FDI IN RETAIL – NOW IN COLD STORAGE

With opposition to Foreign Direct Investment in Multi-Brand Retailing, the centre seems to have relented and put it on the backburner.

Is FDI in Retail good for India? Will it kill the small shopkeepers or the Kirana stores as is known in India. That’s a debate that has gone on and on for many years in India.

For me questions of a different kind arose when I recently visited the Elco Market in Mumbai’s western suburb, which was at one time, the first and biggest local multi-brand garment retail store to open more than 40 years back. Today it is surrounded by Reliance Retail, Globus, Shoppers Stop and many more.

For me the humour was to see a change in a different way. Back in those days, Elco Market would attract shoppers from every strata of society spread across Mumbai and during vacation time from across the nation. What was interesting then is that after filling desires of clothing, they also had the opportunity to fulfill their desires of the stomach. Outside Elco market, on the pavement, was a mouth-watering bhel puri, pani puri vendor where people would gorge to their stomach’s delight.

Famous Elco soon made this eatery more famous than itself. Slowly this pani puri vendor became bigger and bigger and set up a brick and concrete restaurant just atop Elco, also known as Elco (don’t know it by any different name). So strangely when I went this time on a public holiday, I realized that there were crowds of people come to eat from all across Mumbai but not to shop at Elco. Elco market was deserted. As I entered Elco and checked out clothes in a few shops, they seemed dusty and old. Other well known shops in that area like Parison, Hilton who also did business for more than half a century , downed shutters last year. Reasons may be varied.

So coming back to the question of FDI in Retail. Competition is always good. It is supposed to make it cheaper for us consumers and put more money in the hands of farmers and our wholesalers. Hopefully so. But the bigger question here is - Are our workforce being educated and trained for these bigger changes to come. So for example is an Elco or was a Hilton, Parison and its workforce changing with the changed times.

I wish to now divert a bit to a recent policy change that industry leaders tell me has been more detrimental than beneficial. That of the NREGA scheme or the National Rural Employment Guarantee Scheme. It puts Rs 100 a day in the hands of all those rural people who are unemployed, not as a dole out but for 8 hours of work. Industry people tell me they are finding it difficult to get workers in the hinterland as people are more happy to join the NREGA workforce. When I questioned a NREGA in-charge bureauract on this.. at first he vehemently denied that NREGA is the cause of shortage of labour. Later on in the conversation he explained that what happens is people work for 4 days and feel they have earned enough money for the week and chose to idle away the other days. So in a sense this scheme gives them a lot of flexibility and so they chose to work for NREGA. But he added that, only 2 lakh people out of the 8 lakh expected have opted for this scheme. An economist says that this has also led to a lot of demand in the rural region for consumer goods. Which is good. But unfortunately the supply has not kept pace with the demand. This mismatch is leading to higher prices and consequently inflation.

Would it not have been better to use that money in compulsory education / vocational training for the jobless which then automatically would give them employment.

Everywhere I go people talk of scarcity of people for jobs. That reminds me of a vital question asked by someone - What is the one billion plus population then engaged in? With so much growth, should there be unemployment on one hand and scarcity of labour force on the other? Should we even have an iota of poverty? There arises the important question of making India and its workforce ready for the many future changes. A holistic plan.

Industry and farming face a huge shortage of labour. Apart from NREGA, the other vital reason being given is that even the mall culture has roped in a lot of workforce (maybe the kind of people who would have otherwise worked in a factory?). The new generation would rather sit in air-conditioned malls earning quite a hefty pay rather than in factories and in the fields. Surely then the Walmarts of the world may not find it difficult to get people – whether the right kind of people I am not sure.

In such an environment what would then be a boon is if the likes of Walmart bring to the country advanced farming techniques, cold storage systems, better inventory and wholesale systems, buying agricultural produce at better prices, better pay systems, better infrastructure, labour might get shifted back to agriculture and industry. As industry bodies pro-FDI say "FDI in multi-brand retail could have created over 10 million jobs in three years, curbed wastage of farm products and benefited farmers through better prices for their produce. For the growth of this vital sector of the economy, which is likely to result in strong linkages with the farm sector and for the economy as a whole, it is imperative that reforms like these should take place."

So if any FDI changes the ecosystem for the better, it must be welcome.

All this really boils down to creating an environment to give people the right kind of education system and create a better, advanced ecosystem. Prosperous India is on one hand seeing prosperity and money and on the other low paid and harsh working conditions. Inequality in earnings has doubled in India over the last two decades, making it the worst performer on this count of all emerging economies. The top 10% of wage earners now make 12 times more than the bottom 10%, up from a ratio of six times in the 1990s.

The conclusion I wish to draw is as India prospers, the desire for the lower income groups in the rural areas and the hinterland and perhaps everywhere is to join the economically advanced class. They now don’t want to sweat it out in the fields and factories and still have more grease when they get home than food. Either they work hard and live well or then don’t work hard and actually prefer to sit at home. Guess it is their form of retaliation to exploitation and today they have some choice with NREGA. Hence industry and agriculture will have to uplift the conditions of these people to attract them to work.

Whether that is now being left to the likes of Walmart to do … remains to be seen.

Is He My Anna Against Corruption?

In Tamil language, Anna means elder brother. So for the past many weeks since the Anna movement began in India, I keep asking myself is he akin to an elder brother who will protect me from all the bad in the world – specifically in this case corruption - that most Indian citizens practice in their daily life without blinking an eye. I don’t seem to have a confident yes as an answer. Why I ask myself? Maybe because the buck stops here – that is with us citizens…. And honestly are we ready to stop corruption? or the bigger question can we get on with life without being a part of it….. We, without questions, buy a house with black money which the builder demands very openly under the eyes of our very government. If we don't, we won't have a home. Baba Ramdev went on a fast to action government to bring back black money hoarded abroad…. Why abroad , it is there in plenty in front of us and we seem oblivious of it. Parents will not even think twice to give donation to get their children a seat in engineering, medical or management schools. What’s the big deal – Children come first and how else to secure their future. I did not get to do an MBA because my father was asked to pay Rs 30,000 under the table, that was 15 years ago (so now you know how long corruption is breathing in India) and my father and me refused to take a management seat by paying that money. So here I am without an MBA.

In fact just yesterday I watched the movie Aarakshan which means Reservation – the movie though is a mix of the debate on whether there should be reservation based on castes in education (read Mandal Commission) and the trend of EDUCATION being transferred to rich money making coaching classes and out of schools and colleges. Well again to cite my own example, my father refused us, his children, coaching classes right up to graduation, in great part because of lack of finances but also because he strongly felt that school and our home work should suffice. Ah maybe I could have got 90% plus in my tenth exam had I gone for coaching against the 73% I got… well that is open to debate!. What the movie brings out beautifully is that if you stay an Upright and Honest individual you stand against the crowd and even many times against your family members who think you are being stupid.

So where does corruption begin and where does it end. I remember my Indian friend from America who visited me in the mid-nineties (and this was in post liberalization India) telling me how his uncle who was setting up business in India had to take N number of licences and pay N number of bribes. And I smiled and did not even look shocked….I said that’s ok, normal. He was furious to see my apathetic attitude. I then did not understand that corruption has become too commonplace for us to even understand that it is corruption.

So I guess the answer lies in changing our mindsets – that of politicians and ourselves too. If only the politicians get themselves to think of citizen welfare rather than 99% concentration on where the millions can be made and put in place systems where corruption is easily detected and stopped….. And If citizens have the courage to say No to bribes, we could move ahead to a cleaner India.

The Jan Lokpal bill is obviously a beginning but with a billion people spread across a large country, I wonder if it will bring the much needed change without change from within ourselves.

To end it on a festive spirit, it is Krishna Janmashtami today, a celebration of the birth of Lord Krishna, marked by human pyramids breaking the Dahi Handi on the roads. The Spirits are high here in Mumbai with many groups sporting white CONGRESS T-shirts, many the saffron SHIV SENA T-shirts and host of such groups ... all sponsored I guess by taxpayers money? ENJOY.

The Kerala Visit

One needs to on and off reconnect with one's origins... and here I don't only mean getting back to the place where one's ancestors came from.. Kerala for me. But also the need to reconnect to nature's way of life that is soul enriching.

Beginning my trip at a place called Makulam, a hill station 18km before Munnar, but untouched by tourism commodities, the sheer beauty of forests and tea gardens and waterfalls in the monsoon splendour is breathtaking.

The most interesting aspect though was sitting outside our room at the resort with the verandah lights on and you see dozens and dozens of the rarest of rare moths (I presume moths as it was night and attracted to light, otherwise they could be taken as beautiful butterflies) which is a far greater and rarer experience than watching such at the National Geographic channel (which I doubt has ever known of the existence of these species). ....the sheer variety, sizes, the colours, their eyes, their habits made you get a wee bit closer to the beauty of nature.

Interestingly my friend carried this green one below to his home in Cochin and it seemed oblivious of its new city surroundings.

You can push them, touch them, move them and it hardly matters. Most peaceful of all creatures. Something we need to ape in our bustling city life.

From Makulam to the simplest of simple Malayalee wedding.... my first and that too in Kerala...a temple, few rituals of less than an hour at the temple itself

and then lunch which was quite comic akin to the Mumbai trains... you need to fight to get a seat. There are gates that open... and before you can blink your eyes, the seats are taken up!!!! We got lucky only the third time. But the takeaways were - We are getting married, you are invited to be a part of it and you look after yourself!!!!!! No guest egos of was I welcomed and looked after or host egos of who all came, how they dressed and did they eat.

You wonder then why we don't keep our marriages simple rather than getting it more complicated by the day (Note: The ever increasing dishes in the menu of a city wedding and the ever increasing number of priests at Tamil weddings)

Then there was the trip to Kodamangalam (2 hrs from Cochin city centre), from where we went deep inside the forests to a tribal region. You witness there such stark contrasts of living. People living in concrete houses with all the modern amenities and many provided by the government..... and harmony with them are those who chose not to give up their tribal nature. One such was this 90 plus old man (some say 100 plus) living on a tree with some basic protection against elephants...

the animal to be feared as many stories abound of tribals killed by elephants. An absolutely contented tree man who communicates only with laughter, but yes must add that he too needs his daily peg!!!.. maybe to sleep without fear of the animals.

Walking through the forests, you get bitten by leeches who happily suck your blood without one even realising its bite... salt is the trick to get them off you ....you pick out and eat herbs and different kinds of fruits along the way...you taste pure forest honey ..you let the rain drench you....you meet the tribal people housed atop a hill with the lake and greenery as their view (but also with the risk of leeches inside their homes like our mosquitoes and animals around)....

And then you are in awe of the creativity of these simple uneducated tribesmen who make use of nature's gift to mankind to the fullest. ... bamboo which is used extensively around the house and to make curtains and mats which have a market value.... and coconuts being the most useful product. This man here in the photograph

makes the most interesting of products with mere coconut shells and shows immense creativity that only needs to be tapped and nurtured and encouraged so that he does not lose the nature's touch from his fingers.

I loved the monkey he made out of the coconut shell..a unique piece of art that seems so alive that I had to beg him to part with it and I brought it back to Mumbai.

My brother joked that now I don't need a mirror. All I could say is that it just keeps me connected to my origins!!!

How Government Operates Aarey Milk

For more than 30 years I was a loyal consumer of Aarey Milk as many Mumbaikars would be. Over the last few months, the milk quality has been deteriorating. The curd prepared out of the milk has a strange texture to it… custard like feel, all sticky and difficult to describe with nothing like a curd taste to it. Though the milk strangely seemed okay (till we realised that gradually in time we forgot how authentic milk tastes).

I visited the Worli office of Aarey Milk and met up with an official out there who was very cooperative. To begin with he said there is a huge shortage of most kinds of Aarey milk and especially the toned milk (the less fat one). Why was that? He said with a flood of private players entering the milk business, farmers are getting better paid and Aarey, under government rules, cannot go beyond a certain payment level. Well according to dairy industry estimates, the prices of milk have consistently increased around 17-19% in the last three years. This is attributed more to the sharp increase in demand from milk-based food industry.

Ok that’s regards quantity, what about the quality. He said he would check with the concerned milk booth guys (the Aarey vendors supplying to us in our area) if any kind of pilfering was happening.

But the other interesting things that came out during our long chat suggested there may be various twists to the Aarey growth story. When the milk and dairy business is booming with large number of private players entering this segment … you even have a private player like Carlyle Group, one of the largest private equity firms in the U.S. investing Rs 110 crore for a 25% stake in Tirumala Milk products, a Rs 750 crore dairy company..... you wonder what the government is doing with a long running till now successful enterprise like Aarey Milk occupying huge tracts of land in the city of Mumbai (Worli, Goregoan, Powai). And interestingly this Aarey official harped on it … for what reason I don’t know. He said you know politicians must be eyeing this huge land and on the same tone he himself thinks Aarey will close down soon. Strange words coming from one working in there. These words were also voiced by MNS MLA Pravin Darekar saying “I have a feeling that the government is eyeing the hundreds of acres of land owned by the Aarey dairy, whose milk production has gone down drastically.” This was said in the context of the opposition allegation in state assembly in March 2010 against the government leasing out 1,811 Aarey Milk Colony stalls to a private player for a paltry Rs 7 a stall per day.

Even if the story of a vast land in the heart of Mumbai is not the moot point here, the government seems to be showing no interest in making Aarey one of the leading milk businesses when it has a long head start and the resources available. Leave alone innovation and diversification, it hardly matters if private competition is eating up its market share.

I for one did not even wait for a response to see if the milk quality has been checked, I changed to another milk brand which so many others may do. Seems like the government can hardly be bothered about the business of milk as surely it is not as lucrative as the vast tracts of land it owns!!!

Now Wikileaks Says It

The Hindu, March 28, 2011

Six years on, a mixed record of implementation, but military sales hold the key.

Most observers of the Indo-U.S. relationship remember 2005 for the civil nuclear initiative that was launched during Prime Minister Manmohan Singh's visit to Washington in July. But the ‘New Framework for the U.S.-India Defence Relationship,' which was signed at the end of June 2005, was just as path breaking — at least for the U.S. government, which saw expanding military cooperation as central to the growing ties between the two countries.

Leaked U.S. Embassy cables, accessed by The Hindu through WikiLeaks, provide an unparalleled insight into the military and strategic considerations that drove – and continue to drive – U.S. administrations towards seeking closer ties with India. There is the sheer size of the Indian market for weapons imports, estimated by U.S. diplomats to be worth more than $27 billion in the ‘near term' alone. There is also the promise of a closer working relationship with the Indian armed forces in the Asian region.

Towards ‘interoperability'
In 2005, the United States felt it was on the cusp of a big breakthrough. It eagerly looked forward to the sale of a major military platform like the multi-role combat aircraft (MRCA) and an Indian willingness to sign up to “foundational agreements” that would allow U.S. forces to access Indian facilities and build “interoperability” with the Indian armed forces. But if the cables reflect Washington's sense of elation at the fact that “for the first time, India can afford (politically and financially) to purchase front line US equipment,” they also capture its anxiety, impatience, and frustration when the Indian side pushed back on various fronts or failed to respond enthusiastically to insistent American demands.
Mixed results
Whatever the promises held out by the 2005 defence agreement, the actual balance sheet today is a mixed one. The U.S. has made considerable headway on military sales; it hopes still to achieve that “breakthrough sale,” especially after striking an understanding in 2009 on end-use monitoring (EUM). But its pursuit of interoperability and access has not yielded the desired results.
The cables reveal that the Indian method is never to say ‘No' when asked by the Americans about the Logistics Support Agreement (LSA) or the Communications Interoperability and Security Memorandum of Agreement (CISMOA). Indeed, when pressed by U.S. diplomats, senior officials and Ministers blithely assert that the internal review process has “nearly” been completed and that the Cabinet will “soon” consider the texts. But these agreements remain unsigned despite five years of assurances. A senior member of the Cabinet described for The Hindu, Defence Minister A.K. Antony's jocular response when a ministerial colleague asked how he dealt with the American pressure to sign. “We have not said no,” he recalled Mr. Antony saying. “But I tell them, there are soooooo many procedures. We have to follow alllllll the procedures!”
This resistance cannot be traced to any firmness shown by the Indian government as a whole or the bureaucracy as an institution. It cannot, in fact, be attributed to any single factor. But the primary reason for the mixed balance sheet has been democratic opposition in the polity and public life of the country, to which influential sections of the media have also contributed.

Backstory to Pranab's 2005 visit
At the start of 2005, the U.S. believed the time had come to make a big push. The Next Steps in Strategic Partnership (NSSP) that the Bush administration had launched the previous year in tandem with the National Democratic Alliance government of Atal Bihari Vajpayee had already established a framework of mutual undertakings in which India and the U.S. would move the bilateral relationship forward. In the initial phases, India undertook to bring its export control and end use verification procedures for dual use items in sync with U.S. requirements, while the U.S. side would lift some export restrictions, provide a classified briefing on missile defence and allow India to buy the Patriot system.

For more go to Hindu website....