It is a little unfair to pour cold water on the euphoric reaction of the Indian industry to the UPA government’s decision to allow foreign direct investment in retail (“Irrational exuberance,” Sept. 17). It has been a long time since the government has done anything of significance to stimulate a stagnant economy. That the reforms were carefully timed to distract the Opposition from pressing on with its litany of allegations is another matter.
The measures announced are clearly in the nature of economic reform. Adequate safeguards and enabling provisions have been built in, both to protect the ‘mom & pop’ stores and give a boost to the supply side infrastructure.
Judah S.G. Vincent,
The UPA government has gone in for big bang reforms only to satisfy the rating agencies and the international finance capital. Our economy was saved from crumbling during the recent crisis only because we have restricted FDI in key sectors. The entry of global retailers like Walmart will have a devastating impact on employment. Experience has shown that the MNCs have a greater monopolistic power over both farmers and consumers and they manipulate the prices.
FDI in retail will affect not only small retailers but also wholesalers. Retail giants have two formats — the Easy Day format (retail) and the Cash & Carry format (wholesale). The Cash & Carry format is dangerous for the wholesalers because MNCs bargain and buy stocks in huge quantities and sell them on very narrow margins. They manage to profit from these margins because they have a huge product line. The Cash & Carry store in Punjab attracts a large number of wholesalers from Delhi and adjoining areas. If New Delhi’s market can be disturbed by these giants, we can imagine the situation in the rest of the country.
FDI is important but it is not the one solution to all problems. The government’s thinking that FDI in retail will help solve the crisis in the agriculture sector is misplaced. Most people in rural India depend on their local retailers. The retail business in the rural and semi-urban areas is based on credit where farmers pay whenever they get the money. Crores of people are in the retail business. FDI in retail will make most of them jobless.
Y.V.K. Ravi Kumar,
Supermarkets are filled with packages of uneven weights. There are packages of 95 gm, 110 gm, 155 gm, 950 gm and so on of similar products of different brands. As a result, the customer is unable to identify the best deal. He selects an item that looks cheaper but may be costly in terms of per unit price. The government should take steps to correct this and ensure that all companies have same standard sizes of packages. It will protect the consumer’s interest and provide a level-playing field for new brands which will mushroom rapidly as a result of the decision to allow FDI in retail.
Tushar S. Baviskar,