| Clearly, the Marxist in power in West Bengal is singing a completely different tune from his seniors and political masters in the Politburo. (Another irony is that the Marxists have found a great love and sympathy for the rural population "" Lenin was a strong advocate of the dictatorship of the proletariat over the backward peasantry in the Soviet Union. |
| His successor killed millions in the drive to farm collectivisation.) The Marxists' "" and the Swadeshi Jagran Manch's (SJM) "" opposition to globalisation in general and foreign direct investment (FDI) in particular make some sense only in the context of our experience with the East India Company. |
| It came here to trade and ended up colonising the country. Do the anti-globalisers have such contempt for our rulers as to believe that the latter can be bought by the foreign investor as easily as Mir Jafar was by Robert Clive before the historic battle of Plassey? |
| If so, they must have a low opinion of our political class, to which, of course, they themselves belong. |
| If the debate over the inclusion of "foreigners" in the Planning Commission's consultative committees was one manifestation of our paranoia, the fracas with Suzuki was also not an edifying spectacle. |
| If the objections and issues were really substantive, it is difficult to see how they could have got resolved in one meeting in the ministry. Having had some experience of Japanese negotiators with their emphasis on group decision-making on anything of importance, it is difficult to believe that Suzuki suddenly changed its stand. Again, would it not have been better to resolve any issues privately before going public? Have we completely forgotten that it was Suzuki who came to the rescue of the Indira Gandhi's government when no other car manufacturer was willing to invest in India in partnership with the government, to rescue the mess created by her younger son? |
| Congressmen claim to have an emotional attachment to Maruti because of its founder "" if so, surely they should not forget that they owe something to Suzuki for bailing out Sanjay's legacy. |
| On the general issue of FDI, Prime Minister Manmohan Singh in his recent visit abroad argued that, "India needs large doses of investment, both FDI and FII [foreign institutional investment]." His finance minister is saying the same things in his current visit abroad. Both must be surely feeling embarrassed at the fact that the Budget statements regarding lifting of sector caps on FDI in the telecom and civil aviation sectors, have not been notified yet "" nor is there much chance of amending the Insurance Act to increase the FDI limit: both are opposed by the Left. |
| Just as, on economic policy, Atal Bihari Vajpayee had to keep at least one eye to his right (SJM, RSS and so on), Singh has to be even more wary of the Left. |
| The difference, of course, is that Vajpayee had the political weight to, at least sometimes, override internal opposition; the good Sardar unfortunately does not. If the Budget announcements are not implemented, this will surely affect the credibility of the government. Lest we forget, it is worth remembering that every Asian country that has moved up the ladder in economic terms, including China, has done so by laying a red carpet, not red tape, before foreign investors. |
| But the Left need not be unduly worried about FDI flooding the Indian economy whatever the desires of the prime minister and the finance minister "" it has a very strong ally in the Indian bureaucracy. Warburg Pincus' proposal to take up 29 per cent stake in Max India has been objected by the small-scale industries (SSI) ministry. |
| Why? Because the plastic products manufactured by Max may include, some time in the future, items reserved for SSI. It seems to be irrelevant that what Max is manufacturing now is not in the reservation list, and that even after the Warburg investment it will have to continue to abide by the restrictions. |
| Another reassuring factor, for the Left, is that in its World Investment Report 2004, the United Nations Conference on Trade and Development (UNCTAD) has ranked India 114 in the FDI performance index. There does not seem to be any risk of our following the south-east and east Asian models to grow out of poverty. |
| But to come back to the prime minister on the subject of FDI, he emphasised that foreign capital would continue to amount to only a small part of the total investment, much of which would have to come from domestic savings. |
| True, of course. But to look at FDI only as a source of capital underestimates its total impact on the economy "" through technology, quality standards, process benchmarking, markets and so on. To quote just one example, take the auto ancillaries sector. |
| A recent McKinsey study estimates the export potential at $ 20 billion to $ 25 billion in 10 years, creating employment for a couple of million. |
| While many of the fast-growing houses are Indian, it is difficult to imagine that the current and potential growth would have been feasible without the presence of foreign car manufacturers in India, and their quality, cost and delivery demands on suppliers. Premier and Ambassador, with their years of waiting lists, could never have brought this about. |
| Is it not time to get over our hang-ups and join the Marxists "" in Calcutta and Beijing "" in welcoming FDI? avrco@vsnl.com |
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