Rationalisation and modernisation of the unorganised retail trade

The recent decision of the central government to allow 51 percent FDI in multi-brand retail trade and 100 percent FDI in single brand retail trade has aroused consternation of various sections of the society, viz. the retail traders, politicians, farmers and consumers. The reasons adduced by the government and the votaries of FDI are not only shallow but also whimsical. When the very usefulness of globalisation and neo-liberal reforms have become a question mark all over the world, the government’s move to destabilize the retail trade sector by allowing foreign multinational retail giants to compete  with the petty traders and hawkers in the name of  reforms is rather perplexing, besides being objectionable.

       Of course, the unorganised/informal retail trade sector in India is overcrowded with too many tiny/petty operators leading to the emergence of the problem of disguised unemployment/under-employment. There are far too numerous informal retail operators in the country than is required for the efficient functioning of the retail trade sector. That is, even if a portion of the retail traders are siphoned off from trading, the transfer of goods from manufacturers/ producers to consumers will not be affected. Thus, after agriculture, the incidence of underemployment/ disguised unemployment is probably highest in the Indian retail sector.  Yet it continues to act as a shock absorber for the unemployed   people as well as those who are displaced from other sectors of the economy. But, if government is able to ensure better opportunities for gainful employment with higher earnings, much of those involved in the unorganised retail trade will move away.

       Consequently, it is the bounden duty of the government to protect and promote the unorganised/informal retail trade sector until it is possible to generate adequate job opportunities so that all those who are disguisedly employed will move out. Until then, the informal retail traders have to be fostered and protected.  It is possible only through rationalisation and modernisation of the unorganised retail trade. But, so far no worthwhile schemes or programmes have been initiated by the government or the planning commission for the improvement and stabilisation of the retail trade sector.

Relaxation of Norms in FDI in Multi-brand Retail

FDI in multi-brand retail was being touted as the big bang reforms that will leap-frog India's growth. But the notification to allow 51 percent FDI in retail trade evoked strong condemnation and disapproval from all sections--political parties, traders’ bodies, farmers’ associations, experts and the public in general. In fact, all political parties barring the Congress Party, Nationalist Congress Party, Rashtriya Lok Dal and Rashtriya Janata Dal, vehemently opposed the move to allow the multinational retail giants to open shops in the country. Now, the Cabinet decision to liberalise the norms allowing foreign investment in multi-brand retail stores has caused grave anxiety and condemnation of cross-section of Indians. The general opinion among political leaders, experts and others is that the UPA government took an unusually strange and adamant stand on the vital issue of allowing FDI in multi-brand retail trade. It refused to heed to unprecedented public sentiment and opposition from almost all political parties, the entire trading community, farmers’ associations, experts, social activists and the public in general. Reports suggest that the government became susceptible to powerful lobbying. Wal-Mart and other multinational retail giants have been relentlessly lobbying to pressurise the Indian Government to allow FDI in multi-brand retail trade. Many believe that once again the government has succumbed to the pressure of the multinational retail giants and their home governments. The action of the government in modifying the regulations and norms for FDI in multi-brand retail is particularly flawed because of the fact that the opposition leaders have indicated that a change of government in 2014 or even earlier might see scrapping of the decision to allow FDI in retail trade. The general temper of political opinion in the country on FDI in retail trade was sounded by AIADMK leader V. Maitreyan in the Rajya Sabha on December 6, 2012 as follows: “The people will reply in the 2014 polls and I give a solemn assurance that the next government that comes to power will reverse this decision of the UPA.” Senior BJP leader Murli Manohar Joshi stated that FDI in retail would be scrapped, if NDA is voted to power in 2014 general elections. Convener of National Democratic Alliance (NDA) Sharad Yadav said that if NDA is voted to power in general election of 2014, it will reject the current notification of allowing FDI in retail trade.. On December 11,2012, CPM General Secretary Prakash Karat warned that left parties would not allow even a single Wal-Mart outlet to be set up in the country. The decision to ease the norms around the number of cities that qualify for FDI in multi-brand retail is in stark contrast to the recommendations of the Standing Committee Report on FDI.

3 US entities lobbied on tax plan

Now it is clear that lobbying is  widely practiced in America. But the government of India succumbing to the pressure of lobbyists on a sensitive issue of national importance such as FDI in retail trade is a matter of grave concern. The general opinion among political leaders, experts and others is that the UPA government took an unusually strange and adamant stand on allowing FDI in multi-brand retail trade. It refused to heed to unprecedented public sentiment and opposition from almost all political parties, baring the Congress Party, Nationalist Congress Party, Rashtriya Lok Dal and Rashtriya Janatha Dal, entire trading community, farmers’ bodies, experts and the public in general. Reports suggest that the UPA government became susceptible to powerful lobbying engaged by Walmart and other multinational retail giants to pressurise the Indian government to allow FDI in retail trade. It seems that through constant lobbying, they were able to persuade their home countries, especially the American government to exert pressure on the Indian government.  Further, it is also reported they had also influenced American based rating agencies to plant news warning possible downgrading of India to negative rating unless India embarked on second generation reforms, including FDI in retail trade.   Now it has also come to light (as per the lobbying disclosure reports filed by Walmart with the US Senate) that Walmart has spent about $25 million (around Rs. 125 crore) since 2008 for its various lobbying activities, especially for allowing FDI in mutli-brand retail trade India. Moreover, it is suspected that in addition to the amount disclosed as expenditure towards lobbying, Walmart has reportedly spent huge amount as kick off payments to Indians. The revelation about spending huge amount by Walmart for lobbying to persuade the government of India to allow FDI in   retail trade in India  has caused utter consternation among a cross section of the people of the country. And bowing to opposition pressure, the government on 12.12.2012 announced a time-bound inquiry by a retired judge into reports of lobbying by retail giant Walmart to gain entry into India.  But many believe that announcement that a retired judge would hold inquiry will be of no use. They feel that the inquiry should be conducted by a Special Investigating Team (SIT) under supervision of the Supreme Court or at least by a sitting judge of the Supreme Court. So, for the judicial inquiry, terms of reference should be broad based, otherwise it will be very easy to skip off and get clean chit to this giant company. Where is the guarantee that Walmart will not indulge in high voltage lobbying to get clean chit?

Th Times of India, December17, 2012.

Probe against Walmart

Readers' opinions (422)

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Dr.C.Murukadas (Chennai)
14 Dec, 2012 01:13 AM
Walmart has been relentlessly lobbying to pressurise the Indian Government . Reports show that it has spent huge amount (as per the lobbying disclosure reports filed by Walmart with the US Senate) since 2008 for allowing FDI in mutli-brand retail trade India. The issue raised by Ravishankar Prasad, BJP national spokesperson, in the Rajya Sabha during the zero hour on Monday, 10th December, 2012 has drawn the attention of various political parties and consternation among the people of the country. And BJP, CPM, CPI, SP, JD (U), Trinamool Congress, AGP and AIADMK used the issue to question the government over its decision to allow 51% FDI in retail. The opposition parties alleged that Walmart had indulged in corruption to enter Indian market. So they have pressed for a probe into this "illegality" and the wanted Prime Minister Manmohan Singh to make a statement on this issue. So, Walmart was pretty sure that it will be possible to pressurise the Indian government to allow FDI in multi-brand retail trade. The Public Interest Litigation filed in the Madras High Court by T. Vellaiyan, President, Federation of Tamil Nadu Traders' Association, has brought to light that Walmart has fraudulently entered into multi-brand retail trading even before the government notified FDI in mutli-brand retail trade. That is, in March and April 2012 year, Wal Mart Stores Inc, USA through its subsidiary, in collusion with two Indian firms, illegally invested Rs 455.80 crore in multi -brand retail in India by masquerading it as for “Services Sector.” Moreover, in his complaint submitted to the Prime Minister's Office the CPI Rajya Sabha member M.P. Achuthan alleged that Walmart had invested about R456-crore in a company called Cedar Support Services through compulsorily convertible debentures (CCDs) in March 2010. Moreover, it is feared that once they get a foothold in any part of the country, Walmart and other multinational retail giants will somehow be able to penetrate throughout the country and bring peril to the livelihood of the small traders. They have the wherewithal and knacks to fine tune the greedy politicians and bureaucrats. Once they are allowed to enter the country, they will not respect the Indian rules and regulations. Experiences show that the multinational corporations like Walmart generally rarely respect the rules and regulations of the host countries, particularly the developing countries. It is reported that Walmart has been making preparations in various cities of the county to stage a grand entry into retail trade once India gives permission. The announcement that a retired judge would hold the inquiry into reports on lobbying by international supermarket chain Walmart to open the way for foreign equity in retail trade in India is not the end. It will be of no use. The inquiry should be conducted by a Special Investigation Team under the supervision of Supreme Court or by a serving Supreme Court judge.
Dr.C.Murukadas, The Times of India, Dec.14, 2012.

Opposition demand probe against Wlmart lobbying

The issue regarding FDI in multi-brand retail trade has been blistering since the UPA announced this on 24th November, 2011. All political parties baring the Congress Party, the Nationalist Congress Party, the Rashtriya Lok Dal and the Rashtriya Janatha Dal have expressed their concern against the policy. The issue hot up during the current winter session of Parliament and almost for a week there was dead lock in both houses of Parliament the FDI issue. All the opposition parties insisted upon discussion with voting on the issue of allowing FDI in multi-brand retail trade in both the Houses of Parliament (Lok Sabha and Rajya Sabha). But the government was against any such discussion with voting because of its lack of confidence to muster enough support in the voting due to the fact that DMK, the main constituent of UPA, was vociferously opposing FDI in multi-brand retail trade. Mr. Karunanidhi had always been saying that his party was totally against FDI in multi-brand retail. In fact, the executive council of the DMK party passed a resolution stating that it will not support the government on FDI in retail trade. Moreover, both BSP and SP, which are providing support to UPA government from outside, were also vehemently opposing FDI in multi-brand retail-trade and had been saying that they will not support the government on the issue of FDI in retail trade. Despite best efforts to express their disagreement, the government stood firm to allow FDI in multi-brand retail trade. They forced UPA to discuss this issue in both house of parliament with voting rights. Entire nation has been witness as to how majority of politicians had their own doubts against FDI and its adverse effects. Together with the DMK President M.Karunanidhi, the BSP supremo Mrs. Mayawati and the SP supremo Mr. Mulayam Singh Yadav, the Congress party and the UPA government have enacted the most foul scenes of inducement, appeasement, cajoling and bullying. And the nation stood aghast when it was found that these political parties how suddenly changed their profile and to support Govt by voting or abstaining. This upside down changed can only happen if Congress has done something very strong in return. CPI (M) Politburo Member Sitaram Yechury slammed the UPA government for the "€œhanky-panky"deals to secure a majority against the motion on FDI in retail. He said: “Something extra has happened" threat, intimidation, a bribe or a promise of doing something." Now is disturbing to know (as per the lobbying disclosure reports filed by Walmart with the US Senate) that Walmart has spent about $25 million (around Rs. 125 crore) since 2008 for its various lobbying activities, especially for allowing FDI in mutli-brand retail trade India. What a shame?
The Times of India, Dec.11, 2012

Political storm in India over Walmart lobbying

It is disturbing to know (as per the lobbying disclosure reports filed by Walmart with the US Senate) that it has spent about $25 million (around Rs. 125 crore) since 2008 for its various lobbying activities, especially for allowing FDI in mutli-brand retail trade India. The issue raised by Ravishankar Prasad, BJP national spokesperson, in the Rajya Sabha during the zero hour on Monday, 10th December, 2012 has drawn the attention of various political parties and consternation among the people of the country. And BJP, CPM, CPI, SP, JD (U), Trinamool Congress, AGP and AIADMK used the issue to question the government over its decision to allow 51% FDI in retail. The opposition parties alleged that Walmart had indulged in corruption to enter Indian market. So they have pressed for a probe into this "illegality" and the wanted Prime Minister Manmohan Singh to make a statement on this issue. Moreover, it is feared that once they get a foothold in any part of the country, Walmart and other multinational retail giants will somehow be able to penetrate throughout the country and bring peril to the livelihood of the small traders. They have the wherewithal and knacks to fine tune the greedy politicians and bureaucrats. Once they are allowed to enter the country, they will not respect the Indian rules and regulations. Experiences show that the multinational corporations like Walmart generally rarely respect the rules and regulations of the host countries, particularly the developing countries. The Public Interest Litigation filed in the Madras High Court by T. Vellaiyan, President, Federation of Tamil Nadu Traders' Association, has brought to light that Walmart has fraudulently entered into multi-brand retail trading even before the government notified FDI in mutli-brand retail trade. That is, in March and April 2012 year, Waimart Stores Inc, USA through its subsidiary, in collusion with two Indian firms, illegally invested Rs 455.80 crore in multi -brand retail in India by masquerading it as for “Services Sector.” Moreover, in his complaint submitted to the Prime Minister's Office the CPI Rajya Sabha member M.P. Achuthan alleged that Walmart had invested about R456-crore in a company called Cedar Support Services through compulsorily convertible debentures (CCDs) in March 2010. It is reported that the Prime Minister's Office (PMO) has forward to the Department of Industrial Policy and Promotion (DIPP) for proper inquiry.The Times of India, Dem 10, 2012

In allowing FDI in retail trade, India is sold in the hands of US & Europeans

''In allowing FDI in retail trade, India is sold in the hands of US & Europeans, paving the way for economic colonialism. Empirical studies have shown that consumer prices in supermarkets in Latin America, Africa and Asia have remained higher than the open market by 20 to 30 per cent after the entry of Walmart and other multinational retail giants. The Indian retail market is estimated to be around $400 billion with more than 12 million retailers employing 40 million people. Ironically, Walmart’s turnover is also around $420 billion, but it employs only 2.1 million people all over the world. Recently New York Times exposed showed how Walmart had captured nearly 50 per cent of Mexico’s retail market in 10 years. As per the NYT disclosure “the Mexican subsidiary of Walmart, which opened 431 stores in 2011, had paid bribes & an internal inquiry into the matter has been suppressed at corporate headquarters in Arkansas.” As per a disclosure statement made in the U.S Walmart alone has spent US$ 260 million in two years to lobby for FDI in retail trade in India. Therefore, all right thinking Indians should fight for the scrapping of the decision to allow 51% FDI in retail trade. India is only country in the world which thinks that the foreigner is better for us than a local. For a country that has experienced colonial rule, this is bizarre. No doubt, FDI in retail trade will eventually lead to economic colonialism. Therefore, we have to fight to emancipate our country form falling into colonial control under the multinational corporations of America and the Western countries. Indeed our fight against FDI in retail is akin to second freedom struggle. All of us should be prepared to sacrifice to attain the goal of scrapping the notification on FDI. Now coming to realities, actually, Dr.Manmohan Singh and the so called votaries of FDI in mutli-brand retail trade know very well that “FDI in retail trade will not serve any purpose. It will do more harm than benefit the people.” In fact, in 2002, as leader of the opposition in Rajya Sabha, Dr.Singh fought tooth and nail against the introduction of FDI in retail. His colleague Mr. Priya Ranjan Munshi castigating the BJP, which was in power then and who tried to bring FDI in retail, said “it is anti-national to bring FDI in retail.” Now, Dr. Singh says that FDI in retail is pro- national and is to be welcomed, irrespective of merits or demerits. What is cause for the somersault by Dr.Singh and the Congress party? Is it not true that they have fallen prey to the powerful lobbying by Walmart and other multinational retail giants and the pressure exerted by their home governments? Does it not mean that erroneous factors and extraneous considerations have played foremost roles?
The Times of India, Dec.10,2012