FDI in retail

The onslaught of neo-liberal policy on India continued and in its attempts to give a message to the corporate India that the government is not suffering from decision making paralysis due to allegations of corruption scams and consequent public protests at large scale in last few months, the cabinet gave clearance to FDI in retail to kick-off so called second generation reforms. It will clear the way for entry of global retail giants such as Walmart, Teso, and Carrefour to Indian markets. The decision is likely to have great consequences on supply chain of food as the sector at present is largely in unorganized sector despite attempts by Indian corporate giants like Reliance, Bharti, and Future group to make inroads into lucrative retail market by displacing present wholesalers, small traders and household’s kirana store. At present organized retail, account for about 5 percent of total retail. Even at this meagre share the country as witnessed protests of small sabji vendors in form of protest at reliance stores countrywide which made the news few years back.

Retail-Source of livelihoods to millions

Retail sector in India accounts for whopping 22 percent of G.D.P providing employment to Crores of people. According to NSSO’s Employment and Unemployment Survey for 2004-05, employment in the retail trade has been 35.06 million, divided between rural (16.08 million) and urban (18.98 million) sectors. This constituted about 7.3 per cent of the workforce in the country (459 million). Wholesale trade, on the other hand, contributed to an employment of 5.48 million, of which only 1.71 million was in the rural sector and 3.77 million in the urban sector.

Lucrative market to make inroads

 The Retail Business in India is currently at the point of inflection. Rapid change with investments to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion. Organised retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years. The tempting number in itself reflects the desire of global retail giants to tap the lucrative markets and thus the pressure on Indian government along with their local corporate allies to open the market. As per Technopak Analysis and Industry Estimates the organized retail has been able to create only about 18 lakhs job so far. The employment security of this large population is likely to be effected due to this onslaught of neo-liberal policies.

Impact on farmers

The food products alone account for about 40 percent share of organized retail which explains the concern of many on its impact on small and marginal farmers of India, who accounts for more than 90 percent of total farmers in the country. As has been seen in Punjab in case of potato farming where Pepsi has entered into contact with big farmers to promote contract farming, which is a dangerous trend, considering situation prevailing in Indian agriculture which is already in distress manifested by suicide of more than 2 lakh farmers even according to the government data. The linkage of FDI in retail which is to boost organized retail with promotion of Contract farming in country side is self evident. It is likely to intensify contradiction in agriculture with big and feudal landlord farmers benefiting at the cost of small and marginal farmers as the reduced cost due to large scale capital intensive farming is likely to push out marginal farmers out of farming. It has been wrongly argued that FDI in retail will control inflation by promoting efficiencies in supply chain. This is because it’s likely to increase speculative trade by surplus finance at MCX which is already responsible for inflationary pressure in food items.

Inept logic of efficiencies

 Moreover, the so called efficiencies which is generally given as rational for promoting organized retail by neo-liberals ideologue  can be better ensured by encouraging public procurement of remaining cereals ( for which it doesn’t exist presently) along with increase in existing procurement of   wheat and rice, fruits, vegetables, dals etc to protect the interests of marginal farmers. Even with roll back of public procurement due to faulty targeted PDS in vogue, it can be observed in that the commodities in which public procurement is there, the inflationary pressure has been relatively low. Food security of India is in problematic condition reflected in lowly 67^th position of India on global hunger index. It can be also seen through the data quoted in “Economic Survey 2009-10” in chapter titled “ Human Development, Poverty and public programs” through a Ministry of Rural Development report which accepts that calorie consumption of below 50 percent of population is consistently decreasing since 1987. This abysmal state of food security is likely to be further compromised due to this insensitive decision of Union cabinet to allow 51 percent of FDI in retail as its likely to jeopardize interests of small and marginal farmers indirectly who are backbone of India agricultural sector. The decision is likely to put the long pending demand of Universal PDS to back burner considering the direction of government policies it is reflecting.

By Saurabh Naruka