the kind of noise that is coming from the white house. From the time Obama was elected, this question pestered me as none of his speeces gave that away. However, now after more than seven months in office, the picture does not look good on many fronts for India. Recently US has tried to allay India's fears with Clinton's visit but those steps I think are too less and infrequent. Some of the major observations from which I could answer the question is given below.

Taxing Outsourcing
Obama – “It's a tax code that says you should pay lower taxes if you create a job in Bangalore, than if you create one in Buffalo, New York.” There is no problem if you simply plugging a loophole in your tax system. However, to associate Bangalore with the loss of jobs in the US economy is not the correct way of looking at the problem. The major issue is that the current employees have stopped adding more value to their work. Thus any business when sees that a guy can do the same work at a cheaper rate would definitely prefer the cheaper option. Another point here is that outsourcing is done to other countries as well apart from Bangalore.

http://ibnlive.in.com/news/obama-bailout-say-no-to-bangalore-yes-to-buffalo/91807-2.html

Signing of NTP
India has always opposed the signing of NTP on the grounds that NTP would take away the minimum nuclear deterrence that India needs to protect itself from China and Pakistan. However, Obama administration is trying to get India sign it more dangerously equating India with countries like North Korea, Pakistan and Iran. This is despite the clean record that India has regarding nuclear proliferation. Iran and North Korea openly defy US and go on with their nuclear armament programs. On the other hand Pakistan is already indicted of proliferating nuclear technology.

http://www.hindu.com/2009/05/07/stories/2009050755551000.htm

Kashmir Issue
India has long adopted the stand that it is a bilateral issue between India and Pakistan and there is no need for any third party to get involved in this. The visit of Jones and Hillary Clinton now do indicate an indirect pressure from US on India to resolve the Kashmir issue urgently. No issue in that. However, US cannot force a solution on India so that Pakistan is satisfied.

One major reason for such aggressive posturing is to please the Pakistani administration so that Pakistan deploys more forces on the Af-Pak border rather than on the Indo-Pak border. The situation here is ironic to say the least. US is giving millions of dollars to make Pakistan to co-operate on its war on terror. Pakistan on the other hand is gleefully accepting that, give more forces to US for manning the Af-Pak border and on the same time is putting the same money to develop terrorist camps in PoK to spread terror.

http://www.dnaindia.com/india/report_us-may-pressurise-india-to-resolve-kashmir-issue_1253283

Emission Cuts
The US lobby is trying hard to sign India for the emission cuts which India has rightfully rejected. The main reason is that the emission level of India is far below than US or China itself. India contributes only 5% of the total CO2 emissions while US and China contributes 22% and 18% respectively of the total CO2 emissions.
http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions

For US, China is the buzzword as it is looking at China to escape from its economic turmoil as China can bankroll America’s debt. This is the main reason why for US, China is more important than India. China can ruin US without firing a single bullet. Similarly for China US is the single largest market for its cheap goods. Thus both US and China have become interdependent on each other for each other’s survival. India thus has to ensure, it doesn’t get sandwiched between the interests of these two giants. Another point to be noted is that the US for its war in Afghanistan needs Pakistan and for its economic security needs China. Thus US will always be wary of India’s interests to ensure its interests are met by China and Pakistan.


However US is trying to reduce India’s fears with the recent Hillary Clinton’s visit. We can only hope that US is really serious about its commitment towards India under the current circumstances where it is severely dependent on China and Pakistan.
http://www.hindu.com/2009/06/27/stories/2009062759961000.htm

Flipside to all this is that India, can stand up for itself and do not require US support on lot of issues that affect the world. However, we need leaders who can discern the difference between what is good for India and what is not in the long run. Can the current leaders do that? Only time will tell.