Traditional kirana retailers were upset on Friday by the Economic Survey favouring a phased opening of foreign direct investments (FDI) in multi-brand retail.
Traditional kirana retailers were upset on Friday by the Economic Survey favouring a phased opening of foreign direct investments (FDI) in multi-brand retail.
Pic for Representation only
"We are shocked by the way Prime Minister Manmohan Singh has done a volte-face, and is now pushing for FDI in the multi-brand retail sector. In the first week of February this year, he personally assured our delegation that as of now, the government had no intention to allow FDI in the retail sector. Now he has done a complete turnaround," Pravin Khandelwal of the New Delhi based Confederation of All India Traders (CAIT) said.
Khandelwal added that FDI for retail goes contrary to the government's own parliamentary standing committee study submitted on June 8, 2009, which had imposed a blanket ban on FDI in multi-brand retail, and organised domestic retailers like Big Bazaar.
"It is even more surprising because merely five years ago, a Reserve Bank of India study had mentioned that Indian traditional kirana retailers earn very small profit margins and their overheads are very low. The government has neither accepted its own parliamentary committee study nor rejected it. Simply adopting a policy is nothing but a mockery of democratic norms," said CAIT's national executive president, BC Bhartia.
The retailers also ridiculed the PM's economic advisor Kaushik Basu's claim that FDI in multi-brand retail will bring down food inflation. "This is a novel economic theory. They refuse to tell us exactly why there is food price inflation, even as they raid hoarders. We feel large-scale hoarding and reckless speculation on the commodity exchanges is responsible for inflation. If Basu is sure of his claim, he must also explain how allowing FDI in the multi-brand retail sector will bring down food prices," demanded Khandelwal.
Dismissing the 'Mexico theory' as one floated by Walmart, they argued that India is a market like Mexico where traditional retailers have not been wiped out of existence.
"Organised Indian retailers will eventually sell their businesses to MNC retailers, because they cannot compete against such financial muscle and logistical expertise. Once big Indian organisers are bought out, it will be the turn of traditional kirana retailers. After that happens, foreign players will have a total monopoly and this will harm consumers," Bhartia cautioned.
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