The Government of India, under the guidance of Harvard-educated P. Chidambaram, appears to be ready to open the floodgates of foreign investment, more popularly known as Foreign Direct Investment (FDI). The Government seems to be in a hurry to support its sagging economic performance as the financial waterdogs have downgraded the annual growth rate of India for 2012-2013 to a low 5.6 per cent. It has made the dangerous decision of allowing FDI in retail trade, which no doubt would bring some benefits, but on the other hand is fraught with great dangers for 45 million small traders who support about 225 million people (about 20 per cent of population). It is not that the whole small scale trade will collapse immediately but this move will certainly affect a large segment of population.
Let us make a comparison with China, our immediate neighbour, which was at par with India in economy up to 1977. China opened its door to FDI and at the height of it in 1993 the total percentage of FDI in China was only 6 per cent. Gradually it came down to 3 per cent. China has become an economic giant challenging the might of the USA not because of FDI. On the contrary, its formidable growth is based on its hard work, stress on development of skills, heavy investment in infrastructure and open encouragement to entrepreneurship. The days are gone when the Chinese were regarded as short-statured, weak-bodied, opium-addicted members of human species. Now you will not find any man or woman in China working for less than 10 hours a day. China’s per capita income is three times more than India’s. Its GDP also is three times more than ours.
Therefore Indians must recognise that FDI is no magic wand. Let foreign investment come in heavy industries, infrastructure, electricity generation, etc. but not at the cost of common man and retail traders.
Why not invite Arab investors to be our partners in progress when they are willing to invest not on the basis of detestable and usurious interest but partnership. Let us learn a lesson or two from our stronger neighbour China and depend on our own human and material resources to build a strong economy.