IS ALLOWING WALMART IN INDIA REALLY A GOOD IDEA?
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| Research on Wal-Martisation reveals that the price of any product from a retail outlet like Wal-Mart is invariably 10% more than what is available on the streets |
"Are we knowledge-proof?" asked the late Prof Raj Krishna. As memorable as his other coinage, the Hindu rate of growth, this question is relevant, given our current growth strategy.
The SME sector is a vibrant part of the economy, accounting for 40% of manufacturing and generating jobson a scale second only to agriculture.
The figures are similarly significant for handicrafts and handlooms. According to the Tenth Plan, GDP from handicrafts contributed about 25% of GDP of unregistered manufacturing sector in the country, and about 7.5% of the total manufacturing sector. However, the number of craftspeople and SSI producers has been coming down, due to the sector's marginalisation and lack of investment.
Strengthening this supply chain in the manufacturing sector would make an enormous contribution to the revitalisation of the Indian economy, generate growth and jobs and insulate India from global crises.
Yet, when we see the kind of generous financial benefits given to the high end of the manufacturing sector - concessions for the 'big', for example, the big space and interest in the Delhi-Mumbai Industrial Corridor - one wonders if Raj Krishna's argument is not proving right even now.
While every concession - of tax, land and policy attention - is being beamed at the big players, the engines that are driving steady outputs as well as jobs are elsewhere.
Another dimension to knowledge-proof-ness is bringing FDI in multi-brand retail as the most-favoured and important revitaliser of the Indian economy: lowering prices, linking the farmer to the consumer and creating economies in the food chain.
Research on Wal-Martisation reveals that the price of any product from a retail outlet like Wal-Mart is invariably 10% more than what is available on the streets. An ICRIER study in2008 estimated the Indian retail market at close to $409 billion, while Wal-Mart's total revenue was $405 billion. While for the same revenue, theIndian retail sector employed closeto 40 million workers, Wal-Mart employed only 2.1 million.
Bulk buying even as it is now practised in India by companies such as Reliance leads to contract farming with buy-back arrangements against credit and technical inputs. Experience from both Karnataka and Himachal Pradesh, apart from Latin America and Africa, shows that contract farming eventually results in ownership of the land by the company.
India is fortunate in having the example of the 'Anand pattern', the cooperative structure behind the Amul brand, as a way of introducing scale in the agricultural economy and ensuring better techniques of production, greater efficiency in the supply line and higher quality, apart from larger profits.
Here we see small farmers being enabled by modern techniques and structures to produce milk efficiently, with full pick-up and marketing as a service by the federation. The link between the consumer and the producer is done. Investing in finances and bringing skill resources to this kind of model of linking production to retail can be done without disturbing ownership or bringing in international retail experience.
Women in New Delhi slums wind wire for electric irons. This is, of course, highly 'indecent' work, but it is an illustration not only of the desperation for livelihood, however exploitative and oppressive, but as also of the preference of the citizens to work for their livelihood - to see and grab opportunities. It could be argued that these sectors are providing wages even in hardship and, therefore, generating the broadest field for livelihood