FDI in Retail – A deep look within

Quite a lot of speculation has been going around these days about the proposed govt plan for allowing FDI in multi brand retail sector. People from various sections of political and social classes, holding different ideologies, from the hard core socialists to neo liberals have voiced their options for or against the proposal. As a result, we have a rich and diverse set of opinions in public domain. Let us have a look at what it is all about.

The Cabinet recently agreed to allow foreign multi-brand retailers such as Wal-Mart Stores Inc. and Tesco PLC to own up to 51% of retail joint ventures and single-brand retailers to own 100% of their Indian operations, up from 51% now.

This proposal, which has come after at least five years of setting the stage for the creation of a modern retail industry by allowing 51% FDI in single brand retail, is being acknowledged as a step in the right direction towards economic liberalization by the Indian corporate sector and most economists.

The rationale for liberalization is based on a definite premise. It will create an opportunity to leverage foreign investment in the supply chain infrastructure, which suffers from certain inherent deficiencies due to the lack of investment flows into the sector. Inadequate storage facilities and limited cold chain infrastructure causes heavy losses in terms of wastage in quality and quantity of produce in general, and of fruits and vegetables in particular.

While allowing FDI in Multi brand retail will provide the much needed impetus to the crumbling infrastructure, it will also help in improving supply chain efficiency, with the better technology, management practices and decades of experience of foreign retail majors coming in to play.

The opening up of Multi Brand Retail will also aid in regulating food inflation in the long run as it would contribute to saving the food which perishes on account of inadequate infrastructure.

It will also help in securing remunerative prices for the farmers. In the present dispensation, there is a complex chain of procurement involving several middlemen. As a result, Indian farmers realize only 1/3rd of the total price paid by the final consumer as against 2/3rd with higher degree of retail. Also, the average price a farmer receives for horticulture produce is barely 12 to 15% of what is paid at the retail outlet. FDI in retail will create the enabling environment which can ensure direct procurement, at least of horticultural produce from farmers to enable them secure remunerative price.

Huge investments in the retail sector will see gainful employment opportunities in agro-processing, sorting, marketing, logistic management and the front-end retail business. About 1.5 million jobs will be created in the front-end alone in the next 5 years. Assuming that 10% extra people are required for the back-end, the direct employment generated by the organized retail sector in India over the coming 5 years will be close to 1.7 million jobs. Indirect employment generated on the supply chain to feed this retail business will add millions of jobs. Examples from other countries like Russia, China, Thailand and Indonesia also present figures of impressive growth in retail and wholesale trade along with growth in agro processing industry.

One of the counter arguments put forward against the proposal is that opening the retail sector will drive millions of small shopkeepers and kirana stores out of business, thus depriving them of their source of livelihood. Based on this argument there has been a stiff opposition against retail FDI from many political parties, some of which include the allies of the government.. This led to a stalemate in the proceedings of the parliament, and consequently government had to suspend the decision to allow FDI in retail for now.

Most of the economists are of the opinion that the government should be praised for finally taking a measure that should allow India to take advantage of 21st-century supply-chain management. Finally, it remains to be seen whether Indian consumers are ready, en masse, to abandon the model that has served them well for decades, that being a model that still elicits awe from the foreigners who come to India, hence posing a challenge for the foreign companies to get Indians to flock to their doors.

Anna Hazare movement - A Bash-Congress Forum

It is really unfortunate to see the movement which started as an apolitical crusade against corruption, getting slowly transformed into a platform for opportunism and politicking (All thanks to Anna Hazare). Use of this platform for the unabashed display of  furore against the UPA government by some political parties which themselves do one thing when they are in power and take a u-turn when in opposition, can only be perceived as a sordid attempt to gain political mileage.
The movement for a strong Lokpal bill is fast turning into a Bash-Congress forum.
The need of the hour is for the political class as a whole to rise to the occasion and respond to the challenge of enacting an effective law.. Targeting the government will not help.
Also Team Anna's unilateral posturing on the Lokpal bill and making it an ego issue of 'my way or no way' is only making things worse.

Startling Claim

It was astonishing to read about the Planning Commission's affidavit in the Supreme Court which says that an individual income of Rs.25 per day is sufficient to make both ends meet.
When even a rickshaw puller and vegetable vendor can understand the minimum daily expenditure, why does it appear elusive to our expert committees? If after 60 years of independent democratic governance a huge chunk of society still lives a substandard life, it is because of a failure of our developmental planning.
When we talk about the stupendous growth rate that India has achieved over the past decade, because of the booming Service sector, we often tend to overlook the fact that this growth has not been all inclusive, and has left the marginal and deprived sections of our society even farther behind by widening the poverty gap.
Today one-third of the world's population living on less than one dollar a day is in India. These figures if incorporated in the country's growth projections in terms of per capita GDP consumption, will seriously expose the flaws in our development and planning machinery.
I think time has come for a serious rethink over the way planning and budget allocations are carried out in our country.

SOMEWHERE ONLY WE KNOW

"Somewhere Only We Know"
http://www.dailymotion.com/video/x2eec8_keane-somewhere-only-we-know_music

( "Somewhere Only We Know" composed and played by English alternative rock band Keane.It became one of the greatest hits of 2004 worldwide.)



I walked across an empty land
I knew the pathway like the back of my hand
I felt the earth beneath my feet
Sat by the river and it made me complete



Oh simple thing where have you gone
I'm getting old and I need something to rely on
So tell me when you're gonna let me in
I'm getting tired and I need somewhere to begin



I came across a fallen tree
I felt the branches of it looking at me
Is this the place we used to love?
Is this the place that I've been dreaming of?



Oh simple thing where have you gone
I'm getting old and I need something to rely on
So tell me when you're gonna let me in
I'm getting tired and I need somewhere to begin



And if you have a minute why don't we go
Talk about it somewhere only we know?
This could be the end of everything
So why don't we go
Somewhere only we know?



Oh simple thing where have you gone
I'm getting old and I need something to rely on
So tell me when you're gonna let me in
I'm getting tired and I need somewhere to begin



So if you have a minute why don't we go
Talk about it somewhere only we know?
This could be the end of everything
So why don't we go
So why don't we go



This could be the end of everything
So why don't we go
Somewhere only we know?

Double Standards

When on one hand Team Anna advocates that Prime Minister and Higher Judiciary come under the ambit of Lokpal, one would assume that other institutions - corporations, Media and NGOs would naturally be included in the jurisdiction of a Lokpal Bill. But the proposed bill leaves them out completely.
Looks Like Mr. Arvind Kejriwal, who owns a NGO named Parivartan has some vested interests.

War of Words - Lokpal Bill

While it is true that neither Team Anna nor any individual can make a law to curb corruption, the government would do well to remember that there is an undercurrent of dissatisfaction among people who feel that the laws are not stringent enough and that political parties are not serious about the falling standards in public life. This undercurrent may swell with time and cause a tsunami.

Saddening Display of Protest against Lokpal bill

Looking at the yesterday's event of  burning of the copies of the Lokpal bill by social activist Anna Hazare and other civil society members, it is deeply hurtful to see the way this protest has turned out to be. Although my respect for them has not diminished because their cause is genuine. Burning copies of the bill is an inappropriate way of protesting, especially in a nation where paper is equated with knowledge and wisdom. Millions of trees are cut every year to meet the requirements of paper consumption. The fact that it was used for burning is quite saddening.