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Finally, debating markets

Business Standard/New Delhi 06 Dec 12 | 12:25 AM

The Samajwadi Party and the Bahujan Samaj Party remained absent at yesterday’s voting in the Lok Sabha on foreign direct investment in multi-brand retail, which as a result gave the United Progressive Alliance or UPA the necessary numbers to defeat the challenge to its key economic policy initiative. The scene of action will now shift to the Rajya Sabha, where the UPA government is likely to face similar opposition. While UPA’s victory may pave the way for more purposive policy action, what was more reassuring from the two-day long Lok Sabha debate was the return of normal business in Parliament. It is a sad reflection of recent wasted sessions that the outcome of the debate and voting was perhaps less important than the fact that it took place. It is necessary to remember that FDI in retail is at best an incremental reform, and at worst a useless step — as currently written, that is. Only 16 cities will benefit — scale effects, important for margins in organised retail, will not be present. Unlike, say, modification of state-level agricultural produce marketing legislations, it will not be a game-changer. And yet, this debate mattered for more than petty political reasons.

Perhaps Sharad Yadav, president of the Janata Dal (United), put it best. In his impassioned if misguided speech opposing FDI, he asked Kapil Sibal, the UPA minister who had spoken first for FDI, why Parliament did not set aside “just an hour" to discuss the economic direction of the country at a higher level than it has so far. Mr Yadav is correct; Parliament needs to discuss the benefits – or lack thereof – of economic reform. His own speech was a textbook study of the mistaken anxieties caused by the expansion of the market; but it was not surprising. It is the absence of discussion in Parliament that has caused parties to be able to pretend to be anti-reform even as their voters benefit from it. To the extent that almost all the speeches in Parliament touched upon concerns about or benefits from the expansion of the market economy, the value of this debate extended far beyond the specific proposal being discussed. The speeches were, with the occasional exception, less memorable than those during other moments when Parliament has transfixed the nation, such as the no-confidence motion over the nuclear deal with the United States – but they were no less important for all that. They showed investors, for example, exactly where the Indian polity stands on the issue of reform more generally.

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That the UPA government has belatedly realised the necessity for competent floor management and allowing the Opposition to have its say is welcome. It is to be hoped that the Bharatiya Janata Party has similarly realised how counter-productive its strategy of blind obstruction was. The question that some have raised, of course, is whether it is not worrying that actions in the realm of the executive are being voted on by the legislature. In this case, there is some legal sanction for it; but does it set a precedent? That would indeed be a problem. But when administrative measures touch so closely on a matter so under-discussed and yet so important for the ideological content of politics, that the representatives of India’s people have thrashed the issue out in public is welcome.

Sensex

Company Price Gain (%)
Reliance Inds.979.302.94
Hindalco Inds.160.402.39
TCS2,557.902.21
GAIL (India)509.651.93
Infosys3,946.151.72

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