The winter session of Parliament began on 22nd November. The agenda includes several proposed new laws, cleared recently by the Cabinet, which require parliamentary approval.
There are two Bills relating to foreign investment in insurance and pension funds, which are of vital concern to the working class and all families of the middle strata whose hard-earned savings are under threat of being opened up to capitalist profiteers and speculators. There is also a Bill on land acquisition and rehabilitation, which is of vital interest to peasants and other individual land-holders as well as tribal communities. It is reported that this land bill may be postponed to the budgetary session of February-March, 2013.
The first week of this 3-week long winter session was consumed in a bitter fight over the issue of opening up multi-brand retail trade to FDI. Both sides in this bitter fight are claiming to be acting in the best interests of the working people.
The Congress Party and its Commerce Minister claim that the entry of giant global trading companies would create one crore (10 million) new jobs in supermarkets, cold storage plants and other allied activities. They say that the growth of large-scale modern retail trade outlets would “get rid of the middlemen”, reduce the huge wastage of perishable food items, fetch better prices to the peasants and lower the consumer prices paid by urban families.
The opposition camp, led by the BJP and the Communist Party of India (Marxist), claims that this policy decision would lead to the destruction of livelihoods of crores of small shopkeepers and peasants. They compare it with the British East India Company, which came to trade and ended up conquering and enslaving our country.
Where does the truth really lie? Whose interests do these two warring factions and their respective positions really represent?
Position of the Ruling Camp
There is some truth in what the Congress Party claims, which is, however, overshadowed by very big lies.
It is true that the system of trade in our country needs to be modernised and managed on a larger scale, with cold storage facilities that would cut down the enormous wastage of perishable food items. Such wastage raises the cost to society and increases the prices that working people have to pay.
It is a big lie that the best or only way to modernise trade is by handing it over to private profit maximising corporations. The logical solution and best alternative is to socialise not only the scale of operations but also the ownership and control over trade. This means to establish public wholesale procurement and distribution, through a variety of public and private retail outlets.
Wherever Wal-Mart and other corporate trading monopolies have penetrated, there has been widespread destruction of livelihoods. Traditional classes of trading intermediaries have been rapidly replaced by the modern monopoly capitalist intermediaries, integrating all stages from wholesale to retail, with enormous market power to squeeze both the producers and the consumers.
In the conditions of the global crisis and the deepening recession in North America and Europe, major global retail chains such as Wal-Mart, Carrefour, Metro and Tesco are eager to penetrate the Indian market. They are eyeing our country as an under-exploited area with massive scope for modern large-scale retail chains to reap maximum profits.
The Indian corporate houses, including Reliance, Tatas, Birlas, Bharti and some others, have been in the retail business for the past 10 years and managed to gain control of less than 5% of the market. They were all insisting so far that FDI must be allowed only in single-brand and not in multi-brand retail, so as to protect their territory from foreign competition. Now the majority of them have realised that to become 49% partners with global giants is the quickest route to gain control over the retail market of our country.
Position of the Opposition Camp
There is indeed some truth in what the opposition parties in Parliament are saying, especially the reminder that it was a global trading monopoly whose entry led to the colonisation of India. The biggest global trading monopolies of today play a pivotal role in the neo-colonial plunder of the majority of countries in Asia, Africa and Latin America, for the benefit of a minority of imperialist powers.
While pointing to this truth, the opposition parties are hiding two important facts. One is that the Indian corporate monopolies who have already established trading chains in the country are also on an expansionary imperialist course. They are 49% partners in the monopoly capitalist offensive to gain control over trade. Hence it is necessary to fight not only FDI but also the Indian corporate monopolies in retail trade.
The second important fact is that the monopoly capitalist offensive threatens traditional and capitalist wholesalers in agricultural and industrial markets as much as it threatens the retailers. This section of the bourgeois class wants to block FDI so as to strengthen its own position and market power to squeeze the producers and the consumers.
M Karunanidhi, leader of the DMK which is the largest ally of the Congress Party within the UPA, reportedly said on 25th November that “our political constituency in Tamil Nadu is vociferously against FDI in retail”. He admitted that his party’s core support base includes capitalist wholesale merchants of various towns and traditional trading intermediaries in the countryside. The situation is similar in the case of the Trinamool Congress in West Bengal, the Samajwadi Party in UP, the JDU in Bihar, etc.
Capitalist merchants wield considerable influence over state governments, which is the reason why many regional parties are opposing the entry of multinational trading companies. They say no to this policy reform, without putting forward any alternative reform, which reveals that they represent a section of the bourgeois class which is happy with the existing conditions and wants no change.
From ancient times, our civilization has developed on the basis of recognizing that the State must prevent private interests from exploiting shortages. The bourgeois agenda of letting trade be dominated by private monopoly players, be they Indian or foreign, is against the general interest of society. The pro-social agenda, the people’s agenda, is to bring trade under social control.
Trade, or the business of buying and selling, does not add anything to material wealth. It is only a process through which goods get distributed from one set of hands to another, from the producers to the ultimate users. Why then should private profit maximisation be allowed in this sphere? All the profits that private merchants pocket will have to come from robbing value from the hands of the producers or the consumers, or both.
The Communist Ghadar Party is of the opinion that the workers, peasants and other middle strata of society must unite to demand and fight for immediate nationalisation of wholesale trade and a modern public distribution system subject to worker-peasant supervision and control. Peasant committees and cooperatives should supervise the fair procurement of farm produce. People’s committees in the towns must supervise the fair price shops where the final products are sold. State monopoly over wholesale trade will ensure that all retail outlets will have to rely on this single source for their supplies.
The working class and people must not rely on the parliamentary opposition to defend their interests. Parliament is an arena for competing bourgeois interests to sort out their contradictions, while denying any space for the interests of the exploited majority of people.
The Communist Ghadar Party calls on all those opposed to the monopoly capitalist offensive to unite and demand that wholesale trade be immediately nationalised and a modern universal public distribution system be established, covering essential agricultural and industrial consumption goods.
There is an urgent need for all parties and organisations of the working class to unite to oppose and agitate, in Parliament and on the streets, against the Pension Fund Regulatory and Development Authority (PFRDA) Bill and the Bill to raise foreign ownership of insurance companies from 26% to 51%.
Even though the Land Acquisition Bill may not be presented in this session, it is important for workers’ and peasants’ organisations to unite against this Bill. Unity must be built in defence of the principles that those who till the land cannot be forced to part with it, and that land acquired for a public purpose cannot be sold to private parties.
Present structure of trade and the proposed reform
Trade refers to the entire process of selling and buying of commodities, through which the goods produced in one part of the country reaches the final consumers in other parts. It includes the buying and selling of both agricultural and industrial goods.
Most manufactured consumer goods such as clothing, cosmetics, pens, watches, etc., typically go through a 3-tier system of trading intermediaries before reaching the final consumer. A manufacturing company operating at an all-India level would have between 40 and 80 redistribution stockists, each of whom would sell the product to between 100 and 450 wholesale merchants. The redistribution stockists and wholesalers will together sell to between 2.5 and 7.5 lakh retailers throughout the country.
In the case of industrial enterprises operating within a particular state, their products pass through two types of intermediaries, wholesalers and retailers. Agricultural products pass through a variety of intermediaries, including traditional rural merchants, commission agents of wholesale traders, agents of the Food Corporation of India, the official ration shops, millions of family-owned retail outlets and push-cart vendors.
The total number of retail establishments in the country was 1.5 crore (15 million) in 2005, according to the official Economic Census conducted once in 5 years. The total number of wholesale establishments was 8.5 lakh (0.85 million).
Of total retail sales, the large-scale department stores account for only about 5%. The remaining 95% of sales are through the “unorganised” sub-sector, consisting of family-owned stores, individual shopkeepers and push-cart operators.
Wholesale trade is dominated by traditional merchant capitalists who wield considerable clout at the local and state level. This includes those who purchase from peasant producers at the official and unofficial rural markets (mandis), and those who buy industrial goods from different parts of the country and supply to retailers within a particular state.
Multi-brand retail refers to large-scale department stores that are several thousands of square feet in area and sell goods of numerous brands sourced from numerous suppliers and producers. Examples are Reliance Fresh, Reliance Mart, Star Bazaar, EasyDay, More, Big Bazaar and other large chains owned by corporate monopoly houses. These are wholesale-cum-retail chains, which buy directly from the producers and sell to the final consumers.
Single-brand retail refers to stores that sell products of one company and brand name, like Nike or Apple or Blackberry. Foreign companies have been allowed to set up single-brand retail stores in our country. However, no foreign company has been allowed to set up multi-brand retail stores. The recent Cabinet decision in September opens up this possibility.