Indian Economy: News and Discussion (Apr 1 2011)

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RamaY
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby RamaY » 29 Nov 2011 02:42

^ +1.

This FDI in retail sector is sold on three promises.

1. The farmer will get fair price. It is hardly true as many case studies has shown w.r.t WallMart affect.
2. The consumer will get fair price. As TF explained, the consumer will pay the artificially balanced price. It would definitely be more than the current average price.
3. Employment. GoI estimate is 10 million jobs. As mentioned in my post above, in Kerala alone the retail association has 1 million members.

This is nothing but

1. Corporate farming - Don't know how this would pan out. On one extreme the farmers will become labor in their own land for a fixed salary (farm insurance?). The corporate farming will go towards usage of GM products and reducing the arable area foot print. On the other side India will say good bye to Organic Food system.

2. Consumers will get a mix of GM products. Bye bye to seasonal produce. Need to study the impact of that on human health. What happens when we consume a fruit/vegetable that is not in-season locally?

3. The gen-Y kirana merchants will become as employees of big retail shops with no ownership.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby paramu » 29 Nov 2011 02:49

^^^
Due to cheap GM food, you will see, as in massa, poor people who are fat and rich people who are slim.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Singha » 29 Nov 2011 10:28

I am not sure why its assumed that foreign retailers will make a beeline for food - a hard business to thrive in, given its linkages to land, farming, climate, cold storage and politics. there are organized indian retailers of food like reliance fresh, big bazaar, spencer et al.....

it seems to me they will make a beeline for other areas that have minimal logistical tail and political risk...like textiles, electronics, shoes, furniture, plastic goods, books (amazon.com is said to be in process of setting up in mumbai), hardware tools, outdoor gear...

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby chaanakya » 29 Nov 2011 11:14

Theo_Fidel wrote:

Price will be uniformly high through the year. Big retail will buy out the farm produce 3 years in advance leaving nothing for the unorganized. They are then free to charge as they like.

This trend is visible in some cases where Reliance Fresh is operating. Farmers are doing contract farming with inputs and monitoring from reliance .

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Sri » 29 Nov 2011 12:30

30% SME clause is a flawed. What if the SME guy does well and he graduates into a large scale guy. Then he risks losing his established market which depends on him staying SME. This will lead all kinds of corporate law jugglery.

Instead it should be mandated that 30% of goods should always be sourced from and withing the state of the store. This will help a lot of small guys as well as local farmers.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby harbans » 29 Nov 2011 13:20

All of the foreign based retailers will have huge problems inside India since India is a different market.


All Markets react in a similar way to a particular stimulus. I mean we heard these arguments 30 years ago, same with the opening of the telecom sector. Every reform has been opposed in this Nation. Indonesia, China have opened retail and nothing of the sort has happened. The question is how much of China's manufacturing Industry has benefited because of opening up of Retail. Every argument in the past from the almost the same set of people (left Commies, INC commies and BJP economic leftists..basically socialist leaning left wingers cutting across party lines really) has been proven wrong in the past. Why must i believe the fear mongering now. There's no objective evidence that points towards that. I don't for an iota consider that India reacts to Market situations in a different manner than other countries. Some one from an Economics background could shed more technical light on that, but from what i have seen..i never heard of that.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby svinayak » 29 Nov 2011 14:04

It is the economics of scale. India has many sub market and hence even though with huge population there will not be the effieiciency of the large market.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby RamaY » 29 Nov 2011 19:30

Singha wrote:I am not sure why its assumed that foreign retailers will make a beeline for food - a hard business to thrive in, given its linkages to land, farming, climate, cold storage and politics. there are organized indian retailers of food like reliance fresh, big bazaar, spencer et al.....

it seems to me they will make a beeline for other areas that have minimal logistical tail and political risk...like textiles, electronics, shoes, furniture, plastic goods, books (amazon.com is said to be in process of setting up in mumbai), hardware tools, outdoor gear...


Hopefully so GD.

I am worried about the GM lobby in US and its long term impact on Indian eco-system, health and food security.,

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Abhijeet » 29 Nov 2011 19:41

Theo_Fidel wrote:Price will be uniformly high through the year. Big retail will buy out the farm produce 3 years in advance leaving nothing for the unorganized. They are then free to charge as they like.


This assumes that "big retail" is a single entity that sets a single monopolistic price, or a small set of entities that collude. Both are illegal under existing laws and can be handled on their own terms if and when they occur.

More to the point, there is nothing that prevents Indian retailers from behaving in exactly the same way. Why single out foreign retailers for special mention? At that rate we should ban anything other than small kirana stores because big retail, Indian or foreign, can behave as you say.

The point of allowing foreign retailers is to:

1. Introduce more competition into the market between companies that have decades of global experience in these industries.

2. Reduce the spread between the price paid to farmers and the final retail price by increasing efficiencies in the supply chain.

Neither of these point to the kinds of outcomes you expect. It's perfectly possible that farmers will get paid more than they are now, yet consumers will pay less than they do now, simply because the supply chain is more efficient and a large percentage of the food doesn't rot away before it reaches the consumer.

I don't get the fear mongering that exactly the opposite scenario will occur -- prices will rise despite higher efficiencies and more competition! This is a claim that flies in the face of empirical evidence in every industry known to man. Is there a single country where this has actually happened?

In any case, thanks to the federal structure of India, we have a great experimental scenario coming up, if it is allowed to happen. The Congress states will get the foreign retail chains, the BJP and other states will not. At the end of a few years, what seems to be working better?

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby harbans » 29 Nov 2011 20:05

Farmers in India today receive a small share of the end consumer price.

As an example, for tomatoes, farmers in India earn only 30 per cent of consumer price, while in more developed markets this is in the 50-70 per cent range.

Organised retail has the potential to drive efficiencies in this chain by:

(a) Increasing price realisation for farmers by 10-30 per cent through sourcing directly or closer to the farm.


The above is from Rediff. Seems TOI, Rediff are carrying articles promoting why FDI in retail is good for us. TOI has gone to the extent saying they are for it. This is significant.

Can anyone confirm the above quote by Rediff that farmers get a bigger slice in organized retail as compared to unorganized. It should be obvious as middle men are eliminated, but still worth getting it in B&W.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby sanjeevpunj » 29 Nov 2011 20:18

For once Dr Singh is putting his foot down there must be some truth in his proposal, I hope there is. It is a move that would help move local stocks, which often end up rotting.Also, surplus material would not be allowed to go waste by the Walmart/Carrefour retailers, they would push it around the world.If they buy from Indian sources at better prices than now,this experiment would benefit the marginal farmers.I feel it is worth trying, the PM after all is an economist, and seems to be sure of something, so he is putting his foot down.
Uma Bharti on the other hand has a habit of hogging headlines with her outbursts,I do not see much threat emanating from her,except vocally.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby harbans » 29 Nov 2011 21:13

Sanjeev Ji, i think MMS realizes he will be considered a wimp of a PM. Even the legacy of reform will be taken away from him if he doesn't carry out some basic reforms that can change things on the ground. You are right. He will stand his ground here till it is clear the IAC is against it. I feel this is his prologue period of PM-ship. 2 things UPA 2 he'd like to leave behind as legacy..Nuclear Power and FDI and possibly some other reforms. I too like you feel that these may redeem him..if he manages to push them through.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Vipul » 29 Nov 2011 21:24

Let MMS put his foot down, he risks exposing the thin majority (already a minority?) he has in the parliament if a vote is called on the FDI proposal.A vote of no confidence would then be a good way to kick out this spineless (beiman)aman ki tamasha govt.
He was a good economist but as a politician he has become a lousy one as he is wasting Rs 100,000 crores annually in subsidies (the tab would go up in the future) and is unable to control inflation.
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby vishvak » 29 Nov 2011 21:25

Abhijeet wrote:Neither of these point to the kinds of outcomes you expect. It's perfectly possible that farmers will get paid more than they are now, yet consumers will pay less than they do now, simply because the supply chain is more efficient and a large percentage of the food doesn't rot away before it reaches the consumer.

I don't get the fear mongering that exactly the opposite scenario will occur -- prices will rise despite higher efficiencies and more competition! This is a claim that flies in the face of empirical evidence in every industry known to man. Is there a single country where this has actually happened?

If I am not mistaken, this may also lead to all the increase in efficiency without reduction in prices, thus better margins for foreigners. It may also happen that there would be competition not in reducing the prices but (preference 1)increase profits (preference 2)reducing wastage (preference 3) cartels for profits.

There are industries that work on standardizing margins etc.

As also, desi stores may not become unprofitable immediately, but later as inflation increases, the foreigners may not increase prices & hog resources in AC storage( with/without wastage etc.) till it becomes unaffordable for desi stores, thus eliminating competition without all this becoming noticeable.

My understanding is that it is always better to pay in environment with competition & preferably desi logistics, desi stock and desi skills - an entire desi system.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby csaurabh » 29 Nov 2011 21:47

Even if the FDI in retail is good for India, let us see the manner in which it is introduced.
On a subject like this, one would expect discussions, negotiations with other parties.. Instead they have just passed the proposal, while the parliament is not even in session!
Seriously what do they take us for. Are the top brass of congies completely unaware of the ground realities. They are committing political suicide, or else they are completely sure of winning via evm rigging.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby harbans » 29 Nov 2011 22:02

My understanding is that it is always better to pay in environment with competition & preferably desi logistics, desi stock and desi skills - an entire desi system.


Yes, that even had a brand name: 'The Hindu rate of Growth'. Point is the Lefties that oppose reform don't represent anything Desi in their Economic philosophy. Last 20 years of reform in India have rubbished the above. India has the ability to compete in the global supply chain. Only those that believe in India's infirmity, very like those 20 years ago who believed delicinsing Gold import regulations and License Raj were selling India..think that India will fail the FDI retail reform so needed.

The opposition to FDI reform is the same as vote bank politics being peddled, puerile assumptions and Leftist economics as propagated by the likes of Ashok Mitra 20 years ago..no substance and only fears being propagated. I really thought we'd conquered that defeatist mindset..

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Singha » 29 Nov 2011 22:12

MMS is not wasting 100,000 cr...Madam and her advisers are. if MMS goes, do you really think NREGA will be curtailed or cancelled. under the glorious rule of Yuvaraj it will be escalated by 10 times.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Vipul » 30 Nov 2011 01:59

He is in it willfully so equally (if not more) guilty.
FDI in retail is being pushed/persued by UPA not out of concern for or for the betterment of the citizens rather it is a desperate attempt to secure funds for perpetuating its rule at the tax payers expense and is risking the livelihood of millions of small shopkeepers.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby SwamyG » 30 Nov 2011 05:12


All this loss of jobs and mom-and-pop shops loosing out is a real nonsense. Can someone please tell me how this happens?

Have not the Big-Bazaar and Star Bazaar and others been already in operation for some years now? Have they managed to obliterate the local shop-owner? Don't they buy in bulk and bring down prices for goods and compete with local kirana sotres? But have they managed to put a serious enough dent in the ops of these stores?

As for Wal-Marts and others, why do people blindly apply the western model to these companies in India? And why do people beleive that the local shop-owner cannot or will not change his business model or increase service levels? And in all this - why do people forget the consumer? Whay should they be held hostage to the inefficiences in market and fvcked up distribution systems?

People need to give more credit to indian consumer and business men.


Decades ago, on Pongal and Deepavali days, Vasanth & Co, Vivek & Co ityadi put pressure cookers on sale. They had mopeds, Godrej bureaus, USHA ceiling fans, sewing fans on sale. Life was simple, the sale was on items that people needed. Moms bought such items to stock up because they would give these as part of 'dowry' when their daughters were married. Yet other moms and grannies bought these because they were essential items.

Foreign retailers are far more aggressive than local retail. Hence the argument does not work. Quite often, an predatory and invasive species when introduced in a region, it could obliterate the local species in matter of decades.

Credit to Indian consumer? Sure. But they will fall in line when the big Corporations start influencing the politicians and create environment for selling. The West now is known for unadulterated and unchecked consumerism. Thanksgiving in USA has become a giant Thursday-thru-Monday Mega Fair or Sale. People act as raving fanatics. Such culture is easy to spread with agressive marketing and corrupt business and politicians.

It took De Beers about 40 years to introduce the culture of having a diamond wedding ring in USA. It took them less time to create the same culture in Japan. And both countries never had a history of infatuation with diamond before. The only country that, in the ancient days had some kind of moh for diamonds was India.

India, like the rest of the World needs a mix of organized and unorganized retail that will check each other. Offering efficiency and stability.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby nachiket » 30 Nov 2011 05:39

SwamyG wrote:Credit to Indian consumer? Sure. But they will fall in line when the big Corporations start influencing the politicians and create environment for selling. The West now is known for unadulterated and unchecked consumerism. Thanksgiving in USA has become a giant Thursday-thru-Monday Mega Fair or Sale. People act as raving fanatics. Such culture is easy to spread with agressive marketing and corrupt business and politicians.


How exactly would that hurt the economy if it happens in India? Isn't robust domestic demand considered one of the strengths of India's economy? I am inquiring from a purely economics point of view. Consumerism may be deemed as "not part of Indian culture", but that is a different matter.

Edit: In fact, if I think about what I would miss the most when I eventually RtoI, the smooth and easy retail experience in massaland, both online and in store, is what comes to the top of my mind. Indian retail could certainly do with change. Domestic players like Big Bazaar etc, are already simplifying things for people back home. More the merrier I'd say.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby SwamyG » 30 Nov 2011 06:23

Robust domestic demand of goods that are needed, when people spend and buy wisely. The Purushartha Economic model should be borne in mind. It has stood the test of time across regions and people. All material wealth and happiness are best enjoyed under a sustainable model leading to eternal bliss. When countries and people spend beyond their means it becomes unsustainable. When consumerism for the sake of keeping the economy moving becomes the mantram, chaos is not very far.

People buy, during these mega events, for the sake of buying on the premise that goods are on sale. True, they are on sale. But do they need them? The average holiday shopper has spent about $400 on Black Friday. An additional $130 odd bucks on Cyber Monday. First the shopping was on Friday, then it was extended through Saturday, then Sunday. Clever online retailers came with the idea of Cyber Monday. Granted people wait for these sales and put off buying things earlier. However, the entire tamasha is based on retailers pushing items - like drug peddlers - than a robust demand for products.

The larger an entity gets, the tougher it is to control it. And the chances of it hurting others is larger. Sure, it can institute efficiency and productivity gains, but at what cost for the society? Negative externatlities. During a short vacation to Cost Rica, I talked to the local people - probably a very dangerously small sample set to draw any inferences let alone conclusions - but they talked about how the companies from USA has changed the way pineapples are grown and harvested. They were not exactly thrilled. Anish probably can talk more about Costa Rica than anyone here :-)

You might call me a hypocrite for enjoying the very same pleasures that I deride. Sadly, I am guilty as charged. But I would never deny humans the chance to improve their lifestyle purely based on their real needs or wants.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Vasu » 30 Nov 2011 10:31

Are you talking about the US with the black friday and cyber monday?

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Abhijeet » 30 Nov 2011 10:45

Such moralizing. So people should buy "wisely" the things that they "need". Who decides what is a wise purchase and what is needed -- the grand poobahs of BRF? How about letting the consumer decide what they want to buy and when?

The hypocrisy of posting this while living in the US and participating in the same consumerism you want to keep out of India is breathtaking.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Singha » 30 Nov 2011 11:21

I dont see any NRIs running away from the west to India due to GM foods, unchecked animal consumerism and so on...
which means they are able to control their impulses and choose wisely

they cannot sit in judgement on what enters the gates of gondor here (er india)

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby svinayak » 30 Nov 2011 11:22

Half the people in US have stopped shopping. With entire family ruined with credit loans one can see what can this do to many countries round the world. India is not aplace for this kind of ruthless exploitation.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Vasu » 30 Nov 2011 11:29

India is well on its way to find this out the hard way.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Singha » 30 Nov 2011 11:45

learning things the hard away is also part of growing up as a nation. we have not had the kind of existential crises that all the P5+japan have gone through in the last 100-150 yrs.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby svinayak » 30 Nov 2011 11:54

The credit system and bankrupsty is a cruel form of handling families. Poor countries are dependent on safety nets and social welfare.

US ended u p with a system with more 50M without medical care. This is due to crony capitalism
The system is built to suck the society. Loan and credit system in extreme form due to profit motive of the large corp can sap the country

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby nachiket » 30 Nov 2011 12:23

Acharya wrote:Half the people in US have stopped shopping.

:roll: And your source for this is?

With entire family ruined with credit loans one can see what can this do to many countries round the world. India is not aplace for this kind of ruthless exploitation.

Exploitation? Nobody forces anyone to buy stuff that he/she can't afford. And there are plenty of people in the US who manage to enjoy the benefits of organised and efficient retail without going into debt.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby nachiket » 30 Nov 2011 12:32

Singha wrote:I dont see any NRIs running away from the west to India due to GM foods, unchecked animal consumerism and so on...
which means they are able to control their impulses and choose wisely

they cannot sit in judgement on what enters the gates of gondor here (er india)

Darth Singha as usual hits the nail on the head. 8)

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Nihat » 30 Nov 2011 16:52

the whole point of the excersice in a democracy is to give the people options. let the people decide whom they want to buy from.

the rationale for blocking FDI is similar to the case for automobiles, we cannot prevent a hyundai or a VW from coming in just because they will ruin padmini and 800 production. so if farmeres dont want to sell to foreign firms, then they wont and if people still wish to buy from kiranas then they will but for god's sake, leave it to the consumers.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby sanjeevpunj » 30 Nov 2011 17:16

Right, the competition must be fair,the choices should be available,and the consumer should not be compelled by limiting his choice.I feel there is no harm as long as no consumer feels forced.Let the companies compete on a healthy ground, and let jobs be created.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby rohitvats » 30 Nov 2011 17:23

I really find this amazing. People beleive that because Walmart will come to India, everthing else will go kaput. But what happened when Big Bazaar opened shop? Or, other retailers? And the best part is this - rather than follow the big box format, most of the retailers have gone for hub and spoke model. There are various formats depending on the place or location where the store needs to be opened. More than Walmart, it is the small formats from bigger Indian chains that threaten the mom-and-pop shops. They are exactly where I go to shop. The indian retailers translate their purchasing power into lower cost and through these stores compete directly with local kirana stores. I haven't heard anyone talking about these in a -ve sense?

As for Walmart - why do people think that the western model of people driving long distances to shop for months rations will apply in India? How many people own transport? and given the petrol prices, what cost benefit ratio does this translate into? After all, does a common Indian family have same propensity to store items in fridges and use them over longer time? Or, do we buy fresh? The average fridge size will not be more that 300ltrs.

And the most important point - the cost of real estate - the land prices even in periphery of big cities are bloody expensive. This will push the Big Box guys further out. And the question of cost benefit will become even more acute. So, let us not simply react as if armageddon is about to come. I remember similar stories when cash-and-carry was allowed. On the contrary, smaller shops benefited by buying in bulk from these stores.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby sanjeevpunj » 30 Nov 2011 17:56

Yes,smaller shops buy in bulk from wholesale stores like the METRO in Bangalore, at an affordable price, and retail the stuff in their shops, keeping a decent margin.Definitely this is good for the small shops.They do not need to look for stuff too far away in dirty and crowded city market areas, instead a drive down to Metro wholesale outlet replenishes their stocks.
I also noticed that International retail chains do a lot to compete with each other, thus lowering prices down.So the idea as such is fringed with many benefits.What is irking Uma Bharti and her likes, I do not understand,why she just shouted Halla bol at the very mention of FDI retail.Some thinking is needed before one reacts in public.After her Mayawati took up the rant and then parties pitched in, without even going deep into the idea.I feel the man (Dr MMS) made a move that brings back his sharp economist acumen to the fore,and we got to respect it, and wait for the results.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Upendra » 30 Nov 2011 18:38

Supporters of FDI in multi-retail
Sonia Gandhi
Rahul Gandhi
Manmohan Singh
Chidambaram
Pranab Mukherjee
Sharad Pawar [NCP]

Political parties protecting livelihood of farmers and SMEs by opposing FDI in multi-retail
BJP
BSP
AIADMK
DMK
TMC
From within congress- A K Antony, Jairam Ramesh, Virbhadra Singh

Most parties are against FDI, even in congress.

sanjeevpunj wrote:I feel the man (Dr MMS) made a move that brings back his sharp economist acumen to the fore,and we got to respect it, and wait for the results.

Sharp economist who is cutting bellies of people with his ill-conceived economic plans leading to double-digit inflation.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Upendra » 30 Nov 2011 19:22

viewtopic.php?p=1201686#p1201686
Singha wrote:the Govt will likely issue a clarification by tomorrow on the 30% being local thing.

a typographical error probably.

Did they correct the error?

{Deleted further questions}
Last edited by Suraj on 30 Nov 2011 22:22, edited 1 time in total.
Reason: Next example of trolling will earn you a warning.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby Nihat » 30 Nov 2011 19:49

retailers enjoy 3 basic advantages vis a vis the big store owners , these being

1. home delivery system
2 .line of credit
3. good faith and personal connections

the walmarts et all cannot compete with this and if the small shop owners can buy in bulk from the large retail chains , bring down their own margins and yet offer these service advantages then its win win for everybody i.e farmers, kirana shops , big retailers and the consumers.

how does anyone loose their jobs eh??.
Last edited by Nihat on 30 Nov 2011 19:51, edited 1 time in total.

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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby gakakkad » 30 Nov 2011 19:50

I think we must argue about the FDI issue on a strictly economic basis rather than from a party politics view.

There are two set of arguments here -1)Pissing & dissing the khanate model 2) Pissing and dissing the Indian model..



Is the present American ideal ?

Surely not. But the system has had a fair bit of success . 22 % OF THE COUNTRY WORKS IN RETAIL , COMPARED TO 7 % in DESH. But the negatives are far to obvious . There is an oligopoly in the sector . The Manufacturing capacity has been decimated and many excellent companies shut shops. The salary that walmart employees receive is meagre.

I recently wanted an office chair in ny . Due to my business prolonged sitting is inevitable . There were 2 types of products available in the market . In the 100-200 USD segment These were imports from Panda.. The only word I describe these is crap. They would not lost 6 months .The truly comfortable chairs were from 300 onwards. (MORE EXPENSIVE THAN MANY RECLINERS) . I settled for an Herman Miller for obnoxious cost of 500 . I asked the guy about the reason for the product for being so costly. His reply was , that due to inflitration of cheap chinese furniture , the company is having tough time. Only the upper segment people bother buying these , besides corporate orders from big companies . (who else would cough 500 on an office char ) .




Does the current Indian model need change ?

The Indian system prevents competition , narrows scope of employment opportunity breeds poverty and limits product availability . Retail in India does not even have an Industry status.

Many products are hard to find in India .

For eg - The wet electric shaver .. A few years ago , I searched a lot of places in Ahemdabad. The model I wanted was only available at a few places. 50 % GREATER cost than its listed price. I wondered , why don't Indian companies make these ? I know the Answer now. The are unsure of the demand . Previously no Indian company made cell phones. But now we see several. I ll not be surprised if in a few years time , India becomes the largest manufacturer in the world. That happened because , everyone knows that India is the largest market and that there is money in the cellphone business. Because of the unorganized nature of the retail business the product exposure of Indian customers is much less than ideal .


The whole retail sector needs to be revamped .

Lessons from child-care - It is said that , if you overprotect your kids they become incompetent . You need to expose them to competition . One of the reason why protectionism thrived in India is that people feared decimation of Indian industries. Once the auto-industry FDI was permitted in India was tata decimated ? No. Its product quality is truly becoming world class. And it acquired Jaguar and Land rover. That would not have happened if FDI in auto would not have been permitted.

But it is also parental duty to prevent kids from getting bullied. So the FDI rules have to be framed in the manner that prevents undue advantage of foreign companies.

need to shed the bad blood

After 91 reforms many of the previous giants became defunct . eg The Modi group of industries. These companies had previously thrived due to their political connections. But were lousy companies otherwise. Ones every one had level playing field they got in trouble. Once in a while bad companies have to go bust.



An excellent presentation-

http://www.slideshare.net/mchintey/indi ... l-industry


RamaY
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Re: Indian Economy: News and Discussion (Apr 1 2011)

Postby RamaY » 30 Nov 2011 20:25

rohitvats wrote:I really find this amazing. People beleive that because Walmart will come to India, everthing else will go kaput. But what happened when Big Bazaar opened shop? Or, other retailers? And the best part is this - rather than follow the big box format, most of the retailers have gone for hub and spoke model. There are various formats depending on the place or location where the store needs to be opened. More than Walmart, it is the small formats from bigger Indian chains that threaten the mom-and-pop shops. They are exactly where I go to shop. The indian retailers translate their purchasing power into lower cost and through these stores compete directly with local kirana stores. I haven't heard anyone talking about these in a -ve sense?

As for Walmart - why do people think that the western model of people driving long distances to shop for months rations will apply in India? How many people own transport? and given the petrol prices, what cost benefit ratio does this translate into? After all, does a common Indian family have same propensity to store items in fridges and use them over longer time? Or, do we buy fresh? The average fridge size will not be more that 300ltrs.

And the most important point - the cost of real estate - the land prices even in periphery of big cities are bloody expensive. This will push the Big Box guys further out. And the question of cost benefit will become even more acute. So, let us not simply react as if armageddon is about to come. I remember similar stories when cash-and-carry was allowed. On the contrary, smaller shops benefited by buying in bulk from these stores.


You need to read the many available case studies on WalMart model to understand it. It hasn't become the largest retailer in the world for nothing.


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