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Saturday, 27 October 2012

Effects of Foreign Direct Investments in India.

India is said to be the finest destination for foreign direct investments next to China. India was always the finest destination for foreign powers. The East India Company which came to India for trade purpose, decided to colonize India after seeing the resource in India, and disunity among Indians. Both India and China at first followed soviet model economic system and was reluctant to foreign direct investment, this system was a failure, so India and China liberalized their economic policy which includes allowing of foreign direct investment. The economy of India and China witnessed a rise only after allowing foreign direct investment.

India and China are said to be the emerging superpowers and foreign direct investment plays a very positive effect on it, but at the same time there are negatives too. Indian Government allowed 51% foreign direct investment in retail sector amidst strong resistance.Bharatiya Janata Party were the first to allow FDI,when they were in power.BJP did not face a strong resistance as Congress is facing now because BJP did not allow much FDI in retail sector.

India government claims FDI will create job opportunities. It is true that it will create job opportunities; but it also raises question, job opportunities for whom? For literates and illiterates.FDI will recruit people with basic educational qualification. The targeted audience of FDI will be only upper and middle class people who were slowly adapting to western style. In order to communicate with these classes of people certain basic education qualification is necessary.

In India and China basic education is compulsory for all citizens but the problem in India is, Indian Government will not check whether everyone is getting the basic free education nor it will take effort in developing the educational institutions or academic standards. In China they take measures to check whether everyone is getting free basic education, even then China is accused of being partial in giving education to the urban and rural. In India educational system is commercialized so the downtrodden could not afford to study in private institution.

Along with job oppurtnities, many will lose their livelihood. The middlemen were the most affected in FDI.The middle men includes wholesalers, agents, brokers and retailers. In FDI, the foreign companies will directly purchase products from the producers and sell to the consumers; this method will help farmers because they will get a reliable fixed price. The middlemen were always blamed of purchasing from the producers at a very low cost and selling to the consumers at a high price by fixing a high commission for them. This has lead to exploitation of farmers and consumers, but they play a major role in making the life of consumers easy by making the products available near their living place.

The life of a street vendor is different in India, they were poor and illiterates. They don’t even have the money to purchase the goods they want to sell. Every morning they borrow money for high interest and then purchase the goods they want to sell and in the evening whether they were able to sell the goods or not, before they return home they have to pay interest for the money they have borrowed. They sometimes return home without even a single paisa in their hand, if at all they earn, it will only be helpful in filling half of their stomach. In time of sickness or special occasions they will be forced to borrow a large sum of  money with high interest and they strive hard to repay it, sometimes they could not repay, this has lead to lot of suicides and hard labors.

FDI is not going to vanish the local retail stores. The local retail stores have established a name among its customers. In time of need they will lend goods and later collect money without any interest and also they will provide goods according to their need. In local retail stores it is not necessary that they have to buy as whole, they even give loosely, this will help the poor. So the poor will always be the loyal customers of these stores and foreign companies are not going to open its stores throughout India, It is going to concentrate mainly on cities. In case of urgent need, everyone has to approach local retail stores. It also raises question, if the poor lose their livelihood, can they afford to buy even in this local stores?

Can our businessmen compete with the foreign powers? First we have to change ourselves. No one can deny that we lack perfection and honesty. Foreign Powers show much concentration on hygeine, quality, customer care and in developing the existing business, we lack very much in these fields. Employee welfare is another important concept in FDI; this concept does not exist in Indian retail sector. Government should take steps in preventing the corruption in business and regularly check the qualities of products sold. Government should help the local business financially to compete with the foreign powers.

FDI supporters point out China’s economy, whenever there is a resistance. China is also facing widening inequality between the urban and rural population, which does not comes to light much.FDI will yield benefit to our nation and at the same time it will also widen the urban-rural gap. In order to eradicate this inequality, Government should create opportunities for rural people too. It is time for us to think innovatively and work hard to establish the pride of India. Government alone cannot do it; we citizens should also play a much important role along with government. Citizens should elect the party which is more favorable to the welfare of citizens, rather than parties that look for the welfare of those who favors them.