Relying on FDI is not fiscal solution
The UPA government’s massive move to hike foreign direct investment in as many as 13 sectors within days of the union finance minister’s visit to the US reeks of a hypocrisy that is unseen of in a long time. It is deeply unsettling to witness the Indian domestic industrial sectors increasingly fall prey to the competitive appeasement of the corporate lobbies operating from Washington by the current government. The Manmohan Singh-led UPA-II is, almost singlehandedly, responsible for hurtling the economy down an abyss of permanent fiscal dependence on the US markets, with the rupee now all the more susceptible to external shocks from the crests and troughs of the financial graphs drawn in New York and London. In a most unparliamentary manner, the FDI limits have been hiked in sectors as sensitive as insurance, telecom and defence, without holding even a twig of discussion and pretty much shoving the decision down the throat of the bumbling economy, ostensibly to ‘stabilise’ the depreciating rupee. However, the government’s decision to relax the FDI norms, raising the upper limit to as much as 100 per cent in case of telecom and 49 per cent in several other areas indicates that the move has been on the one hand to soothe the flared up nerves of the foreign investors, particularly of the American variety, and on the other, to pose as the saviours of the steadily depreciating rupee, thus turning this exercise into a middle-class vote-catching endeavour.
The government’s move is also extremely suspect not only because of its unimaginably wide scale, for example by including sectors that have been buoyant and doing well without the purportedly required injection of FDI, thereby giving the huge foreign corporate bodies a free hand at the expense of the smaller domestic players, but also for the sensitive nature of the development. The FDI hike in defence sector from the earlier 26 per cent to 49 per cent, even though the above 26 per cent foreign investments will be studied on a ‘case-by-case’ basis, appears to be nothing a euphemism for granting a covert state sanction for perpetuating the culture of kickbacks and bribes, as evident in the recent choppergate, and the earlier Bofors scam. Furthermore, overdependence on foreign companies for crucial defence equipment leaves the country vulnerable to security threats from other countries, a matter of particular concern after the recent bevy of revelations on electronic surveillance as well as bolstering the ‘technology denial’ regime that does not permit transference of military technologies from the developed to the developing worlds. In fact, the increase of FDI in telecom to 100 per cent, too, has grievous security implications for the country, as control of the telecommunications platform by foreign companies could easily jeopardise sensitive state correspondence and also make the country more vulnerable to corporate espionage.