This weekend I was in Delhi at my parents' place. Had gone to the city for a business trip, and stayed back a day to dig into some of Mom's yummy chaat.
Chatting about this and that, the conversation came to the opening of FDI in retail, and whether it would be any good for us. Being a dyed in the wool reformist, I played out the usual arguments about how large format retail would increase efficiencies in the value chain, help farmers and producers get better prices, and reduce prices for consumers. Additionally, they would help allied areas like real estate, employment etc. For good measure, I added that any sector that has seen foreign money come in (telecom, airlines, insurance, automobiles, white goods etc etc has all improved product quality exponentially and driven prices down so significantly that it would have been unimaginable a decade ago.
My mom's experience had been that large format retail (think Big Bazaar or Reliance Retail) initially had low prices which caused the local kirana folks to buy from them and on-sell, but over time prices moved up and the kirana shops applied a mark up on the higher prices. Also, the large stores usually stocked sub standard produce (cold storage potatoes, stale veggies etc) which cannot be good for health, generally speaking. In dad's opinion, large format stores would drive out small shopkeepers from business, and with less competition, prices would begin to rise. While I agree with some of these points, I think they miss the wood for the trees.
I do not think that it is imperative for India to have Wal Mart stores. However, I think it is imperative that we get the intellectual property that these chains have and apply them to Indian supply chains. As for collateral damage, such as loss in livelihood of middlemen or mom and pop kirana stores, creative destruction is unavoidable. As an example, politicians in the state of UP shut down Reliance Fresh stores there, while other states have welcomed them. I do not think UP is any better off than before, or than its alternative. In the welcoming states, on the other hand, at least a large chunk of people have got gainful employment, and consumers low prices.
I am all for opening up the economy even more fully to foreign money and expertise. Long live liberalization!
2 comments:
Hi,
This is gonna shock all of you , out of your pants.
It was decided in the Bilderberg club long ago, to gate crash into Indian economy, by a conspiracy.
If you want to know what this elite club is –
Punch into Google search
THE SHREWD CLUB WITHIN THE NAÏVE BILDERBERG CLUB- VADAKAYIL.
And if you want to know how the Bilderberg bankers control the world using their stooges on the PM’s and Presidents chair—
Punch into Google search
THE MURKY TRUTHS OF INFLATION AND GLOBALISATION- VADAKAYIL
The banking cartel had been given a toe hold in India, by giving away FDI in multi-brand retail and FDI in insurance.
Insurance affects transport costs and trade costs -- it requires perception to understand all this.
We are confusing GDP with economic progress. We are destroying entrepreneurial activity and eating our own children. Fitch , S&P and Moody’s are bouncers for the banking cartel. The economics of Rothschild’s Indian alchemist Manmohan and his gunslinger Montek is VULGAR pseudo science.
The Indian intelligentsia must wake up!
DORKS and desh drohis shall lay off !
Capt ajit vadakayil
..
First of all, to reply to the cagey captain's shocking revelations, I do not think Indian traders are true entrepreneurs. We're reacting as if there is some local industry being killed while all they are doing is peddling the same Made-in-China goods at higher prices, lower service standards and paying no taxes. They are middlemen and not entrepreneurs. And no one talks about the exploited labour force in these lala ki dukaans.
Vishesh, a larger store is imperative for profits given high rentals in India but these will never replace the kiranas because these are two different trip missions entirely. I see the kiranas with their indisputable advantages of low rentals and local familiarity migrating, either as franchisees or independents, to the big retailers' supply-chain, helping them bridge these last-mile challenges. BigBazaar is not a prototype of a true retailer; it had been a scrapper and is as much a harbinger of the things to come as a pager was of the cellphones.
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