The small shopsin the rural areas are unlikely to be affected by the advent of organised retail trade.
The UPA government is set to trigger yet another round of discontent, by restricting FDI (foreign direct investment) in retail to large cities with populations of over a million each. This tilt towards the urban, to the exclusion of the countryside, does not stand to reason.
The Government of India recognises the key role of FDI in supplementing domestic resources, and as a source of technology and global best practices. The restriction of FDI to larger towns can only be counterproductive.
India has only 35 towns with a population of over one million. The total population of these towns totals just 108 million. A policy to allow FDI in the retail sector in just 35-odd townships amounts to closing the doors of 91 per cent of the Indian economy to greenfield FDI.
FDI has provided the main boost to industrial growth, now entering the double-digit spectrum. On the contrary, the countryside and, in particular, agriculture is starved of investments, credit, technology, efficient marketing networks and also managerial acumen.
It would be more logical if FDI in the retail sector were to be primarily channelled into the rural regions.
TRANSFORMING RURAL INDIA
FDI in retail trade in the metros is more likely to be in the nature of mergers or acquisition of existing outlets, and, in most cases, would not lead to introduction of any new technologies in the economy.
On the other hand, the FDI in rural small towns and even villages will be predominantly of a greenfield character. It will open up new production lines, leading to an improvement in cultivation practices, better varieties of produce and creation of new retail networks.
FDI can replace the existing APMC (Agriculture Produce Market Committee) network, with its long chain of commission agents that deprive the farmer of remunerative prices and the consumer of a fair price, assured quality, choice and transparent accounting.
Further, FDI retail outlets in the cities tend to displace the existing indigenous and well-settled corner shops that cater to the needs of the urban consumer. They give little by way of catering to the input needs of the urban population, except through vending of kitchen garden equipment, books, computers and white goods.
In rural India, such direct investment can put agro-inputs such as hybrid seeds, pesticides and fertilisers within easy reach of the farmers, help improve cultivation practices through extension services and information on SPS (sanitary and phyto-sanitary) standards, and usher in effective farm contracts.
The traditional retail sector is the second largest hive of concealed unemployment and underemployment, next only to agriculture. The neighbourhood corner shops in the mofussil areas are unlikely to be affected by the advent of organised retail trade as they have their own strong points that make clients stick to them, often with fierce loyalty.
EMPLOYMENT POTENTIAL
The widespread misconception that the organised retail causes a net reduction in employment has been comprehensively disproved by a number of well-documented studies. If there is some reduction in the floor staff, it also means a marked elevation in the skill level of jobs done. If one calculates the secondary and tertiary effects, retail trade promotes higher employment as also a higher lifestyle with greater degrees of freedom at both ends of the production chain.
The traditional corner shop is often the cause and the beneficiary of pilferages in the PDS (Public Distribution System). The informal system of inventory control and accounts used by them does not permit them to supplement the PDS. BPL customers would welcome the supermarket that accepts food coupons.
FDI is known to boost credit, finances, technology levels and efficiency in marketing. These are required in all sectors of the economy, but the need is most dire in the rural sector, and predominantly agriculture. Keeping such investment flows away from Bharat can only be an act of sheer animus towards the farm sector, on a par with the imposition of deliberate negative subsidies.
The UPA government is set to trigger yet another round of discontent, by restricting FDI (foreign direct investment) in retail to large cities with populations of over a million each. This tilt towards the urban, to the exclusion of the countryside, does not stand to reason.
The Government of India recognises the key role of FDI in supplementing domestic resources, and as a source of technology and global best practices. The restriction of FDI to larger towns can only be counterproductive.
India has only 35 towns with a population of over one million. The total population of these towns totals just 108 million. A policy to allow FDI in the retail sector in just 35-odd townships amounts to closing the doors of 91 per cent of the Indian economy to greenfield FDI.
FDI has provided the main boost to industrial growth, now entering the double-digit spectrum. On the contrary, the countryside and, in particular, agriculture is starved of investments, credit, technology, efficient marketing networks and also managerial acumen.
It would be more logical if FDI in the retail sector were to be primarily channelled into the rural regions.
TRANSFORMING RURAL INDIA
FDI in retail trade in the metros is more likely to be in the nature of mergers or acquisition of existing outlets, and, in most cases, would not lead to introduction of any new technologies in the economy.
On the other hand, the FDI in rural small towns and even villages will be predominantly of a greenfield character. It will open up new production lines, leading to an improvement in cultivation practices, better varieties of produce and creation of new retail networks.
FDI can replace the existing APMC (Agriculture Produce Market Committee) network, with its long chain of commission agents that deprive the farmer of remunerative prices and the consumer of a fair price, assured quality, choice and transparent accounting.
Further, FDI retail outlets in the cities tend to displace the existing indigenous and well-settled corner shops that cater to the needs of the urban consumer. They give little by way of catering to the input needs of the urban population, except through vending of kitchen garden equipment, books, computers and white goods.
In rural India, such direct investment can put agro-inputs such as hybrid seeds, pesticides and fertilisers within easy reach of the farmers, help improve cultivation practices through extension services and information on SPS (sanitary and phyto-sanitary) standards, and usher in effective farm contracts.
The traditional retail sector is the second largest hive of concealed unemployment and underemployment, next only to agriculture. The neighbourhood corner shops in the mofussil areas are unlikely to be affected by the advent of organised retail trade as they have their own strong points that make clients stick to them, often with fierce loyalty.
EMPLOYMENT POTENTIAL
The widespread misconception that the organised retail causes a net reduction in employment has been comprehensively disproved by a number of well-documented studies. If there is some reduction in the floor staff, it also means a marked elevation in the skill level of jobs done. If one calculates the secondary and tertiary effects, retail trade promotes higher employment as also a higher lifestyle with greater degrees of freedom at both ends of the production chain.
The traditional corner shop is often the cause and the beneficiary of pilferages in the PDS (Public Distribution System). The informal system of inventory control and accounts used by them does not permit them to supplement the PDS. BPL customers would welcome the supermarket that accepts food coupons.
FDI is known to boost credit, finances, technology levels and efficiency in marketing. These are required in all sectors of the economy, but the need is most dire in the rural sector, and predominantly agriculture. Keeping such investment flows away from Bharat can only be an act of sheer animus towards the farm sector, on a par with the imposition of deliberate negative subsidies.
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