Walmart spent spent $25 million ’as its lobbying fee to enter #India


India’s blind fists of fury

The rage in Parliament is off target. Walmart’s disclosure of its lobbying fee in the US Senate should trigger a different debate in India, says Shaili Chopra
Shaili Chopra

December 13, 2012, Issue 51 Volume 9

Illustration: Anand Naorem

WALMART’S DISCLOSURE on the fees it paid to lobby for opening up the Indian market created an uninformed and noisy debate in Parliament. The notion that allowing Foreign Direct Investment (FDI) in multi-brand retail would be the only stumbling block for Walmart’s entry into India quickly evaporated as proceeding in both Houses were disrupted for two straight days because of this disclosure report. As the time of its entry into India gathers pace, any piece of news to do with the company is being greeted with protests.

Earlier this week, the multinational retail giant disclosed in a report to the US Senate that it spent $25 million over the past three years on lobbying, including on issues related to “enhanced market access for investment in India”. Opposition members picked on this number and stalled Parliament, claiming lobbying was illegal and accused the government of taking “bribes” for pushing Walmart’s entry into India. BJP members demanded a probe into the matter. To the surprise of many, the government agreed to an inquiry into Walmart’s lobbying practices.

“This disclosure has nothing to do with political or governmental contacts with Indian officials,” says a Bharti-Walmart spokesperson. “It shows that our business interest in India was discussed with US government officials along with 50 or more other topics during a three-month period. Naturally, our Washington office had discussions with the US government officials about a range of trade and investment issues that impact our businesses in that country and worldwide, and disclosed this in accordance with the law.”

A look at the facts will help us understand better the legality of lobbying. For a start, though it is true that Walmart did pay lobbying firms to push for retail reforms in India, it is also true that it voluntarily disclosed this information. In America, lobbying is a valid practice, a right protected under the US constitution. Therefore, to say that lobbying equals bribery is an outlandish assumption. Just because there are no laws in India regulating lobbying to influence policymakers does not make it illegal. You have laws to make an act illegal, not having a law doesn’t make it otherwise. It is wrong to say Walmart bribed its way into India when there are no facts to prove so, although it may be the right time to address long pending issues around disclosures and lobbying in the country.

How should industry or individuals in a democracy try and convince policymakers of a particular position if not by lobbying? Unlike in the US, where the constitution allows it, we, in India, are running away from lobbying. We cannot expect transparency unless we have a right to approach our elected officials on any issue, in a manner similar to groups such as the CII and FICCI, who work with the government on behalf of corporate India, and with the rest of the world on behalf of India. In the US, such groups would have to register as lobbyists.

“Lobbying is often viewed with suspicion since it is confused with fixing,” says Sunil Kant Munjal, Joint MD, Hero Corp. “If it is in the form of advocacy to wean others to your point of view, it is absolutely fine and is an accepted practice worldwide and in India.”

Walmart has been the mascot of the battle between the UPA and its political opponents, who have been anti-reform in retail, their argument being it will hurt small traders and farmers. There is no doubt that the rollout of FDI will be complex and tedious and this latest controversy is a part of it. But what is also clear is that Walmart will need to rethink how it plans to make the most of India’s push for reforms amidst growing hatred for its brand. For the BJP to translate lobbying into bribery is misleading. What they should highlight is Walmart’s investigation of its Indian officials under the US Foreign Corrupt Practices Act (FCPA). They are more likely to find some ammunition there. Instead, they are confusing the two issues.

The company has undertaken a detailed investigation of its own arm in India with regard to internal bribery charges under the FCPA. It has sacked five employees in India, including CFO Pankaj Madan, following the inquiry, and Walmart India CEO & MD Raj Jain — who has just returned from the United States — is under severe pressure to sort out the mess.

The lobbying fee disclosure is not connected to this case at all but with all the wounds suddenly open, anti big box retail segments are making use of every opportunity to show how the entry of Walmart will be detrimental to India’s economy. It, of course, helps to remember that retail is not just Walmart or vice-versa.

Says Ronen Sen, former Indian Ambassador to the United States: “Anywhere you have democratic institutions, this is a registered way of doing things.” Sen further says that Indians have for long engaged in lobbying to push their case.

Unfortunately, in India, lobbying as a term is still associated with Niira Radia and the 2G spectrum scam, acts to be scoffed at, proofs of the unsavoury business- politics nexus. But the truth is, lobbying is undefined, vague and controversial because we have never considered a framework for it or its scope, albeit it has existed in every sphere — corporate, government, NGOs and more. And not one party can be exempted from indulging in it.

Often lauded for his business-friendly ways, Gujarat Chief Minister Narendra Modi reportedly hired Apco Worldwide, a public affairs firm, to boost his image internationally. Apco today boasts of a client list that includes names such as former Indian ambassador to the US Lalit Mansingh, US ambassador to India Tim Roemer and many more.

The UPA had also paid a US firm to lobby for the Indo-US civilian nuclear deal. As reported by the Daily Mail in November 2012, Washington-based Barbour Griffith & Rogers (BGR) was hired by the Indian embassy to seek media interviews for Prime Minister Manmohan Singh and get Congressional resolutions passed in his support ahead of a US visit.

“What is being said reveals ignorance,” says Sen who was instrumental in the Indo-US nuclear deal. “As India’s ambassador, I have actively engaged in lobbying, wherever it was. For example, when the erstwhile Soviet Union broke up, we had to lobby for a certain point of view to influence opinion. Even during legislations, as foreign envoy, I would get into the language of the legislation and lobby to get it changed with our trade, economic and security agenda in mind.”

INDIAN TECH companies routinely hire lobbying firms to get improved visa rules passed. Reliance, Tata and Nasscom have all used the services of global firms to get a foot in the door in other markets or appointments with governments.

Does an Indian citizen have any basis for seeking answers from those who receive funds? As a nation, we do not believe in disclosure of campaign finance, lobbying funds or even any gifts received by those in office. As a result, our political class gets uncomfortable whenever there is talk of disclosing information voluntarily. Why would any politician or entity disclose that they accepted any money when no such rule makes it incumbent on them to do so?

What this debate has once again exposed is our discomfort with transparency where all institutions — government, corporations or the bureaucracy — will have to deal with an open system of discussion, debate and decision. The government should take this opportunity to seek a basic framework to recognise lobbying as a legitimate industry, which should be given due importance when policies are drafted. At the same time, we need to recognise that excessive influence of money like in the US is not desirable and hence, the need for a set of rules.

People who work in the building that hosts the Walmart Federal Government Relations offices watch as hundreds of people from several different labor rights groups demonstrate in the street below August 5, 2011 in Washington, DC. Organized by the Jobs With Justice 2001 Conference, the demonstrators called on Walmart to secure decent, living wage jobs during their attempt to build four new stores in the District of Columbia, and not to retaliate against associates who join labor organizations.

We would also do well to acknowledge that lobbyists are professionals, who possess special skills of persuasion and tact to make a point of view acceptable to those who did not approve it. So that we understand that when Walmart spends $25 million on lobbying, it is because it used the best professional help it could to achieve its objectives. Calling it a bribe is not only irresponsible, but also defamatory.

Shaili Chopra is Business Editor, Tehelka.
shaili@tehelka.com

 

#India-State sponsored competition works -Pharmacies to sell medicines at 60% less #goodnews



11 December 2012
statesman news service

SILIGURI, 11 DEC: All medicine-shop owners around North Bengal Medical College and Hospital (NBMCH) have decided to sell generic drugs at 60 per cent less than the maximum retail print price.
The shops’ owners displayed a notice in this regard in front of their shops today. The medicine shop owners’ association affiliated to the Bengal Chemists and Druggist Association, Darjeeling district, adopted the resolution on Sunday after they came to know that NBMCH would open a fair price medicine shop.
The Zonal Secretary of the association in Siliguri, Mr Atul Roy, said: “In order to survive in competition with the government’s fair price shop, the medicine sellers have decided to sell generic drugs at 60 per cent less than the printed price.”
Mr Roy also said: “Several companies supply generic products to us at 80 per cent less than the printed price. If we deduct 60 per cent, the profit of margin would be 20 per cent. People will be able to buy medicines at even lesser price from us than the state-run outlet.”

 

(The tussle between NBMCH and Chemists’ and > Druggists’Association is providing medicines at cheaper rates. Is it going
to be for a short time or would it be continued continuously. Any how patients have  benefited.

 

#India- How FDI in retail affects the “Mango Man”


 

MATHEW THOMAS | 07/12/2012 02:29 PM , MOneylife.com

FDI in retail is an example of deregulation, devoid of any safety net for its after-effects. Would the government consider the Parliament Committee report or treat Parliament with disdain? 

Here is a simplified explanation, sans economic jargon, to help understand FDI (foreign direct investment) in retail and what it has in store for the aam aadmi—“The Mango Man”. Let us start with an analogy.When a falling stone hits the ground its energy is converted and dissipated as heat. However, if the same stone lying on the ground is heated, it does not take off. What is the relevance of the falling stone to FDI in retail?
What is FDI in retail? It means “Foreign Direct Investment” of 51%, a controlling stake is permitted to any foreign company to set up retail trade in India. Simply put, a number of foreign-owned supermarkets would sprout all over the country. At a political party rally in Delhi, the leaders extolled the virtues of FDI in retail as symbolic of the party’s reforms agenda. The phrase, “economic reform” has many different meanings depending on ideological and political leanings.
One view is that between 1875 and 1975 it meant more government and since then it means less government intervention or free run for market forces. A Wall Street view says that it means, “Change for the better as a result of correcting (economic) abuses”. “Better for whom?” and “whose abuses would the reforms correct?” Did the post 1975-reforms in USA correct the abuses by financial wizards that led to the 2007–08 meltdown? A third view holds that economic reform refers to policies directed to achieve improvements in economic efficiency. Which of these did the rally leaders have in mind when they toasted the FDI reform push?
Those in favour of FDI in retail painted rosy pictures of benefits such as better prices for farmers, more jobs, better shopping experience and so forth. Those against it predicted the opposite. Few had hard facts to back their arguments. It is strange that neither the government nor the opposition referred to the report of the Parliament Committee which examined FDI in retail. The Committee seems to have done a comprehensive study, examining a number of witnesses, individuals, NGOs and trade bodies, travelling around the country, studying reports and experiences of other nations and asking questions of government departments. The Committee concluded that more people would lose jobs that the number that would find work. They said that FDI in retail would destroy large numbers of small and marginal farmers. They cautioned against the probable monopolistic behaviour, predatory pricing and attendant consequences. The Committee found that unorganized retail provides livelihoods for 40 million people, that is, for about 8% of the country’s workforce. Referring to the projection of FDI in retail creating 2 million jobs, the Committee said that this was exaggerated and that this ignores 200 million people who depended on retail trade for a living. The Committee was not only critical of FDI in retail, but also of any large corporate in retail business. The Committee drew a dismal picture of the effect of FDI in retail on the “Mango Man”.
With FDI in retail, shops like this will disappear. How sad.
ICRIER (Indian Council for Research on International Economic Relations) carried out two studies, one in 2008 and the other in 2011. The 2011 study predicts a great shopping experience for consumers. ICRIER surveyed 300 consumers, in high and middle income groups. Evidently, the government relied on the ICRIER recommendations, rather than on the Parliament Committee report. Does the reliance on a private organisation’s recommendations in opposition to Parliament, have anything to do with the chairperson of ICRIER bearing the same surname as the Deputy Chairperson of the Planning Commission?
ICRIER’s sample of 300, from high and middle income brackets, for a population of 1.2 billion with over 40% poor, for recommending foreign investment, is questionable. In reply to a RTI (Right to Information) query on whether the government had done any study on FDI in retail, the commerce ministry replied that it had not done any such study. The reply referred to the ICRIER report and not the Parliament Committee report. The Committee’s report was not discussed in Parliament. Rejecting the Parliamentary panel study and accepting a private study report, does not augur well for Parliamentary democracy. ICRIER says consumerism promotes economic growth. The earlier study (2008) surveyed 2020 unorganized small retailers out of 6 million shops. None of the studies addressed the issue “why India requires FDI in retail?” Would it lead to a net increase in foreign currency earnings, improve India’s balance of trade? Stiglitz’s views on FDI in retail are significant. He asks, “Why India needs foreign entrepreneurs in any sector, particularly the retail?” He then talks of the power of Wal-Mart to drive down prices and suggests that they will use that power to have Chinese goods displace Indian goods. Next, he draws attention to Wal-Mart’s abusive labour practices. He asks, “Why would you want to import such practices into India?” Why indeed? The foreign retail lobby reportedly spent over Rs52 crore in India. Could that be the reason why? He also talked about increasing inequality that Indian reforms are ushering in, accompanied by corruption.
It is appropriate to now look at the falling stone analogy. To see the relevance of it look at two economic philosophies prevalent today. One is the “Trickle-down” variety. Subscribers to this believe in less and less of government. The market would correct itself. De-regulation is the key. Concessions to the rich would lead to investments and economic growth. This would trickle down to the poor. The second view holds that left to itself, unregulated market economies, would become so disorderly that the human costs would be enormous. FDI in retail is integral to “Trickle-down” economics. It is part of the reforms’ cry for deregulation.
No lessons have been learned from the deregulation induced meltdown. That is why the government and proponents of FDI in retail do not bother about its effect on 6 million small shop-owners or the 50% of the farming-dependent population who would lose their livelihoods. Some of these dispossessed may find jobs in the retail supermarkets, as shop assistants or labourers. Does deregulation help them? The stone does not take off when heated because heating causes disorder. The heat energy is random, disorderly; the stone’s molecules jostle each other randomly. Hence, they cannot lead to orderly motion of the stone. The natural propensity of things is to move towards chaos. Markets are no exception. Without regulation the result is disorder. FDI in retail is an example ofderegulation—thinking devoid of any safety net for its after-effects. Would the government consider the Parliament Committee report or treat Parliament with disdain?

India–Caste control & FDI


The opening of the retail market for foreign entrepreneurs has invited sharp reactions from several quarters.

The main argument against it is that the livelihood of millions of small shop owners would be seriously affected as they would be handled by global marketing giants like Walmart and Tesco.

According to the opponents of foreign direct investment (FDI) in multi-brand retail, the small marketing sector will be devastated and this would lead to massive unemployment and hunger.

And the supporters of FDI argue that the inflow of foreign funds would create a lot more jobs and the small shops would suffer only marginally.

I, for one, welcome FDI in retail even if it would disrupt the chain of small shops as that is appreciable from the point of view of the likely social change it will bring about.

Certain systems are so well-entrenched in this country that a serious shake-up is long overdue.

For one, if we look at the caste-wise presen­ce of people in the groce­ry (kirana) shop system that is spread over villages and urban areas, the locally entrenched baniyas and marwadis control the major chunk of the grocery business. In these shops, as a rule, they do not employ those from the lower strata of society.

Even in urban areas, when they need someone to supplement the role of their family members, caste comes into play.

They make sure dalits are kept out. The OBCs do have some space in the baniyas’ scheme of things, though this business is mostly run by family and clan members. They are, I noticed, casteists to the core.

One major character of the Indian retail market was or still is that it historically practised untou­chability vis-a-vis da­l­its.

The shudras, though not untouchables, were not supposed to engage in the retail business of essential food items in ancient and medieval times.

Even now, this rule applies to dalits. If a dalit opened a retail shop in a village, those from the higher castes would not buy things from the shop.

From village upwards, the baniyas (komatis and marwadis in An­dh­ra Pradesh) have, over generations, established their hegemony.

Rice, pulses, oil, turmeric and even salt were considered Hindu items and only a baniya was ex­pected to sell them in the village settings.

Meat, fish, ropes and other thi­n­gs were considered “un-Hindu” and were ne­ver sold in these sho­ps. Leather goods were completely banned and were sold by those cast­es and communities that manufactured them.

The fact remains that at the production level, even the Hindu goods, as raw materials, were/are produced by shudras and dalits only. Even at the milling and grinding level, they were/are at work.

But, once they reach the baniya shops as finished products, these commodities become untouchable for the communities that produced them.

In a baniya shop, these articles are considered spiritually pure but once sold to shudras and dalits, the same articles become impure.

This vicious cycle continues. In the process, the shop owners become kuberas (rich). As a result, a huge amount of black money gets accumulated and in many cases they bury that we­a­lth underground, whi­ch historically was kno­wn as guptdhan.

This process un­der­cut the growth of in­di­genous industrial de­velopment, in as far as that this buried wealth was not being re-invested.

The wholesale busine­ss of groceries used to take place mostly from urban settings and it us­ed to be completely un­der the control of bani­yas.

Till we attained In­dependence, the right to do business in retail and wholesale market was vested on the basis of the Varnadharma ideology.

The entry of Muslim tra­ders changed the caste-based trade relationshi­ps in some urban centr­es, as the Muslim tra­ders were not concerned about the caste or religious background of buyers and se­llers. But their influence on the Indian retail market was limited.

The baniya businessmen and Bri­tish officials colluded to sustain the Hindu market and tried to checkmate the expansion of Muslim trade in the co­u­ntry during the colonial period. However, it was the Muslim traders who initiated the process of decasteising market relations.

That process, however, was slowed do­­wn during the colonial and nationalist pe­r­i­ods. Indian nationali­sm did not play a very positive role in this respect.

In Independent India, market relations have substantially expanded. But the caste controls of markets survived dramatically.

The emergent capitalist growth also shared its bed very well with the modern mode of Varnadharma.

The emergence of Mahatma Gandhi, with an anti-industrialisation theory, saw to it that varna relations did not face odds in the market.

For, if the baniyas lost their control on the markets, they would have become unemployed and looked for different ways and means of survival.

But the Gandhian nationalism protected them with a shield of Varnadharma in the market. Though his emergence as an unchallenged leader created tension between brahmins and baniyas, that was overcome very soon. Between them, they accommodated and adjusted well.

Till the liberalisation process began in 1991, the Indian retail market was choked by caste controls and a lack of liberal creativity in the business structures themselves.

Hopefully, if the FDI in retail liberalises the caste-controlled ma­r­ket, a new relationship would begin to unfold in the Indian market system.

It is important that foreign investors res­pect the social diversity principle in the retail market and employ SC, ST, OBCs too in their chain of shops at least up to 50 per cent. That will create a business-experienced human resource base among these communities.

If the FDI system has to survive, it is imperative that a lot more money flows into the hands of the toiling masses. So that they too can become buyers in these shops.

The system of money transfer and MGNREGA resources, coupled with the new-found jobs in the market, might hopefully revolutionise their lives. In the process, if a few baniyas see their own exit from the market, that does not matter. Let the FDI come.

The writer is director, Centre for the Study of Social Exclusion and Inclusive Policy, Maulana Azad National Urdu University, Hyderabad