Retail FDI- Creating political storms

Abstract

The retail trade suffers from two major handicaps. One is the non-availability of credit at reasonable rates from institutions; the other is the bribe one has to pay to the government babus to leave him in peace. The announcement by the gov ernment about cabinet decision on 51% FDI in Multi Brand Retail and 100% in single brand has created significant debate among political parties even to the extent of affecting the stability of this Government. Trade constitutes the largest segment of the economy with a nearly 16.7 % share in NDP in 2010-11, that is, in the aggregate NDP of Rs 43.2 lakh crore that year trade accounted for Rs 7.2 lakh crore [at 2004-05 constant prices] higher than the share of manufacturing [at 13.4%] and Agriculture [at 15.0%]. (National Accounts Statistics of the CSO, New Delhi 2011). Trade is conducted mostly [more than 80%] by partnership /proprietorship firms with active involvement from members of family and community. More than 125 lakh kirana stores provide a source of livelihood to nearly 16 crore people. Retail trade has grown faster than the economy: it registered a compounded annual growth rate (CAGR) of 9.2% between 2004-05 and 2010-11 when the Indian economy grew at 8.6%. The retail trade comprises all kinds of people and formats – from street vendors to departmental stores of various types, shapes and characteristics. More than 80% of trade is accounted for by partnership and proprietorship forms – often called the “unorganized” sector. The kirana shop adjacent to my home opens at 7am and closes at 10pm every day, 365 days of the year. It is very efficient, and one can order through a mobile. The owner knows the tastes and price preferences of our family, but his business is classified as “unorganized” by our experts and economists. Read more at: https://www.freepressjournal.in/business/retail-fdi-creating-political-storms#bypass-sw