FDI in retails: Some Facts

The revenue of Wal-Mart is 605 billion $ and India’s retails business is of range 609 billion $.  The Wal-Mart employee’s 1 million people for its entire business and India have around 70.48 million people associated with it. So does it mean for every 1 job Wall-Mart created in India, 70 will lose their job?
This line is especially blinking on social media sites and fears are made by some anti-social elements that the entry of foreign retail players like Wal-Mart will destroy the Indian Retail market and they will be the only place where consumers will shift their focus for buying day to day products. Will it really happen my friends? The shouts are made on Chinese cheaper goods and vegetables will be flooded into these supermarkets and Indians have no choice.
The existing Bharti Wal-Mart imports 3% of its goods, sourcing 97% indigenously. The present import duties, countervailing duties, shipping costs make imports uneconomic save for a supermarket goods, such as plastic toy. India shopkeepers can freely import the Chinese plastic toys, but they do it on a fraction only, not because of chauvinism boycotting foreign products, because they are profit seekers and don’t find much profit on Chinese items.
We must accept the fact that if we lags some expertise on certain fields then we must come up ahead and enhance our skills or import those technologies to set ourselves globally competitive. The self sufficiency is an old saga. Like the increase in the import duties on foreign products from few % to 300%, till the crises of 1991 has not resulted into faster economic growth. In fact it killed the competition, created monopoly. So for a phone connection, Scooter, cars like ambassadors the common man has to wait for years. The growth in GDP was a meagerly 3.5%.  The number of poor people doubled.
What happened after 1991 is now the well-known story. The computers were costs there times post import substitution area. This held back software and BPO development. India’s Software and BPO exports only accelerated when computer cost came down. When import duties were first slashed in 1991 critics were made in same that Indian Industry will be killed. In fact, industry thrived never as before, both in domestic and export production. Merchandise production was growing from 5% of GDP 1991 to around 15% today. India is emerged as global manufacturing hub. Global auto companies are shipping their vehicles from India to outside world. Even Indians are affording the foreign cars. Their Indian counterparts are also set themselves on global status taking control of companies such as JLR. Freely allowing foreign competition simply created thousand of supplier to these global auto companies opening new era of manufacturing. Wal-Mart, Ikea, Carrefor will do in same way. They will interact with Indian suppliers and make them world class exporter. Foreign retail chains will devise their ways for their suppliers to combine cheap imported inputs with domestic one to produce world class goods. And competing with them the Indian retailers will do something similar.

The Currency Rupees must have a Global Acceptance

A lot of chaos is made on whether we should have multi brand FDI or not. The subsidy on petroleum products should be continuing or not. The FII and FDI should be encouraged or not. The answer of these questions will be better answered by the upcoming time that the any policy pundit. India has finite sources of petroleum products and the demand for these products is continuously rising. So import of these products is essential. India is second largest imported of crude-oil from Iran. The import bill of last year was to the tune of 10 billion $. The Rupee price was average Rs 45 and Rs 56 per $ in 2011 and 2012 respectively. So for same quantity the bill of import of Crude-oil from Iran was 450 billion Rupees and 560 billion Rupees of in year 2011 and 2012 respectively, 24.44% rise on year-on-year basis.  So a weakening of Rs against US $ was simply cost 11,000 Crore more losses. The subsidies are not yet discussed which neatly costs Rs.1.86 lakh crore. Now if we continue with subsidies on petroleum products ultimately we have to curtail the Funds on other Schemes. So first we will find out how this import bill can be curtailed itself.
If the agreement for supply of crude oil was in Indian Rupees then we must have save the Rs.11k Crore. For which the Indian Rupees must be globally accepted. But it is not the case today. Increase in bilateral trade, exports, tourism and technology transfers are the simpler way to make it globally acceptable. US $ or Euro has created its status in similar passion. Japanese Yen is the better example of this. Recently HPCL, MRPL has signed the agreement to pay 45% of the Oil bill to Iran in Indian Rupees, reducing the currency fluctuation effects. It is a need of hour that we must enhance our expertise and utilizes our resources to create the global leadership. Suppose India’s expertise in Launching Space Vehicle launching, Irrigation, Nuclear Power Projects will find business in Iran it would simply reduce the trade imbalance and the hefty prices  on account of currency fluctuations can be smoothly curtailed.

We need smarter Cities

The Mumbai being a financial capital of India, most populous city in India, and the fourth most populous city in the world, with a total metropolitan area population of approximately 20.5 million have a population of 1.8 Crore and every day 10,000 people are added into it. Around 70% of population of Mumbai lives in Slums and the percentage is constantly increasing. The real estate prices are astronomical and are record breaking high. The story of Delhi, Kolkata and Chennai is similar. Our metro cities, Tier-II and Tier-III cities have already reached their maximum permissible limit of town planning are still flooding with migration of peoples from rural areas. The authorities are working hard to establish the networks and smooth functioning of these cities, however the unpredicted increase in rate of urbanization have drastically affected the planning of infrastructure making the things worse. So the traffic jams, power cuts, long distance travelling, inadequacy of drinking water and sanitation are the major among the problems faced by these cities.

What we need immediately is to construct other planned cities to decrease the inflow coming to these megacities. This includes construction of satellite city like Navi Mumbai where many Government offices will get shifted in comparative cost. We need smart cities. Smart cities are depending on some axes, these are: a smart economy; smart mobility; a smart environment; smart people; smart living; and, finally, smart governance. India is experiencing unprecedented growth. In the next 20 years, 30 Indians will move every minute from rural India to the cities. To accommodate this massive urban migration, India will need about 500 new cities in the next 20 years.

While this rapid urban growth creates tremendous opportunities, it also puts extreme pressure on our resources. Transportation, public safety and energy are some of the most critical issues facing our cities today.

These smart cities must constructed keeping following aspects:

A) Smart Economy: Housing for all classes in adjoining Vicinity: This maintains the social balance of the city. Keeping LIG, MIG, and HIG colonies together minimizes the social differences. One can easily figure out the slum pockets are developed in heart of city for this reason only.

B) Smart Transportation: Mass rapid transit system can set a floating population to adjoining city next to these megacities. It must be well planned rail and road network having cheaper cost. Well constructed transport means decreases the travel time of commuter.

C) Smart Governance: The business centers should be evenly distributed and not to be concentrated in specific area of city. The high tech Governance is an essential factor.

D) Smart Environment: The planned cities could have ample of free spaces, gardens, playgrounds.

We must focus on building the world class infrastructure and new cities to solve the problem of migrations.

Examinations and Candidates

Examination 1: The examination for post of Deputy Collector is conducted by Maharashtra Public Service Commission on 2^nd to 4^th September, 2012. There was around 6085 candidates appeared for this mains examination. Among them only 150 candidates will be selected after the final round of interview.

Examination 2: The Union Public Service Commission is conducting its flagship Civil Services mains Examination from 5^th October 2012; for top post in Indian Bureaucracy like IAS, IPS. Around 10500 screened candidates will appear for it and eventually 850 will get selected.

Now let us start the debate on real burgeoning questions on these examinations and their patterns, the selection procedures and final outcomes. All major newspaper will have a headline on the day of final results quoting some guy and girl toppled the examination, their preparation strategies and success stories. However no special emphasis is yet made on the candidates who fail to cross the final round. As both of the above examinations are toughest one, at State and National level respectively, requires tremendous efforts. On an average every candidate puts around 2-3 years in the actual preparations. The preparation for these examinations will have itself a bunch of stories, which will be dealt separately. Around 4 lakh students appeared for prelim examination for MPSC and 9 Lakh Students for UPSC. We have 28 state recruiting boards’ in India means at least 80 lakh and Let us assume no one repeats these examinations; so we have 80 lakh eligible candidates having graduate degrees. All these candidate puts minimum 2 years of preparations, simply means we have 26 lakh people engaged annually which should be happier thing for Government. But engaging this 26 lakh people for one year means total annual loss of Rs. 84,240 crore; keeping our average per capita income of 1950 $ of statistical data. So we understood what we are losing while preparation of these examinations.

This is the only one part of story, it has a lot of another shades too. Many aspirants are Highly qualified professionals such as Doctors, Scientists, Engineers. Again the Nation where majority of public works in service sector and need immediate capacity building in areas such as Research and Development, looses many of its professional among these 26 Lakh people. Again there is question of failed candidates among these examinations for employment, skills development as they have invested in preparation of these examinations and this will mostly un-useful in Manufacturing, Infrastructure and other industries as most of syllabus is theoretical and memory based. However the jobs in private firms require hands on practices and technical skill sets.

To understand the seriousness of problem we need to understand the grass root person of these systems. The investment made by the candidates and the success ratio is a need major attention. The examinations needs immediate reforms to have a capacity building nature, that the supplementary post could also get filled through the unsuccessful candidates. Also the other agencies including Various Boards, Government as well as Private Banks, PSU, and Software Firms should collaborate to have different types of single entry examinations reducing the preparation times and increasing the productivity of World’s Largest Democracy.

The Bill Drill

The Government has played its dirty game of caste based division of Indian society by passing the Bill of “Reservations in Promotions”. The last reshuffle in cabinet the corporate sector was expecting reforms in policies and governance from Finance Minister P Chidambaram, however for carrying out such reforms there are three established ways.

First sort of reforms need constitutional amendments for which a 2/3 majority is required means support of BJP lead NDA. The BJP is already is attacking mode on UPA-2 and had almost cancelled all session of the parliament on account of Coal gate. Everybody wants a healthy debate on issue of Captive Mining and allocations however the BJP wants to use this opportunity and the early elections. However this seems to be impossible. So the reforms such as Taxation, Goods and services Tax, Direct Tax Codes, General Anti Avoidance Rule which are really needed to boost the economy and to have a healthy market conditions are seemed to be next to impossible. The pension system reforms, insurance sector reforms are essence to control the burgeoning situation of the capital market. Lack of this has already affected the market sentiments and the net FII inflow is drying in exponential manner. Also the lack of adequate policy formation has made the image of Government unstable and brought the phenomenon of Policy Paralyses. The FDI and FII have worries in this area and till date no one is acting one it. The adjourning of entire session of Parliament has drastically affected the process of Policy Making and BJP lead NDA seems to be in no hurry to end this epidemic. The Ruling party is also counter attacking on BJP, wasting the important time on nation when the market conditions needs immediate attention to pace the slowing down of economy. This political chaos is baseless, selfish and against the National Interest.

Second form of reforms is one in which only majority in parliament is required. These included FDI in multi-brand retail investment, civil aviation, curtailing the subsidies on the fuels. The hurdle in this is the coalition parties. The UPA partners could oppose or even agitate these reforms. But they cannot block these reforms. So they are acting in same way of NDA to put hurdles in reforms.

Third types of reforms may see the oppositions in the Congress party itself. The food security bill, the land acquisition bill has major differences between the congress parties itself. In view of upcoming elections P Chidambaram have huge pressure of retaining the subsidies such as fuel subsidy which already killing the Oil marketing companies. The only success of MGNREGA is also need to push with fund and simply increasing the deficit. The FII and FDI are mounting pressure to curtail the subsidies so as to have minimization in fiscal deficit. So the only solution to this is softening of Global crude prices and increase in diesel prices in small doses. The allocation of spectrum and renegotiation of Natural resource allocation is also need. The imposition of windfall gain tax on the beneficiary companies could also lead the way; however we need a strong Government for it. So instead of making concentration on these issues to distract the mind of Aam-admi the UPA chosen the political way and declared the “cast based promotion system”. How could it is reasonable to promote someone not on basis of merit but on base of caste ??