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.