Editorial

Retail Fiasco

Congress may heave a sigh of relief as the opposition seems to be losing the battle on corruption. They won the first round after the disintegration of the Anna Team. And now the ‘Auction Judgement’ legalising ‘any method valid if common good is the goal’. In reality the Supreme Court judgement guarantees the executive’s right to do whatever they would like to do in the name of public good. There is jubilation in the Congress camp because they think they may decide to auction or may not decide to auction natural resources, particularly after the apex court’s verdict. It’s their prerogative. Law Minister Salman Khurshid didn’t hide his pleasure as he would go on record saying, ‘it is conforting’. Maybe, it is a huge loss of face for the Bharatiya Janata Party (BJP) that banks in the main, on corruption issues, not Ram temple in Ayodhya, to face voters in the coming parliamentary poll.

2G-scam, Coal scam and all that are likely to have footnote status, like ‘Bofors’, in history so that future researchers could burn midnight oil to chronicle the misdeeds of the Nehru dynasty. As the Congress party knows the limitations of its junior partners in what they call United Progressive Alliance (UPA), it can really go ahead with the Bank-Fund scripted ‘reforms’ measures, dismantling whatever remains of social security for ordinary wage earners and opening the door to private players, both domestic and foreign, in every sector of the economy. In the alliance different parties—small parties—have different opinions on how best to ‘help’ the poor people out of their desperate plight. But they hardly differ with the Congress in principle on the basic course of minimising state role while giving the market carte blanche to dominate every aspect of social and economic space. In truth Congress has friends even in the Opposition and they are sure they would be able to withstand test of time, notwithstanding the side-talk of snap poll or no poll. Ironically, BJP may be the saviour of Congress regime if a no trust situation arises as both sides look reluctant to go to polls at this juncture.

The Centre has allowed 51 percent Foreign Direct Investment (FDI) in supermarkets and departmental stores, albeit each individual state could decide whether or not to allow the Walmart people to set up their counters in their regions. But meek opposition to FDI in retail from industrially backward states like West Bengal and Bihar, is unlikely to affect the Walmarts much because they are so big in terms of investment outlay and scale of operation. It’s the power of dollar that counts, not feeble voices of a few states. Then there are too many Indian collaborators who are too willing to hide the sign-boards of global giants if there is serious opposition from the public. New Delhi had already given green signal to Walmart, Tesco and Carrefour to build supermarkets and now they are permitted to exert exclusive control with majority equity stakes in big retail enterprises. Despite their anti-FDI stance, Trinamul Congress, an ally of Congress in UPA till the other day, didn’t really oppose foreign money in retail in parliamentary discussions dating back to 2006 onwards. The erstwhile CPM government in Bengal, was strongly in favour of Walmart and reportedly offered land to this American monopoly house in retial trade. Even now they are not that vocal about the FDI controversy and abolition of subsidies on LPG and hike in fuel prices. They cannot do much other than organising a protest march or two because they too are partners in crime.

Going by mere statistics Congress has reasons to congratulate themselves for taking ‘bold steps’ which are simply suicidal. The organised retial sector accounts for about just 2 percent of total retail sales in India as opposed to 85 percent in USA, 55 percent in Malayasia, 44 percent in Thailand, 38 percent in Brazil and 10 percent in China.

Given the Indian reality, a few domestic players in organised retial seem to be enjoying the moment as they are regarded as the stepping stones for the elephants like Walmart. Then nobody is serious about the long-term impact of Walmart bulldozers as Kirana shops—small shops—will slowly but steadily vanish, rendering about 50 crore people jobless. They are all low-skill-low-wage employees and they won’t be absorbed under any circumstances in foreign controlled retial chains. Also, the so-called safeguard as touted by the Congress that foreign retail outlets should be in cities, with a population of over 10 lacs, as the MNCs intend to target the affluent section of the society, is too clever by half. Small farmers would be routed through contact farming and they would be simply unable to meet MNC’s imposed arbitrary quality standards. As there is no provision for ‘‘mandatory sourcing’’ from Indian small industries, medium and big businesses will foot the bill. What is more the very definition of ‘small industries’ has been done away with to woo the Walmart clan. Walmart hopes to flood Indian retail markets in a year or two through direct marketing and mainly through franchising.
Carrying on business under franchise is already a dominating trend in today’s India. As a result even small cities and suburbs won’t be immune to the onslaught of MNCs. Already 10 states and 2 union territories have arranged red carpet reception to Walmarts—they are mainly Congress and Congress-coalition ruled states.

If Congress-led UPA is a divided house over retail business, the Opposition too is not talking in unison over how to greet or oppose Walmart. The Akali Dal, the Punjab partner of BJP-led National Democratic Alliance is very much in favour allowing FDI in retail. One can hardly expect rational thinking from a reactionary outfit like the Akali Dal that thrives on religious orthodoxy and feudal obscurantism.

Frontier
Vol. 45, No. 13, -Oct 7-13, 2012

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