India's about-turn on retail reform only shows up the rot in its politics
What was my old friend Dr Manmohan Singh thinking about? Is it time for him to step down as India's prime minister and take a well-earned retirement after 40 years of top-level public service? Should Singh and Sonia Gandhi's Congress Party coalition call elections in the hope that younger politicians with fresh ideas may take over?
These suggestions are prompted by the extraordinary events that saw Singh promise that India's US$500 billion retail market would be open to up to 100per cent foreign direct investment. Yet, within days, he reneged on his promise in a devastating U-turn.
The worry should not be about the retail sector or the fear that, as one foreign commentator claimed, India might be closing its doors to all foreign investors. The main damage is political: how could a government which has a sufficient majority to push through any measures in Parliament have so misunderstood opposition from within its own ranks as well as from outside? How can any government which says one thing and then changes its mind so quickly be trusted on anything?
Shopping mall mania has hit the suburbs of India's big cities hard. Sprawling glass palaces for leisure, with cinemas, cheap restaurants including McDonald's and KFC, and clothing stores galore, are springing up. In several places in Delhi, Mumbai and other metropolitan cities, the malls cast a lurid light on slums in their shadow.
But India is proof that anecdotal journalism is dangerous. Overall, the modern sector of the retail business is between small and tiny, ranging from a high of 23per cent in clothing and fashion to a miniscule 1per cent modern penetration in food and grocery items.
Outside metropolitan India, markets sprawl in the open air with endless opportunities for spoiling and wastage: some 40per cent of India's food is estimated to be wasted on its journey to market because of poor roads and inadequate storage.
Hence, the idea of bringing in foreigners to supply expertise, quality control and purchase agreements to ensure fresh quality produce and fair prices for farmers, supply chains, procurement and distribution systems, and modern management from the fields to the shops.
Indians who opposed the measures worked themselves into a lather about the potential threat, seeing a latter-day army of British East India companies ready to march in and steal their country. Nevertheless, it is reasonable to ask what foreigners could bring to the party.
After all, it is not rocket science to understand the steps needed to get food from the farmers' fields to the shops. And Indians know better than any foreigners that it is the hardest thing in the world if you don't know what the farmer is producing because of his financial stringency and exigencies of weather, there are no roads from the fields, and the electricity supply is uncertain.
India is a huge and complex country with many major languages, many more varieties of cuisine, religious and dietary restrictions, a growing middle class of 300 million people greedy for 21st-century fashions and goodies, a mass of people who struggle to survive and a growing underclass of barely literate people who struggle to find work and stay alive.
The argument about whether foreigners can bring the competitive edge to unleash India's retail revolution is bogus. India should be working from the bottom up: fix the roads, provide the schools, empower the farmers so that they are not cheated by middlemen, and Indians will soon show any foreigners the way to the hypermarket.
By all means, let Indians team up with foreign retail giants to tap management expertise and let the foreigners learn the wonders of India. Encourage foreign investment and partnerships to supply and replenish India's impoverished infrastructure.
Unfortunately, grubby middlemen who dominate Indian politics hijacked the debate. They presented themselves as defenders of mom-and-pop shops, ignoring that in the poorest villages there are no shops, and in the cities moms and pops might like to upgrade to a pleasant air-conditioned environment.
In the same way, Indian politics as a whole has been hijacked by grubby middlemen who play with caste, regionalism, religion and language to enrich themselves.
The surprise is that Singh allowed himself to be suckered in, distracted from the main task of reforming India from the bottom up, from the fields of the struggling farmers about whom Singh himself spoke so eloquently.
I don't want to damn Singh with faint praise. I have known him, very much on and off, and increasingly from a barricaded distance, for 40 years since he was chief economic adviser to the government.
As finance minister, he rescued India from the brink of bankruptcy by opening the door to economic reforms. He remains a gentleman, and a stranger to the criminal thuggery and corruption that is now part of India's democratic deficit.
Until recently, Singh's political back was protected by Sonia Gandhi with her control of the Congress Party machine and funds. Gandhi, ominously, has not made the headlines since she came back from the US recently after months of treatment for cancer. The retail debacle suggests that Singh is tiring and it is time for Gandhi's son, Rahul, and his companions to prove their worth.
Kevin Rafferty is a political commentator
