The truth behind FDI in retail

An example of street markets accepting credit ...

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Will UP really go bankrupt if FDI in retail were allowed? Why is TN and WB opposing foreign investment? In the meantime, why is the farmer’s association in favor of it? The funny thing is that we already have FDI in retail except that it is for cash-and-carry “wholesale” only. But whatever the original intent was, it has been diluted to mean a minimum of Rs.1000 ($20) per purchase, that can be paid using a credit-card and can include anything from liquor, food and soap! So what is the whole ruckus in the parliament really about?

The problem, apparently, is that if you give a choice between getting ripped off at the corner store and buying stuff in a clean, organized environment, the aam aadmi will chose the latter. So what are the traders in the kirana stores to do if everybody chooses to shop wisely? Its like saying, lets not build a bridge across the river because that would drive the ferry out of business. Building the bridge is a common good. It cuts down on travel time, it makes it cheaper and safer. And hence, the cost to society of the ferry going out of business is outweighed by the benefits.

Lets apply that logic to multi-brand retail. Its no secret that there’s tremendous waste and corruption not only in food-processing but in every step of our supply-chain. The government or the domestic industry, on its own, neither has the will, money or the expertise to setup a system that can fix those problems. After spending an inordinate amount of time in decision-making limbo and almost a year with inflation in double digits, the government finally mustered up the courage to put this in play. And now the peanut gallery has erupted in self-righteous rage.

So what are the nay sayers protesting against anyways? Are they against brining down inflation? Are they against reducing waste in our supply-chain? Are they against more choices for the aam aadmi? Are they against getting farmers paid market rates for their work? They are protesting against something that is for the common good; supported by trade organizations that represent the kirana stores. In the end, the aam aadmi can only vote but the traders can pay.

Support FDI in retail! It is the right thing to do.

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