Karela Fry

Just another WordPress.com weblog

Who is for Walmart?

leave a comment »

One view about foreign direct investment (FDI) in the retail market is now well-known through prime time TV: the move will eventually be inflationary because it will raise prices without ploughing the profits back into India, since retailed goods are expected to be sourced globally. When the issue was first raised by the NDA government, the then-opposition parties opposed the move. Now that it has been raised by the UPA government, the then-government and regional parties oppose the move on the same grounds.

So, it is remarkable that there is a well-formulated pro-FDI in retail view emerging from the grassroots (literally). The Kolkata Telegraph reports:

Farmers, a holy-cow constituency considered more valuable than small traders to the political class, have begun to ask uncomfortable questions to those opposing foreign direct investment (FDI) in retail.

Several farmer groups, some of them led by politicians with ties to the Congress, have asked why some parties are standing in the way of a measure that is expected to reduce the clout of middlemen and increase farm earnings.

Although Prime Minister Manmohan Singh also underscored the same point today while stoutly defending the cabinet decision to liberalise FDI rules in retail, it is not clear yet whether the murmurs from the farmers are stemming from active political intervention.

If the latent mood reflected by farm lobbies gathers depth and sweep, the parties opposing FDI will have to choose between the small trader and the farmer. Almost all parties, including Mamata’s Trinamul Congress, arrayed against the retail reforms describe themselves as the best friends of farmers.

“Not only will FDI in retail eliminate four to five middlemen at different levels, it will also enable farmers to get quality inputs,” said Changal Reddy, the secretary-general of the Consortium of Indian Farmers Association (Cifa).

Reddy has a Congress background but his federation’s views cannot be ignored as it has many affiliates spread across the country.

His assertion tallies with that of commerce ministry officials who have been trying to hammer home the message that FDI will help lift farmers’ incomes.

Few political parties will deny farmers are now being ripped off. (See chart)

A CPM-affiliated farmer outfit betrayed that dilemma. “Agro business would no doubt flourish if FDI is allowed in retail. But there is a rider: it would not benefit the marginal farmers; they hardly produce anything. It would only benefit the big farmers,” said Biplab Majumdar, assistant secretary of the CPM-affiliated Pradeshik Krishak Sabha.

Another farmers’ body referred to another likely dividend from FDI.

“FDI is expected to roll out cool chains that will bring the market closer home, reduce the number of middlemen and enhance returns to farmers,” said Prakash Thakur, the chairman of the People for Environment Horticulture & Livelihood Himachal Pradesh.

“Highly perishable fruits like cherry, apricot, peaches and plums have a huge demand but are unable to tap the market fully because of lack of a cool chain and transport infrastructure. All this should see a boost with the opening up of retail for large investments through FDI,” he said.

The cabinet kept this in mind while taking the FDI decision. Each foreign investor will have to invest at least $50 million (Rs 250 crore) in back-end infrastructure that will include cold chains, refrigeration and transportation.

We have been hearing about cold chains for more than a decade. The real reason why there is nothing on the ground is that there is no electricity across large swathes of the country. UPA 1 sacrificed itself trying to open a green route to energy for all without succeess.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: