Recently, I was studying about the so-called Foreign Direct Investment in Retail. As I studied more, it soon caught my attention. Attention of a common Indian, who earns his living working in an IT company. Do I need to worry? These are just the rumours or do they have some basis. Will my job be affected? What is this global slowdown all about? Foreign Direct Investment in retail as a measure to counter inflation. Anna Hazare team – on their struggle to achieve Corruption-free India. Opposition parties alleging government of various scams & ghotalas. Economists exercising their brains to reach a sensible conclusion. Do all these activities affect me? Do I need to do anything? How can a common man contribute? These were some of the updates & questions which I acquired over a course of 2 hours that I spent reading & enhancing my knowledge of the basic economics.

India – one of the fastest growing economies. But, a 2 year time span uncovering a whole lot of scams & ghotalas; have left India on the verge of collapse. In the wake of corruption, domestic money [Rupee] is accumulated by various politicians / babus over a period of time. This common man money is deposited in foreign banks as foreign currency, just to boost their economy.

With no systematic supply chain, farmer’s produce is either wasted in warehouse or it reaches consumer with its price sky-rocketing. The reason we get is “Fuel price rise”. But in recent past, diesel prices have not raised proportional to the equivalent commodity price rise. As food inflation rises in the darkness of weak / poor / inefficient supply-chain, consumer buying power is reduced. As a result, consumption decreases. India, with inflation rising, cannot even boost of a self-sustained growth independent of foreign investments.

As this FDI in retail debate picks up heat – there are both pros & cons to it. The basic supply chain infrastructure will surely enrich with FDI in retail. But, at the same time, small & medium retailers & middlemen will loose their jobs. This left me with a question of why our government needs a support of FDI to restructure our supply-chain. We have faith in foreign investors that once they invest in India, they will tend to restructure & reorganise our chain for better. But, why the government itself do not take any measure of the same degree & effect. If at all, government itself is successful in restructuring our supply-chain, I guess there won’t be any need of foreign investments. Farmer’s won’t commit suicide as they will get their worth. Inflation will be contained with proper administration of supply-chain. Consumers will buy more & it sets a chain process of self-sustenance.

Some people also shared their views like let Rupee fall. It will be for the benefit of India on the whole. As Rupee fall, we will have to compulsorily restructure our administration & policies. Reforms will set in. But, why do we need to go till the end just to show that we are capable of reforms. Why our elected representatives cannot forecast our external dependency.

Overall, as I studied this topic, I came to realise that it is a vicious “Circle”.

  1. We elect our representatives without due thought about their education, their knowledge background, their efficiency to administer & their capabilities.
  2. Most [not all J] of these representatives, once elected, forget the common man / India’s concerns & start filling their own pockets. [Corruption]
  3. Parliament / Judiciary are weak enough to contain this corruption or in-efficiency.
  4. As this scenario is executed, investors loose their confidence in India, & they retreat.
  5. Poor supply-chain management ensures that poor gets more poor & consumers buy less due to the rising inflation [in contribution to ‘some’ external factors like fuel price rise]
  6. Defeated on both ends [Domestic consumption as well as foreign investments], government tampers with their current foreign policy to incorporate more foreign investments in order to set things right.
  7. Once this policy is effective, money again flows in the economy [like in 1991], for 20 years economy blooms, and after that the same seven steps are repeated.

So what I understood, as far as my mind can understand J, this is basically a 3-fold problem:

  1. Elect sensible / educated / knowledgeable / efficient politicians.
  2. Corruption-free India [For which Anna & team is fighting, I strongly support corruption-free India].
  3. Government should be made accountable [one of the clause of Jan Lokpal bill]. Political stability [Single party majority – no coalition government] ensures that government process smoothly & efficiently. Accountable & stable government in return guarantees investors confidence & support, thereby driving the economy to self-sustenance & growth.

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