Note: India rupee shoudl fall further to atleast rs 60 to a dollar to reflect its actual worth.Growth in India is in price terms and not in terms of quality and quantity.if quantity had grown prices would fall.It is all artifical growth to loot and plunder.
Rapid Haramikaran Of India - Growth Rate Food 2%, GDP 8% Retail 12%-15%
Dear Tarun Vijay,
I am responding to you on behalf of farmers and people in rural India and urban consumers to your comments and BJP RSS stand on Inflation, Corruption & FDI.
You are just a year younger to me, for five decades I clearly understood BJP RSS is organization for Traders & Banias, your blogs further confirms this.
When you confirmed traders association's assertion that Retail sector is growing at 12% to some even claiming 15% while food production growth is not even 2% that too fluctuates with monsoon to me accessing the exactly same economic data as you with Magnifying Glasses perceive it as 'Haramikaran of India' and BJP RSS and you as its spokesperson fully endorsing it.
Growth Rate Food 2%, GDP 8% and Retail 12%-15%
Just a glance even without Magnifying Glasses you wear will tell you that Retailers without contributing anything to the GDP are 'Expanding Furiously' at the cost of Consumers and Producers/Farmers resulting in price rise of essential commodities, spread of poverty and hunger.
Margins of WalMart 6% - Indian Retailers 50% to 300%
When all over the world contribution of retailing sector is very low due to direct marketing of essential products from producers and farmers to consumers, BJP RSS supports multiple chains of middlemen. Profit margins of WalMarts is barely 6% that too in WHITE – Indian Retailers Traders realize 50% to 300% that too in Black Money. So WalMarts shall contribute 'Substantially to Taxes' and generate White Business.
Rural population and farmers are no less qualified than Urban population in terms of absolute numbers yet 80 crore Rural population get just Rs.2,96,850 crores out of Rs.33,45,169 Crores Total Bank Credit rest of it going in to the pockets of Banias and traders mainly.
1. Can you explain why direct credit to 80 crores farmers is Rs. 2,96,850 crores but direct credit to 1 million traders is Rs. 305482 crores out of Rs.33,45,169
Crores Total Bank Credit? Majority of the retail traders and all vendors get supplies from Producers on free of charge credit for a day to three months are not included in the direct credit to traders.
Most of the credit is not utilized for creating Cold Chains or for hygienic storage of food but for Money Lending of farmers, MSMEs.
2. You may also find credits outstanding under Professional Services Rs. 3,05,375 crores, Personnel Loans Rs. 5,58,895 crores, Traders Loans Rs. 3,05,482 crores and Finance Rs. 2,43,139 crores all adding up to Rs.14,12,892 crores.
3. How do you explain credit to Industries is Rs.13,55,232 crores but under above services Rs.14,12,892 crores going to handful of people for personnel enrichment.
4. In Rs. 3,71,688 crores transferred from center to states every year on the basis of population of states with poverty factor therefore means BIMARU strates get Rs.1 crore per village but this too is swindled by primarily Traders Bania Contractors.
Corporate India Invested $300b in Foreign Industries, $280b in India
5. $300b is the money invested by our Trader Bania corporate in foreign countries legally itself is more than Credit to Indian industry Rs.14,12,892 crores or $280b. You BJP RSS has not tried to tell us the Profits Repatriated by Indian investors in foreign countries.
HarmamiKaran Of India by BJP RSS
6. BJP under Ram Naik allocated 25 of 29 Off shore blocks to RIL when RIL no expertise and resources or even a single drilling rig. Similarly allowed illegal mining of natural resources.
7. BJP RSS allowed traders and banias in to every sector of economy even agriculture through contract farming, plantations, bio-fuels programs.
8. BJP RSS opposes WalMart because it doesn't want any COMPETITION to Bania Loot.
9. BJP RSS opposed Nuclear Power or even Hydro Power that were primarily reserved for public sector.
10. There is not a word of Ambani Loot and Fraud.
11. BJP RSS tell Indians through army of Haramis that all the BLACK money is generated by Rahul Gandhi and locked up by Rahul Gandhi in foreign accounts.
12. BJP RSS through Ramdev, Kejriwal want to Cripple Legislature, Executive and Judiciary through Jan Lokpal but there are no Lok Pals for Banias, Traders, Moneylenders and Corporate Thugs.
Why can't India have Lok Pal for Bania, Traders, Moneylenders and Corporate Thugs?
Why didn't BJP in BJP ruled states promoted Co-operatives and Direct Marketing by farmers? Gujarat Co-operatives were promoted long before Modi came to power.
When Indians with little skills for example Tata Steel or Tata Motors could acquire 100% of Corus and Jaguar Land Rovers, why can't WalMart and other expert Retailers operate in India?
Ravinder Singh, Inventor & Consultant November27, 2011
The much-awaited go-ahead for FDI in multi-brand retail has raised fears not only of unemployment -- as Union Minister Dinesh Trivedi observed -- but of creation of monopolies in the food sector.
The government has sought to sweeten the deal by restricting the entry of Walmart, Carrefour et al to 37 urban centres with a population of one million or more -- but this is no hardship for the multinationals, as it is unlikely that smaller centres figure in their initial rollout plan in any case.
The rationale for the decision is ostensibly to control food prices, as suggested by the Inter-Ministerial Group, IMG, on inflation. Permitting farm-to-fork retail is seen as a means of containing food inflation. India being apparently too resource-poor to achieve this, the retail sector had to be opened to FDI.
FDI enthusiasts say the entry of Wal-Mart and its ilk will ensure that the producer gets a better price, the consumer gets cheaper products (as the company purchases directly from the farmgate, there is no middleman) and jobs and infrastructure are created.
This rosy picture must be taken with a pinch of salt. To begin with, the FDI proposal was initiated long before food inflation became an issue, so clearly it has been pushed through because of considerations other than rising prices.
Essentially, a vertical integration of the food supply chain is proposed on the assumption that it will have a positive impact on all the stakeholders. The caveat that 50 per cent of investment must be in the rural sector is meaningless; building a supply chain from farmgate to shelf would naturally entail investment in storage and transportation infrastructure in rural areas wherever the supply bases are located.
The primary producers are expected to get better prices. But nowhere in the world have the farmers who supply goods to big retail chains benefitted. It is difficult to understand how they would benefit, when players like Wal-Mart look for the cheapest possible suppliers. To sell cheap, they buy even cheaper. To begin with, they might offer better remuneration, but that would be only until traditional channels like ahratiyas are eliminated and the farmers have no choice but to sell to Big Retail -- at any price. In his book Stuffed & Starved,.
The contention that FDI will create jobs is also open to question, as it is more likely to create large-scale unemployment. The unorganised retail trade in India accounts for over 40 million jobs and 98 per cent of the total trade. This includes pansaaris, kirana shops, hardware stores, convenience stores, weekly haats, paan and tobacco shops, as well as a whole range of teh-bazaari (pavement vendors). It is informal, with credit traditionally extended on trust and based on an intricate web of relationships.
The majority of consumers, who buy essentials from their neighbourhood stores on credit and pay bills on a monthly basis, will also suffer with the disruption of the traditional system.
Hundreds of thousands of people who earn their livelihood from the 12 million existing retail outlets may be put out of business by Big Retail. Some may find employment with Big Retail although this is doubtful given their lack of language skills or education -- the minimum requirement for staff at any sizeable store is a command of English. Even if they did, there would not be enough jobs to go around.
Global retail giants are highly capital intensive and create fewer jobs. A single Wal-Mart store could put tens of thousands of mom and pop stores out of business -- as it did in the US -- while generating perhaps 3,000 jobs.
Traditional retail will struggle with the likes of Wal-Mart and lose, because Big Retail with its deep pockets, would resort to predatory pricing. Nor should we expect ethical practices from multinational players.
In a highly publicised case, the Punjab excise and taxation department raided 'Best Price,' a joint venture between Bharti and Wal-Mart. The company was only licensed for wholesale cash-and-carry trading, in which 100 per cent FDI is allowed. According to press reports, it was found to be carrying out retail trade through the issue of membership cards to those who did not have a valid VAT number.
Drawbacks to allowing FDI in retail were pointed out by the Standing Committee of Parliament in June 2009. In the absence of a level playing field between Indian retail and the MNCs, it suggested comprehensive steps to strengthen the former before opening the gates to FDI. Otherwise, it said, the economy would suffer and widespread unemployment would lead to social unrest.
The third great myth about FDI in retail is that it will improve infrastructure by attracting investment in storage and transportation. Why Indian companies in the retail sector have not invested in the back-end along with the front-end is yet to be explained.
Indian economy was dominated by the services sector, accounting for 58 per cent of the Gross Domestic Product (GDP), and it was not ready for FDI in the retail sector.
1. There will be monopoly of big retails houses and small shops will be squeezed.
2. Farmer will have to supply at the price these retails so demand as a small farmers will have no bargaining power.
3. Threat to food security of the nation.
4. Will kill more than 40 crore jobs.
5. Craving of luxury and unnecessary items will increase causing less inclination for savings.
6. Lower of savings will lead to problems such as faced by west.
7. Chinese model is not best suited to India because they are manufacturing economy while we are a service base economy.
8. No guarantee that best practices will be followed by large retail houses.
9. Lots of dotcoms will have to close shop since Amazon and others will kill such marginal players.
10. Small states will suffer the most in the long run (states such as Uttrakhand).
11. Lead to greater corruption and other unethical practices. as larger players know how to bend the rules in their favor.
12. Well increase social disparity and the middle class which has been the motor of our growth will be substantially hit.
No, I do not intend to make a socialist case here, which is best left to political parties and activists. Here, I intend to spell the disadvantages that big brand retail shops have for me as a consumer. This is in the back-drop of the Indian government approving 51% foreign direct investment in multi-brand retail or hypermarts, as they are known in the west. This will bring in the big guys like Wal-Mart, Carrefour, etc. The benefits are being touted as big for consumers. They will bring in money, their expertise with supply chain management, etc. to sell goods to consumers at the lowest prices.
But for this, they need infrastructure, which the government would have to provide. Large warehouses would necessitate a smooth supply of electricity, well connected roadways to connect the warehouses to manufacturing centres and the stores, etc. This is woefully missing in India, where outside big cities, a minimum 6-8 hours of load-shedding is considered normal. The success of such retail firms relies big time on the availability of such first class infrastructure. But, whether they succeed or not, they have many disadvantages for consumers.
We may not realise this, but in the quest for selling things at cheaper rates to us, these retail outlets rely more on volumes of business, compared to per unit margins. So, the brand that sells most is the one they will stock. Of course, there are a number of subtle tricks they use to entice us into buying certain brands or products, but then, that is a completely different topic. So, if you like a particular brand and fragrance of incense sticks, you might not find it in the supermarket, because they do not get good volumes on it. And you are stuck to buying from the ones available in the store. So, you tend to lose your favourite brands, if they do not fit in the strategy of the supermarket. The small shopkeeper, though, will keep a fairly diverse number of products. Smaller quantities of the less popular ones may be stocked, but nevertheless, you have a fairly high chance of finding your choice there, than the supermarket.
If a certain product is out-of-stock in the supermarket, you have no way of knowing when it will arrive. The mom-and-pop shopkeeper around the corner, will not only give you an idea of when the product will arrive but also keep it aside for you, once it is in. This personalisation of service is out of question for supermarkets! Their business model just does not have this feature.
Thirdly, the supermarkets stock only big sized products. E.g. shampoos in large bottles, toothpastes are available only in 400 gm. size or detergents in min. 1 kg stocks or buy-3-get-4th-free soaps and many more such things. A very huge number of India's people live on frugal income. For them, to spend Rs. 100 (for a shampoo) in one go is extremely difficult. That is why most of India's FMCG manufacturers have come up with small sized packs (sachets for shampoos, detergents, 50 gm. toothpastes, etc.) which cost very less and are affordable to that population. Such small sizes are not stocked by the supermarkets, as the margin is too low and their rate of sale unpredictable to justify the efforts required to stock them. So, (even if you have a high salaried job but) if you live alone, you won't be able to purchase these things. If staying alone, I wouldn't want to buy a pack of 4 soaps and be stuck with them for 6 odd months. I would rather buy a single cake of soap, which would last for well over a month and be free to choose a different soap every time. Plus, I would be left with liquid cash, free to spend it as I like, instead of being tied up in three soap cakes, which would be useful only after a month.
Such mass stocking of products also hampers the variety available and this is especially visible in the clothing sections. They will not stock premium products. E.g., here in Edmonton, people advise to get winter jackets from special shops, not from Walmart, as it doesn't stock those. These supermarkets won't stock out-of-season stuff too. E.g. no chappals or floaters are available in the supermarkets during winter. For that, you have to look out in the footwear shops only.
This is a very simplistic analysis of what would happen to us as consumers, if big supermarkets are allowed to dominate the retail business scene. Most of it is my personal experience. In India, there is a certain social aspect associated with shopping, which will not be available in supermarkets. The shopkeeper and the shop is where the local news is exchanged. Moreover, the personal relation developed with the shopkeeper help us in many other ways. His/her network helps us access various other services. E.g., some of his relative or acquaintance might be running a travel agency, from where we would be able to rent a car. Or contract a plumber's services at discounted rates. These informal channels will not be available with supermarkets. Economic and social analyses tend to indicate contrary views, but as a consumer, will we get all that we want? I have my doubts. We might end up getting what the supermarket wants to sell to us and when they want to sell it. As consumers, if we would like to have wider choices, I think supermarkets should not have a free run in the Indian economy.
By Shekar Swamy,
Group CEO, R K SWAMY HANSA and Visiting Faculty, Northwestern University, USA.
The views are personal.
The big boys of global retail must be readying the champagne. The Indian corporate sector with investments in retail is rejoicing at the prospect of the deals they can be doing shortly to shore up their balance sheets. At the time of this writing, the government which has been talking about an 'inclusive' agenda for growth is about to deal a body blow to the small traders and the entire retail and distribution chain, by allowing 51% foreign direct investment in multi-brand retail. This will be a huge mistake that the country will pay for over time. For the present, the government can claim that it is on track with its "reforms" agenda and that is all they seemed to be concerned with for now. The manner in which the policy is outlined is itself a dead giveaway that the policy makers are well aware of the pitfalls. They are declaring that this is a policy designed to support big capital and the predatory multinationals in retail. The policy states in action that the government is not concerned about the interests of the small and medium businesses in the millions that will be adversely affected. Let's look at what has been outlined and what it means.
1. Foreign retailers will have 51% equity interest. This means they can control the Indian operations and consolidate the financials with the parent company. All kinds of transfer pricing will be possible which will not be transparent in India. Investments can be made without accounting for losses in the parents' books, in the year incurred (it can be classified as investment in the books for a period of time). This opacity is what big companies seek all over the world. They can lose money for years and decades, and call them "investments".
2. The minimum amount fixed for foreign investment is $100 mn … over Rs 500 crs at today's exchange rates. By definition, the policy is designed in favour of the big guys. In reality, the big foreign retailers will invest billions to take over a ready market, as they have done in other countries. With global sales in the hundreds of billions of dollars, and with unlimited access to capital, even the sky is not the limit for what they can invest. The small Indian retailer and wholesaler and trader will simply be swept aside by their money power. Just consider this.
As they build scale, the foreign retailer can go into any mandi or market and buy up the entire supply of whatever is available there. All those dependent for a living as participants in the supply chain will be rendered jobless. Money power will enable the big foreign retailer to set the price at which they will buy. It will enable them to hold and sell at any price they want. This will be the exact opposite of what is in place today.
3. The foreign retailer can purchase locally all agricultural produce, including fruits and vegetables, pulses, fresh poultry, fishery and meat products, and sell them unbranded in their stores. They can virtually corner the market and trade in these products. If in a local region in India this trade is served by tens of thousands of small people, they will be replaced by giant retailers with money power. What the small trader will do when his livelihood is taken away appears not to be a concern of the government.
4. The policy says that at least 50% of the investment must be in "back-end infrastructure". What constitutes "back-end infrastructure" is not defined (not seen in the media so far). Perfect, says the foreign retailer. They will have to invest in infrastructure in any case. They will set up their own warehouses. They will have their own fleet of trucks. In India, lakhs of small truckers and owners of LCVs make a living moving agricultural produce. To the extent the big retailers take this over, this avenue of making a living will be closed.
5. The policy recommendation stipulates at least 30% of the procurement of manufactured and processed products should be sourced from "small industry". Such a concession is made precisely because policymakers are aware that small industry is under threat. What is lost in this is the fact that Indian retail trade sources far more than 30% currently from small industry. So this is no concession. Small industries will suffer a massive loss of access to the consumer and market.
Further such a stipulation cannot be implemented. The game of the big foreign retailer is one of building scale and fixing large sources of supply. How will the small supplier cater to them? How will the government ensure this happens? There is no clarity on this.
6. All compliance is supposed to be through self certification of the foreign retailers. They are supposed to maintain all records. In reality, what is the method to monitor them? So this process of self certification is touchingly naïve. The Indian government that views all Indian businessmen, companies and traders with a huge dose of distrust is quite happy to repose its trust with a bunch of big foreign retailers who are involved in hundreds of litigation issues all over the world. Why this faith in companies whose track record the world over is hardly clean?
7. The policy states that retail locations should be restricted to cities with one million plus population. This is to protect the smaller cities and rural areas from the predatory practices of the foreign retailers. This shows that the policy makers know and understand the implications. They are sacrificing the small retailers in the cities with full knowledge of the consequences.
8. The government is retaining the first right to procure agricultural produce. This is hardly a policy. Such a right exists with or without stating it. It is an admission that things can go wrong, if foreign retailers end up controlling the nation's food supply chain. This misses the point to a large extent. Even if the government keeps the right to procurement, but if the distribution channels are controlled by foreign entities over time, the nation's interest is still in jeopardy.
The government is playing with the lives of millions of small people. It is remarkable that a government that talks the language of "inclusive growth" is sacrificing the aam aadmi to support big foreign capital. As the old observation goes, it is not what they say but what they do that reveals the true colours.