Walmart-Bharti deal under probe on FDI norms violation

No wonder that Walmart had entered India's front-end multi-brand retail business two-and-a-half years before the government actually lifted the ban on foreign investors. It is not surprising to note that the Prime Minister's Office (PMO) has forwarded to the Department of Industrial Policy and Promotion (DIPP), an allegation by CPI Rajya Sabha member MP Achuthan that raised specific questions on Wal-Mart's R456-crore investment in a company called Cedar Support Services through compulsorily convertible debentures (CCDs) in March 2010. Multinational corporations like Walmart generally do not respect the rules and regulations of the host countries, particularly the developing countries. Reports suggest that they often violate the laws and indulge in unlawful activities .For instance, when the foreign banks such as Citi Bank and HSBC entered India, they agreed to adhere to the rules and regulations imposed by Reserve Bank   of India and strictly follow the laws of the land. But after stepping into Indian soils they often violated the BRI guidelines as well as rules and regulations, besides breaking Indian laws. Quite often they indulged in criminal and unlawful activities.  In their efforts to broad base their activities and customer base such foreign private banks, through advertising, propaganda and persuasion, had brought into their net a large section of the urban middle class people. In fact, millions of unwary urban middle class households, who have a bundle of unmet needs, were drawn to enter into a borrowing spree. Many of them were chained to the perpetual wheel of borrowing and indebtedness, through the issue of credit cards and leasing and hire purchase. The saddening aspect of such a trend is that many households had undergone extreme troubles and tribulations to meet the monthly commitment for the repayment of hire money or other obligations. Such foreign banks often adopted unlawful and criminal tactics to realise the payment due from the distressed borrowers. Some of the techniques followed by them are unknown in their countries of origin. The modus operandi is to engage “collection agents” who, in turn, with the help of `paid goondas’ visit the customers at the office  premises, residences and at odd places at odd times, including  during midnight and early mornings, and intimidate them, including women, children and the aged. Sometimes they forcefully take away household articles, jewels and other immovables. There are also instances in which they have obtained forcefully signatures of the customers for the sale of their immovable properties. In one instance, in Mumbai, one such agent of Citibank N.A. demanded “the kidney of a customer” in lieu of repayment of loan.  In another incident in chennai the goondas engaged by one such agent of the Citibank N.A. abducted a young entrepreneur from his residence, kept him in custody and beaten him mercilessly causing grievous injury.  It was reported that but for the intervention of the Chennai Police Commissioner, he would have been tortured and done away with.  

   Walmart currently partners Sunil Mittal-led Bharti Enterprises and it has stated that the partnership will continue. Apart from that Walmart is reported to be planning a series of partnerships with small and mid-level suppliers in India across product categories to create a big list of private label brands that will be priced substantially lower - as much as 10-15% - than established products and brands. The move is part of the company's strategy to go deeper into the into those states which do not allow Walmart to set up shops. It also signifies that Walmart is going against its original commitment that that will directly procure from the farmers and hence the farmers will get better price. According to Mr. Jain 95% of what they sell will procured from within the country. But what is the guarantee that Walmart will continue to do so. In fact, in other countries, including the United States, Walmart is selling cheap Chinese goods.  Walmart has already has a joint venture with Bharati. It is alleged that Bharti-Walmart is illegally carrying out multi-brand retail trade despite being permitted only to carry out wholesale cash-and-carry or wholesale trade in the country. On the basis of the suit filed by environmental activist Vandana Shiva, the Delhi High Court sought replies of the Centre, Bharti-Walmart and Bharti Retail on a plea for a probe against the firms for allegedly carrying out retail trading in the multi-brand sector in violation of India’s existing FDI policy. Thus, even before getting permission to operate, Walmart has violated Indian rules and regulations and has unlawfully involved in multi-brand retail trading. Will Walmart and other multinational retail giants respect Indian laws once permission is granted to operate multi-brand retail stores?

   Dr.C.Murukadas, Hindustan Times, October 12, 2012

Nuclear Powerin India:Koodankulam Impasse

Electricity is one of the most powerful forces in human life. Industrialisation and modernisation has largely been facilitated by the use of eclectic power. Electricity’s role in the energy mix of any modern economy is even more critical and growing. Electricity is an extremely flexible form of energy, and has been adapted to a huge, and growing, number of uses. Electricity comes from many sources. Although numerous sources exist, the primary ones include coal, natural gas, hydroelectric, petroleum, wind power and nuclear power. These energy resources fall into two main categories, often called renewable and non-renewable energy resources. The difference between renewable energy used for electricity and nonrenewable energy consists of the infinite amount of available renewable energy. For example, solar energy remains renewable since the available amount remains infinite. Coal, natural gas and petroleum remain non-renewable energy sources due to their finite amounts. Each of these resources can be used as a source to generate electricity, which is a very useful way of transferring energy from one place to another such as to the home or to industry. The selection of electricity production modes and their economic viability varies in accordance with demand and region. Just as many conventional thermal power stations generate electricity by harnessing the thermal energy released from burning fossil fuels, nuclear power plants convert the energy released from the nucleus of an atom via nuclear fission that takes place in a nuclear reactor. The heat is removed from the reactor core by a cooling system that uses the heat to generate steam, which drives a steam turbine connected to a generator producing electricity. Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity In 2007, the IAEA reported there were 439 nuclear power reactors in operation in the world, operating in 31 countries. The economics of new nuclear power plants is a controversial subject, since there are diverging views on this topic. Nuclear power plants typically have high capital costs for building the plant, but low fuel costs.  However the recent disasters in Japan have raised concerns over the safety of nuclear power, i.e. he Kashiwazaki-Kariwa Nuclear Power Plant in Japan following the Niigata-Chuetsu-Oki earthquake. And there is an ongoing debate about the safety of nuclear energy. While   the proponent of nuclear energy like World Nuclear Association, the IAEA and Environmentalists for Nuclear Energy content that nuclear power is a sustainable energy source that reduces carbon emissions, the  opponents, such as Greenpeace International and NIRS, believe that nuclear power poses many threats to people and the environment.

India is the world's fifth largest producer of electricity. At present the installed capacity is205.34 Gigawatt (GW). Captive power plants generate an additional 31.5 GW. Thermal power plants constitute 66% of the installed capacity, hydroelectric about 19% and rest being a combination of wind, small hydro, biomass, waste-to-electricity, and nuclear. But there is severe shortage of electricity in India. India currently suffers from a major shortage of electricity generation capacity, even though it is the world's fourth largest energy consumer after United States, China and Russia. In a May 2011 report, India's Central Electricity Authority anticipated, for 2011–12 year, a base load energy deficit and peaking shortage to be 10.3% and 12.9% respectively. The peaking shortage would prevail in all regions of the country, varying from 5.9% in the North-Eastern region to 14.5% in the Southern Region.  The per capita average annual domestic electricity consumption in India is 96 kWh in rural areas and 288 kWh in urban areas for those with access to electricity, in contrast to the worldwide per capita annual average of 2600 kWh and 6200 kWh in the European Union.  Today, over 300 million Indian citizens have no access to electricity. Over one-third of rural population and nearly one-tenth of urban population in India lack electricity. Of those who have access to electricity in India, for many the supply is intermittent and unreliable. Frequent blackouts and power shedding interrupt irrigation and manufacturing across the country, besides causing grave inconvenience to households. The International Energy Agency estimates India needs an investment of at least $135 billion to provide universal access of electricity to its population. In India nuclear power  constitutes  the fourth-largest source of electricity after thermal, hydroelectric and renewable sources of electricity. At present there are India has 20 nuclear reactors in operation in six nuclear power plants, generating 4,780 MW^, while seven other reactors are under construction and are expected to generate an additional 5,300 MW. In October 2010, India drew up "an ambitious plan to reach a nuclear power capacity of 63,000 MW in 2032." But  there has been  protests  around the   nuclear power plants (NPP) sites raising questions about atomic energy as a clean and safe alternative to fossil fuels"  There have been mass protests against the French-backed 9900 MW Jaitapur Nuclear Power Project in Maharashtra and the 2000 MW  Russian-backed Koodankulam Nuclear Power Plant in Tamil Nadu. The West Bengal government has refused permission to a proposed 6000 MW facility near the town of Haripur that intended to host six Russian reactors. Therefore, the prospect of nuclear energy as a major source of electicity is has become a question mark in India.

Tamilnadu has embarked on ambitious plan of raid industrialisation and economic development, which  in depends to a larger extent on the supply and availability of electricity.  In 2005, Tamilnadu was one of the few Indian states with surplus electricity generation capacity, enabling the electrical authority to sell it to neighbouring states of Andhra Pradesh & Karnataka. But in 2011 the situation was completely different and power cut has caused untold sufferings to the people, particularly to the industrial sector. At present there is shortfall in the supply of electricity in the state. The demand-availability gap is 2000 to 3000 megawatt. It means that Tamilnadu is in a precarious situation in terms of electricity generation. The per capita energy consumption is around only 800 units per person, which is one-fourth of the global average. Moreover, consumption is set to rise dramatically over the next few years for industrial, commercial, agricultural and domestic needs. Therefore, in order to attract more investment in the industrial sector the state has to augment the power supply enormously. During 2006-2011, there was no proper strategy for aumentationof power supply. The power to be generated from Koodankulam Nuclear Power Plant in Tamil Nadu is very much needed to solve the shortage of electricity in the state. Kudankulam Atomic Power Project is a nuclear power station under construction in Koodankulam in the Tirunelveli district of Tamil Nadu. The construction of the plant has been delayed due to anti-nuclear protests by the locals and People's Movement Against Nuclear Energy.  Despite continued agitation,   the commissioning of the of the first unit of the Koodankulam nuclear plant with a  generating capacity of 1000 MW, is likely to take place shortly and the second unit of the plant with a  generating capacity of 1000 MW will be in operation within a few months. But protesters belonging to the vicinity of the plant have used various means to protest against the plant fearing a Fukushima like disaster despite assurance of its safety by the scientists and the Atomic Energy Commission of India. The panel of experts constituted by Government of India, with Dr. Muthunayagam as the convener, which did a survey of the safety features in the plant, reported that the Kudankulam reactors are the safest and fears of the people are not based on scientific principles. The Tamil Nadu state government formed a four-member expert panel which submitted a report to the government after inspecting the safety features of the plant. The Tamil Nadu government in the wake of the acute power shortages in the state has ordered in favour of the commissioning of the plan.  Thus, different levels of competent technical authorities (responsible for the design, safety, operation and review of all these aspects concerning the KKNPS) have been reiterating the safety of this power station time and again, especially with respect to the problems due to earth quakes and tsunamis, being the current concern that are being seeded in the minds of the people. Available information suggests that there may not be any threat to the locals from natural calamities such as moderate tsunami or earthquake. Nevertheless, there have also been rallies and protests in favour of agitators of this nuclear power plant.

Kudankulam Nuclear Plant issue is unwarrantably blown up by vested interests. Kudankulam Nuclear Plant is situated in a very backward area. Farming and fishing are the major activities in and around Kudankulam. But as there is no irrigation facility; only dry land farming is undertaken in the area. Literacy level is also relatively low in the area. Most of the people are poverty-stricken and illiterate. Therefore, it is easy to misguide the people. Even though the nuclear plant is situated in Koodankulam, it is the neighbouring village of Idinthakarai that is leading   the anti-nuclear protests. The local population at Koodankulam was reportedly supportive of the plant initially, in the hope that there would be plenty of jobs for them, while the people in coastal Idinthakarai, who are dependent on fishing for their income, have opposed it because of apprehensions that hot water generated by the plant and radiation would affect the fish, and thus their livelihood. Support for the agitation grew, locals say, after the disaster at Fukushima last year.  However, the agitation is carried out by only a small section of the people, particularly the illiterate and poverty-stricken fisher folk.  Reports indicate that outside disruptive forces are fomenting the feelings of the local people by spreading falsehood. Reports also suggest that the agitation is fomented and funded by foreign agencies. According to Union Home Minister Shushilkumar Shinde, "Foreign NGOs are supporting this movement. We are aware about the NGOs which are behind it." The media, especially the TV channels, is blowing the news out of proportion. A serious look at the nature of agitation and the participants shows that most of the agitators seem to women and senior citizen. Moreover, now the agitation has assumed religious color.  The reports also state that these people are paid a hefty amount as daily allowance, besides serving food. The central/state government as well as the department of nuclear energy should have taken steps much earlier to allay the fears of the people. Then, the agitation would not have reached this stage. Better late than never, the current moves, the assure  made by the government that the recommendations made by Dr. Abdul Kalam for the development of this backward area and employment generation  would be taken up  as soon as the agitation is withdrawn. In fact the state government has allotted Rs. 500 crore for the development of the areas. The department of atomic energy also has also announced that it will take up infrastructural development in this area, including building roads, schools, hospitals and so n on. Therefore, it is unwise to continue the agitation, when Tamilnadu is reeling under power cut.

 Dr.C.Murukadas, The Times of India, Oct.8, 2012.

Anand Sharma: Decision on FDI taken by consensus

The claim Mr. Anand Sharma  that the  decision on  FDI in multi-brand  retail trade  was taken based on consensus. It is a naked truth that he miserably failed to build a consensus on the issue. Consensus means that an overwhelming majority agree to a particular idea or measure. In the case of FDI, only a small section has expressed agreement with the decision, that too under persuasion and threat.  FDI in multi-brand retail trade has been notified much against the sentiments and wishes of almost the entire spectrum of political parties, trading community, farming society, and, of course, an overwhelming majority of the citizen of the country. Mrs. Mamata Banerjee, West Bengal Chief Minister, has alleged that the FDI decision was unveiled only to divert attention from the “coalgate” scandal involving the government. Moreover, many experts have questioned the perceived benefits of the so called “reforms,” particularly 51 percent FDI in multi-brand retail trade. The general consensus is that no point in pressing for a change in policy measures (or conveniently termed as reform) that evokes strong condemnation and disapproval from all sections--political parties, traders’ bodies, farmers’ associations, experts and the public in general. Moreover, everybody knows that the  decision to allow FDI in mult-ibrand  retail trade was taken  due to powerful lobbying by Walmart and other multinational retail giants and pressure from their home governments, particularly the US and European Union.  Reports show that extraneous considerations have played a dominant place for taking the erroneous decision to allow 51% FDI in multi-brand retail trade despite strong opposition from all quarters.

Dr. C.Murukadas,  The Economic Times, Oct. 7, 2012.

TN Chief Minister: UPA govt deceiving people in name of grand reforms: Jayalalithaa

Tamilnadu Chief Minister Dr. J. Jayalalithaa has always   been concerned about the welfare of the downtrodden people. So she never failed to oppose anti-people measures, conveniently termed as “reform” undertaken by the UPA government.  In fact, reform is a much maligned word in this India and has come to be associated with just price increase and foreign direct investment. Dr. J. Jayalalithaa deserves appreciation for her   stand in opposing FDI in retail trade, insurance and pension funds. On 24th November, 2011, the Government of India took the hasty, illogical and unsound decision to allow 51 percent foreign direct investment (FDI) in multi-brand retail and 100 percent FDI in single–brand retail.  The decision to allow FDI in retail trade evoked severe opposition from almost all political parties, traders, farmers and the public in general.  In fact, the Tamilnadu Chief Minister immediately opposed the decision of the central government to allow FDI in retail trade. She  expressed her strong resentment as follows: “The sudden decision of the Government of India to open up Foreign Direct Investment  up to 51 percent in multi-brand  retailing and (FDI) 100 percent for single brand retailing   has come as a  rude shock to the thunder struck millions  of traditional  retail vendors in the country….I strongly  feel  that this decision of    the Government of India is a wrong decision, taken and  under pressure from a few  retail  giants, who are starved for capital infusion for their future survival….Therefore, I am constrained to state that my Government will not allow the multi brand global players as permitted under the new policy to set up their hyper markets   in Tamil Nadu.”  Again when   (on October 9, 2012) the Union Cabinet ultimately took the retrograde step to allow 51 percent FDI in multi-brand retail trade, Dr.J Jayalalitha vehemently condemned the decision. She reiterated that: "I would like to register my unequivocal opposition to the decision of the central government to allow 51 percent FDI in multi-brand retailing and demand that the central government should withdraw its decision immediately. Further, my government will never allow FDI in retail trade in Tamil Nadu.” The firm stand taken by her against allowing 51% FDI in retail trade has been acclaimed by leaders of various like minded political parties, traders’ associations, farmers’ bodies and the general public.  Contd….

On October 5, 2012 the Cabinet cleared 49% foreign direct investment (FDI) in the insurance sector, 26% in the pension sector, cleared the Companies Bill 2011, amended the Forward Contracts Regulation Act and the Competition Act. The decision to allow FDI in insurance and pension has received the condemnation of a cross section of the society.  Many experts believe that the new set of economic reforms announced by India is not necessary to promote economic development and to ensure welfare of the people. The UPA government is unwarrantably obsessed with FDI. Cross country data show that FDI in vital sectors affecting the livelihood of the people create more harm than benefit to the people. The Tamilnadu Chief Minister   is right in expressed strong disapproval to the Centre allowing foreign direct investment in insurance and pension funds sectors. She has blamed that the UPA Government at the Centre for inflicting harm upon the people in the name of reform.  According to her, "The UPA government is unfazed at the sufferings of the common people, small traders and small farmers .....This move at best is a gimmick and at worst an unworthy risk.'' She added, "The act of disguising harmful decisions and promoting them under the name of grand reforms amounts to deceiving the people of the country. No amount of rhetoric will change the truth…
As to whether they have the right to jeopardise this crucial sector is a debatable issue."

Many believe that it is unethical for the UPA government to bring such anti-people “reforms” because it is now reduced to a minority status. Trinamool Congress has already announced the withdrawal of support to UPA government. The second biggest allay, DMK, has also stated that it would not back the government on any resolution brought against the government on FDI in multi-brand retail trade. The Tamil Nadu Chief Minister, Dr. J.Jayalalithaa, has vehemently opposed the decisions. Samajwadi Party (SP) supremo Mulayam Singh Yadav has expressed support to Mamata Banerjee's resolution. Likewise, almost all opposition parties such as BJP, CPM, CPI, Janatha Dal (United), Telugudesam Party, Bhahujan Samajwadi Party, and a host of other minor parties have expressed their strong resentment. Therefore, there is no chance for the UPA government to survive any no confidence motion brought by Trinamool Congress or any other party. It is quite possible that the government would find it extremely difficult muster adequate support for raising the cap on foreign direct investment in insurance firms and open the pension sector to foreign investors.

Dr.C.Murukadas, The Times of India, Oct.6,2012