UPA has taken some gutsy steps to support the crumbling economic condition of the country, much to the ire of the supporting parties and the opposition. The decisions may seem bit hasty, but Manmohan Singh is back to job that is close to his heart. The dynamics of politics have been changing very rapidly in New Delhi, first the CoalGate, then the disruption of Parliament then increase in fuel costs. FDI was indeed much awaited step towards opening the economy for foreign players, much like in early 90s, which created hue and cry but it fuelled the economy to grow at much faster pace decade and half later. The clutter may be same this time, but reforms were waiting to be taken.
FDI in retail can do wonders to the local farmers if implemented in proper way; the middle men practice will be abolished. Though FDI will have long term impact, the diesel price rise will have short term impact; it will increase essentials’ prices immediately, but will curb the inflation later. The LPG prices after sixth cylinder show nothing but the enormous subsidy given on them. The FDI in aviation may be the last option left to save the industry. The political parties which are opposing the decision have typical concern- who will purchase from roadside vendors once Walmart comes in? But competition brings the best out of everyone and we the consumers are the winners. They also often forget that the kiranawala they are concerned about sells items that are overpriced and substandard sometimes. They do not have any regulation and hence large amount of tax revenue are lost as they do not give invoice on purchase. BJP may be opposing the decision, but they would have done the same had they been in power to maintain growth rate of economy. Other political parties in UPA may be opposing but may come forward to save the government. This shift of Congress from being Populist Party to development oriented one has been dramatic.
BJP has called for ‘Bharat Band’ to oppose the price rise and FDI in retail. But it sounds ridiculous to close the same kiranawala’s shop for their sake. The amount of revenue lost is large in such strikes is large apart from inconvenience caused by the people. Meanwhile the Government is bound to survive the acid test as the option of accepting the FDI in retail has been rested on state Government. Mamata’s TMC has always been populists favoring party, but their final call happens on Tuesday. No matter what happens, Manmohan Singh- The Economist has emerged a hero here especially in corporate world. It won’t be wrong to say- ‘when it rains, it pours.’