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Tamil Nadu Chief Minister J Jayalalithaa today came down heavily on the centre's move to increase the Foreign Direct Investment (FDI) limits in various sectors, stating that it is neither an effective nor an appropriate measure to tackle the macro-economic imbalances faced by the country and such "short sighted policies" of increasing FDI caps will not help the Rupee to stengthen.
In a press statement issued today, Jayalalithaa said that announcements of this nature are only a "knee-jerk reaction" to the problem of the falling Rupee. "Concerted policy action to promote exports, curb imports of non-essential items, and to eliminate speculative trading in the Forex Market are all essential for the rupee to remain strong," she added.
"Stock Market indices and the views of the external credit rating agencies and fickle foreign investors on how liberal our economy is, are not barometers for measuring the well being of our people," said Jayalalithaa.
She said that the decision to raise FDI in telecom from 74% to 100% has implicit security concerns since foreign companies will be able to control the entire telecom network.
"Data security and privacy issues will arise, which will be very difficult to regulate. This was also witnessed recently in the case of a Private Service Provider who had laid more emphasis on individual privacy rather than National Security. It is reported that even the Home Ministry at the Centre is against this move," she said.
The move will perhaps only benefit the Foreign Companies which have reportedly incurred losses on account of the orders of the Supreme Court in the issue of 2G Licenses. Even advanced countries restrict foreign investment in the Telecom Sector precisely for security reasons, whereas the Government of India seems to be oblivious of these concerns.
She also critisised the centre for raising of the cap on FDI in the Insurance sector while the country has strong Public Sector Insurers in this country who provide very good service, with the public interest in mind.
Meanwhile, the Insurance Law (Amendment) Bill, 2008, is still pending in Parliament; the UPA does not have the numbers in Parliament to have the Bill passed.
Raising FDI in Plantation Sector cannot be allowed since foreign investment in this sector to tip the scales in favour of the larger plantations and jeopardize the livelihood of the small growers. "uch a move could reduce Small Tea Growers to labourers within a few years," she said.
There must be adequate consultation with State Governments before granting of clearance by FIPB for investment in the plantation sector in order to ensure adequate safeguards for the small growers and plantation labour.
It has been announced that the Cabinet Committee on Security (CCS) may consider higher investment levels for state-of-the-art technology in Defense sector. There are grave security and self sufficiency concerns in allowing FDI in this very crucial sector.
Since single brand retail involves setting up of sale outlets by manufacturing or marketing companies at different locations, decisions in this area should be made subject to the clearance of the State Governments, as in the case of multi-brand retail, so that small retail trade which provides livelihood to millions of small traders and shop owners can be effectively protected, she added.
