Wednesday, November 30, 2011

INDIA: REFORMS IN RETAIL SECTOR

  In Kerala, on  29th of this month  the retail shop-owners  had stopped work and downed their shutters in protest against the Government decision to open the retail sector to the foreign investment. The parliament also is not functioning for the last few days out of protests from opposition. 

The opening up of retail sector to foreign players is  part of the economic reforms and the Prime Minister, a renowned economist, has been keen on the issue. Now that the Cabinet has passed it, he is up against a volley of protests as in the period of signing nuclear co-operation agreement with the U.S. The main point of dissent by the opposition and some of the allies of the Government themselves is that it would put the small and medium Merchants of India in peril.

 As for the Government, the Cabinet finally decided to approve the program  obviously on considering several factors. Now the economic front is in bad shape with an high inflation, dwindling value of rupee,  large trade deficit, and  dim stock market. In the circumstance the immediate necessity is to bring in some foreign exchange in to the system. The Government thought that the time was ripe to take up the reforms in the retail sector as it would bring in long term foreign capital and jobs.  The big international retailers like Wal-Mart, Tesco  and Carrefour Group were also pressing the Government to open the 400 Billion retail sector. 

The program is capable of creating jobs and helping both the consumers and farmers if properly implemented. The opposition against it is mainly political.  As for the small merchants, not all of them would have to shut down their business, the rural  merchants have nothing to fear at all.  Already Reliance and some others have shops in cities  where the big and small live side by side without complaints. Besides, the whole history of reforms was change of regimes in the job sector. When computer was introduced the traditional typists and stenos were disappeared from the world, only to create a  whole new job opportunities in computer software and hardware 
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The opposition parties, mainly Leftists and the B J P are shamelessly stalling the proceedings on this count for the last many days instead of going for an healthy discussion in the matter.  When it comes to financial reforms the leftists are always against it, but  B J P, a rightist party which supported and executed reforms while they were ruling,  too is standing up against it as they positioned while the Nuclear co-operation bill was in Parliament. It seems that they have become directionless these days. Chasing votes by hook or by crook can only help lose credibility.

In fact the Government faces more threat from its own allies than from opposition especially from Trinamool Congress of Mamta Banerjee. She is difficult to handle as proved in her stubborn fight against setting up car factory in Singur by the Tatas. 

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2 comments:

Shukoor said...

See this opinion also...

Twenty years ago, people argued that foreign companies would take over the Indian market; Indian companies would disappear in a few years; and small companies would not be able to grow. But, today, we find that micro and small scale industries continue to grow and are a nightmare to their MNC counterparts. The market potential is big and can accommodate everyone. There is space for the Nano as well as the BMW, the roadside idli shop as well as the KFC. Small retailers who deliver quality grow consistently, in spite of the presence of domestic giants. No matter who enters the market, quality and reliability with fair price will always succeed.
J. Richard Jonathan,
Letters to the Editor,
The Hindu

V.M.S. said...

It is a generalized statement. However as it says quality and reliability counts whoever operates the business. Thanks Shukur for the comments.