A day after a Mint report on a yet-to-be-released study commisioned by the government on the impact of organized retail chains on small stores showed significant reduction in the latter’s profitability, politicians across parties asked for“protection” for small retailers and for the report to be made public even as they tried to strike a balance between the interests of small store owners and middle-class consumers.
“...There must be some kind of protection for small corner shop owners,” said T.K.S. Elangovan, organizing secretary of the Dravida Munnetra Kazhagam (DMK), the ruling party in Tamil Nadu and the first political party in south India toadopt a resolution against foreign direct investment (FDI) in retail after Congress president Sonia Gandhi, the head of the United Progressive Alliance of which the DMK is part, asked the government to study the impact of organized retail on small traders.
UPA chairperson Sonia Gandhi had asked the government to study the impact of organized retail on small traders
In response, the government commisioned Indian Council for Research on International Economic Relations, or Icrier, to study the issue. The report, ready for over a month, is yet to be submitted to the government.
“Local shops provide self-employment to thousands, so if they face risks from big domestic retailers, I can only say that we are on the side of small players,” Elangovan added in a phone interview from Chennai.
Bharatiya Janata Party leader and member of Parliament Jaswant Singh said the report’s findings validate his party’s position against FDI in retail. “I think high-rise malls are obscenities,” he said. “No report (by Icrier) was needed. We know very well—and every state government should know—what the impact (of organized retail) will be. The Centre should have asked states to answer questions on on-the-ground impact and those views should then have been made public.”
The BJP leader said he is against FDI in organized retail, since it will notbring in know-how, expertise or new technology. “What does a retailer in the West know that an Indian does not?” he asked.
While the government could use the report as background for its policy on FDI in multi-brand retail—this is currently not allowed—it is the domestic context that is of particular interest to small store owners as well as large conglomerates such as Reliance Industries Ltd, the Aditya Birla Group and Bharti Enterprises that have multi-billion dollar investment plans in the sector.
The Communist Party of India (CPI), which had issued a joint statement with other Left parties in October 2005, when the issue of organized retail and FDI in the sector was first debated in India, said it is firmly against large brands and retail chains being set up in the country. CPI general secretary A.B. Bardhan said there was no question of trying to balance the interest of big retail outfits with those of the middle-class metropolitan consumers or small corner shops.
“Though I have not seen the (Icrier) study myself, I know that it has only been conducted in the four metropolises (it has actually been conducted in four cities but only two of them, New Delhi and Kolkata, are so-called metropolises; the other cities are Ahmedabad and Hyderabad). But India is so much larger. There are 40 million people directly dependent on retail outfits for jobs, and 160 million if their dependants are counted as well...,” Bardhan said.
The Congress, the dominant party in the ruling UPA government at the Centre, has previously said that its economic reforms would have a “human” face inkeeping with the demands of Left Front constituents such as CPI.
It had declared in a resolution on economic issues early last year that existing small retail outfits would be “strengthened” throughout the country. M. Veerappa Moily, a senior Congress leader who had introduced the resolution on economic issues, said over the phone from Mangalore that the party is seeking to balance both constituencies—small shopowners as well as a growing number of urban consumers who seek the shopping experiences and quality hitherto available only in developed countries.
“Our approach is that small retailers cannot be displaced regardless of the impact. We believe they will have to be strengthened through technology upgrading, training and other means. (But) for us, the consumer’s point of view also cannot be ignored,” he said. Like every other politician interviewed by Mint, Moily said he is yet to seeIcrier’s report.