"Politics is the art of choosing between the disastrous and the unpalatable," said John Kenneth Galbraith, America's best-known economist. This precept befittingly explains Prime Minister Manmohan Singh's latest political gambit on big-ticket economic reforms opening up India to foreign direct investment (FDI) in retail. Simply put, the multi-national companies can now set up shop in India selling anything from soap to salsa.
In the absence of a cross-party political consensus on this long-debated but most critical - and contentious - reform, the Centre has left it to the state governments whether they would like to roll out a red carpet to foreign investors, or shut the door on them. This masterstroke of federalism has put the non-Congress-ruled states in a to-be-or-not-to-be predicament. The debate is getting particularly intense in the agrarian states such as Punjab, where the FDI in retail is seen more as an opportunity than an obstacle for a leap to the next level of prosperity.
For record's sake, Chief Minister Parkash Singh Badal has been quick to tow his time-tested political ally, the BJP, in debunking the FDI in retail. In private, however, his son, deputy chief minister Sukhbir Singh Badal, a die-hard reformist, detests the FDI-phobia and rather views it as a game-changer for Punjab's future. But, implicit in their dichotomous stance is the peril of letting their short-term political expediency override the state's long-run economic imperatives.
Punjab's descent from a frontline state to one of the economic backbenchers is only too well known. Its historic advantage of a green revolution-powered growth has long petered out. While agriculture, still the engine of Punjab economy, is stagnant and starved of investments for the much-touted 'second push'; its industrial growth remains stunted, hobbled by locational disadvantage, infrastructural deficit, and tax concessions to neighbours Himachal Pradesh and Uttarakhand.
When it comes to foreign capital inflow, Punjab presents a glaring paradox. Punjabis, with roughly two million of them settled abroad, are the most global Indian diaspora. But, Punjab's economy is least globalised as is evident from its scanty share of 0.7% of FDI in the country since 1947!
Worse, in the last two decades since India embraced the first-generation reforms, Punjab has missed every revolution worth the name - be it information technology, automobile manufacturing or biotechnology, the revolutions that transformed the economic fortunes of many states, leaving Punjab way behind.
That's precisely why the new wave of reforms raises a pertinent question: Can Punjab afford to miss the FDI bus? Over the next few days, Hindustan Times will bring you the perspectives of key stakeholders in Punjab polity, and also perceptive takes of leading economic experts on the FDI sweepstakes.
First in the series, economist Sardara Singh Johl's piece appears on Page 3 today. This forum, we at HT believe, is the best way to bring clarity and evolve a consensus on this hot-button issue that perhaps holds the key to the future of the sunshine state.