Many letters and articles have appeared on the UPA government’s decision to open up the retail sector to foreign direct investment. As a layman, I am unable to understand how a Walmart in our neighbourhood can change the retail scenario in the country. I am sure people will continue to buy groceries and vegetables from nearby shops. Our own big retail chains across the country have not posed any competition to the smaller stores. We also have what is called margin free shops, and well-established shops that give a discount on all essential products. People may, at the most, go to high-end retail shops to buy items that are not available in their neighbourhood shops.
FDI in retail will benefit people in a big way. Foreign items which they buy shelling out hard-earned money will be cheaper. There will be no place for brokers in the market and quality can win over quantity. Those who value quality can heave a sigh of relief.
FDI will bring foreign investment and reduce the current account deficit. True, the hike in diesel prices will increase inflation but the move is necessary to protect our rating from becoming junk. The import duty on SUVs should be increased to put some burden on the affluent class which enjoys subsidised diesel to fill its car tanks.
The editorial “Irrational exuberance” (Sept. 17) has explained the impact of the government’s announcements on the economic front in a lucid manner. Some sections of the media are all praise for the ‘reforms’ which will certainly benefit the U.S. lobby, corporate houses and rich investors but certainly not the poor. The message that the government is not pro-poor is loud and clear.
Those supporting FDI in retail argue that with the entry of foreign retailers, middlemen will be eliminated and that will, in turn, benefit farmers. Nothing can be farther from the truth.
Indian multi-brand retailers have been in the business for a while now, but they have not succeeded in eliminating middlemen.
FDI is allowed only in cities with a minimum population of one million. How will it really help small farmers? It is being claimed that at least one crore jobs will be created. Where? The fact is supermarket expansion will lead to retail “Darwinism” in which only the fittest will survive.
The UPA government, it appears, is worried more about the U.S. economy and Barack Obama’s re-election than the aam aadmi who elected it to power. Are the foreign giant retailers coming to India to do social work? Their sole motive is to make maximum profits and we, the people, will be robbed directly or indirectly.
The government’s decision is dangerous. Retail giants will capture all local and agro-based industries. The small scale sector will collapse. While FDI may be useful in the manufacturing sector, it will lead to job losses in retail and the displacement of the traditional supply chain. One of the main features of rural India is disguised unemployment. Farmers will be evicted from the agricultural sector, and forced to engage in small retail trade for livelihood. The opening of big markets or foreign sponsored departmental outlets will not necessarily absorb them. The giants will only try to establish a monopoly.