Team CrawFin/ Harshal Jawale, CFPCM
Recently opposition party stalled parliament again in protest of Government’s decision to allow FDI in Retail. Retail industry constitutes to 15% of our national GDP. India has highest number of retail outlets per capita about 14 million that employs around 40 million. Moreover it also acts as a marketplace to 60% of our national population that directly or indirectly is engaged into agriculture products.
What was the decision?
1. To allow 51% FDI in Retail, where they have to source 30% products from Indian small industries.
2. To allow open store in cities with population only above 1 million. Note India currently has about 50 such cities.
For Kirana Stores –
Kirana shopkeepers will be directly affecting by this decision. I fail to understand why allowing a foreign counterpart will kill Kirana stores if they can manage to survive against long list of Indian superstores like BigBazaar, More, Spinach, Reliance Fresh etc. These superstores are more potential threat to small stores since they are competing with them at national level, very unlike WalMart who will be allowed to open a store only in big cities.
Bigger question is who will lose? Shop workers who are exploited by shop owners will anyway get a job replacement in these superstores. Shop owners are much less in number to voice rollback.
For Farmers –
India prominently agri economy always works against farmers. While superstores make contractual agreement to purchase goods even before they plant seeds, farmers will be well off than current conditions where kirana store buys only after checking quality of goods. All the losses in manufacturing goods gets transferred to poor farmer, otherwise a superstore makes sure the right environment is being offered to a farmer to produce quality goods. In some crops the loss of crop is as high as 40% and farmer bares it all. FDI in retail will solve most manufacturing, storing related problems of food items in the country.
For Consumers –
Small kirana stores offer below average hygiene products to consumer. Moreover in my personal opinion small store never sells a packaged food below MRP, meaning MAXIMUM retail price. Superstores because of its mass buying/selling/transporting power manage to keep prices in check.
These superstores have some wonderful practices of insuring each crop, that makes sure to protect monetary losses. Helping farmers before plantation will create wonders in producing more quality food-grains. Better transportation and storage facilities will be built by these private companies.
Is it justified to let live problems of billions to protect interests of millions? Can this issue be resolved by simply asking these companies to procure 100% from within India? For years we have been cribbing of farmers not getting enough prices while consumers are fighting with inflation, cutting middlemen chain, wrong govt policies, rotting foodgrains, transportation and storage issues resulting into loss of valuable food and we still are not realizing the importance of it. Can’t we reach to a solution by tweaking some points rather than protesting it in full?
I am no expert in retail industry, but believe issues don’t get resolve like this. Issue needs to be discussed to reach out to a solution. Current rollback in FDI is a mere political failure from both government and opposition end; countrymen were, are, will pay price for it.
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