Is India ready to welcome FDI in Retail
The most speculated issue in the nation of the day is the proposed 51 percent foreign direct investment proposal into the retail segment, FDI in retail is supposed to give the necessary impetus for a robust economy. There are contradictory opinions by the experts on this issue. The Viswakarma of Indian economical reforms in 1991 was silent for quite some time on the issues. But pounced back with reforms in FDI on Friday. Some call it the gloomy Friday' while others call it the divine Friday. But first lets take a deep look at the happenings that have forced the union government take these remedial measures on a war footing, post medical visit by the UPA Chairperson to US.
Firstly Indian FDI seems to have global implications. Lets consider the issue, the esteemed President of the US, who might be feeling secured for a second term as our proposal, sure to help him retain his residence for another term. Yes with FDI, most global brands (majority of US brands) who have been eying for an inroad to this robust consumer markets, have got it their way, after alleged lobbying for some time from now. And that means they would be able to revive their economies with their presence in this nation of billions. That simply translates into positive measure for the US elections.
Infact the same H. E. Barrack Obama, earlier had imposed a 'stop outsourcing to India,' which did trouble our software segment much. And inspite of good-office-counseling nothing positive could be achieved from the US. The same premier criticized our Prime Minister Dr Manmohan Singh for his failure to push economic reforms in India. A leading magazine dubbed him as an 'underachiever' who appears "unwilling to stick his neck out" on reforms that will put the country back on growth path. All these pressures or could be something else that would have pushed the ruling government hard to press in the reforms button as an emergency. Because there reached a stage, when the global media was bent upon seeking a 'reboot' in the leadership. However none of the indicators seem to be pointing fingers at European Union, UK or USA where the situation of an economical crisis is no better either.
Anyways are we ready to take on these retail giants. For instance the three things that the optimists say is that there would be a sea change are in agriculture, employment and inturn economy. Looking at the figures that the proposal attracts into the nation, it looks warming. But the oppositions claim that this figure is no where near the figures that the CAG unraveled about the discrepancies in 2G, Coal gate or power sector. If we could correct them and get them to cough up the lost dividends then the country need not look the FDI way.
Secondly about the agriculture developments, a small example quoted by a renowned food and agricultural policy analyst Devinder Sharma is cited for reader enrichement. 'Even in the U.S., big retail has not helped farmers, it is federal support that makes agriculture profitable. In its last Farm Bill in 2008, the U.S. made a provision of $307 billion for agriculture for the next five years.' The suggestions that the middle man avoidance will give better deals to the farmers, Mr Sharma quoted, 'In the U.S., some studies have shown that the net income of farmers has come down from 70 per cent in the early 20th century to less than four per cent in 2005.'
The reasons ascertained holds good for every nation. And the reasons reported for this downward surge in income was by inviting FDI newer rules cropped in and they ate most of the pie, miserably leaving the farmer with nothing but crumbs. The major chunk went to the quality controller, standardiser, certification agency, processor, packaging consultants etc. This had a nett negative impact on the standards of the farmer's earnings.
Then let's now see how employment will be boosted with the new proposal. In the Indian scenario there are approximately 12 million retailers toiling it out along with their 40 million employees to churn out roughly USD 400 billions annually. On the other hand only Wal-Mart alone achieves a turn over of USD 420 billions annually, and the irony is that it only employs 2.1 million people to make this happen. So who is benefited over the issue.
However the PMO that announced the proposal on Friday also gave out the clause that left the ball in the state's armory whether to invite or oppose the FDI. This is a clever ploy especially after India inking the pacts of multi-lateral business ties with almost 70 countries under the G20 agreement. So with this development, once into the country they would have a free hand to operate across with libel alternatives. The growing discrepancies on the proposal seems to have divided the nation into two, one is te states that are ruled by the Congress, they agree to the proposals. And the second are the ones that disagree, ruled by other parties.
On the other hand the Indian multi-branded retail chains like the Future Group, Bharti Retail, Spencer's Retail, Videocon's Next Retail and Gitanjali Group are gearing up for the transformation. They propose to split their operations in to two point formula. One ideal for a joint venture with global giants in the Congress ruled states. While another format would be where the proposal is firmly dissented. On the whole the retail segment is ready to fire on all its salvos with the latest proposals. Now going through the whole issue what makes you comfortable needs to be posted in the comments box below and this aids in the development of the nation. (With inputs from internet-AW AarKay)
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