Excuse me!!! Aren’t we being too touchy about FDI in retail? Is this a country of farmers only? Is the interest of only kiranawalas paramount? What about India’s largest socio-economic class? What about us? We, the ubiquitous consumers. It is high time now to bring the largest stakeholder in the discourse.
Farmer’s interests are important. Role of small traders is not less significant. But we are a country of 1.25 billion people. Consumers, especially middle class consumers are the largest mass directly influenced by the happening in retail arena. Producers are also consumers in a practical manner. We can’t deny the fact that the recent growth of Indian market is a gift of nation’s emerging consumer culture. Constant and strong growth in individual consumption expenditure over last few years has upped growth of Indian market. Private consumption expenditure is rising at an annual rate of 8-9 percent since last seven years as per the Economic survey of 2012.
Organized retail has already become a ten year old experience in India and consumers have developed their own perspective about retailing. A host of researches and surveys are there to support the fact that organized retail has qualitatively improved shopping paradigms in India. A recent survey of renowned consulting agency has found that the growth of modern trade ushered in several benefits for consumers, some of which include better prices, increased product choice and an improved quality of life. Consumers are experimenting with products, brands and categories, and are trading up in their purchases, wanting to use products of good quality. Modern trade retailers, on their part, will also help consumers understand how to use products.
Greater supply of products, increased competition, new product launches, etc., increase the flow of products into the market. As a result, prices tend to fall and become more competitive. Locally sourced products and commodities also help keep prices cheaper. Basic food of the urban poor is cheaper in supermarkets of Delhi than in traditional retail shops: rice and wheat are 15% cheaper and vegetables are 33% cheaper, just because of scale of retail operations and better supply chain management. Indian consumers have got a proactive support from organized retail during the recent bout of high inflation. This support came in the form of innovative packaging and bundling/discount offers.
India’s organized retail experience has remained by and large satisfying for the largest socio-economic class ie consumers. Is it really true that organized retail have put danger to the survival of small retailers? Or farmers have suffered coz of retail opening? It is time to look for the ground realties and debate practically. Let the consumer enter in the debate, the bona fide stakeholder of India’s growth story.
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You are missing the big picture by looking at a particular section of society for particular goods only. Remember that FDI is going to encompass all sections of society and all types of goods.
ReplyDeleteThe farmers are also consumers, middle class kiranawalas are also consumers in one form or the other noone is self sufficient.
Imagine 3 persons doing business.One kiranawala, second cloth merchant and third shoe market. FDI comes, 2 and 3 rush to FDI shops for food items because they are 15% cheaper. Same would be case for 2 and 3. So all are rushing to FDI now.
1 who was a kiranawala/farmer would be forced to sell his goods to FDI shop because his sale has gone down and he needs some market anyways. Same would be for 2 and 3.
You could argue that what if 1,2 and 3 will sell their product at a high price by forming a union in their business community. Again that wont help much since FDI retailers are having huge cash reserves and some stats say that organized retailing is 19th in terms of revenues, i.e. only 18 countries in world have liquid cash higher than organized retail sector (I am not sure about this fact though, but it is fact thay they have huge cash reserves). With such huge cash reserves and liberalized economy, they would still be able to sell products at lower price.
To sum up, this would be a very short term solution. Right now, they have granted it in 53 cities, again when such economic crisis will come, they will grant in more cities. This is not the solution. It is like borrowing money from someone and shouting that I am rich. You need to generate money that is your own.