FDI in Multi-brand retail in India

Revolutions are not made with rose water, this proverb suitably fit into the politics that is going on, on the issue of 51% FDI in multi-brand retail sector.  Almost majority of the opposition parties in India are against this bill. In spite of repeated assurances from UPA government that the decision will only benefit the country, the opposition is not even moved an inch from their present position, as if they got a magic potion before the UP state elections. Trinamool Congress the ally of UPA government whose main leader Mamata Banerjee known for her pro farmer ideology is also against the decision to open India’s retail sector to global giants such as Wal-mart stores. So obvious question is that - is 51% FDI in retail is good or bad for India?

The opening up of retail can be seen in two ways – one is small traders may bear the brunt on the other hand farmers who were for long time now not getting the  right price will be definitely get benefited. “Not only will FDI in retail eliminate four to five middlemen at different levels, it will also enable farmers to get quality inputs,” said Changal Reddy, the secretary-general of the Consortium of Indian Farmers Association (Cifa).

While a section of 40 million traders may get affected, 123 million consumers will gain from the move to allow FDI in multi-brand retail. If the latent mood reflected by farm lobbies gathers depth and sweep, the parties opposing FDI will have to choose between the small trader and the farmer. Almost all parties, including Mamata’s Trinamool Congress, arrayed against the retail reforms describe themselves as the best friends of farmers.

Why there is so much fuss about this issue? Where is the gap? Why farmers are complaining

·       Farmers get only one-third of the price consumers pay

·       Average price farmers receive for horticulture produce is barely 12 to 15% of the final price

·       Tomato farmers earn only 30%of the consumer price.

·       Potato farmers sell crop for Rs 2 to 3 a kg and consumer buys it for Rs 12-20.

So where is the leak, as Changal Reddy, the secretary-general of the Consortium of Indian Farmers Association (Cifa) said that intermediaries are responsible for the poor state of farmers. The decision of 51% FDI in multi-brand will benefit in following ways.

·        Intermediaries will be wiped out

·        Farmers will get right prices

·        Supply chain network will improve

·        The food wastages will go down.

·        50% FDI will be spend on backend process

·        Wal-Mart and other stores will bring high technology with them

·        Control over food inflation

·        Consumer will get essential products at cheaper price

·        With competition growing the quality of products will improve

·        Employment generation will get a boast.

·        Government will get revenue in terms of taxes.

      Disadvantages

·        Small traders will be affected

·        Marginal farmers may get nothing out of it.

·        Once mega stores like Wal-mart establishes they may dictate terms with farmers

As they say the only constant thing in this world is “change”. History shows that whenever a big change is about to take place there is always some kind of resistance that develops, be it opposing TV in 1980s, currency devaluation and liberalization of economy in 90s, nuclear deal in recent past. But history showed this changes made India more prosperous and strong.