FDI in Retail, How Far Needed???

Recently the Govt of India has announced to open doors for FDI upto a certain limit in single brand and multi brands. Its natural to rise a question whether it is good?, if yes to what extent???

If, define FDI, it is Foreign Direct Investment through Automatice Route i.e. investment by foreigners which do not require prior approval of Govt of India and/or the Reserve Bank of India, under the Foreign Exchange Management Act, 1999.

Consequently, it will inspire for investors to invest in India in retail sector. It will enhance our fund of foreign exchange, strengthen exchange rate of Indian Rupee, supply of products will balance the demand and supply hence there could be a sufficient decline in prices or say inflation.

To some extent it will create ample of job opportunities by way of constructions, marketing, management, information technologies, manufacturing, transportation of goods and many more (or say for the infrastructure which the upcoming markets will need). Simultaneously it will enhance Govt revenue by way of indirect taxes viz. sales tax, custom duties etc. Moreover having sufficient volume of funds of foreign exchange will make it easy for the country to import more essential products and technologies.

Again, its natural to arise a question, if all above are the benefits of the said FDI initiative, why it was not taken earlier?? A general response to the question is enough that until the things don't go beyond control, we need not to go to our neighbour to ask him to come to us and help. In present situation inflation and prices of all essential commodities are at the sky. Situation is day by day going beyond control. Hence, it has become a compulsion over the Govt to find out an immediate solution and to go for such a  welcome move before elections.

On the other hand, this move has its' demerits also. It may harm to some extent native retail markets, small scale industries may have to go out of the markets as the people having small retail business are arguing with their protest. Moreover there may be chances of dumping into our markets which in long run increase the prices of concerned products and may have adverse effect over the jobs etc.

Still, there is an understanding among WTO members that the member countries will try to make the Globe as free trade economy. The present move although has it's demerits yet the merits are more and it is need of the hour. At this moment, we don't have any other choice except welcoming this move. Of course, the Govt, should impose appropriate restrictions & conditions and continuously review it as and when the time and economy demands for.

Business by the Government

Some scholar in ancient times had told-'Doing business is not business of the Government. Government should work only for the good of public and regulate the state.'

In present scenario it has several meanigs which can be opposed by the public. First, business should be given only to the private sector..It results in to capitalism like in US and easily not acceptable in India where socialism is always a demand. Further, it may result in to high prices, monopoly, consumer exploitation and less revenue to the Government.

Presently, Govenment is also operating business through Public Sector Undertakings and PPPs with proper care by consituting regulatory bodies. Obvously it gives revenues to the Government so as to meet the expenditure, form and implement the plans, create ample of job opportunities, upgrading living standard of people, decentralisation of money.

Concluding, there is nothing wrong in business by the Government. Though a well balance should be maintained between public and private sector in the growing Indian Economy.