SAD in dilemma as constituents back FDI
Tuesday, 25/09/2012
http://www.tribuneindia.com/2012/20120925/punjab.htm#2
Chandigarh, : The refusal of the political leadership to allow FDI in retail in Punjab is based more on political compulsions than on giving the much- needed push to growth in agriculture. Even as the Punjab Mandi Board, farmers' organisations and the Punjab Farmers' Commission have endorsed the Union government’s decision to allow 51 per cent FDI in multi-brand retail, the ruling SAD- BJP alliance has decided not to allow FDI in the state.
With a stagnating agricultural growth and food production having reached a plateau, Punjab is likely to miss the bus once again. Perhaps, Deputy Chief Minister and SAD chief Sukhbir Badal understands the perils of not allowing FDI in retail in a state that has a largely agrarian economy. This is why in private he continues to be an advocate for allowing FDI. It seems political compulsions and the Chief Minister’s insistence on toeing the NDA line on opposing FDI have forced him to oppose the move.
Initially, when the Centre had announced its decision to allow FDI in multi-brand retail in November 2011, Badal Junior had publicly welcomed the move. He had shot off a letter to Commerce Minister Anand Sharma, welcoming the decision and highlighting the benefits that states like Punjab would accrue with the arrival of big retailers.
“Punjab being an agrarian economy, we are delighted to hear that your government is taking this major initiative that will offer tremendous benefits to the farmers and people of my state".
“We strongly believe that opening FDI in multi-brand retail will bring in the expertise, experience and resources of foreign retailers. A major beneficiary of the back-end investments would be farmers, who will gain substantially….” the letter read.
Interestingly, though the SAD has chosen not to allow FDI in retail in Punjab, small efforts are being made to allow smooth operations for big retailers who have set shop in the state. Punjab has tasted success with big retailers like Reliance Retail, Bharti Walmart, PepsiCo and now Metro Cash and Carry, who are sourcing a lot of fresh vegetables and fruit from the state.
Following the rolling back of ITC’s retail operations in Punjab two years ago, the state government is now giving a new lease of life to private retail by speeding up amendments in the Agricultural Produce Marketing (Regulation) Act (APMC Act).
ITC Choupal had wound up its operations in Punjab after the government failed to amend the Act and allow it to purchase agriculture produce directly from the farmer. Though the government brought in a special ordinance and allowed it to purchase the produce from the farms directly, it could not amend the APMC Act, and the retailer was again forced to buy vegetables and fruit through the mandis by paying the market fee. Finding the retail operations unviable, the company wound up its operations in the state.
Sources in the government said amendments in the Act had been endorsed by a Cabinet sub-committee and was now awaiting Cabinet approval. With the state readying its new agriculture policy, these amendments in the Act would come into effect, the sources said.
Punjab collects almost Rs 40 crore per annum as market fee from the sale of fruit and vegetables through mandis. Punjab produces 36.45 lakh tonnes of vegetables and 13.73 lakh tonnes of fruit per annum. The Punjab Mandi Board at a meeting recently decided that no market fee would be collected on the sale of fruit and vegetables. This will indirectly promote greater private participation in the purchase of vegetables and fruit.
The state is also setting up packing houses (where sorting and grading will be done) at Samrala, Nabha, Samana, Hoshiarpur and Gurdaspur, besides upgrading its perishable cargo centre at the Amritsar airport.
With neighbouring Haryana, having the same topography, agriculture practices and production as Punjab opening its doors to foreign retailers by allowing FDI in retail, experts are asking if Punjab would be the loser by closing its doors to foreign retailers. Interestingly, Ludhiana is the only city in the state where foreign retailers can set shop (its population is over 10 lakh).
Volte face
Initially, when the Centre had announced its decision to allow FDI in multi-brand retail in November 2011, Sukhbir Badal had publicly welcomed the move. He had shot off a letter to Commerce Minister Anand Sharma, welcoming the decision and highlighting the benefits that states like Punjab would accrue with the arrival of big retailers
Rethink: farmers
The Consortium of Indian Farmers Associations has appealed to the Punjab Government to rethink its decision on opposing FDI in multi-brand retail. It said the government should not "ignore" the interests of Punjab farmers. The consortium said the government should back FDI as it would free armers from exploitation at the hands of middlemen.
