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.