Indian Economy: News and Discussion (Apr 1 2011)

harbans · Post by **harbans** » 27 Nov 2011 12:28

Take a look at China opening to retail mid 90's. while 600 big chains were set up in the period, small outlets too increased by 1.9 million to 2.5 million. Employment in the retail and wholesale sectors increased from 28m to 50 plus million. Guess the anti-reform mindset is more entrenched leftism and political drag than any economic sense. The big crime here is letting lakhs of crores worth of foodstuff just rot, when improving the systems is a couple of reforms away.

Upendra · Post by **Upendra** » 27 Nov 2011 12:30

Free mobiles, bicycles for retaining Bihar migrant labourers

Ludhiana (Punjab): Facing acute labour shortage mainly due to less influx of migrant labourers, particularly from Bihar, employers are doling out freebies like mobile phones and bicycles to lure workers.

Witnessing almost 30 per cent labour shortage, nearly 5000 small and big manufacturers of bicycles and parts in Ludhiana, popularly known as the country's "bicycle capital", are facing threat of closure, traders said. Some of the leading names in the bicycle manufacturing here include Hero, Avon and Rolex.

The ill-effect of the labour crisis is also felt on the farm sector as well as on textile manufacturing in the district.

MGNREGA was another factor pointed out for this.

"The labourers are also given mobile recharge coupons of Rs 50 to Rs 200 denominations to talk to their families," D S Chawla, former president of United Cycle and Parts Manufacturing Association, told PTI.

A bicycle costing around Rs 2500 is given either free or for a paltry sum to these labourers so that they can paddle to their work place, P D Sharma, president of Chamber of Commerce and Industries (Punjab), said.

Cost of these freebies are passed onto consumers increasing the prices of food and clothes.

Artificial shortage of labor is created in agricultural and SME sector by ill-conceived policies like MGNREGA and then MNC's are welcomed into the retail sector further decreasing the space for SME.

Commies in UPA who designed the MGNREGA are bidding their time, when these SME close down, poor laborers left with no employment will be used to start the class war which commies have been planning for years.

chaanakya · Post by **chaanakya** » 27 Nov 2011 12:36

Well these SMEs can shift their base to Labour surplus states rather than depending on migrant labour or should employ local labour rather than giving freebees

vishvak · Post by **vishvak** » 27 Nov 2011 12:39

harbans wrote:Take a look at China opening to retail mid 90's. while 600 big chains were set up in the period, small outlets too increased by 1.9 million to 2.5 million. Employment in the retail and wholesale sectors increased from 28m to 50 plus million. Guess the anti-reform mindset is more entrenched leftism and political drag than any economic sense. The big crime here is letting lakhs of crores worth of foodstuff just rot, when improving the systems is a couple of reforms away.

If the problem of rotting foodstuff is coupled with opening up retail, there is a mismatch - according to me.

There was also this issue of commodities getting wasted but with inclusion of huge Air Conditioned storage houses, there is still hoarding and prices of commodities have actually spiraled. The ones doing global work are more likely to buy these expensive ones.

What happens if few could buy these foodstuffs in the face of increasing inflation? What is the guarantee that foodstuffs won't rot during global retail?

The red tape and absence of vision about reducing loss, with or without global retail, is costing the country dearly.

Upendra · Post by **Upendra** » 27 Nov 2011 12:42

Deleted conspiracy theory about Freemasons etc.

Upendra · Post by **Upendra** » 27 Nov 2011 12:45

chaanakya wrote:Well these SMEs can shift their base to Labour surplus states rather than depending on migrant labour or should employ local labour rather than giving freebees

Most SMEs are family run businesses and its not possible to shift to other states. Lack of local labour led to employing migrant labour in the first place.

Singha · Post by **Singha** » 27 Nov 2011 12:55

the Govt will likely issue a clarification by tomorrow on the 30% being local thing.

a typographical error probably. else it makes no difference for imported goods whether a small outfit in latvia made it or a large one in taipei....GOI has nothing to gain by helping foreign SMEs...per my conspiracy meter I cannot find any angles on this.

Suraj · Post by **Suraj** » 27 Nov 2011 12:56

Upendra wrote:The big crime is helping masonic MNC's who have an agenda of reducing global human population to 500 million and imposing an NWO.

Enough with wild conspiracy theories on this thread, please.

Upendra · Post by **Upendra** » 27 Nov 2011 14:09

Suraj wrote:
Upendra wrote:The big crime is helping masonic MNC's who have an agenda of reducing global human population to 500 million and imposing an NWO.
Enough with wild conspiracy theories on this thread, please.

Conspiracy?

Selling India’s retail wholesale

S GurumurthyLast Updated : 26 Nov 2011 09:12:14 AM IST
Finally, FDI in retail has arrived. The collapse of the Rupee by one-fifth in just weeks, dwindling forex inflows and net FII outflows have forced a desperate government to sell India’s retail trade wholesale. Corporate and multinational lobbying to induct FDI in retail, branding it as “big ticket reform”, has been intense in the last few years. The lobbies have won. India has lost. The decision betrays a metropolitan bias; and exposes lack of understanding of India’s agricultural and rural economy. That it will endlessly damage the huge 1.2 million strong community-run retail business in India is undisputed. But the less known truth is that it will destroy food security in rural India. How? Read on.

The principal lobby argument for FDI in retail is that the deep pocket and expertise of Walmarts to establish supply chain will make rural areas and farmers prosperous. It does not need a seer to say how illiterate those who advocate this view are about rural India. The report of the “Working Group of the Planning Commission on Agricultural Marketing, Infrastructure, and Policy Required for Internal and External Trade” for the XI Five Year Plan [2007-12], read along with the 19th Report of the Standing Committee of Parliament on Food, Consumer Affairs, and Public Distribution [2006-07] submitted to Parliament draws the true picture of the rural/agricultural India. Compare the farms in India with those in the West. A total of 58.8 million of small and marginal farming families, that is over 32 crore rural people, live on farming in India. Their farm size is 5 acres or less. In contrast, in Canada, it is 1798 acres; in US, 1089 acres; in Australia, 17975 acres; in France, 274 acres; in UK, 432 acres. The US farm size is 250 times larger than the Indian; the Australian farms, 4000 times! Therefore, Farm Gate to Walmart supply chain that works in the US/West cannot be imagined here. Now look at how - and how much of - the Indian farm produce is brought to the market.

The Farm Gate to Walmart theory is founded on the elimination of not only middlemen but also small farmers by making farming contractual and corporate to reap economics of scale. It ignores global studies and Indian experience that affirm that economics of scale does not operate in agriculture. Actually smaller farms gives better production. The SMFs in India farm about 34% of the cultivated area, but produce 41% of food grains; their productivity is 33% higher. Replace small farms by large ones. Nation’s food production will instantly fall by 7%. Not just food. SMFs produce most of the 100.9 million tons of milk. So, unless half the rural population is done away with, small farming cannot be dispensed with. The Working Group concluded: “The small and marginal farmers are certainly going to stay for a long time in India - though they are going to face a number of challenges. Therefore what happens to small and marginal farmers has implications for the entire economy”. More critical is that what SMFs produce, they consume and share with the farm labour; they have no surplus to sell. See how Walmarts will destroy their food security.

A less known, stunning truth about rural India is that more than 60% of India’s food production does not enter commercial stream at all, but gets distributed, consumed within the villages. It is retained or stored by farmers for consumption, payment of wages in kind to farm labour; and for use as seed and feedstock for animals; for sale within the village. Even if a small part of the 60% un-marketed food production is drawn into the market through supply chain which Walmarts will establish, that will mean urban pricing in rural areas. Can SMFs and landless labour afford the market price and buy their food? Never. If that happens, will that what happened Alfanso mango in Konkan and Kerala fish not happen to rural food also? The Konkan people see, but don’t eat Alfanso but only export it for high prices and spend that money on urban goods. And the Kerala fishermen fish and export it at high rates, get cash and drink foreign whisky! The FDI in retail undoubtedly puts at risk, the food security of SMFs and agriculture labour who who constitute 2/3 of India’s population, as the supply chain of Walmarts will make Alfanso out of the basic food grains in rural areas.

How does the marketable surplus of 40 percent of food produced by Indian farmers cross the village borders and enter the market? Nine out of ten tons [35%] of the surplus [of 40%] that enters the commercial stream enter the market through traditional Haats, Shandies, Fairs whose number is estimated at 47000. Only the balance of 5% directly enters the 6359 traditional wholesale Mandis organised under government supervision. Here begins the modern market economy where the surplus 40% of national production gets traded. This is from where the government procures and stocks food for the nation!

How do the Haats/Shandies function? Some 3/4th of them are held once a week; 1/5th twice a week; 1/20th on daily basis; one Haat covers some 14 villages; all put together cover almost the entire 6.58 lakh Indian villages. Some 2/3rd are held at 16 km from the villages; 1/4th at between 6 and 15 km; a tenth at less than 5 km. More than a third of the buyers walk to the Haat; 1/3 use bicycle; the rest use bullock carts, even motorised vehicles. According to the Working Group, at the Haats, the farmers not just trade, but also exchange social and cultural information about neighbourhood areas, settle marriages and disputes, make crop choice and discuss resource allocation. Therefore, the Working Group recommended that instead of asking the farmers to come to government for knowing what they should do and should not, the government should open its offices at the place where millions meet at the Haats. Now, by its retail FDI policy, the UPA government expects Walmart to go where the Planning Commission Working group had asked the government to go! See how the agricultural India is far removed from even the government. National Sample Survey data shockingly reveals that 7 out of 10 Indian farmers had not even heard - yes not even heard - of the Minimum Support Price [MSP] announced by the government with lot of fanfare; 81% of the those who have heard of it do not know - yes do not know - how to use it! This is because the MSP system operates only in Wholesale Mandis, not at Haats. That is why the Working Group wants the government to go to Haats. The Standing Committee rightly asked the government ‘how will farmers who do not know what MSP is, make use of futures market’. The government, which had no answer, finally banned forward trading in foodgrain.

QED: Thanks to FDI in retail, twelve million community-run retail shops are in danger; and rural food security at risk. This is UPA government’s gift for 2012 and onwards.

Upendra · Post by **Upendra** » 27 Nov 2011 14:14

'Retail FDI rider to help China and not India'

Posted: Sunday, Nov 27, 2011 at 1200 hrs IST

New Delhi : A rider in the multi-brand FDI policy which mandates 30 per cent sourcing by retail chains like Walmart from the micro and small enterprises (MSEs) may be more helpful to the Chinese rather than Indians, industry fears.

Small industries have raised serious concerns over the fine prints of the controversial policy, which gives liberty to the foreign players to source 30 per cent of their requirements from MSEs anywhere in the world. The fear is more with regard to China with which India is already running a huge trade deficit of $20 billion (about Rs 1.05 lakh crore) as Chinese goods are pre-dominant in the Indian markets.

"China has done nuisance for us. And after this (the FDI policy) it will become more difficult for us," President of Federation of Indian Small and Medium Enterprises (FISME) V K Aggarwal said.

He said that the issue had come up in the meetings of Planning Commission with the industry, where it was stressed that India should seek FDI in multi-brand retail on its own terms and model like the Chinese have done to foreign investors.

"This (the policy) has come as a shock to us. It makes no sense at all. Indian government is not supposed to take care of the MSEs of entire world," Aggarwal said. In the Cabinet decision of November 24, the overseas players have to do 30 per cent of their sourcing from MSEs which however "can be done from anywhere in the world and is not India specific".

The only condition is that these MSEs must not have more than $1 million (Rs 5 crore) investment in plant and machinery - in line with the Indian MSME Act. However, the government has said that the language of the policy has been framed in such a way that it should not violate India's WTO obligations.

Experts, requesting anonymity, agreed saying if the MSEs sourcing was restricted to India, it would be violative of the Trade Related Investment Measures (TRIMs) agreement and Most Favoured Nation (MFN) obligations of the World Trade Organisation (WTO).

R P Singh, who recently retired as Secretary in the Department of Industrial Policy and Promotion (DIPP) said: "technically they (foreign retail chains) can source from China and sell here".

But measures like anti-dumping duties are available to check flooding of the imported goods, Singh said. Secretary in Micro, Small and Medium Enterprises (MSMEs) Radha Krishna Mathur said, "It would be premature to comment".

FDI in retail dangerous for farmers: Naidu

Hyderabad: Senior BJP leader M Venkaiah Naidu today said that allowing Foreign Direct Investment (FDI) in multi-brand retail would adversely affect the interests of crores of small and marginal farmers in the country.

"Such a move by the Centre would be the most dangerous and suicidal for small and marginal farmers which would also have impact on food security," Naidu told reporters here.

The party would oppose tooth and nail any move of the Government of allowing FDI in multi-brand retail which would affect thousands of traders in the sector, he said.

State BJP president G Kishan Reddy and official spokesperson NVSS Prabhakar were also present at the press conference.

FDI in retail: Govt's job gets tougher as Mayawati targets Rahul Gandhi

Mayawati vowed to never allow any foreign retailer to set up a shop in UP, while declaring that her party would oppose the decision in Parliament and outside.

LUCKNOW/NEW DELHI: Congress's political troubles over the government's decision to let in foreign retailers appeared to be worsening on Saturday, with UP chief minister Mayawati alleging that the important policy decision will destroy local businesses and was meant to benefit Congress general secretary Rahul Gandhi's foreign friends.

"As the move (to allow FDI in retail) is aimed at benefitting Rahul Gandhi's foreign cronies, any reluctance on UPA's part to roll back the proposal would only strengthen my resolve to take some tough decisions," Mayawati told media persons here.

She vowed to never allow any foreign retailer to set up a shop in UP, while declaring that her party would oppose the decision in Parliament and outside.

Her charge and plans for protest in Parliament raised the political cost of the Cabinet's decision on allowing foreign retailers such as Wal-Mart, pitchforked Rahul as the brain behind a controversial decision seen as hurtful to the interests of an influential segment in UP, and is likely to hinder government's plan to get important bills passed in the ongoing Winter session.

The stinging attack is seen as a retaliation against Rahul, spearhead of Congress's UP campaign who had stepped up the attack on Mayawati government during his five-day tour of UP, which concluded on Saturday. It is also aimed at wooing vaishyas, who form a sizeable and increasingly assertive constituency in the state.

Worryingly for the Centre, her declaration that BSP would protest in Parliament the decision to allow multi-brand retail to foreign chains may ensure that no business is transacted when the two Houses resume on Monday. BJP, Left along with Trinamool Congress who protested on Saturday the decision to allow FDI in retail, are likely to do so again on Monday, while Samajwadi Party, another keen suitor of vaishya votes in UP, find it difficult to let go of the opportunity to curry favour with the influential community.

The rumblings may tempt the Opposition to expose government's numerical frailty, especially because of BJP's keenness to burnish its credentials as the party of traders. The principal opposition that has long been taunted for being a bania party, sees the emerging scenario as an opportunity to encash the tag.

Traders increased the pressure on all political parties by giving a call an all-India bandh on December 1.

Viewed along with the plan of the Telangana Rashtra Samiti leader Chandrashekhar Rao to disrupt proceedings in Lok Sabha again on Monday, gathering protest against throwing open multi-brand retail to foreign biggies can lead to a prolonged impasse, upsetting government's failure to get crucial legislations approved by Parliament. Non-passage of bill has contributed to the perception of government being in a pause mode.

Talking to media persons in Lucknow, UP chief minister focused her fire on Rahul Gandhi who had targeted graft and lawlessness during his five-day tour of UP. She made repeated references to him as "Congress party ka yuvraj" , a term the Gandhi scion is known to be detest.

The UP chief minister also harped on Rahul's alleged foreign links, in a shrewd move to link the Congress general secretary to the controversial decision of the Cabinet. "He was more of a foreigner in many ways. "He was brought up and educated abroad and his style of living and thinking is also more that of a foreigner. He is in the habit of dashing off to foreign countries after spending a few weeks in India",, she said.

Continuing in the same vein, Mayawati said: "During his UP sojourn, Rahul planned fun trips for his foreign companions and promoted poverty tourism". He takes his guests to poor peoples huts for entertainment and makes a mockery of their suffering, she claimed.

Alleging Rahul's hand behind the move to allow 51% FDI in retail, Maya said, "It seems to have been geared to please Rahul and oblige his friends, even though it would finally prove perilous for the nation's economy. If allowed, this would surely take India on the path of slavery along the lines of East India Company."

She added: "If multinationals are allowed to enter the Indian markets, they would wipe out small entrepreneurs and traders, apart from rendering crores of workers jobless." The move, Maya said, would lead to an import influx from China and force Indian farmers to undersell their products.

"The Centre must have been aware of all these factors, yet it took the decision for it cannot afford to incur the wrath of the Prince. The public would not put up with all this," she said, adding: "My party will oppose the move in Parliament and outside."

chaanakya · Post by **chaanakya** » 27 Nov 2011 16:44

Upendra wrote:
chaanakya wrote:Well these SMEs can shift their base to Labour surplus states rather than depending on migrant labour or should employ local labour rather than giving freebees
Most SMEs are family run businesses and its not possible to shift to other states. Lack of local labour led to employing migrant labour in the first place.

They would have to do the needful else they would be in danger of closing down sooner or later.

harbans · Post by **harbans** » 27 Nov 2011 17:15

Reading Gurumurthy..coming to think of it..must've been a really bad idea to introduce and allow tractors in farming...so many peasants lost there jobs.

Upendra · Post by **Upendra** » 27 Nov 2011 17:37

chaanakya wrote:They would have to do the needful else they would be in danger of closing down sooner or later.

Indian SME's are victims of flawed economic policies cooked up by commies. Asking them to do the needful is like asking a accident victim to get himself patched and go home instead of helping him.

Upendra · Post by **Upendra** » 27 Nov 2011 17:42

harbans wrote:Reading Gurumurthy..coming to think of it..must've been a really bad idea to introduce and allow tractors in farming...so many peasants lost there jobs.

That's plain lying, he never said that neither implied such. I hope you read him again and try to understand him better.

chaanakya · Post by **chaanakya** » 27 Nov 2011 17:49

Upendra wrote:
chaanakya wrote:They would have to do the needful else they would be in danger of closing down sooner or later.
Indian SME's are victims of flawed economic policies cooked up by commies. Asking them to do the needful is like asking a accident victim to get himself patched and go home instead of helping him.

Who is victim here.SMEs or labourers? They need to increase wages to the extent labourers become dignified. Need to read the writings on the wall. Same story like I read in case of Spain.

Upendra · Post by **Upendra** » 27 Nov 2011 18:17

chaanakya wrote:Who is victim here.SMEs or labourers? They need to increase wages to the extent labourers become dignified. Need to read the writings on the wall. Same story like I read in case of Spain.

Primary victim-SME-who will to have chase after laborers instead of concentrating on his product development and sales
Secondary victim-laborers-When the SME's close down what will these unskilled laborers do? Either starve to death or be used as cannon fodder by the commies in their class war.
Final victim-consumer who will have to shell more money for the same damn thing

Spanish economy was killed by banksters. If you have different opinon on that i would like to hear that.

rohitvats · Post by **rohitvats** » 27 Nov 2011 18:21

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.

gakakkad · Post by **gakakkad** » 27 Nov 2011 18:33

CTs aside I tried to look into some of the literature on the Indian retail sector.. I came to the conclusion that the FDI in retail sector will not harm anyone . But till the basic problems of infrastructure , labour laws , simplification of tax structure etc are not solved , it ll not have the kind of impact that has been marketed around..

Here is a decent yet somewhat dated (2006) review on the Indian retail sector prepared by the CII, with emphasis on the challenges we face..It is especially recommended to those who believe in the CTs..

http://www.ibef.org/attachdisplay.aspx? ... rt_id=4165

I enlist the key points -

Retail in India is estimated to be worth 22% of the GDP.. (22% OF 2 TRILLION == 400 Billion) .. In 2005 it was worth 250 b..

98% of the Indian retail is in the Unorganized sector..

A. T. Kearney Inc. places India 6th on a global retail development index. The country has
the highest per capita outlets in the world - 5.5 outlets per 1000 population. Around 7% of
the population in India is engaged in retailing, as compared to 20% in the USA.

This ESSENTIALLY DEBUNKS THE MYTH that MALLS can cause unemployment .. Out of the 7 crore people employed in retailing , 80% are in the unorganized sector...

Further

KSA Technopak. Retail can create
as many new jobs as the BPO/ITeS sector in India. A strong retail front-end can also
provide the necessary fillip to agriculture & food processing, handicrafts, and small &
medium manufacturing enterprises, creating millions of new jobs indirectly. Through it’s
strong linkages with sectors like tourism and hospitality, retail has the potential of creating
jobs in these sectors also. Though the Planning Commission has identified retail as a
prospective employment generator, in order to strengthen the multiplier effect of the growth
in organised retailing upon the overall employment situation, a pro-active governmental
support mechanism needs to evolve for nurturing the sector. Issues like FDI in retail,
allocation of government-controlled land on more favorable terms, strong political and
bureaucratic leadership, etc., need to be addressed adequately.

Challenges of Retailing in India

Retailing as an industry in India has still a long way to go. To become a truly flourishing
industry, retailing needs to cross the following hurdles:
• Automatic approval is not allowed for foreign investment in retail.
• Regulations restricting real estate purchases, and cumbersome local laws.
• Taxation, which favours small retail businesses.
• Absence of developed supply chain and integrated IT management.
• Lack of trained work force.
• Low skill level for retailing management.
• Intrinsic complexity of retailing – rapid price changes, constant threat of product
obsolescence and low margins.
Code: Select all
The retailers in India have to learn both the art and science of retailing by closely following
how retailers in other parts of the world are organizing, managing, and coping up with new
challenges in an ever-changing marketplace. Indian retailers must use innovative retail
formats to enhance shopping experience, and try to understand the regional variations in
consumer attitudes to retailing. Retail marketing efforts have to improve in the country -
advertising, promotions, and campaigns to attract customers; building loyalty by identifying
regular shoppers and offering benefits to them; efficiently managing high-value customers;
and monitoring customer needs constantly, are some of the aspects which Indian retailers
need to focus upon on a more pro-active basis.
This busts a lot of myth about evil mncs bla bla ..

Regarding china market - The biggest dealers of Chinese products are the Unorganized sector and the grey market.. Eg Crawford market in Bombay ..So walmart is unlikely to create trouble..

When Indian malls were not able wipe out kirana ki dukaan how do you expect Walmart to be able to do so .. May be @ the subconscious levels the COLONIAL MENTALITY is still present in us.. We still think that the white man can rule over us..

Retail can potentially generate 20 crore jobs in India if it is made into an organized industry.. KIRANA WAALA model of RETAIL is UNSUSTAINABLE in the long run..

-----------------------------------------------------------------------------------------

gakakkad · Post by **gakakkad** » 27 Nov 2011 18:37

@ chanakya

SMEs are the victims..

Indian labourers are lazy and not interested in learning skills.. They ll go on a holiday without any notice .. And they are trade unionists.. The compensation that they receive today (Rs 200 - 300 /day is ) is above their level of skill ..

My family had sme's 2-3 decades ago.. Labour problems nearly bankrupt my uncles..

vera_k · Post by **vera_k** » 27 Nov 2011 22:55

Global firms may face hurdle in 28 of 53 cities opened for FDI

So NDA and some UPA ruled states may not allow foreign stores. This shouldn't be a hurdle at all if an UPA ruled state can be a role model and do for foreign stores what Gujarat has done for power or ports.

chaanakya · Post by **chaanakya** » 27 Nov 2011 23:43

gakakkad wrote:@ chanakya

SMEs are the victims..

Indian labourers are lazy and not interested in learning skills.. They ll go on a holiday without any notice .. And they are trade unionists.. The compensation that they receive today (Rs 200 - 300 /day is ) is above their level of skill ..

My family had sme's 2-3 decades ago.. Labour problems nearly bankrupt my uncles..

you expect labourers to be paid poorly and work far away from his home in undignified conditions and then blame them?
Well here question is that of shortage of labours due to better opportunities at places nearer to home. This trend would continue if Bihar and other states keep growing and providing good opportunities. NAREGA is of course one such scheme which give at least 100 days job guarantee but that is not enough to reduce migration.It is better development in erstwhile states and Industries have to adapt to this situation else die. It is liberal economy.

Big industries and cheap imports would anyway kill SMEs, they are surviving on subsidies and siphoning away public money and giving poor quality products.They don't even bother train laourers and happy keeping them untrained and low paid. They can't compete with chinese influx for various reasons.

chaanakya · Post by **chaanakya** » 27 Nov 2011 23:44

Upendra wrote:
chaanakya wrote:Who is victim here.SMEs or labourers? They need to increase wages to the extent labourers become dignified. Need to read the writings on the wall. Same story like I read in case of Spain.
Primary victim-SME-who will to have chase after laborers instead of concentrating on his product development and sales
Secondary victim-laborers-When the SME's close down what will these unskilled laborers do? Either starve to death or be used as cannon fodder by the commies in their class war.
Final victim-consumer who will have to shell more money for the same damn thing

Spanish economy was killed by banksters. If you have different opinon on that i would like to hear that.

Well they have options.

g.sarkar · Post by **g.sarkar** » 28 Nov 2011 02:02

http://www.bloomberg.com/news/2011-11-2 ... iling.html
"India Paves Way for Wal-Mart, Tesco to Enter Market; Retailer Shares Rise
India approved allowing overseas companies to own as much as 51 percent of retailers selling more than one brand, paving the way for global companies such as Wal- Mart Stores Inc. (WMT) and Tesco Plc to own stores.
Overseas companies must invest at least $100 million, half of which has to be spent on developing back-end infrastructure, Commerce Minister Anand Sharma said in a statement presented to parliament today. India’s cabinet yesterday eased retail ownership rules, including permitting 100 percent foreign holding in single brand stores.
India’s decision to allow overseas ownership in retail will create up to 10 million jobs and give farmers better prices, Sharma said. Wal-Mart, Carrefour SA (CA) and Tesco (TSCO) seek to step up their presence in the world’s second-most populous nation to tap a market estimated by Business Monitor International to double to $785 billion by 2015 from $396 billion this year.
“This is possibly the most exciting thing that has happened in retail in India,” said Hemant Kalbag, who heads the consumer and retail practice for Asia at A.T. Kearney in Mumbai. “This is probably the next big wave of change in organized retail in India.”
Overseas retailers will be required to purchase at least 30 percent of goods sold in the ventures from small industries, Sharma said. Stores will be permitted only in 53 cities with a population of 1 million or more, and the government will retain the first right to buy farm products, he said.
‘Important First Step’
The government’s move is “an important first step,” Wal- Mart Asia President Scott Price said in a statement. The retailer looks forward to “playing a key role” in India.
Asia’s third-biggest economy permitted foreign retailers to own wholesale stores in 1997. Policy makers have been debating ownership rules in retail for at least seven years.
Wal-Mart has set up 14 such stores through a joint venture with billionaire Sunil Bharti Mittal’s Bharti Enterprises to gain a foothold in India, while Metro AG operates six wholesale stores. Carrefour opened its first outlet in December.
...... "
Gautam

Muppalla · Post by **Muppalla** » 28 Nov 2011 07:47

Read all the tweets related to FDI. Too much of opposition inside congress party.

http://twitter.com/#!/RAJAGOPALAN1951

I don't understand why the f-c-u-k UPA has to organize matter this way. As far as FDI in retail is concerned, it is possible to get a consensus across the political specturm and pass it. Instead when parliament is in session, they declares that cabinet has passed the decision. It will not stand even in the cabinet now and they already screwed it so much it will not get into India.

I do not think the west wants this kind of liberalization from India so that china will grow. Daal mae kuch kaala hai and hence it is being orchestrated as a failure. I don't know what else is possible to think for such an easy thing being messed up.

disha · Post by **disha** » 28 Nov 2011 13:09

Muppalla wrote: .... I don't understand why the f-c-u-k UPA has to organize matter this way. ..
I do not think the west wants this kind of liberalization from India so that china will grow. Daal mae kuch kaala hai and hence it is being orchestrated as a failure. I don't know what else is possible to think for such an easy thing being messed up.

Perfect way to organize a failure., icing will be if government also falls. Then no furrin' government will push any other government in future regarding FDI - the third rail.

Pratyush · Post by **Pratyush** » 28 Nov 2011 13:57

See the thing with retail store is that it will store what it can sell in the local market.

It is hard to see, that, the variety of Indian tastes and preferences can be met by organised retail just like that, unless it orders from the Indian manufacturers. That said, the organised retailers must be forced to buy 100 % of what they sell in India from Indian manufacturers. It has to be made from Indian labourers and Indian raw materials. The Retail store can repatriate profits that it makes.

That is the only way the opening up of Indian retail can help the Indian economy. Other wise it is just a re hash of the EIC days with Indian wealth being exported.

Upendra · Post by **Upendra** » 28 Nov 2011 14:13

Muppalla wrote:Read all the tweets related to FDI. Too much of opposition inside congress party.

http://twitter.com/#!/RAJAGOPALAN1951

RAJAGOPALAN1951 R. RAJAGOPALAN

4 Union Ministers of State of Congress met today- close to Rahul Gandhi are opposed to FDI in multi retail,also greeted Dinesh Trivedi

Pranab da attitude and rudeness with Dinesh Trivedi in the Union Cabinet was unexpected. Ambika Soni and Narayanaswami apologised to Dinesh

Pranab da threatened Dinesh Trivedi in the Union Cabinet."You are a first time MP and first time Minister" Do you know process of Cabinet

Dinesh Trivedi angrily shouted FDI in multi retail is a suicidal act as he walked out of Thursday Union Cabinet meet. Trivedi lost cool.

Sharad Pawar, P Chidambaram, supported Pranab da-on FDI in multi retail, while 5 Congress Ministers opposed."What is the hurry" asked Antony

Heated discussions in Union Cabinet taken two and half hours on FDI in multi brand retall. Differences amongst Congress Ministers on FDI

Pranab da lost anger when many Ministers in Union Cabinet opposed FDI in multi retail.

Dinesh Trivedi Railways Minister walked out of Cabinet meeting last night protesting against FDI in Multi retail.

Parliament and Central Hall crowded.all MPs including Cong shout echo anger on multi retail FDI. Senior Ministers absent escape criticism

DMK Minister MK Alagiri to oppose FDI in multi retail at the 5 pm Union Cabient meet, a shock to UPA2 especially to Prime Minister

Good to see dinesh trivedi standing up to NWO slaves like pranab, chidu, s pawar. Even thou pranab backstabbed chidu with leak of 2G note, here they surprisingly display congruity on the issue of FDI in retail sector.

JAYALALITHA ;OPPOSES FDI IN RETAIL

PRESS STATEMENT OF SELVI J JAYALALITHAA,
HON’BLE CHIEF MINISTER OF TAMIL NADU -27.11.2011

The sudden decision of the Government of India to open up Foreign Direct Investment (FDI) up to 51 percent in multi brand retailing and 100 percent for single brand retailing has come as a rude shock to the thunder struck millions of traditional retail vendors in the country. While Parliament is in session, this move of the Government of India to announce such a major policy decision affecting millions of people outside the Parliament without even consulting the State Governments is unprecedented and indicates the overweening arrogance of the UPA Government. The FDI policy in the retail sector is a sensitive issue and it was strongly opposed by various trade bodies even when the Committee appointed to study this issue made field visits. But, by making this sudden announcement ignoring the sentiments of the people, the Central Government has stirred the proverbial Hornet’s Nest.

The purported intention of the Government of India seems to be to bring more foreign investment into the country to improve market efficiency and bring down double digit inflation prevailing in the country, mainly due to the series of policy blunders made by the Congress led UPA Government at the Centre. Does our Nation lack such resources or the technology to deal with such problems? The Central Government should realize that constraints on farm products, on the supply side, which is one of the contributory factors to food inflation cannot be addressed through the FDI route, but only by squarely addressing the infrastructural constraints through appropriate policy support.

The world over, whenever local Governments opened up the retail sector, local prices went up sky high instead of curbing the price level. There are many countries whose experience shows just the reverse, as the price mark up by such MNCs is much higher than what is being charged by the small vendors. Further, such invasion of MNCs leads to monoplolisation of the market, exploiting both farmers and producers on the one side and the consumers on the other side as, once the traditional system of retail is broken, it cannot be rebuilt, if the MNCs adopt a predatory pricing policy. In most such countries, the unorganised retail sector, which provided livelihood to millions of traditional retail vendors, has been completely destroyed, as the organized Multi National Companies swamped the retail markets. For instance, in the U.K., it is reported that 3 retail chains now control 65 percent of the entire retail market. Similarly, in a country like Thailand, over 30 percent of the local shops were forced to close and pull down their shutters within 10 years of the entry of Foreign retailers. In India reports suggest that 90% of the total retail business is in the unorganized sector wherein 40 million people depend on unorganised retail for their employment and livelihood. While the Government of India talks about creation of 10 million jobs in the next 3 years, this will lead to 40 million people being uprooted and thrown out from their business. Most of these people are not well educated and will remain unemployed for ever. When we talk about the creation of employment opportunities, these retail vendors in the country who depend on this business for their livelihood will be rendered destitute and will be driven to the streets. Therefore, I strongly feel that this decision of the Government of India is a wrong decision, taken under pressure from a few retail giants, who are starved for capital infusion for their future survival.

The announcement of the Government of India has come as a thunderbolt and shocked millions of small vendors who have been completely taken off guard. Their fear that this move will completely throttle small retailers and distributors is not unfounded. As this will affect the livelihood of millions of small departmental store owners and completely destroy the unorganized retail sector within the next couple of years, I strongly oppose this move of the Government of India to open up the retail trade to Foreign Direct Investment. Though the policy guidelines are yet to be released by the Government of India, any amount of safeguards will not be any use in protecting the interests of the domestic sector. Therefore, I demand that this ill advised move of the Government of India should be reversed as it will not serve to bring down inflation or improve market efficiency. Rather, the domestic manufacturing and services sectors will take a serious hit and the retail trade will be completely taken over by the MNC dominated big retail giants which is not good for our country. Therefore, I am constrained to state that my Government will not allow the multi brand global players as permitted under the new policy to set up their hyper markets in Tamil Nadu.

http://rajagopalan1951.blogspot.com/201 ... etail.html

abhischekcc · Post by **abhischekcc** » 28 Nov 2011 14:50

This government excels in shooting itself in the foot.

Just when the storms of Baba Ramdev and Anna hazare blew over, this government decides to paint a bulleye on all parts of its body by extending FDI in retail. It has given ammunition to all non-Congress parties, whether friends or foes

At this rate, I doubt that the government will last another 6 months. Good riddance!

sum · Post by **sum** » 28 Nov 2011 15:15

abhischekcc wrote:This government excels in shooting itself in the foot.

Just when the storms of Baba Ramdev and Anna hazare blew over, this government decides to paint a bulleye on all parts of its body by extending FDI in retail. It has given ammunition to all non-Congress parties, whether friends or foes

At this rate, I doubt that the government will last another 6 months. Good riddance!

M.J.Akbar feels that this might be MMS last decision before he is removed to make way for baba and so this unexpected painting of the bulls-eye:
Wholesale bungle:FDI IN RETAIL

If it had been only another item on the continuing agenda of economic reform, the decision to permit Foreign Direct Investment (FDI) in retail would have been taken at least two years ago.

Dr Manmohan Singh’s government has been in its favour from the moment it was sworn in seven and a half years ago, but was thwarted by the Left, without whose support it could not have maintained a majority in the Lok Sabha during its first term. That is understandable.

No sensible government risks its survival for the benefit of a multinational’s bottom line. But 2009’s general elections changed the arithmetic of the Lok Sabha dramatically, and with it the algebra of policy manoeuvres. However, the Left’s decimation did not alter a basic fact: that opposition to retail FDI cuts across partisan lines. The government has majority support in a compliant cabinet, but not in the less obedient Lok Sabha. The coalition that governs India is now split, although not broken.

What prompted the prime minister and his finance minister Pranab Mukherjee to expose such fissures by pushing through a decision that could have remained dormant? Neither of them has any ideological commitment to adventure in governance. Both would rather live to fight another day than duel unto death over a policy-shift that may have its merits, and certainly does not demand any trapeze swing immediately. They knew that support for FDI was fragile even among senior Congress leaders like defence minister A K Antony, who was at the top of the wobble list. As it so happened, Antony did wobble at the decisive cabinet meeting, but did not fall out of line.

Antony is not alone. A section of Congress believes that it is leftist by persuasion, and finds itself closer to the Marxist view on international retail chains. Even the broad pragmatic base of the party is wondering whether it is quite the right moment to alienate the influential local market, small-town vendor and supplier on the eve of an election as important as that of Uttar Pradesh. The change might impress those who are driving the Indian economy into the international matrix, but it makes no domestic political sense.

If the Congress loses ten additional Assembly seats in UP because the shopkeeper has persuaded the mandi that foreigners will arrive with the capacity to eliminate those who make a living through the supply-and-purchase chain, then the psychological impact on Congress’ fortunes could be many times more than a handful of seats would measure.

But there is another possibility. Manmohan Singh and Pranab Mukherjee may have realised that the clock has begun to tick in the wrong direction, and that their period in power is winding down. A vociferous lobby within Congress, perhaps with support from Sonia Gandhi, has been arguing that the only way that the party can face another election is under a new leader, and that leader can only be generation-next Rahul Gandhi. Since Rahul Gandhi would need some time to establish his credentials, the switch has to be by next summer. The assumption is that the older generation will perform their last service to the party by getting its candidate elected in the Presidential elections, after which the new era can be formally launched.

Timing in politics is never determined by a single factor. But there is always a decisive factor. Two have been offered; take your pick. But get ready for 2012; there is lots of excitement ahead.

Aditya_V · Post by **Aditya_V** » 28 Nov 2011 18:01

I just hope RG takes over and Priyanka is made Deputy PM, enough of this mask from MMS.

Supratik · Post by **Supratik** » 28 Nov 2011 18:28

Am OK with FDI in retail but the Walmart model is highly suspect and I have seen and read
reports in American media where it has decimated local manufacturing and small business.
All it does is sell goods from PRC of questionable quality at dirt cheap prices. They squeeze margins from suppliers and do not provide employee benefits.
So there should be enough regulation to prevent a repeatation in India.

Those who are claiming Commie conspiracy in the opposition need to get their brains checked.
PRC doesn't suffer much from opening up retail because it is the primary supplier. The Govt. should have first opened up large scale manufacturing to make India a supplier before opening
up retail. They have placed the cart before the horse probably in desperation to be seen to be
doing something when the macro economic picture is not very pleasant.

gakakkad · Post by **gakakkad** » 28 Nov 2011 19:38

>>. They have placed the cart before the horse probably in desperation to be seen to be
doing something when the macro economic picture is not very pleasant.

Precisely , that's what experts are suggesting.They are in desperate need of money.By opening up fdi they ll get some forex flowing in , to finance there otherwise criminally injudicious fiscal spending of tax-payers money..

@ Chanakya - Try opening an industry in India. You ll automatically know how tough it is. Unskilled labourers demand 200-300 /day . Thats 6k-9k /month . In our hospital we pay the nurses (with a Bsc. degree) around 8-10k INR for 10 hours work / 22 days a month. And 300 additional for night shift. By that standard 200-300 for a completely uneducated , unskilled worker is a good compensation indeed. In Khanate unskilled labourers only get USD 10K a year (BARELY ENOUGH FOR THEM TO SURVIVE).. (if they are lucky to find a job) .. So unskilled labourers in India are way over-paid..

>>NAREGA is of course one such scheme which give at least 100 days job guarantee but that is not enough to reduce migration.It is better development in erstwhile states and Industries have to adapt to this situation else die.

You know what happens in NREGA ? They go there , sit around doing nothing and collect the 100 INR note at the end of the day spending it all on drinking . what an opportunity .

>> It is liberal economy.

Is this poe's law ? Forgetting smiley's has been your habit of late. Unless you mean liberal in the American sense.. (in khanate liberal == commie )

chaanakya · Post by **chaanakya** » 28 Nov 2011 20:15

gakakkad wrote:>>. They have placed the cart before the horse probably in desperation to be seen to be
doing something when the macro economic picture is not very pleasant.

Precisely , that's what experts are suggesting.They are in desperate need of money.By opening up fdi they ll get some forex flowing in , to finance there otherwise criminally injudicious fiscal spending of tax-payers money..

@ Chanakya - Try opening an industry in India. You ll automatically know how tough it is. Unskilled labourers demand 200-300 /day . Thats 6k-9k /month . In our hospital we pay the nurses (with a Bsc. degree) around 8-10k INR for 10 hours work / 22 days a month. And 300 additional for night shift. By that standard 200-300 for a completely uneducated , unskilled worker is a good compensation indeed. In Khanate unskilled labourers only get USD 10K a year (BARELY ENOUGH FOR THEM TO SURVIVE).. (if they are lucky to find a job) .. So unskilled labourers in India are way over-paid..
(SOme one trained and skilled as nurse whom you pay low doesn't mean others should not get better wages. Its mostly demand and supply. The moot point was about lack of labour supply due to various factors and most significant of them seemed development in states from where these migrant labourers come.To me it seems positive development and I would like Industries to adapt to changed circumstances. Moreover, why not employ trained manpower or better still train them so that they get better paid. Poorly paid poor quality. If you pay for donkey you can't get horses.
Anyway there is no escape from this. eventually.)

>>NAREGA is of course one such scheme which give at least 100 days job guarantee but that is not enough to reduce migration.It is better development in erstwhile states and Industries have to adapt to this situation else die.

You know what happens in NREGA ? They go there , sit around doing nothing and collect the 100 INR note at the end of the day spending it all on drinking . what an opportunity .

Ah I know about NAREGA and what happens there. Sadly though , I have to agree with you here.

>> It is liberal economy.

Is this poe's law ? Forgetting smiley's has been your habit of late. Unless you mean liberal in the American sense.. (in khanate liberal == commie )

No , it is not poe's law here ( thanks to theo) and I don't use smiley if not required. And liberal , I mean , in Indian sense if you understand what it means.

putnanja · Post by **putnanja** » 28 Nov 2011 21:06

If allowing FDI in retail did not need parliament approval, why the heck did they clear the policy in cabinet during parliament session, that too when so many bills are waiting to be passed? Couldn't the decision have waited for a month more? Is the government really serious about getting its bills passed? Or is this a ruse to prevent parliament functioning by back door, so that bills like lokpal are stuck and they can put the blame on opposition?

Abhijeet · Post by **Abhijeet** » 28 Nov 2011 23:00

A report from a grocery store visit yesterday: a small bunch of coriander leaves cost Rs. 16. My wife told me that the same item apparently cost Rs. 5 just last week -- a 3X increase week on week. We spent a total of Rs. 360 on vegetables that will last a few days. A couple of weeks back, a single piece of cauliflower cost us Rs. 49.

These wild swings in the prices of essential commodities are quite common in India and are symptomatic of a deeply broken supply chain. Too much rain here, too little there, a few traffic jams are all it takes to make prices spike sharply.

Indian consumers should be clamoring for the biggest companies in the world to come in and apply all their global expertise and capital into making the system better. A $500 billion market will have the attention of the biggest and most innovative companies in the world. Instead, what we have are misplaced fears for the well-being of inefficient, under-capitalized, corrupt small retailers who continue to keep consumers in the 19th century forever.

I, for one, welcome our new Sweden and Bentonville based overlords.

svinayak · Post by **svinayak** » 29 Nov 2011 00:41

All of the foreign based retailers will have huge problems inside India since India is a different market. If you see the markets in the western countries there is uniformity in the consumer demand. Indian consumers are very personal in their choice and each regional preferences are unique. Hence retailers serve the consumers.

These price fluctuations are part of the plans to disturb the consumer habits and dislodge the small retailer. They have been studying the Indian market for a long time and price controls and hikes are to change the consumer habits

svinayak · Post by **svinayak** » 29 Nov 2011 00:43

Abhijeet wrote:

Indian consumers should be clamoring for the biggest companies in the world to come in and apply all their global expertise and capital into making the system better. A $500 billion market will have the attention of the biggest and most innovative companies in the world.

Indian govt should encourage capital from Indian companies to create large Indian companies which can first cater to Indian consumers and allow lot of Indian companies to become big inside India.

RamaY · Post by **RamaY** » 29 Nov 2011 00:52

In one Telugu news paper I read that Kerala's retail association has 1 million members. I wonder why they cannot raise $1000 per member and start their own Retail Chain and go for an IPO? $1B capital development should not be a big issue if they can come together.

It is up to the next generation of this SME families. Do they want to develop a employee owned corporation and survive or become mere employees of MNCs?

As long as the small players come together there is little hope for the unorganized retail sector. They need to bring "Corporitization" into their system and offer the benefits of that efficiency to customers and farmers.

Otherwise they will be swept away by big business houses.

Theo_Fidel · Post by **Theo_Fidel** » 29 Nov 2011 02:32

Abhijeet,

What you will really get is a piece of Cauliflower at Rs 49 for the entire year and labeled as price stability. What you see as price rationalization is the farmers being hammered for over-production and being forced to sell at cost or below cost. This is what causes prices to collapse during harvest season which in tropical India is pretty much most of the time baring monsoon.

I posted earlier that the organized food sector in USA is worth $800 Billion for 300 million people and the farmer gets about $150 Billion. You will see something similar in India.

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.

RamaY · Post by **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.