What prompted me to write
this was reading Yaswant Sinha’s statements about FDI in retail field in an
interview published recently in the Deccan Chronicle.
About fifteen or twenty
years back when supermarkets came to Cochin
there was considerable fear among the small retailers that their business would
be affected. The magnitude of this concern spread to more areas when the big
shops started selling meat, fish and vegetables too.
What really happened? One
chain of supermarkets closed down, obviously due to mismanagement. Unfortunately
they did not know Yaswant Sinha’s miracle therapy – send your people outside to
learn best management practices in retail. (It would be useful if he can
publish a list of places where such training is available to Indian retailers.)
Another well-known chain also pulled down its shutters. Some others are doing
well of course. Even Reliance and More have entered the scene in a big way. But
it has not affected the small retailers.
Take the area where I live
in Cochin. Seven
years back when we moved to Chennai the place had three or four vegetable shops
and a few retail outlets for other goods. We shifted back three months ago. The
situation is interesting. Within a radius of less than 1km, there is a Reliance
Fresh (with a notice on the front door that they need personnel), around ten
vegetable shops and a number of retailers dealing in every imaginable goods
from pencils to electronics. All of them seem to be doing well.
We go to Reliance
occasionally. The main reason is that there is a good fish stall and a medical
shop near Reliance. It also helps us to learn what the new goods on the market
are. But it is the corner shop near the house that we depend on mostly. It has
almost all the stuff we need for the house. That shop too has grown. Incidentally,
women still bring fish home. The cold storages apparently have not affected
their business
If Walmart or Morrison’s or
Carrefour opens a super shop in the heart of the town not many people are
likely to drive in the traffic congestion to do regular shopping there. It is
true that the malls which have come up in Cochin seem to be doing well. But mostly,
people stick to their local shops where they are known. The habit of buying in
large quantities and stocking for a month or so is not common.
Yaswant Sinha says that
foreign involvement in retail would mean cultural invasion. Well, the middleman
culture would be under threat. That should benefit the farmers and the
consumers. As a matter of fact, reading through the whole interview gives one
the feeling that FDI is something that Sinha is not really against, though his
intention was to justify his party’s stand to oppose it.
If the major international
retail chains come to India,
they would require people to man the new facilities. It is unlikely that they
would grab staff from the existing small outlets. They would recruit according
to their set standards and train the personnel. This should certainly create many
new job opportunities.
Would the customers have any
benefits? Let me give my wife’s and my example. After a recent cataract
operation, I had to use different types of eye drops. They are cheaper in the
hospital pharmacy by about 20% compared to the medical shops. The same is true
about my wife’s diabetic medicines and equipments for taking sugar readings.
The reason is that these hospitals buy in volumes and regularly.
Efficient and quantitative
buying certainly reduces the cost for the outlet. You might have noticed ads in
the media and otherwise by big shops offering commonly used goods cheaper than
market prices and MRPs.
Now, on the political angle.
In fact the BJP was for FDI in retail when they were ruling. But that proposal
was not pushed through for some reason. Now they are objecting to it because
the UPA is trying to implement it. Purely political reason.
BJP must realize that the
party is very important to India.
They would be/should be either running the government or sitting the opposition
in a responsible manner. Seeing the BJP lining up with the left parties too
often these days makes one worried. The
Communists have opposed everything good for the country from Quit India to
computers. That is why they are where they are today.
Inactivating the Parliament for
political reasons – sometimes silly ones – for days at a stretch and wasting
the taxpayer’s money is not right. Stay
in the Parliament and bring a no confidence motion if the government is really
doing something seriously wrong.
That is the true democratic
process.
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