Once the share of overall modern retail in food reaches about 25-30 per cent, it is bound to affect kirana and small traders, Prime Minister’s Economic Advisory council Chairman C Rangarajan said on Friday.
Organised retail out-competes traditional retail on prices, variety and quality and offers greater convenience, he said.
Mr. Rangarajan, however, sought to allay apprehensions over the government move to allow FDI in multi-brand retail, saying that kirana stores will survive and can become part of modern retail by organising themselves and getting assimilated into the organised sector.
Mr. Rangarajan’s comments come a day after the government notified its last week’s decision to allow 51 per cent FDI in multi-brand retail despite widespread political opposition.
“Once the share of overall modern retail in food reaches about 25 to 30 per cent, it is bound to affect the kirana traders first and then the small and marginal traders,” Mr. Rangarajan said in his inaugural address at a seminar on “Organised Retailing Vis-is the Farm Economy of India”
He said, however, “They (small retailers) will continue to remain. In fact, the international experience shows that even in advanced countries where there are large scale department stores operating, the ‘mom and pop’ stores have not disappeared. They continue to exist.”
Besides, Mr. Rangarajan said that kirana stores can be a part of the organised retail.
“These kirana stores and street hawkers can also become part of the modern retail change story if they can be assimilated into organised retail, organise themselves under their banner through franchisees, upgrade through infusion of capital, better training,” he added.
Later, he told the media that large retail outlets probably will come in major cities and Tier—II cities.
Replying to a query on whether there are any possible initiatives for small retailers, Mr. Rangarajan said that when large retailers come into operation, then small retailers need to strengthen themselves.
“This is something that the small retailers will have to do on their own. To some extent for example organising farmers or some clusters can be helped by government, NGOs or other agencies,” Mr. Rangarajan replied.
He said it will create an opportunity to improve infrastructural facilities in the agricultural marketing field which may ultimately lead to price reduction.
“The present marketing arrangements are not on sound lines. Therefore, induction of organised retail, more particularly foreign investments in to retail, can lead to an improvement of the marketing system and therefore will lead into some sense of softening of prices,” he added.
Mr. Rangarajan said modern retail also ensures quality and safety standards for different products for the consumers.
“Thus organised retail out-competes traditional retail on prices, variety and quality. They offer greater convenience and better shopping environment to consumer,” he said in his speech.
The traditional system and modern retail chains are complementary to each other and their co-existence is important for each other’s functioning while providing options to producers and consumers, he opined.
Keywords: Rangarajan, PMEAC, FDI in retail, traditional retail, kirana stores
In first world countries like US and other western countries, we can see numerous success story examples of how the mom and pop stores are competing and also out performing the likes of Walmarts and Tescos of the world.
Indian unorganized sector consists of around 8 million+ mom and pop stores which is more than the populations of many of such countries, By that I mean it is quite unlike other countries. Indian Kirana stores can work in tandem with the modern retails, as it is necessary for India to get exposed to the best practices of the world as there is a lot of inefficiency in the sector. What government can do is instead of shrugging of the responsibilities is, They can train and aware the indian stores by some campaigns and other TVCs, and as Hon. CJI said, We want inclusive growth, not just the growth in absolute terms.
There are many areas to improve competitiveness in India...higher
education, healthcare, energy, engineering, high technology being some
of the critical areas. For example, why do we still need to import
setup boxes for TV - the simplest of things?? When such critical areas
are neglected, why is FDI in retail being made out to be so critical
and urgent for the Indian economy at the moment? Unable to figure out
what is the benefit of allowing FDI in retail..a few questions on what
a multinational retail chain would bring on the table (1) Teach us to
run a supermarket? (b) Technology to operate a supermarket (bar codes,
RFID, Point of Sale software, internet, cold storage, trucks etc,.for
automation? (c) Teach us on how and where to buy the products to sell
in the supermarket? (d) Provide access to imported products that we
Indians otherwise cannot dream to lay our hands on? (e) Foreign
currency to setup supermarkets?. Does allowing FDI qualify to be
called a reform?
"In fact, the international experience shows that even in advanced countries where there are large scale department stores operating, the ‘mom and pop’ stores have not disappeared. They continue to exist.”
Whose mom and Pop is Mr Ranga Rajan talking about? Ranga Rajan must have Sam Walton's children in mind.
And what advanced countries he is talking about where Mom and Pop stores are thriving competing against Walmarts etc.?
Even big chain Grocery stores or not able to compete with Walmart when they are expanding their business to include Grocery. There is no way on God's green earth that a Mom and Pop store owner is able to compete with Walmart. Simply put It is not level playing field.
But when a person like Mr Ranga Rajan makes the above statement we must think how informed our policy makers are and and how intellectually honest or bankrupt they are. Show us that Numbers or point to studies that prove your point.
"kirana stores can be a part of the organised retail", this happens only by sacrificing their stores to the big super markets and working for those big super markets.
A proud indian citizen of yesterday is a Humble worker in a modern retail of tomorrow.
Thanks to Congress govt.
Another example how callous and insensitive our UPA-2 is. We can't
expect anything better from a Govt. that thinks inflation is good.
However, what the center has forgotten is these kiranas are set-up
with small investments and were a source of self-employment. With
increasing unemployment and most of the people in the middle and low
income levels, from where do these people accumulate funds to complete
the giants like Walmart which are already having an international
presence?
Regarding quality, from personal experience, most of the food sourced
by these giants are from far of places - vulnerable to infection and
loses its nutrients due to transport. Kiranas on the other hand didn't
have the means to store for longer periods nor could out source from
afar, rendering the foods both tasty and healthy? Personally, i have
seen vegetables (packed) infected with fungus when bought from Auchun
(French retail) and fruits getting rot faster than normal. If you want
I can share pictures...
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