The Aam Aadmi Party ruled Delhi government has decided to withdraw permission for foreign companies to make direct investments in supermarkets and other so-called multi-brand retail stores.
On Monday, the Delhi government informed the central government of its decision to cancel the approval for FDI in retail that had been granted by the Congress government that it defeated in the state election last month.
Last year, the central government decided to allow 51 per cent FDI in multi-brand retail trading, but left the implementation of the policy to individual states. Twelve states, mostly Congress-led, including Delhi, had agreed to allow global retailers to open supermarket chains.
Although Delhi has become the first state to withdraw permission for FDI in the retail sector, the decision wasn't unexpected: this was among the key items in AAP's election manifesto.
AAP isn't alone in opposing FDI in the retail sector. The Bharatiya Janata Party and other political parties have consistently opposed this too, and the centre's decision last year to allow foreign funding of supermarkets was met with protests. The announcement could dissuade foreign supermarket chains from taking the plunge and committing investments, a senior executive of a foreign retailer said.
This isn't the only one of its promises for Delhi that AAP has implemented. Soon after coming to power in the state at the end of December, it also delivered on free water for households consuming up to 700 litres per water a day and a 50 per cent subsidy for those who consume up to 400 units of power.
For now, the economic philosophy driving these decisions is still hazy because AAP has yet to clearly spell out its policies on a range of national economic issues. However, Atishi Marlene, a Delhi-based AAP member and who helped draft the Delhi manifesto, was able to shed light on the thinking behind these measures and the challenges AAP is facing while arriving at an economic policy for the nation. Here are excerpts from a phone interview with her:
1) What was the reason for the AAP deciding against permitting FDI in multi-brand retail?
I have to make it clear first that we aren't taking an ideological stance against FDI, but had decided to allow it on a sector-by-sector basis. After examining studies on how the rise of retail giants like Walmart led to job-loss and problems in the urbanisation process in American cities, we concluded that FDI in multi-brand retail was not ideal for Delhi. Retailers cannot compete against such giants, and this will lead to serious job loss.
2) Which sectors would be ideal for FDI? and would you say that FDI in retail would be bad for retailers across the country as well?
We are yet to decide about FDI for other sectors. And yes, nowhere in India would FDI in multi-brand retail work. If a developed country was affected by multi-brand retailers, how can a developing country withstand it?
3) AAP has delivered immediately on promises such as free water and subsidised power. Now it has decided against allowing FDI in multi-brand retail. Don't you think you come across as somewhat populist?
I don't see how you can link free water, subsidised power and FDI in multi-brand retail. These aren't populist measures, but what we found out were the concerns of Delhi's people.
4) Not allowing FDI in multi-brand retail may ensure that jobs are not lost. But what are AAP's plans to create jobs and economic growth in Delhi?
Major employment-increasing measures can be brought about only by central government. As a state government, we can only try to protect Delhi's people from problems like unemployment and price rise. We have initiated several measures to create a better economic environment in the state.
First, there are several government posts lying vacant, including in facilities such as schools and hospitals, and efforts are on to ensure they are all filled.
We will provide better facilities to the industrial areas within Delhi, another neglected constituency suffering under the licence Raj. The licensing procedure will be simplified, and we want to do away with crony capitalism altogether, as that is main reason for the artificial price rise.
5) You have just come to power in Delhi, and almost immediately afterwards have announced that AAP will contest the general election. Don't you think there are serious challenges facing you, especially in framing a coherent economic policy so soon after Delhi?
Absolutely. We had an entire year to go around Delhi and understand its issues, and we do not have the same time frame for the national election. But at the same time, we are not embarrassed to say we don't have an answer [about economic policy] yet. We are actually thinking about it. The discourse on economic policy is so polarised towards the right and the left that no one is thinking about the concerns of the common man. In any case, policy decisions in other parties are determined by vested interests. We face no such pressures.
6) How is the party going about the process of deciding on a comprehensive policy for the nation's economy?
We are doing on a national scale what we did in Delhi. We understood the concerns of Delhi's people by going door to door and asking them about their most pressing political and economic concerns. We obviously cannot employ the same strategy across the country, and hence are holding discussions with representatives of various sectors, such as industry, farming and several others. In the end, the common men and women will decide our policy, and we have the intent and the will to carry it out.
7) Don't you think this [taking the common man's consent] can be taken to absurd extremes? In AAP's vision document, it says that "the prices of the main commodities should not be fixed without public consent." Of course, it clarifies that not all prices will be decided this way, and, "most items sold in the market are subject to demand and supply but the prices for essential items like diesel, petrol, etc, for which the government determines the price should be determined with public consent". Doesn't this strike you as somewhat extreme?
As the document itself says, most prices are determined by supply and demand alone. We won't be asking the people basic questions about their preferred price. What the document means is that people will be able to participate in such decisions. In any case, these prices today are not determined by calculations alone, but also by vested interests that are served by compromised political parties. That is what we will put an end to. After all, the groundswell of public support for AAP is as much a reaction to the vices of the electoral system as to our party's virtues.
8) When do you think AAP will have a clear economic framework?
The moment we have it, you'll know. We have no intention of keeping it a secret. On the day we announced that we would contest the election, we said the final manifesto would be released in March. That will make all our economic policies clear.
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On Monday, the Delhi government informed the central government of its decision to cancel the approval for FDI in retail that had been granted by the Congress government that it defeated in the state election last month.
Last year, the central government decided to allow 51 per cent FDI in multi-brand retail trading, but left the implementation of the policy to individual states. Twelve states, mostly Congress-led, including Delhi, had agreed to allow global retailers to open supermarket chains.
Although Delhi has become the first state to withdraw permission for FDI in the retail sector, the decision wasn't unexpected: this was among the key items in AAP's election manifesto.
AAP isn't alone in opposing FDI in the retail sector. The Bharatiya Janata Party and other political parties have consistently opposed this too, and the centre's decision last year to allow foreign funding of supermarkets was met with protests. The announcement could dissuade foreign supermarket chains from taking the plunge and committing investments, a senior executive of a foreign retailer said.
This isn't the only one of its promises for Delhi that AAP has implemented. Soon after coming to power in the state at the end of December, it also delivered on free water for households consuming up to 700 litres per water a day and a 50 per cent subsidy for those who consume up to 400 units of power.
For now, the economic philosophy driving these decisions is still hazy because AAP has yet to clearly spell out its policies on a range of national economic issues. However, Atishi Marlene, a Delhi-based AAP member and who helped draft the Delhi manifesto, was able to shed light on the thinking behind these measures and the challenges AAP is facing while arriving at an economic policy for the nation. Here are excerpts from a phone interview with her:
1) What was the reason for the AAP deciding against permitting FDI in multi-brand retail?
I have to make it clear first that we aren't taking an ideological stance against FDI, but had decided to allow it on a sector-by-sector basis. After examining studies on how the rise of retail giants like Walmart led to job-loss and problems in the urbanisation process in American cities, we concluded that FDI in multi-brand retail was not ideal for Delhi. Retailers cannot compete against such giants, and this will lead to serious job loss.
2) Which sectors would be ideal for FDI? and would you say that FDI in retail would be bad for retailers across the country as well?
We are yet to decide about FDI for other sectors. And yes, nowhere in India would FDI in multi-brand retail work. If a developed country was affected by multi-brand retailers, how can a developing country withstand it?
3) AAP has delivered immediately on promises such as free water and subsidised power. Now it has decided against allowing FDI in multi-brand retail. Don't you think you come across as somewhat populist?
I don't see how you can link free water, subsidised power and FDI in multi-brand retail. These aren't populist measures, but what we found out were the concerns of Delhi's people.
4) Not allowing FDI in multi-brand retail may ensure that jobs are not lost. But what are AAP's plans to create jobs and economic growth in Delhi?
Major employment-increasing measures can be brought about only by central government. As a state government, we can only try to protect Delhi's people from problems like unemployment and price rise. We have initiated several measures to create a better economic environment in the state.
First, there are several government posts lying vacant, including in facilities such as schools and hospitals, and efforts are on to ensure they are all filled.
We will provide better facilities to the industrial areas within Delhi, another neglected constituency suffering under the licence Raj. The licensing procedure will be simplified, and we want to do away with crony capitalism altogether, as that is main reason for the artificial price rise.
5) You have just come to power in Delhi, and almost immediately afterwards have announced that AAP will contest the general election. Don't you think there are serious challenges facing you, especially in framing a coherent economic policy so soon after Delhi?
Absolutely. We had an entire year to go around Delhi and understand its issues, and we do not have the same time frame for the national election. But at the same time, we are not embarrassed to say we don't have an answer [about economic policy] yet. We are actually thinking about it. The discourse on economic policy is so polarised towards the right and the left that no one is thinking about the concerns of the common man. In any case, policy decisions in other parties are determined by vested interests. We face no such pressures.
6) How is the party going about the process of deciding on a comprehensive policy for the nation's economy?
We are doing on a national scale what we did in Delhi. We understood the concerns of Delhi's people by going door to door and asking them about their most pressing political and economic concerns. We obviously cannot employ the same strategy across the country, and hence are holding discussions with representatives of various sectors, such as industry, farming and several others. In the end, the common men and women will decide our policy, and we have the intent and the will to carry it out.
7) Don't you think this [taking the common man's consent] can be taken to absurd extremes? In AAP's vision document, it says that "the prices of the main commodities should not be fixed without public consent." Of course, it clarifies that not all prices will be decided this way, and, "most items sold in the market are subject to demand and supply but the prices for essential items like diesel, petrol, etc, for which the government determines the price should be determined with public consent". Doesn't this strike you as somewhat extreme?
As the document itself says, most prices are determined by supply and demand alone. We won't be asking the people basic questions about their preferred price. What the document means is that people will be able to participate in such decisions. In any case, these prices today are not determined by calculations alone, but also by vested interests that are served by compromised political parties. That is what we will put an end to. After all, the groundswell of public support for AAP is as much a reaction to the vices of the electoral system as to our party's virtues.
8) When do you think AAP will have a clear economic framework?
The moment we have it, you'll know. We have no intention of keeping it a secret. On the day we announced that we would contest the election, we said the final manifesto would be released in March. That will make all our economic policies clear.