Allying fears that opening up of the retail sector for FDI will hurt small kirana shops, Plan Panel Deputy Chairman Montek Singh Ahluwalia on Sunday said modern retail is an expanding segment and it would more than double in a very short time.
“I don’t think FDI in retail is threat to small retailers. Modern retail is the expanding segment. Those who say that the small sector would be hurt, I think they are wrong by the way,” Ahluwalia said in a CNN—IBN TV programme Devil’s Advocate.
Asked that the much-hyped reform was once opposed by Prime Minister Manmohan Singh as then Leader of the Opposition in Rajya Sabha in 2002, Mr. Ahluwalia said, “I don’t recall what was said by every person on every day. Things move forward, perceptions change, circumstances change. I don’t think that there is any lack of clarity on FDI in retail. BJP was at that time pro-reform.”
When asked about the impact of FDI in retail in Thailand where 67 per cent of the kirana shops had to be closed down, he said, “Look it is based on some studies I am not familiar with. Central point that we should make is, in a growing economy, if we have to achieve our objective of 8 per cent (economic) growth, in that kind of growth scenario total size of retail market is going to be more than double in a very short time.”
Lauding the government’s decision to notify FDI in retail, Mr. Ahluwalia said, “This is a structural change. I don’t believe modern retail can expand fast enough to raise real wages. What happened in Thailand is not a predictor, what will happen here. In the next 20 to 30 years, do you want small retailers to have same share what it is today. I think it is completely wrong. This is like saying when taxis were introduced the share of tangas (horse cart) went down, one could bring them back, no.”
When asked what would be the impact on retail which is the second biggest employer in India with 44 million jobs, he said, “I think it is complete misreading because you need to look at, do you want modernisation of retail sector or not. If you want modernisation of retail sector, you want upward pressure on quality of employment, modern retail produces better quality of jobs.”