Sunday, November 27, 2011

FDI in RETAIL in INDIA: A CORRECT PERSPECTIVE

The total retail industry in India is of the order of Rs. 2.3 lakh Crores and 95% of it comprises of normal Kirana shops, mom & pop stores and about 5% of organised retail sector. The latest government decision to allow 50% FDI in retail is seeing a lot of resistance from the opposition parties as well as some of the constituents of UPA. This action of government will add a small percentage to the organised sector of retail Still the contribution from normal Kirana stores will be in excess of 90%. It is hard to understand the rhetoric of employment opportunities getting reduced as a result of this and it appears to be similar to the fears that were raised when decisions on computerisation of government departments, LIC and banks was taken a few decades back. In fact more job opportunities of a different kind and higher order will emerge which will give all the benefits of employment which accrue from organised sector employment, to our youth.
Any capital inputs to the retail sector will upgrade our back end infrastructure, logistics capabilities and  realty sector directly and benefit the employees involved in giving them better remuneration, working environment and social security. The unorganised sector of retail is a major contributor to black money through excise duty, sales tax and income tax avoidance. Big retail outlets will help reduce this tax avoidance and contribute to the tax kitty of the country.
Those opposing this step are playing petty politics and are in fact working against the interests of their major vote bank of poor citizens of this country as the farmers will be deprived of getting better value of their produce and small time Kirana stores of getting cheaper goods from wholesale mega stores. In fact they are only resorting to mud slinging and slogan mongering for it aids them in cornering the government for immediate political gains. If we don't take decisions that will bring about major changes in our work force capabilities, say from unskilled to semi skilled and finally to skilled one, we are not going to add to their's and country's earnings. The dream of becoming a prosperous and developed nation will never become a reality.