Opinion DC Comment 18 Jan 2020 Govt should heed Mod ...

Govt should heed Modi’s mantra: Treat all equally

DECCAN CHRONICLE.
Published Jan 18, 2020, 5:40 am IST
Updated Jan 18, 2020, 5:40 am IST
Prime facie, deep discounts offered by big ecommerce companies and the losses incurred by them do raise suspicions about their revenue model.
Prime minister Narendra Modi
 Prime minister Narendra Modi

Seven years back, drawing a contrast to the UPA-2 government’s policies, then Gujarat CM Narendra Modi told a television channel that government policy should treat everybody equally, and even if there were loopholes in the policy, it should not favour any one entity. This statement implies the government should be agnostic to any person or company. It should neither favour nor target any entity. But commerce minister Piyush Goyal on Thursday virtually indicted Amazon CEO Jeff Bezos and his company for violating rules by offering deep discounts. This statement almost amounts to extra-judicial prosecution. If Mr Goyal sees something fishy, his government should get the Enforcement Directorate to probe foreign investments by ecommerce companies. But singling out one company or commenting on it, especially when the issue is being looked into by the Rajasthan High Court, does not augur well. At the outset, the rant appears to have been provoked by non-policy considerations, and could damage India’s credibility on the Ease of Doing Business front. Walmart’s recent decision to retrench 56 employees — indicating a virtual retreat from India’s cash and carry business — also does not make good reading for foreign investors.

Prime facie, deep discounts offered by big ecommerce companies and the losses incurred by them do raise suspicions about their revenue model. Thousands of small entrepreneurs have gone out of business as customers swamped ecommerce sites to take advantage of lower prices. While the government should be considerate and sympathetic to them, it cannot do much to enforce price parity between physical stores and online sellers, as the latter don’t have to spend on establishment costs. All disruptive ideas or inventions such as mechanisation in the 17th century or computerisation in the 20th century have created upheavals in traditional markets and led to the loss of old jobs. Ecommerce is one of the disruptive ideas and no country can shy away from it. The government should, therefore, nudge small traders to understand changing market dynamics and refashion their strategy to stay in business.

 

In his role as Prime Minister, Mr Modi should recall his old interview and ensure that the forthcoming National E-commerce Policy does not favour anybody and puts everyone on an equal footing. There are allegations that the government is playing to the tune of some big corporates to put others at a disadvantage. The government should use the new policy framework to unequivocally prove all such allegations wrong. If the government adopts nepotistic practices, India will lose the confidence of foreign investors and that will be a big mistake. Though India’s economy is now the fifth largest in the world at an aggregate level, it is still a middle income country on per capita basis and still needs a lot of foreign money to develop itself to match Western standards. The Modi government should, therefore, avoid all temptations to imitate China in using business restrictions to browbeat foreign companies for political or nepotistic reasons.

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