Here's the wonderful thing about the FDI-in-retail debate: never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork.
Foreign direct investment in retail may be on hold, but Hillary Clinton can stop worrying about Anand Sharma and Pranab Mukherjee.
“How does (Commerce Minister) Sharma view India's current Foreign Direct Investment guidelines? Which sectors does he plan to open further? Why is he reluctant to open multi-brand retail?” Those were among the questions U.S. Secretary of State Clinton posed in a cable to her embassy in New Delhi in September 2009, some months after Prime Minister Manmohan Singh began his second term. (See: Hillary checks out Pranab, and the competition, from The Hindu-Wikileaks India Cables series: March 18, 2011).
Note her pointed query on opening up ‘multi-brand retail.' She had other worries, too. “Why was (Pranab) Mukherjee chosen for the finance portfolio over Montek Singh Ahluwalia? How do Mukherjee and Ahluwalia get along?” And “does Sharma get along with Mukherjee and Prime Minister Singh?” They get along fine, Hillary, and they're all in it together, as a team.
Hillary has reason to be concerned about FDI in retail. There's the tens of thousands of dollars she earned from serving as a director on Walmart's board. And the other thousands of dollars contributed to her 2007-08 campaign by Walmart executives and lobbyists. An ABC News report on that in 2008 also observed that as a director, Hillary Clinton remained “a loyal company woman” (Clinton remained silent as Wal-Mart fought unions: ABC News, January 31, 2008).
And she surely knows the UPA's FDI retreat is tactical. Pranab Mukherjee put it with disarming candour: we don't want mid-term polls. Hillary too had flip-flopped during her election campaign, going by the ABC News report. (While on its Board of Directors, she had said: “I'm always proud of Walmart and what we do and the way we do it better than anybody else” — June 1990.)
Yet, Hillary's campaign website of 2007-08, points out the ABC News report, omitted “any reference to her role at Walmart in its detailed biography of her.” As the race heated up, she recanted: “Now I know that Walmart's policies do not reflect the best way of doing business and the values that I think are important in America.”
Perhaps Hillary's FDI concerns are loftier. She must be worried about the poor Indian farmer. The wonderful thing about the FDI-in-retail debate is the explosion of concern for agriculturists. Never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork ever since the FDI announcement. From Deepak Parekh to Ratan Tata, they've suffered sleepless nights, agonising over the small farmer.
They might want to take a look at the American farm population. At their family farms, especially smaller ones, wrecked by corporate monopolies at every level, from giant agri-businesses to mammoth retail chains. Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s.
With what credibility does our regime, on whose watch farm suicides crossed the quarter-of-a-million mark, speak of helping farmers? Who knows what windfalls the deals struck with retail giants have brought to individuals in this most corrupt government in our history? We need to embrace that old journalistic principle: Follow the money. (Hillary does, though in a very different way.) Meanwhile, look at our government's claims.
Who it affects
Doing away with the ‘middleman': The first to be devastated will be that poor ‘middlewoman' — the vendor who daily provides our towns and cities with fresh produce. She did not push up the prices and has her modest margin squeezed each time they rise. That woman carrying that huge basket to your doorstep, on her feet 14-16 hours a day to feed her family. She's the first ‘middleman' target.
The more exploitative middlemen in the chain will be co-opted by giant retail which needs collectors and contractors, though not so many. It will slash their numbers after a while. This is The Mob taking over from the little guys on the block. You're looking at massive displacement in the agricultural supply chain. Only, the new ‘middlemen' will be Cardin-clad and Gucci-shod, with better access to government than the farmers everyone's dying to save.
That poor woman vendor, whose life we need to improve, not destroy, brings you fresh produce. She has to, or she can't sell it. (Tip: big retail operators pasting the words ‘natural' or ‘fresh' against their names are selling you stuff that could have been refrigerated, even frozen, for days).
Ten million jobs: Try not to die laughing. This comes from a school of economics that has gifted the world jobless growth for three decades now. We worked hard for two of those, making a big expansion of jobs impossible within our policy framework.
From the early 1990s, fantastic claims have been made of small farmers gaining from neo-liberal globalisation. For instance: farm incomes would rise 25 per cent if Indian prices were aligned to global prices; purchasing power would shoot up.
Many steps were taken on such claims, including 100 per cent FDI in sectors like seed. All achieved the opposite. These moves helped double the indebtedness of the peasantry and further spurred the worst-ever recorded wave of suicides. Apart from which we've seen seven-and-a-half million people abandon agriculture in a decade, many driven out by policies to ‘benefit the farmer.' Now we should believe that FDI in retail will undo all the damage that these policies — from the very same authors — caused? And these guys predict 10 million jobs within a year?
The UPA wants to open up a sector that for all its awful flaws and hardships presently employs 44 million people and has total sales of close to $400 billion. (That's about 20 times the number Walmart employs on roughly the same turnover.) And gives some sustenance to many millions more if you think families. Small shops and ‘big box retail' can co-exist, so croons the corporate choir. Sure, after wiping out countless thousands of tiny shops, the survivors can ‘co-exist' with the big guys, who might even have minor errands for them to run. India's powerful will run the more important errands. That was clear from 2005 when then Walmart International Division chief John Menzer told his company's annual meeting: “In our six government meetings, we created a very positive image [of Wal-Mart]…” And: “We've energized the FDI lobby and preempted the anti-FDI lobby in India.” (Wal-Mart's Hot in India, CNNMONEY.COM, June 6, 2005)
Efficiency: The giant chains can never match the efficiency of farmers' markets selling food produced locally or nearby. Their sourcing of produce from all over the world, central warehousing systems, giant transport operations — all these are hugely energy intensive. Which means a lot of what you get is old and much-refrigerated or frozen. Know the other costs of what you pay for.
Benefitting farmers: Here's a paradox. Just when we march determinedly towards super markets, people in the homeland of Big Retail are buying more and more from “farmers' markets.” That is, the oldest form of direct marketing by small producers. More and more Americans seek decent produce not drowned in chemicals, pesticides and preservatives. Growing numbers of that nation's small and family farms are selling through farmers' markets each year. In India, every market was once a farmers' market. Over time, farmers have lost control of such markets to traders and moneylenders. Now comes the coup de grace.
The coming of Big Retail is not simply about shops in the towns of over one million. It brings a radical restructuring of the entire agri-supply chain. The kind of investments — above $100 million — will obviously not go towards labour-intensive operations. The new structures that will confront farmers are stronger than any they have ever known. As a paper on the “U.S. Farm Crisis” from the Kerr Center for Sustainable Agriculture, Oklahoma, puts it: “large corporations have in recent years moved to curtail farmer independence through production contracts and other forms of vertical integration. These moves have included establishment of huge corporate-owned Confined Animal Feeding Operations, where animals are raised without farmers.”
The new middlemen the government welcomes have no regard for village and community. Maximising their own profit is their sole concern. As the number of buyers shrinks to a handful of corporations, farmers will have fewer places to sell their produce. What kind of bargaining power will they have against these mega-middlemen, some of whose worth would place them, if treated as nations, amongst the top ten economies in the world? The “contracts” in the new dispensation will reflect that power equation. The National Commission for Farmers headed by Dr. M.S. Swaminathan had observed that rushing into contract farming without ensuring the needs, safety and bargaining power of the farmer would result in major displacement in the sector. But not to worry, Hillary, your team is still out there batting. Only retired hurt for the moment.
Keywords: FDI in retail, UPA government, Commerce Ministry, Anand Sharma
Comments:
Defintely there will be more damage for small farmers in the coming days irrespective of whether FDI is allowed or not. It is consequence of industrial development. The percentage people who are involved in agricultural sector is about 60% in India. In developed countries it is less than 10%. It is about 3% in USA. By going through statistical data about 60 crore people have to move from agricultural sector to other sectors in order to become a developed country. During this process small farmers will vanish. But at the same time we have to make sure our environment is protected, our water sources are utilised properly.
It is highly debatable topic, economists should work really hard to hard to find solution.
Very similar arguments were made against computerization. Now the benefit is anything but obvious. There is more efficiency, more employment and less corruption. Yes, replacing corruptible people with machine reduced corruption. Same reactionary force is now trying to undermine corporate retail. Yes it will displace middlemen. But farmers and consumers will benefit. Just because farmers and consumers don't have organized voice doesn't mean their interest should be ignored.
P Sainath is one of the most respected journalists in India. He has been championing the cause of poor farmers in India for many years now. But I must say that in this occasion (the above article) his arguments are more ideologically driven than real facts on the ground. He opposes FDI in retail with a passion which looks like derived from his anti American 'heart' rather than his 'brain'. We all know that Sainath will support any policy that will help our destitute farmers but I think he got it totally wrong here. Personal attack on Hillary Clinton- It is a well known fact that most successful world leaders (including in India) proved their mettle in corporate sector before becoming politicians. Being successful (or being in the board of a corporate) in corporate sector is not a bad thing. Hillary will naturally push the case for American companies, after all that's her job (Chidambaram does the same thing for Bharathi or Infosys in USA).
Worth reading, Every Indian must must read it. American will not help Indian, Indian should. and every one should recognize it.
A beautiful article. It is very important to understand the implications of going with FDI in retail. Follow the money ..
Excellent article. but, will the Govt. pay heed?
Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s.This means that the agricultural productivity has increased 25 fold in America. On the other hand, in India, 60% of the workforce is occupied by agriculture and produces only 20% of the GDP. It is a criminal wastage of resources. As long as this state of affairs remain in India, those 60% people will always remain poor, because they will share in only 20% of the wealth. The need is to move all those people out of low productivity agriculture and place them in high productivity manufacturing. If agriculture is 20% of GDP, then only 20% of the workforce or less should be working in it.
Simply put, the high number of workers in agriculture is not something to applaud. It is the reason why farmers commit suicide.
Walmart is not having its presence even in New York. With a lot of social network of traditional retailers, where is the need for FDI in retail.
Few days ago, the Hindu editorial had a piece that bluntly trashed the idea of FDI relaxation. It sounded very communist to me too and I did not like the perspective that was presented. This is exactly the difference from an ordinary writer with nothing other than fury and P Sainath. - *Facts*. He writes this article after extensive study and backs himself to convince an ordinary Indian citizen. This article is proof as to why writers like P. Sainath are needed for this country. Thank you Sir!(Words from one his greatest fans)
I guess this article has heavy negative connotation for the FDI in retail as oppose to the fact-based argument. I have lived in US and I am living in India. I am sure the end consumer and the farmers would have much better opportunity with the FDI in retail. Also, it is true that it might impact some faction of our society but isn't that true with all reforms. Go back 20 years and see the arguments against the Open economy and check the standard of living in India today vis-a-vis that time. One would certainly find answer. Hope the sense prevails.
I can't help but thinking "why this kolaveri, kolaveri, kolaveri di". I am sorry, but isn't it a fact that there are large number of unviable holdings and a large chunk of the agriculture area has to be more efficiently used? We understand that there's large underemployment in the rural areas, basically because of the nature of agricultural operations. Isn't there a need to mechanize many of these operations and create employment in other sectors? How many in the younger generation of farmers want to continue farming? How many of them would allow their children to stay in farming? Isn't there a need to consolidate?
Further large retail outlets are not only about retailing agriculture produce, they're about retailing other produce too, to meet the daily needs of the consumers.
In USA, based on size of town, there will be 1 or 2 Walmarts (Servicing a 10 mile radius). People there are willing to travel 10 miles to shop for ENTIRE week. This may not be 10 miles in India, but definitely 5 km in cities. How many in India will be willing to travel this distance for shopping? How many are willing to stock up food for entire Week? Every time you enter into a mega store, it will take considerable time to collect & bill item. I have (like many others in US), have avoided walmarts for small purchases for this reason. I don't want to spend 20 min to purchase a pepsi can. In US and UK, there are lot of retail giants. But there are still small groceries shop that co exist. There are fresh fruit and veggie markets that open up on sundays. In US, there is a acute labor shortage in technology jobs. The no. of farmers dropped from 25M in 1950 to 1 Million is due to this too. Ppl move to better paying jobs. Note: Computer era started after 1950. Nothing to panic in FDI
Suddenly I began to see a lot of articles in western media(Time, The Economist) in support of FDI in retail in India. they all had same argument - entry of big Corporate houses in retail will help marginal farmers.
I have only one question - How?
p.s. - another great article from the author
What about the consumers? don't they deserve better pricing?
As general secretary of a building RWA at Kaushambi, I had to get the accounts audited by chartered accountant following the so called double entry accounting norms to get certification by government.As a sufferer and after spending a large sum on meeting these statutory requirement, I have understood the faults in the assesment of the socalled votaries of FDI.
The article is an excellent note showing the issues in simple language.
One of the things that the author got quite right is the absurd nature
of American farming today. American farmers despite being so
productive are living on the edge and are virtual slaves of big
corporations like Monsanto and Cargil. In "The omnivore's dilemma"
Michael Pollan narrates this tragic history in detail.
Thiru Kural mentions that farming is the only real profession. Rest
are all dependent on farming. But over time people tend to forget this
man-to-earth bond. Only foolish societies will ignore or give less
priority to good food and hence farming and hence farmers. Farming has
been proven time and again to be not a good item to be ruled by supply
and demand rules of capitalism.
However India has too many farmers. As long as a big percentage of
people live on farming the standard of living of average Indian will
remain low. We have to find ways to move more people away from farming
to other sectors. However this has to happen with less disruption.
Sainath, you got it all wrong. If Walmart were so insensitive and
wobbly, unwieldy and cumbersome, how are they surviving? They
should have closed down long ago?
Nice article. I wish the whos who of the government read this. If the problems are so clearly stated, why isnt there a solution yet? Why isn't the government looking at setting up a State controlled Farmers' market? As mentioned here, we get fresh and un-chemicalled food items, and the farmers benefit from it too, thereby ensuring to some extent that we thrive on agriculture as our main source of revenue as used to be before.
I believe we r working for living..not living for working..
FDI which takes everything to malls (behind glass doors) doesn't provide fresh food!
I am a victim.I travel long distance to a local market to buy vegetables and fruits.I know many people who bring bags of rice and other necessities frm their home town!
I'm talking about middle class people
Nd what about the so called poor-people?
I don't think there will b any local shops surviving under FDI.
Should we ppl depend on malls for ur daily needs?
Am I wrong in using the word MALL?doesn't FDI mean more malls?
When once FDI enters, It crushes everything under its feet
FDI creating jobs.Owners becoming workers?
We can't help our farmers.y would FDI do?
Moreover FDI will have farming land in countries like Africa and they will be importing the products.
Don't even have hope dat it would be farmer friendly
Any ways it may lead 2 a real-estate boom ;-)
This wouldnt be a matter for ppl who r highly paid nd live on brands
Hillary love for WalMart in this brillant article is understandable but UPA-2 love for Wal Mart is pure greed and match fixing.Justification given in India on `no work no pay` during 10 day lokjam has double standards. FDI policy matter brought in by congress is a clear distraction in the Parliament work.Investing energy on FDI is a shocking diversion by both Congress and BJP. This diversion is backed by emotions now. If congress and BJP were really interested to invest >weeks on this issue why did they not educate and sensitise people before as done by Anna Team on Jan Lok Pal ? Wal mart may replace the present network of services in retail by their new network & new employees and cannot increase purchasing power of people and provide more jobs to repair sick economy. How can a chotu or a delivery boy from a retail shop can become tie wearing Wal Mart salesman.Rural consumers in America say they have to travel not less then 30 kms to
big Marts as the small retails have been wiped off.
We used respect Mr.Sainath for his forth right articles. We are pained to see now his indirect justification of exploitative system of mundy merchants and middlemen combine. We request him to visit vegetable/fruit mundies,observe how hapless farmers are exploited and then write an article again. It will be an eye opener for him. Let him suggest ways to eliminate this exploitative system which bleeds the farmers and squeezes the consumer. Consumer is forced to pay more than double of the farm gate price of perishables and the farmer gets less than half of the price the consumer pays. It is exploitation pure and simple going on for ages. There are occasions that farmers throw tomotos on the road as even transport cost is not met.
The local kirana and vendors will absolutely exist even if FDI will come. Supermarkets will be used only when a person has time to visit it and to buy for godsake not vegetables but other consumables. It is the fear in our people that has to be eliminated. Even for 123 nuclear agreement most of the guys were anti-US without knowing its benefits. It's pure tactics of the opposition to oppose for the purpose of opposing it. Open up public.
Why don't we roll back computers and start employing people to do the work they did? After all same argument/logic right?
I don't like FDI implemented in India because crores of retailers will be affected.
Eye opener article. Whom the government of India wants to benefit? From the beginning of five year planning, Congress created a drift between people of Bharat and people of India. Naxalite problem arises and now they want to suppress it. what will happen when large number of uneducated youth who are working as middleman losses their job, another type of social unrest will take place.
This statement by the author seems to be a distorted way of looking at what normally would be considered development. "Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s." Keep in mind that Americans are still one of the agricultural super powers even though most of their labor is in manufacturing and service sectors. For how long can India remain in a position where 65% of its population is dependent on agriculture?
FDI in retail is an inevitable step.Only the timing has to be decided.
And the governnment should be absolutely sure of its moves because it
largely an irreversible decision.
I personally feel the government should do more to make India's
unorganized retail sector organized so that it can compete with forign
retail once they come in. Othervise unorgainzed retail in slightly
biggger cities will completely be washed off by big retail giants.
Thank you Sainath for such a brilliant and refreshingly new perspective on FDI in
retail. This is the first studied piece that I have read on the subject. Not only have
you taken a contrarian view of the subject but you have backed it with facts. I
marvel at your ability to see through the cobweb of lies and deceit that corporates
and the govenrment have spun around the subject and come out with such crytsal
clear analysis.
Sad - expected better from Sainath.
This country's soul has already been destroyed by the neo-liberal ethos that pervades our country's governance philosophy. The poor people and those who fight for their cause in the country have become a nuisance for the governing class. The power elite in India perhaps want to get rid of poverty by getting rid of the poor. Many poor farmers are obliging them. Why should they care about what the likes of P.Sainath write in newspaper columns?
After reading this article, Mahatma Gandhi's words echo in my mind:
"There is enough in this world for the need of everybody but not for the
greed of everybody." Sainath's article reflects the fact that the
cupidity of our politicians is absolutely limitless. Thank you Sainath
for your concern for the dispossessed and thank you The Hindu for
publishing it.
this,refers to FDI in the retail sector,the UPA government is not paying attention towards the long term strategy, by propounding FDI in the retail sector.the economic measures sought in 1991 by manmohan singh, was not so a good policy,but this time he is committing a blunder to ruin the fruit-sellers,vegetable-vendors and also the small scale producing farmers.on the other hand,the promises of MULTINATIONAL BRANDS promising 'fresh' is a blatant lie;which is frozen and comes from refrigeration from other countries.contrary,to this is the fact that the agri-products are grown from HYV SEEDS and often other chemicals for higher and quicker growth of food crops even vegetables.india still has not developed a strict food security bill to ensure safety of food products.how can it handle such an inflow from abroad??
It pains me to read this article and the several ignorant comments below. Do people
realize that going from 60% of indians working in farming to 20% or even 10% is
called development? No developed country in the world has more than 20% farmers.
Why are we so intent on preserving the wretched farming jobs?
It is always about the average than the extreme.Money needs to be generated and it needs to be routed to all sections of the society.Under the current Indian circumstances it has been and is always a section of people who control the flow of agricultural products and result - they eat up the lion share of the profits which should have rightfully gone to the farmers and consumers.There is a high percentage of this sector in proportion to the number of farmers present. This number needs to be cut down and will be done only through the corporate retail giants. Accepted that the retail industry will be more bothered about profits but they will also bring down the prices to consumers and give a better price to the farmers.In addition they will also add to the taxable employment and more revenue to govt in terms of tax.It is very much clear that we will ultimately go for the FDI, the only thing is the quicker the better for the already distressed , over-taxed citizens of this country.
Opponents of FDI in retail may draw some comfort from the fact that the points P. Sainath makes about supermart food being many-days-frozen and so on are known by most householders in India. Freshness of the ingredients is almost a sacred tenet of Indian home-cooking. This, by the way, is very different from Western cooking which, while upholding the importance of freshness in theory, is in practice indifferent to it - atleast home cooking. I grew up hearing my mother tell me not to buy fruit and vegetables from a shop that has a fridge as it is only shopkeepers without fridges that are forced to keep strictly fresh produce. Here's where our great economists from the Left can really learn something from the women of India. If you keep us happy (how about lobbying for tax exemptions for women on maternity leave, to give just one example), we may help reigning in the retail giants.
This article came to me as a tweet from a Congress leader , Suparno Satpathy. Surprised to
know that till date Cong. party still has brave men who openly display their mind with out
being afraid of their political carriers being quashed.
Comming to Sainath's article it is thought provoking but the truth is some where in between
of Hillary, Anand, Pranab, Sonia, Rahul all on one side and Sainath on the other. In my
opinion the truth in this case is neither black or white its gray.
What has hillary clinton to do with our policy of allowing FDI in retail? We as Indians do not want to do anything in an organized manner. The moment it is organized, we see 'exploitation' in it.
What a piece by Sainath! Perhaps for progress, India should adopt the stance of Morarji Desai ministry who threw out all aliens in 1977 - IBM, Coca Cola etc..now why not Microsoft, overseas call centres, Samsungs Nokias etc. Let's not restrict to FDI in retail. Indian firms should refrain from investing abroad (FDI) as it will squeeze those countries.
Thanks Sainath, after the 2011 census article, this article gave me the new perspective of FDI in retail.
FDI in retail will serve to accelerate India's slide down into a demographic disaster. There is an argument that 'efficient', 'developed' world does not employ so many people in agriculture. Fine they do. What about us, you will pull people away from agriculture and then give them what? China has a gigantic SME, what do we have here? And, the Western world does not have Ayurveda, they are missing some science - refrigerated foods are not good for health, they are also energy intensive so not good for climate as well. Why dont we skip this FDI stuff and go for the next revolution which USA is on the threshold now? That is - ORGANIC FOOD!! Actually, we are already there, we dont need to go back to retail chains and live all the ills before we discover ORGANIC. We need to think this over and plan well. Catering for some lobbies is easy money, but suicidal in the long run.
Yes UPA has retired hurt.But this is different from cricket.It retired
due to being hit severely by their own bowlers like DMK.TMC etc.
They would come to bat again only when they drop these bowlers.
it may also been called same side Goals.This is the Fair play we
seee in the game of politics.
For who think prices will get cheaper with FDI: it is a mirage. Don't get fooled. Two eg:
1. The actual manufacturing cost of a soft drink is about Rs.2-3. However, it is sold 400% more than that. (Much of it goes into marketing, advt. - Film/Cricket stars etc.) We buy it thinking the price is cheap considering all the costs. But was that cost justified in the first place? A small trader would not have done that advt. - but since the big corporation has changed the game he is also forced to spend more and make the drink costlier. Ultimately, we are losers. Wat should've cost Rs.5 now costs Rs.12 and we think it is cheap!
2. Take toothbrush/shaving razors. What was simple and effective has been made more complex (zig zag, circular, bent toothbrushes and 3 blades) and costlier. Now the reason for making it complex is not that it is more effective but cos it gives more profits. Over time we will lose the choice of simple brush. Our choices are managed by Big Corps. Wake up!
This FDI issue has generated a lot of confusion. Some argue in favour while others against. But none of them are convincing enough to come to a conclusion. While P. Sainath has lambasted at the proposal of allowing foreign investment in retail sector in his characteristic aplomb, he leaves us with more questions in the end than answers. I've heard several leaders representing different farming communities say they're in favour of FDI in retail with slight changes in the details. They mainly disagreed on the quantum of share the foreign retail giants are being given, produce they are going to collect from them and the amount they are going to spend for back-end infrastructure but they're more or less in favour of it. They agreed that farmers don't have access to supply-chain nor are they getting decent price for their produce. If FDI, in its present form, is harmful then we may adopt a better version, like China did, protecting farmers' interests instead of writing it off altogether.
For the people who are comparing FDI to computer - the analogy is wrong. The constituents of both are totally different. Computer is an advancement of science and human beings. Progress cannot and should not be stopped. Else we would be stuck with stone age or iron age tools. FDI is about corporations. Big corporations. If you are talking about their systems and processes to bring in efficiency - well and good. (Look at what China did. The FDI was managed in such a manner that the local folks learnt those processes to become efficient themselves. Once it was a level playing field then the competition began. (See the numbers - foreign Corp. sales are much smaller than local traders.))
Wake up folks - understand the implications of Big Businesses. Nobody can control its force. Best that we have the businesses broken down. (Eg: Dresses are of standard sizes. Customization costs a lot. But that's what we have now. Why lower our quality of life?)
Mr. Sainath was writing convincingly about the plight of farmers which I watch it in person near my native village, but I was also comparing and buying fruits, vegetables, egg, milk and other provisions in Walmart stores (at developed countries) for several years. The products were of good quality and moderate price. I am made to pay exorbitant price for not so quality products in India. I watch the middlemen and commission agents at wholesale grain markets exploiting the farmers mercilessly. As a consumer I consider something jars in this article.
"We have 60% population working on agriculture". I am shocked to see some comments which tried to potray this fact as 60% of people are poor/couldn't get a job in another industry.20% GDP contribution doesnt imply 20% of population! (GDP is not end all important number our government tries to make it to be).
More pertinent fact of today's agriculture industry is - 60% of production is wasted due to lack of storage facilities. 60% is simply left to rot. So, if Big companies can provide better infrastucture to our farmers than what our Govt failed in 60 years, sure I am in favor of it. But the contracts drawn up by these companies against farmers should be monitored by an independent entity so that farmers are not squeezed.
People cry over the loss of livlihood of small time traders but these traders have been robbing farmers by giving them low prices for their products for years now.Some people's livelihood would be lost by inviting FDI but remember the current situation isn't paradise
I for one would have preferred to hear the views of the farmers and
not the bombastic report by Sainath. Kerala is a classic
example what the nation is going to be in the long run.The communist
ministry brought in the agrarian reform (a good decision in many ways)
but the benificiary was the middle man and not the S.Caste who were
the tillers of the field.Today agriculture is as good as dying out
wityh no labour to work the fields,estates etc and all work has to be
done by non keralites. I know that the same difficulty is faced by in
T.N.All the people in these states use machinery for cultivation(Of
Wall Mart owners Americans).Inspite of the great leftist rule for 30
odd years W.Bengal is one of the worst in the country.Kerala bans
Coco-Cola (LDF) but Pepsi is in full production in the opposition
leaders (ldf)costituency.We do not have adequate storage even for our
Wheat/rice in well of states like Punjab..Wall Mart shops/Mc Donalds
etc are already here
FDI in retail would create more rural jobs than any government based employment
guarantee scheme. That is more important for India.
I was waiting for P. Sainath's view on FDI in retail and finally he
has once again put his viewpoint with convincing facts.Lots of
commentators are critical of this piece of article but at the same
point of time we have to pay heed to the equally important precarious
situations that have been put by esteemed writer.We have to realized
that this issue is a critical one and can not be simply solved by
haste proposals and proceedings as Cabinet ministry has done.People
are exchanging view by giving example of 1991-reforms and other
developed and developing countries examples but both of these
circumstances can not be applied to India.If one want to see the
effect of reform of 1991 then see it first from the perspective of
"Agricultural and Farming Industries" and plight of farmers faced in
last 15 years.When our own Govt is not serious about the plight of
Farmers and their increasing suicide rates, how can Big corporations
driven by Capitalism will give them sustainable opportunities and
What modern day corporates , bankers and media , whose sole motive is profit , have together done to the world , we can see from whats happening in USA and Europe today . Bankrupt nations, rising inequality , large sections of society in debt , rampant psychological depression ! Do we want to tread the same path? is something Indian society and Indian media must debate about. We need a holistic approach to development .Media must promote SIMPLE LIVING . Bringing in MNCs like Walmart in retailing is pure hype for the Govt to showcase "India has arrived ". It will create more problems in India than solutions . Wherever MNCs have been sourcing agricultural products in the world - be it coffee, cocoa etc , the farmers have only been losers -the low procurement prices even resulting in child labour in some countries. Let our Ministers and beauraucrats do their hom work thoroughly , before taking such decisions.
And how can one expect from this courageously corrupt Government that
It will play the role of an Independent and strong observer while
taking care the interest of Farmers and Consumers in the longer run
and using the stick of law in case of expected violations by Big Corp-
orates , if FDI is permitted.Who will ensure that various trade,fair
procurement rules,trade barriers of 30% procurement from local
producers etc. are followed? May be the classical laws of economic can
justify the benefit of FDI,yet from a sociological perspective,we have
to be cautious when any such economic decision has a profound effect
on "Agriculture,Food and employment at wider scale".
at last somebody in the media is supporting the second largest community
in india
FDI in retail will benefit India in many ways: 1)introduce modern logistics such as efficient supply chain & cold storage that will cut down the estimated 40% wastage in farm produce helping to tame inflation & putting more money in farmers' pocket. This will raise GDP growth with additional purchasing power of the farmers & consumers, 2)reduce middlemen who pocket most of the profit today thereby letting farmers get better price & reduce price for the consumers, 3)create jobs in retail without requiring high education level such as in IT, 4)help make medium-small suppliers more efficient since foreign retailers work with their vendors to help them improve quality (look at China example), 5)with the improvement in competitiveness of Indian suppliers the foreign retailers may export more items from India, 6)better quality since organized foreign retailers have to observe quality control for fear of bad publicity, 7)tax revenue for the govt as organized retail will collect sales tax.
No doubt that agricultural trade and movement of produce within and between states currently is complex and inefficient.Instead of opening our retail sector,wouldnt it be better if government adopts measures to simplify and increase the efficiency of internal agricultural trade? The govt. could start a retail chain in public private partnership that augers well to generate jobs if atall thats the intention.By this, the government can establish a strong infrastructure backbone with state of the art refrigeration facilities which would require renovation of FCI godowns. Our Public Distribution System and the retail chain can together benefit from this initiative. This can cater well to the poor, the middle class and the urban elite.Our farmers,Our Market,Our people, Our money - Why leave all these to the corporate claws
while we have enormous potential to trigger an efficient mechanism???
In our country mostly 70% people are depend on the agriculture. farming
is their only one resource for live hood the FDI result totly finished
agriculture and related enterprises an increasing more and more poverty.
Good article. Also read an interesting tamil blog on similar lines at mudhalvanakkam dot blogspot dot com
A beautifully written, well argued, realistic, passionately dispassionate article on the blunders that our government is about to commit. I live abroad. I live in that "nation of shopkeepers" and yet we are all witness to what the corporate retail giants have done to small street corner shop.
Shopping in a giant store like Tesco, Metro etc is soul. The inter linkages that small shops engender within the community will be lost forever. Further more, small shops are educational and training ground for entrepreneurship of which we are rightly proud of. These I am afraid will be lost for ever.
Mr. Sainath is a journalist and cannot be expected to use proper science while reflecting his views. Let us take one issue, namely, shrinking of farming community. When the country grows, the number of people engaged in agriculture sector and agriculture's contribution to GDP should decline and the people evacuated from agriculture should be absorbed in non-farm sectors. Indeed, employment generation in urban areas (in construction industry, hotel industry, motor industry, household industry, etc) does attract good number of people from rural areas, creating a huge labour scarcity in agriculture sector. According to Sainath, 60 percent people should continue to exist in the agriculture, produce food for urban people, supply it through giant exploitative middlemen (please remember, middlewomen do not exploit anybody!) and commit suicide! Farmers should not come out when there is a crisis!
There are many flaws in Mr. Sainath's arguments but the space here is scarce.
My native is a remote village in Andhra Pradesh and I'm a regular visitor.On two or three ocassions(in the last year) I have seen farmer's plucking tomatoes and happen to ask them how/where do they sell their produce.I came to know that, these farmers form small groups and go to the nearest city-Chen 250Km away along with their produce & sell in the Big vegatable market-Kbedu.I asked them how much do they sell for?The reply I got was "They will get 20 rupees for a 50kg bagful of tomatoes, and the price may slightly increase if the produce is of good quality & they may not even sell if the condition of vegatables is slightly damaged".The farmers spend their own money trying to transport produce 250KM away in Govt Transport(Bus) at the same time hoping to preserve its quality from sun/rain,handling,loading/unloading.Break-even or decent return is garuanteed only if he can make it ahead of other competitors/suppliers.Do you know how much we buy 1Kg of tomatoes in the market ? Go figure..
Let us not kid ourselves about this - big corporations want a piece of the pie, for the money, & nothing more. That bringing in foreigners in retail trade, will benefit farmers, generate wealth and employment etc - may be far from the truth.
Going by what we have seen in the west, these are empty claims.
Farmers do not necessarily get better prices. As for generating employment, yes it would mean more jobs, but what about the hundreds of thousands of business that will be forced to shut down? Also large corporations exploit workers in 3rd world countries by producing low cost, low quality products As for their employees - they work on minimum wage, & nothing more.
In the final analysis, who benefits but these corporations, themselves?
Just as an example, the combined worth of the Walton six (the Wall-mart family) was $69.7 billion in 2007— which equated to the total wealth of the entire bottom 30 % of the population in the US!
Hillary also has Gandhi family in her pockets. How can you otherwise explain their studied silence in the FDI retail debate?
Well-written sarcastic prose as is Sainath's wont. I agree with many of his comments about the detrimental effects of FDI in the Indian context. One of the other contributors suggested that only 20% of employment should be in the farm sector. That might be in countries which have a far more advanced education system than ours. Under these circumstances the movement of people into other fields of employment needs to be done in a controlled fashion after the appropriate investment in hard and soft infrastructure. The one thing for Sainath and others to bear in mind is that FDI in retail may not be good for India but we ought not to fail to improve our efficiency in all aspects of the agricultural supply chain.
You can look at this in long term and in short term.
On short term basis, certain sectors of the country will go through turmoil.. just
like the after-effects of closing of Mumbai's huge mills. But these people will be
absorbed into the society in a generation or two.
Over the long term, employing all kinds of millions of poor middlemen (eg. the
'subjivaali') and farmers only breeds more people in those poor economic classes.
Take away these jobs, and we will see some drastic reduction in their populations
in 3-4 decades. This may solve some of the longstanding problems in our rural
countryside. And because people would still like the subjivaali to visit their
neighborhoods, the large retailers may very soon offer an 'order online and we will
deliver to your doorstep' service.
Did India need a wake-up call in the face of FDI and other neo-liberal
agendas? YES! Right now we may be seeing the jobs and opportunities that
our government promises, but our future is the (2008) recession in the
U.S.A. If the Indian consumer does not wake up to the need to oppose
such top-down measure by the government, do not be surprised when our
economy crashes!
I am not a great fan of America, I know it is the most inward looking ruthless meddler, but firmly believed that economic reforms are the only way forward for India’s growth.All along I was under the impression that FDI in retail would help the Indian farmers in getting the best possible price for their produce and release them from the clutches of the middlemen, till I read this article in The Hindu by the Magsaysay award winner P.Sainath. It was a real eye opener, from extreme rightist I have become a neutral guy on this issue. Must read for all guys whether you are for or against FDI in retail.
Brilliant. People should realize that this article steams from years of
peer-reviewed research and experience. It is not a mere position or an
ideology. There is no evidence that Globalization reforms have benefited
India. Rather there is a huge body of evidence that it has adversely
affected greater proportionality of people than those benefited.
I would say, the concept of "Uzhavar Chanthai" brought by then TN
government is better than FDI...revamp it and we actually don't need
these FDI's at all.
Food Inc. – a documentary film unveiling the practices in American
food industry – an industry that has often put profit ahead of
consumer health, the livelihoods of American farmers, the safety of
workers and our own environment.
Some of the facts that the documentary reveals are:
• In the 1970s, the top five beef packers controlled about 25%
of the market. Today, the top four control more than 80% of the
market.
• In the 1970s, there were thousands of slaughterhouses
producing the majority of beef sold. Today, we have only 13.
• In 1998, the USDA implemented microbial testing for salmonella
and E. coli 0157h7 so that if a plant repeatedly failed these tests,
the USDA could shut down the plant. After being taken to court by the
meat and poultry associations, the USDA no longer has that power.
• In 1972, the FDA conducted 50,000 food safety inspections. In
2006, the FDA conducted only 9,164.
• During the Bush administration, the head of the FDA was the
former executive VP of the Nation
At present, the whole trend in the world economy is towards
monopolization. But food is not the sector that humanity can safely
afford to leave in the hands of a few who are incurably suffering from
the malady of Commercialism. One can only fondly recall the days when
the chemical culture (advanced technology!) was not so developed and
all pervasive. People could buy organic, wholesome and fresh food
products in the market. With the advent of commercial spirit and
advanced chemical technology one can practically get nothing which is
fresh or free from an overdose of chemicals. The growing incidence of
diseases such as diabetes, cancer, all kinds of allergies in addition
to new and previously unknown diseases can be unmistakably traced to
the increasing use of the chemicals to preserve the appearance (never
the quality) of the food for longer and longer periods to make it
easier to transport and store and hence commercially profitable. Food
is a sector where real quality must be of utmo
Sainath's article has given vent to my long standing point of view that the government/corporate cannot shoo away the so called middle-man by blaming them for all the maladies of price rise. There are number of other bottlenecks as well, other than cahoot of some big middlemen with government officials, who anyway will survive blow of FDI. Also by bringing in FDI, government is virtually taking away source of livelihood of millions of middlemen without giving any alternative source of income & employment. Claims of creating millions of new jobs doesn't go down easily as most of the displaced people will be low on literacy level & thus will be forced to do low level job which hardly any respectable middleman will accept.
Another article with bombastic nonsense by Sainath. There are plenty of people who have already pointed out how farmers will benefit from the modernization of retail and away from the fragmented and inefficient middlemen that dot the market today.
What I object to is the entire style of writing that Sainath perpetuates. His response to jobs: "Try not to die laughing". Is this anyway to have a cogent discussion? It wasn't too far back the self appointed champions of the poor, told us that the poor could never afford mobiles. Look at things today! Wouldn't it better if Sainath told us why improvements in retail won't lead to more jobs, instead of demeaning sarcasm that teaches nothing?
There are plenty of decent people who support FDI. They are nobody's stooge and many care far more about farmers than Sainath does. Attacking people and their motives simply undermines discussion. Alas, this is the only style of discussion that Sainath appears to understand.
Apart from exhibiting a bias against corporations and America in general, Sainath would do
well to study the impact on China where Walmart is reportedly operating In over a hundred
locations. One can do all the wishful thinking of past glory but no one can stop the march of
technology in our living and the disruptive changes it brings with it. Smart societies learn to
adapt and thrive. Others are condemned to ignore the realities and get mesmerized by Wiki-
leaks and suffer the arm chair intelligentsia and their brethren, the Communist ideologues
forgetting that India not long ago had to look to America for wheat imports which ended after
the Green Revolution in farming championed by an American.
As usual, in his own way, Mr. Sainath has made and in depth analysis of the futility of allowing FDI in retail. I hope, the politicians and the votaries in favour of FDI in retail will read the article and act.The main contention of Coming to reality, the creation of 10 million jobs is unattainable even in the long-run, leave alone in just three years, as stated by Mr. Anand Sharma, the Union Commerce and Industry Minister, who failed to elucidate the ways and means of creating such a large number of jobs, say in millions, by the multinational retail giants. Various studies on the impact of global retail giants setting up retail stores confirm that job losses have occurred everywhere and as a result disrupted the livelihood of the people. For argument sake, if the decision to allow FDI in multi-band retail becomes a reality and four or five big global retail giants decide to open stores and each one of them set up 20 shops on the average in each of the 53 million plus cities, on the whole 5300 shops will be opened by them over a period of time. If each of the retail shop employ on the average about 50 persons directly, the 5300 shops put together will employ only 0.26 million persons; equal number of persons might be employed indirectly. Thus, on the whole, only around 0.52 million persons will be able to get jobs But millions of poor and middle class families who survive on tiny and small scale retail business will be rendered workless and constrained to starve. That is, hundreds of thousands of people who earn their livelihood from the millions of existing retail outlets may be put out of job.
Of all the flowery words, P. Sainath is really wrong first on the "processing of agricultural produce" vaguely presented in this article as "fresh, refreigerated, frozen". Look at the scientific aspect of "preservation and decay of agricultural produce". Do we -Indians- have "scale down" models for agri produce preservation? Never mind FDI or Walmart. So called "bargaining power" will come to both farmers and "poor woman vendor" once we give them this tool. Do not we have brains to develop this 18th century technology. Everybody is pumping "tears" about the Indian farmers (read P. Sainath and M.S. Swaminathan), but where is "locally relevant technology" to support them.
The second wrong foot is about "produce drowned in chemicals and pesticides". So, small Indian farmers never use "pesticides" ? ! And this won't reach us through "poor women vendors"? Mr. P. Sainath, please do not joke.
a Great eye-opener from Mr Sainath.The issue of FDI in retail was projected by powers that be as a panacea for all ills of farmers.In reality , as one reads the article, it is in the contrary.The argument by the ruling elite that Farmers will get better returns and the role of middlemen will reduce substantially is a mirage.If the Govt has the will it can readily eliminate this phenomenon thereby giving Farmers their due.Why should they wait for Walmart to do that?
The opposition against FDI in retail is being blown out of proportion.I think it has become our habit of opposing the things which we feel as foreign in origin,may it be an idea or invention.But ultimately we embrace them when it becomes too late.Here I think we need to learn lesson from China which is way ahead & smart in this regard.As for as this article is concerned here the writer seems to be more concerned about his dislike of America in general & Hillary in particular rather than his opinion on FDI.
For those who support this FDI . Here are is some stuff : When more and more Americans are looking for organic/natural products directly from the farm ,why is India looking for this FDI . Wonder why America has more cancer patients ? Sainath has aptly mentioned some of the reasons like frozen stuff , raising animals through hormones etc . This has directly led to raising healthcare cost . Just check out healthcare mess in USA .Plus much of this money goes to the top corporate brass.The western society has continually failed to learn from its modernization .Hence Indians need to think and adopt their own way.
Economic disparities in India is the root cause of all problems India is facing today, It is the reason for crimes, and suicides. Consumerism, Materialism, and such things, the more we imitate the west, the more problems we create ourselves. FDI in retail will push many more Indians below poverty level. Why do these companies worry about poor farmers of India? They go to any extent to get profit.
a brilliant and a very well researched article. Gets the culprits by the neck! SPOT ON i must say.
Kudos to The Hindu and the Author.
It is important that a reputed newspaper like The Hindu takes an objective view on controversial topics. However, it is unfortunate that The Hindu editorial board takes a single dimension view and presents articles that state the case from one perspective only. The true class of a newspaper is when its Op-Ed pages are opened to both sides of the arguement. In the case of FDI in retail, clearly, writers like Sainath has taken a one dimensional and paranoid view. Reference to Hillary Clinton is childish. If you are in the Indian foreign service, you are witness to thousands of such queries received by the foreign mission from Indian ministers on policy decisions of other countries, sympathetic politicians of other countries and politicians of other countries who are lobbied by opposing interests . There is nothing revealing about including such transcripts in this article other than sensationalising Sainath's view on the matter of FDI.
Beautifully sugar coated article to sell his idea. As on today, for every rupee the Farmer gets, the consumer pays rupees 4(four). the Street vendor may get less than a rupee and the balance is pocketed by money lending 'Banias'. The author has expressed sympathy for the Bania in the name of Street Vendor. Around 30% of the food produced is wasted due to poor storage/processing. Food Processing is a priority area in India for more than 10 years and nothing happened so far and 'nothing' will happen in next decade also. Only the farmers and consumers are affected. Anyone cares?
"The National Commission for Farmers headed by Dr. M.S. Swaminathan had observed that rushing into contract farming without ensuring the needs, safety and bargaining power of the farmer would result in major displacement in the sector."But not to worry, the suicide of the farmers will continue and so the farmers will be rescued and thereby the power brokers.The society is suffering and the power brokers are winning.
Sainath has put together snippets and figures from diverse sources to bolster his line of thinking.The interpretations are debatable as the same sentence can be used to arrive at the opposite conclusion as the comments in the newspaper show.Wonder if Sainath has the consumer anywhere in his scheme of things?To put it simply where do you shop now a days Mr Sainath ?At last count there were more of them than farmers and certainly more than middlemen.Sainath has chosen to side step questions as to whether the farmers for whom he sheds tears gets to benifit currently of the increase in food prices...or is it the middle man who he is concerned about ?? Also in a country with a population as dense as India , one does not need to be an economist to see that there will continue to be millions of shops to cater to daily needs.Also there are jobs to be created millions may be but jobs definitely. The last decade is a sure sign of which way things are headed .
Thanks for an excellent eye opener. Policy as stated was probably designed by likes of Wallmart. minimum investment of USD 100 million is a barrier for small companies. Considering Indian conditions, policy must have CAPS of Size of investment, No. of Stores, Turnover so that many people / companies enter into retail which will COMPETE Interse and provide better pricing to Farmers & consumers as well as need more people to work. GIANTS must not be allowed or else some of Shopkeepers and self employed will become corporate slaves and REST will go hungry and angry.
Well researched and well written as one would expect from Sainath. My only question - Walmart or similar large retail has helped consumers get lower prices. Why should Indian consumers be denied of that? Why should we continue to buy from the women on the street? What about the amount of food being wasted which will be saved with corporate scale warehousing and distribution? Any topic has two sides - Sainath has presented just one side.
After reading all the comments, it appears to me that "All or Nothing" approach is not good. Immediately allowing FDI will erase small shops, and blocking FDI in retail will not impel current systems to improve. The best way is to manage it properly - so that an environment is created that is conducive for both the big corporations and small shops to coexist. Possible only if done gradually and carefully. We can learn from China in this aspect. Or think through it.
I am not fully agree with Sainath. As this level of recognition he should give both the aspects of any policy, not the biased one. For every big positive change there is always some negativity involved for minute part of society. But it doesn't mean that we should stop our growth because of that small part. Considering the middleman most of them are APL and know how to manage their livelihood by slightly changing their track.Very soon they will also get involved in this new system. It is for sure that FDI in retail will give better price to Farmers in comparison to what they are getting today.Then only needed from Government to fix some minimum rate for each product like MSP. So guys try to think as an intelectual and come forward if our politicians are not able to come to the decision. We can also refer the views from most of the beauracrats.
After reading Sainath's column as well as the innumerable views, both for and against, i am of the firm opinion that FDi In multi brand retail will be in the overall interests of the nation - especially, the farmers and the consumers.
I have lived in London and have extensively used Tesco, Sainsbury, Asda, and Waitrose and I can honestly say that it is not only a pleasure shopping at these super markets for the incredible range of items that one can buy - not just food items but a whole range of non food items as well, and all at very affordable prices, thanks to the blistering competition between the competing super markets. I have also extensively used the street corner shops, almost on a daily basis, for various day to day items for which you can't be running to super markets. Incidentally, most of these mom and pop stores in London are owned and operated by Asians. Entry of foreign retailers will surely help in upgrading the standards of our Kiranas as we need both formats.
If two or three villages can band together to form a giant cooperative for selling goods and services it would be a far better solution than the FDI. FDI stands for Foreign Direct Investment. When European countries and the West are struggling to keep their economies afloat where will they find money to invest in India? Most likely they will use India's pension funds to invest in these projects through insurance companies and banks in India. Why cannot these lending institutions encourage India owned and/or locally owned cooperatives?
There are so less facts in this article. The only striking argument I could find against FDI seems to be the fate of agricultural farmers in US. It seems highly unlikely that farmes will be benefitted from FDI, but the fact is that it creates huge employment chances in the urban areas and also creates healthy competition which means better choices for customers.
I totally second Mr. Sainath's opinion. He has accurately summed it up in the final paragraph that maximising their own profit is the sole concern of the govt lobbysts for FDI. It has been, and continues to remain, a grim future for the farmers in India. The ministers have power, and their only intention is to exercise it to mint money. India continues to be a pseudo democracy, where the only privilege left with the citizens is to exercise their vote every 5 years. Whoever occupies the seat of power has only one concern. Siphon, cheat, steal, get rich. We are living in a dark age. Pessimistic, but true.
The Authors like Sainath is a blot on the esteemed newspaper like Hindu which generally has host of writers publishing careful and objective version of the opinion and not the one sided brazen version (I would say concocted). Would Mr. Enlightened (for not wanting to use even harsher language) go to the farmer and ask him if he is happy with the price he gets for his produce. Will the farmer be happy if he gets better price no matter who pays?
We should experiment allowing FDI in retail in state which wants it and restrict and follow policies that this intellectual proposes and seewhich which one will turn out for the better.
Wait, but that has already been tested with Punjab going more consumer and industrial friendly way and his favourite West bengal the other way. Now,After 30 years of reforms labourers from west bengal beg for jobs in Punjab and rest of India. People like Sainath are smitten by leftist's bug that no one can cure. Failure of Soviet style doesn't help them either.
Moreover, its not just agricultural products alone, that the FDI deals with.
I strongly feel, FDI should be allowed, but with certain regulations as the case with other peer nations like China so that , all its negativities can be modulated the other way, for the betterment of the ordinary people.
These kirana shops and the so called Indian supermarkets (run by Indian corporate) exploit the farmers and consumers and profiteer. Go and see any supermarket they sell at MRP only. At times they indulge in tie up sales or bunching sales, the benefits of which are just 'chimera’. So let us welcome FDI in retail and allow multinationals in retailing. Consumers and farmers will be definitely benefitted. When exploitation rears it head, the Government can always take action what with their Competition Commissions and Corporate Ministries! Mr.Sainath is too pessimistic and goes overboard in championing the cause of farmers, nay, the banias and middlemen!
Kirana shops do not need protection to survive, they will do fine with their personalized service and convenient neighborhood locations. The threat to the shop around the corner is a straw man. The Indian Council for Research on International Economic Relations, a think tank commissioned by the government in 2007 to study the potential impact of modern retail, surveyed 2,020 small businesses and found that they wouldn't see a decline in overall employment. Small stores can exist side-by-side with corporate giants, beating the latter at some traditional areas like customer service (Wal-Mart typically doesn't do home delivery) and innovating easily to match their new competitors in other ways (such as accepting credit cards). The reality is that at the rates India is growing, the tide will lift both small and big businesses.
New Delhi-based Technopak Advisors estimates that, if foreign investment were permitted, "organized retail" would see sales rise to $314 billion in 25 years from $26 billion today. But traditional stores could see sales rise to $2.18 trillion over the same span, from $453 billion today. As long as growth continues to boost Indians' purchasing power, the retail pie will expand for everyone. ...The biggest losers from investment liberalization would be the middlemen who currently do today's organizing of Indian retail—and do it badly. Consider that currently, the Indian farmer sells a kilogram of tomatoes for three rupees (six cents) to the first intermediary in the chain. Four more intermediaries later, the mom-and-pop store sells that same kilogram for 15 rupees. Most of the difference goes to the middlemen, not Mom and Pop. Meanwhile, some 20% of the tomatoes rot in transit. On average across the country, vegetables see a markup of 60% by the time they arrive in cities.
The middlemen and their political backers may think they've won an important battle last week. But they haven't won the war. Blocking foreign investment may delay the moment of India's supply-chain modernization—homegrown improvements could take a decade or more to flower—but change is inevitable.
We should not blindly stand against the FDI just because its foreign.I dont feel it can do any more harm to the Indian farmers than, that is already been done (?) by the mega retailers of the kind of Reliance 'FRESH' , Aditya Birla 'MORE' etc (I am not against them either :-) ). So,the one who will be heavily slashed by the FDI will be the indigenous monopolistic retailers.
Those who are against FDI are the same class who once stood against the nationwide introduction of railway 'fearing' it will upset the interest of bus, taxi, rickshaw drivers (did anything happen to them...???). They are the very same who also stood against the computerization claiming it to cause unemployment.
Anyway, neither the NDA nor the UPA govt had done anything great to resurrect or rejuvenate the agricultural sector of our country (the Indian economy, where over 50cr people are involved in agriculture is a standing example). So, why blaming the FDI alone to do any harm..?
Excellent. No words to describe.
To all who are saying it will benefit the farmers, farmers will exist
and middlemen will go etc...
Middlemen wont remain, ok but so will the goods. All the goods will be
hoarded in these so called warehouses. They buy item A for 10 Rs,
hoard it, then sell for 50, Then when Raju buys it he is at loss of Rs
30. The farmer in turn visits Raju for some service, Raju being tight
with the loss charges the farmer more. This circulates. Finally, the
hoarders make mega profit while the common men like Raju try to
distribute their losses to other Rajus.
Computer argument. --- There is no question of machine replacing man
here. Here the case is powerful MAN replacing weak MEN.
P.S : An article like this with sufficient technical points to support
FDI would be welcome as people like me will understand better and can
judge better.
I read The Hindu every day. Even when I do not agree with the views in all editorials or Opinion page articles I enjoy an intelligent analysis and debate nevertheless. I understand that The Hindu editorial team is against FDI in retail which is fine as a lot of people are. It has published several articles and editorials promoting the opposition of FDI in retail and I respect The Hindu editor's prerogative in that matter. Based on the readers comments on this and the past articles in this topic it appears that a significant portion of The Hindu readers are in favor of FDI in retail. I hope in the interest of fairness and balance The Hindu would publish an Opinion page article that argues for FDI in retail. I think that will make the debate more lively and diverse, which will ultimately benefit the great democracy that India and its free media represent.
Kindly ask your web developer to change the layout settings and back
ground colours.
This looks ugly and uninteresting to read the comments posted..
it looks awful...all in same colour blend., little contrasts give appeal
to readers along with diverting their mind.
One thing our finance minister and the prime minister have to notice (since they tried to permit 51% FDI in India)the FDI earns profits to the investor but not for the market place(here India). Naturally an investor invests to earn profits,when it comes to India the government is unable to notice it(I think). one more thing is, we get loans from the world bank and IMF,where U.S,BRITAIN,USSR,FRANCE are the key players.They invest in India and earn profits from the money which we have got as loan.Finally after the increase in inflation we have to bear the humiliation done by the world media(mainly BBC)
Such a prejudiced article!!! Sainath is of the opinion that FDI is the much awaited antichrist that will spell doom for the farmers of India.
Its just not right to oppose anything and everything that policy framers intend to do. After all please acknowledge the fact that they too got some expertise and fair share of knowledge regarding the issue at hand. Every society has its own problems and issues.Have a pro-develeopment and contructive approach while analysing the issue.
In this article he has only crticized the whole policy with a negative attitude. This would have been much better if he has taken slight pain to list out some measures or suggestions to mitigate the so called drawbacks and disadvantages of coming of fdi. Instead he has gone too far in just concentrating on certain contentious areas and has blown it out of proportion to make it look it disastrous!!!
Another nice article by the great P Sainath.
Sainathji, recently we are not able to watch any of your new videos
on youtube. We really miss that. If there are any of your recent
lectures which have not been uploaded on Youtube, please upload it.
thanking in advance.
a very well written factual article. But unfortunately several people in tis country, including some in government, are not concerned with truth. their arguments are stale and repetitive. No one amongst them provides any insight about the corporate ethics of foreign retailers. they are not in a position to deny the numberless voilations of likes of walmart. They talk about benefits of direct purchases from farmers,but refuse to see the condition of sugarcane farmers. the life of claimed benefits for consumers is also kept under carpets. we have seen these so called benefits evaporating in atmosphere recently in case of airfare during kingfisher crisis. FDI in retail sector is a sure step towards social unrest that we can ill afford.
This article seems more ideologically driven than an actual analysis. Yes, the problems of farmers are genuine problems and Hillary Clinton is not to be trusted and this govt. is greedy and corrupt, but the author has made a rhetorical soup out of it. An article was there in The Hindu a few days before detailing China'a and a few other countries' experience with FDI. I would not be convinced that FDI is bad until Mr P Sainath shows that their growth was not affected by FDI and that their farmers did not benefit from it.
FDI should be analysed on its own merit, rather than juxtaposing it with the corrupt govt. Farmer's suicide is a result of bad policy of the govt., I agree, but FDI can be beneficial if a proper and honest oversight is there by the govt.
I am confused whether the article by P. Sainath is a political attack against Hillary Clinton or FDI in retail. People prefer large retail stores with or without FDI because the large retail store prices are much lower than the small retail store prices. Small retail stores still thrive in countries with large retail stores with or without FDI. We need big retail stores with or without FDI to reduce the run away inflation. The large retail stores pay better prices to the farmers directly avoiding numerous intermediaries. The problem in that we have too many farmers with subsistance agriculture and small plots of agricultural land that cannot sustain modern agriculture. All the hue and cry against FDI in retail is political and is not much different from the protests we have seen for decades against IBM, Coco Cola, McDonald and computers and all of them are back after politics cools off. Is the FDI problem in India different from that of China and Russia where FDI in retail are welcome?
the US economy is in shambles because all the manufacturing shifted to china taiwan etc., all their retail trade items come imported.so the local people have no job except at the store level. the same fate will happen if fdi in retail is introduced in India. our people will have more desire for imported cheap goods and our sme and small cottage workers will be without work. economist like Dr.Manmohan sing shall give his thoughts before doing anything which could not be rectifed before big damge to our livelyhood. more over monte sing aluwalia is not even able to assess the poverty line limits, and such a person if is part of the decision making then we can see the sun set for india.
A comment for Sainath and his admirers: Please don't mistake rhetoric for logic. This is a political article designed to confuse the issues rather than to clarify. How else do you defend the status quo of the inefficient middlemen whose margins reduce what the farmers get and increase what the consumers pay?
The reason Indian culture and the Indian economy has been resilient for thousands of years is because it is self-organized, sustainable, decentralized, free market and open-minded. Educated fools of our country who are in support of FDI do not understand the basics economics - blame it on their colonized and brainwashed reasoning. Yes there are issues with the current Indian system, but much of the plight of farmers can be attributed to failed government policies and not the traditional free market. We need smart policies that enhance our age-old practices, not diminish them.
i admire Sainath but unfortunately he focused more on personal attack than facts.He himself wrote how farmers are manipulated in mandi system.FDI is very much required in retail becoz existing players have no incentive to improve it.I belong to farming community,i can say that today nobody want to remain farmer if they can find better opportunity somewhere else.It's a natural process if number of people employed in farming decrease becoz they are underemployed,due to limited labour absorbing capacity of other sectors. If economy will grow and for that we certainly need capital, jobs will be created.Machines can't do evertyhing, machines do need man behind them.Today farmers are at loss if they produce more prices come crashing down and if less than also they get minimum share of profits.Agri is a seasonal biz so their is certainly need to process food for short supply days, it'll generate employment in food processing industry and stability in agri produce output and prices.
Walmart is going to compete with other big firms already in business like 'More' and 'Reliance' rather than the poor vendor woman. Sainath seems to have confused the 'middlemen' with the poor vendor woman who visit our house. The middlemen are the people who makes sure that the farmers do not get an opportunity to sell their produce to anyone but them. When we bought onions for Rs 60, where did all that money go? Certainly not to the farmers or the poor woman.
When people like Sharad Pawar oppose FDI, the money trail is more likely to lead you to Reliance or Spencers. We should either not allow any giants to operate in retail or allow everyone. No selective treatment for Indian extortionists.
For those who are mislead by numbers, eg 25 million worked in farms in the US in 1950 and now 1 million does, ergo agricultural yield has increased 25-fold, beware that agricultural import has replaced domestic production, and the domestic production is hands-free because it is pesticide-full. Apply this logic to manufacturing, and you see the fallacy clearly. Lesser people work in factories because manufacturing is moved to China. Comparing the developed nations' stats with India and chasing it is suicidal, because a) Capitalist economies are in shambles b) The stats are funded by such as Goldman Sachs who are the reason the Western world weeps now c) the Indian value system is different, eg seva is still revered over squeeze-till-the-pips-scream.
We have indegenous groups that have solutions. In the field of agriculture Vandana Shiva's Navdanya and for factory workers the Swadeshi ecomonic model of the Bharatiya Mazdoor Sangh have performed wonderfully. Time to introspect?
Absolutely, we don't need even a single red cent of FDI in our retail sector; absolutely NOT. Those promoting this mirage saying it will create millions of jobs are throwing wool into the common man's(woman's) eyes and fooling them with smokes and mirrors. Following are the reasons for NOT allowing FDI in this area:
1. Wal Mart is the worst company which simply doesn't care about ordinary people's lives.All this company cares about is its bottom line profits for its big share holders/owners that sam walton's family of sons, daughters, ex wives etc etc who can line their pockets. 2.Millions of folks in the small business will lose their jobs besides the farmers. 3. If anything India needs, it is high tech industry like Boeing,NASA that kind of industry to manufacture in India and NOT this low tech walmart retail industry, which is NO rocket science and Indians can do better by themselves by using their effecinet ideas and no wal mart is need to teach how to retail in India.
For all the ignoramus'es on thsi board talking about how low the efficiency is in our agi system and how somehow FDI/big retail will solve this issue, please go and get your head examined. If getting an apple from New Zealand is cheaper than fixing the domestic agri system to produce that apple....guess what a corporation is going to do? Their supply chain/transportion/import-export taxation with countries/EVERYTHING is already in place and highly negotiated. They will do what they need to do to increase margin. Not worry about what an Indian farmer's plight is. Pathetic to see such ignorance from 'Hindu' readers!
As per Government's claim, these big Foreign retailers will set up shops in just about 21 cities in India which might be expanded later if more State Governments fall in line and it is a wonder how such a tiny concentration is going to help the lot of majority of Indians ?? Obviously, those who will be shopping in these big malls will be the Super rich and affluent and ofcourse they will have a big variety to choose from. These retail giants too will be benefited and ofcourse the Government too. But what is not clear is how such a low concentration is going to help the cause of millions of poor living in towns and villages ??? What is also not being pointed out is the Realty Sector which is already artificially inflated will get a boost further by speculators who will inflate it even further.
Now it seems the panacea for all our troubles is the opening up of retail sector to FDI and that is what the Media (barring some exceptions like yourself), Government, Captains of the Industry and even USA are suggesting. Walmart opening up its shop in about 21 cities in India is going to change the landscape of the Country beyond recognition and take it to the World stage, milk and honey will flow in the streets and the youth of this Country would have enormous job opportunities etc. etc. This is what we should believe, if not we will be branded as backwards, Communists etc. etc.
The Disinvestment will come, its a matter of time when we are ready to accept it. There is a need to consensus on the Policy as the success of a policy is driven by execution and the executor's faith in what he is doing. Such debate is necessary for educating everyone (Including the important shareholder's, i.e. farmers) about the Pros and Cons of the policy. An important thing which we are overlooking during the discussion is the "Opportunity for Improvement". The policy needs to be Indian, by which I mean the Bharataisation of the Retail Market while bringing the FDI and somehow creating an Opportunity for Indians. Development shall at times put someone at loss(momentarily) but shall be an all Win in a long run. The FDI for me shall make it more competitive and that is the time when execution can promote Indian Interests by Indicative (Pro-active) Policy making. Lets share more views and learn more, because our Nation needs us to do that.
P Sainath is making very valid points here...if you want to know the underline story you must see a documentary 'the corporation' in two parts. It illustrates the whole game of corporations..how philanthropist they are...how environment friendly are they...how generous are they for mankind.
China introduced FDI in 1992 and the number of jobs in the retail sector increased from 1.9 million to over 2.5 million. There are countries which have nearly 100% FDI in retail. A point to ponder here is why do we want to refrain our country from getting the better Supply chain models that the big, established retailers like Wal-Mart are using. Also, it is easy even for a layman to see that even if big Multi Brand Stores are opened, the consumer who prefers High Frequency stores like the kirana stores will still go to them. The choice of preference will only be for those consumers who are already using Indian Multi brand stores like Big Bazar, Spencer, More etc. Where is the loss for the small retailers ? (references taken from the paper by Nandita Dasgupta, ‘FDI in retailing and inflation: The case of India,’ Columbia FDI Perspectives, No. 52, December 5, 2011).
Another question to ask yourself. How is having a sizable portion dedicated to farming a good thing? Perhaps the monopolization of farms by a large company such as Tata or Mitra would prevent the horrors that the small farmers face. It would eliminate inefficiency and provide stability in times of hardship. Maybe the problem is having too many farmers. Politicians throwing a few rupees their way once in awhile isn't going to fix the underlying problems.
Is the author really preaching protectionism in this day and age? Perhaps you should read a little about comparative advantage and look at the countries of the world that have benefited from liberalizing the economy. Do you really think Hillary Clinton's policies can be bought with a few thousand dollars in campaign money? You are seriously delusional if you think so and come off as a reactionary. Her party is also widely known for having the support of unions.
Don't be foolish to compare India to china in this sector for creating jobs. India has mom and pops stores small and like; china never had small shops like India does now; in china all those so called shops were are all state controlled and when wal mart was allowed inside china it just took over the state small shops and put big box stores in place giving tons and trillions of dollars to the chinese government and since these were all state shops, no private persons lost jobs since they didn't have any jobs in the first place. In India's case is totally 100% different in that all our small private shops are owned privately and NOT by the state and when walmart prices the grocery and products so LOW so as to bankrupt the innocent small mom and pop stores, then wal mart will have monopoly and will do whatever it likes in the market with no competition to speak of. So only the imbeciles will compare India's situtation to china's, for pete's sake DON'T.
Sainath being an eminent opinon maker, it is surprising to see an article from him that misses the wood for the trees.
1. "Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s" - this is a measure of socio economic progression. None of the developed countries have more than 2-3 % of population engaged in agriculture. No country can sustain 60 % of population in agriculture !
2. Who are the stake holders in this debate ? Farmers, General Public (Consumers), Retailers and Middlemen. What does this mean for each of these stake holders:-
a. Farmer: They are the victims of the highly exploitative mandi system that exists today. Organized retail will get rid of the Mandi system - Big retailers will directly procure from farmers or Farmer-aggreation points. Hence Farmers will surely get better prices. This is not just theory - farmers in Punjab & Haryana are already getting better prices via this method from
i believe that fdi should be in retail for non perishable items
Atlast the ARTICLE ..I am inclined to side his point of view .. Facts sometimes do come out of emotions.( I am a slightly right leaning person) I do not support FDI in retail Not sure how FDI would help us .. when we have our own success stories. AMUL is a success story which we can replicate if we are more worried of middle men and farmers not getting the right price.. Big retailer like WALMART is not a socially successful model anywhere including US.. Yes it seems to have brought the prices down for the consumer but in the bargain it had over the years reduced the consumers numbers who can buy anything .. Today China has all the jobs in manufatcuring and the consumers( read workforce have been reduced to low numbers). Walmart seems to have done it job in US and there are no consumers left to help it grow hence targeting the outside world. It is like the scroch earth policy of Russia destroying everytjing in its owm path to defeat the enemy ...
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