A Battle called Retail Reform

Yesterday I was listening to an interview of Amand Sharma on NDTV. Sharma is an efficient minister. He has tried to sell the policy of FDI in multi-brand retails well. However, I failed to understand at least two of his reasons that forced the government to decide to go for the policy.

1. According to Sharma, the MNCs will give the better price to the farmers.
2. And the consumers will have to pay much less.

It will all happen because of the reduction in number of intermediaries that are today fleecing the maximum gain in the trade and causing the price rise.

I don’t understand why Sharma foresee things to happen this way. Will the MNCs go directly to the farmers? Will the farmers be able to negotiate the best price for their produce? Will not the MNCs, at the best, give only a little more than the MSP, price fixed by the government or a little more than what the intermediaries have been giving them. And at later stage, MNCs even may try to squeeze the best advantage from the farmers. Unlike US, with so marginal land holding and financial condition how will the Indian farmers face the MNCs? I like many, doubt that the farmers will benefit from this. At least there is no guarantee of this.

Why didn’t this happen when and where the Indian big business houses, such as Mukesh Ambani entered the retail with the similar promises?

Will these MNCs set up the cold storages and use refrigerated vehicles that will cut down the so much publicized the rotting and the wastages of the perishables? If they can, why couldn’t Indian business houses do that? Does it require any cutting edge technologies that Indians don’t know?

Perhaps one of the best technology developed by Wall Mart related to the networking and logistics, and it may use it in India, but will be of little value to others. But who will improve the time taken even today in ferrying goods between Maharashtra and Bihar because of the delay at interstate toll plazas?

I doubt these MNCs in retails will go the way Maruti Suzuki developed its vendors for the auto components, Will like PepsiCo these MNCs will help the farmers to develop the farm produce such as potatoes of the quality required by it?

Let the government not sell unnecessarily the big dreams of FDI policy as cure all to aam aadami as it did at the time of getting the bill of Nuclear Deal through the parliament and Rahul Gandhi telling a tribal woman that with nuclear deal she would get electricity in her hut.

I also feel like believing now the leaders in opposition that all these policies have come out of a decision by the present government to divert the public attention from the huge scam or mishandling of the allotment of coal blocks to unscrupulous relatives of politicians and business men who didn’t do anything to make them operative in last 6-7 years.

The government, through media and business houses is trying to project its act as a big ticket reform. However, there is one winner and he is Manmohan Singh. The act has certainly made him a brave administrator. All the foreign media that were campaigning for these policies to save the falling economy of the developed nations in West are having all praise for the India government and Manmohan. Sonia finding no way out succumbed to it.

I wish it happens. All the national newspapers are carrying today the ad marketing the FDI in retails showing the benefits to the farmers. I wish it happens.

There is no trouble in going for the policy. But this is certainly not a big reform. People of India will have to see how many MNCs enter the market with so many constraints. But the offensive decision is certainly neither a game changer nor a reform to benefit the small farmers, though MNCs certainly get another opportunity to expand their tentacles in another big country of 1.2 billion people.

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