Just as the Cafe Coffee Days and Baristas could not wipe out the chaiwallahs on our streets, FDI should not throw kirana stores out of business (Devil in the Retail, Dec 12). People visit the former only occasionally, not on a daily basis. Likewise, people won’t go to a Walmart for their daily needs, but for special deals. When we run out of sugar or spices, it’ll still be the neighbourhood store we’ll run to.

Aditya Deekonda, Bangalore

I’m amused to see the Leftists coming out in support of the ‘bania’ class. Since when did they change from being the “wily, bloodsucking, greedy, neighbourhood thugs” to “poor, helpless victims?

Kiran Bagachi, Mumbai

Like India covered itself with glory in the software industry, we can create our own model of retail to suit our conditions. In fact, our retailers can buy out the Walmarts of the world. Look what the Tatas did with Corus and Jaguar.

T.N. Vaidyanathapura, Bangalore

FDI in retail has to be implemented only after careful consideration, not as a means for the UPA to counter its policy-in-paralysis image. Big retailers are not known to care much for labour laws, nor are they very employee-friendly. They also squeeze suppliers. It would be better if our own businessmen could utilise the available resources to offer retail technologies at cheaper prices.

M.K. Somanatha Panicker, Sruthilayam, Kerala

What are the guys opposed to FDI in retail scared of? Competition begets healthier business. Aren’t our local dhabas coexisting with kfc!

George Jacob, Kochi

There’s no doubt about it: Walmart, the largest corporation in the world, perhaps even larger than our entire retail market, can displace lakhs of small and medium businesses, farmers, hawkers, vendors and consumer cooperative stores. Their business model drives out competition and drives down wages and labour standards. In the US, thousands of small and medium businesses have closed down due to its aggressive low-price strategy. Many workers are forced to work off the clock without getting paid, which is why workers in over 30 states across the US sued Walmart, and won!

Shyamal Barua, Calcutta

FDI in retail has been a hot potato in India. Firstly, why is so much Indian investment leaving the country? Policies are obviously not conducive for investment, and I doubt FDI in retail would change that. Further, is there any policy that prevents predatory pricing as has been the case in other countries? Chains already present in India, such as Reliance, do not go straight to farmers but rather to the same middlemen who still thrive because now they simply have to sell all stocks to one entity rather than to many smaller ones. It is interesting to note that the government pushes such a policy for warehousing, cold or otherwise, so as to cut down capital expenditure. The British example shows big retailers have outsourced manufacturing, a fundamental problem for the British economy. An article in the Economist points out that similar chains prefer to overburden existing infrastructure rather than create their own.

Rahul Mudholkar, Pune

In all the countries Walmart has set up shop in, it has put other retailers out of business and driven down wages. The chain, in fact, has a clearly defined anti-union policy aimed at preventing its workforce from gaining any collective bargaining power which could result in increased wages, covered health benefits or job security.

C.K. Subramaniam, Mumbai

FDI will be a one-way street—there will be no turning back if something goes wrong.

Pinaki S. Ray, Adelaide

Who needs billions of dollars for a mere five per cent of the population?

Dinesh Chauksey, Bhopal

 If FDI in multi brand retail is really so beneficial to the country, why is the government afraid of discussing it in the parliament? Why does it do it only at the back of the Parliament? Don't they have "faith" in the wisdom of the people's representatives? Do they have no respect for the parliamentary committees which examine threadbare all such issues in the greatest possible terms, consult professionals and experts, undertake social-cost benefit analysis and then help taking a fair decision? Only the lobbyists are making cacophony in the name of "reforms" and "growth"? Talking reforms without social-cost benefit analysis is the worst form of dishonesty and simply a "trap" to harm people and the country. This hurry by a government known for corruption and scams will inflict untold miseries on the country and destroy the poor economy of India built so assiduously by our nationalist leaders.

 This is propaganda for Walmart & co. witting or unwitting , it doesn't matter.

Look at the below paragraphs,

"Farmers? Visible lack of support for the naysayers speaks volumes about the potential gains to farmers—provided legislative and other safeguards are quickly put in place

"For consumers and producers to really benefit, though, further reforms, carefully thought out, will have to be pushed through."

As you know, Manmohan Singh and Ahluwalia and Chidambaram & others care so much for ordinary farmers. They work for the welfare of poor with so much dedication. 250,000 farmers who committed suicide over the last decade , that is only an insignificant detail.

Manmohan singh & co will surely push legislative and other safeguards to protect the farmers and other reforms , carefully thought out, will also be pushed through, at least as quickly as pigs will start flying in the skies of India.

FDI in multi-brand retail is the best way forward to improve quality and remove the middlemen who cheat both the producers and the consumers. However the local produce, variety and innovation should not die out.

Hence it should be mandatory for all foreign companies to source locally to atleast a declared percentage based on the goods category. The law should spell out clearly in which areas should one source locally minimum 100% (eg: fruits, vegetables) and in which areas minimum 75% (textiles), 50% (electronic goods), 25% (cosmetics) etc. Tax breaks should be given to companies which fund growth of local enterprises. Care should be taken that local sourcers do not serve as a conduit to cheap imports and themselves become middlemen.

 At the heart of the debate is a simple question: are we good enough to compete with the rest of the world ? Since 1991, the answer has been largely in the affirmative.

 just hark back to the 80's and 90's when india crowned itself with glory in the software industry.  we can create our own model of retail suited to our conditions.  in fact, our retailers can buy out the wall marts of the world.  just see what the tatas did with corus and jaguar. indians are all over the world and calling the shots.  all that the government should do is to get the illegal money stashed abroad and release it to the indian farmers and industries.  

The "back-door entry" of the world's biggest retailer WAL-MART not only sparks fears of destruction of the livelihoods of millions who eke out a living from retailing but also spell disaster to the whole social fabric of this country.

Wal-Mart, the largest corporation in the world and even larger than the entire Indian retail market can displace lacks of small and medium businesses, farmers, hawkers, vendors and consumer cooperative stores. Their business model drives out competition and drives down wages and labor standards.

Even in country like US, thousands of small and medium businesses have closed down because of Wal-Mart's aggressive Low Price Strategy. Many workers are forced to work off the clock without getting paid, which is why workers in over 30 states across the US sued Wal-Mart and won! Is Indian retail sector mature enough to face world's most powerful retail giant?
To dig further into the question, pls browse the article "Corporate hijacking of the Retail must be Stopped", vide the link http://www.youthejournalist.com/article.php?aid=2213&sid=19 

India has expertise in every feild and do not need WALL MART to teach us anything. All that Indians needs to be is LAWS to force dis-honest to be honest.-- Stop police and Goons from collecting money from all trucks.-- Allow Indian private firms to establish storage for food grains and perishables. Allow private firms to buy, transport and store food items all over India by withdrawing all restrictions.

Capital??? Obvious is to get the INDIAN LOOTED BILLIONS from SWISS BANKS. Else reduce interest rates on bank loans. It is plain stupid of RBI to push up interest rate to 12% in India while allowing FDI be brought in from USA which has just 2-4% interest rate blaming capital shortage.  Last resort should be pass a LAW liquidate the GOLD holdings of Govt- invest it in infrastructure.

 Which countries are more troubled with economic recession or are at the verge of bankruptcy? These are those countries where these giant retailers are already doing their business. Then what makes anybody think that we should welcome them. We don't need those billions of dollars for 5% population at the stake of 95% population. We don't need a dummy economist Prime minister whose favourite pastime is playing with figures. Prime Minister must be one who is the leader of the ruling party, who has direct communication and has struggled with people of the nation. A pseudo economist who does not know how to curb inflation, who does not know how corruption takes place in ministries, Who does not know what impact hoarding and black marketing have on inflation. who does not know the plight of 95% population, who does not know how to fill enthusiasm & energy in people for nation building, who reads written speach word by word, who does not know the sanctity of the constitutional post (CVC, Thomas), who does not know what is happening in PMO ( S-Band & 2G scam), who does not know how to talk with a straight eye to eye contact ( rather talks with a straight face), Who has put the nation 'on sale' in the international market on the false threat of GDP. Don't panic India has had many PM before MMS but none of them was a puppet. MMS is a shame on the country as PM. As a citizen, he is ok as he may be knowing many other things better than we do.

UPA is right - FDI in retail is going to get rid of middle men and benefit farmers at one end of the spectrum and the consumer at the other end.

But this middle men include millions of small traders, dealers, distributors and the like. While there is no denying that there are sections of middle men - greedy and unscrupulous, UPA is seeking to replace this large section by a handful of MNCs. If middle men are got rid of today, nothing prevents a cabal of MNCs from holding the nation to ransom at a later date, when both suppliers and consumers are at their mercy.

Inflation is high in India becuase the infrastructure is shoddy. The urban population is growing and needs to be supplied from greater distances.  Fruit and vegetables need to be moved quickly otherwise they rot. There is a great deal of spoilage.

What we need are roads, good transportation links, economies of scale, adequate power supply and so on. FDI in retail will not solve these problems. It will not build power plants or roads. The reason why these aren't built is due to deeply rooted problems like corruption and political paralysis.

Growth in modern retailing will happen slowly, and there is no particular need for FDI. But it should not be feared. It can be introduced to increase competition, but it brings no particular technology. If a foreign retailer imports goods from China well thats already a reality. Manufacturing in India is a headache and most Indian businesses prefer to import anyway.

Allowing FDI in retail which means big super market chains like Wal Mart arriving in India with 50% partnership with local big tycoons will affect our own wholesalers.

That segment of wholesalers  would be hit. Though retail kirana stores need not worry much because, these big supermarkets have already been there, which includes Reliance,Spa,Spencers and Futures and also very much  local big super markets which confine to a perticular city, for example in Hyderabad we have central,tri-netra etc., but these are not famous for any brand promotion as such.

The big talk about farmer getting immensely benefitted is quite an exaggeration bacause we already have big supermarkets and we can see how much they are a benefit to our farmers at least proportional to theie  size for example Reliance ? It will not be much.

Job creation , we can say  Yes but even  that will not be at the scale of BPO. It is just too much of a comparison. Profits , will be carried away by foreign companies to their countries, the moment rupee value goes down , or our country goes to war, or in an emergency like internal disturbance  these people , first of all take away their money,profits and close down shop causing sudden job losses aggravating  the existing problem.

Still as the world is moving forward we will also move and allow FDI in retail which mainly promotes certain brands like softdrinks, fruit drinks,noodles,clothes,vanity bags,perfumes,hair oils, and all types of decoratives etc., These they will import , source them from cheaper markets like China and they are not going to source these from our  farmers.

Even the food grans, fruits which they may ultimately source from indian farmer would be very limited to certain vareits only like Basmati rice, Alphanso mango etc.,

So, we can allow FDI but only limited to  fewer than 25 maga cities of India , that is all with 50% partnership. Anything more than that would kill demand for desi goods ,desi brands and finally kill our wholesale markets.

 Let us agree to disagree, but let us have a healthy debate. We are a democracy and we have the right to express our views……..First, we need to put things in perspective. Hype is what politicians indulge in. Debate should not stoop to their level….

I don’t see the need for these sermons here. First ,DLN writes that since we lack capital that is stashed away in Swiss banks, we should get capital from the FDIIs When a counter-point is made, he calls it nonsensical. He does not illustrate any point that he makes by citing sources or statistics. And he blandly talks about googling to validate a business model. Are these his ways of having a healthy debate?

The GDP of the US is $ 14.5 trillion, Western Europe\s is over 10 trillion, China's is nearly 6 trillion, Brazil's is over 2 trillion and India's is about 1.7 trillion. (One trillion is Rs. 50 lakh crores).

Generally correct. European union has a GDP of 16.2 trillion USD. China is 5.87 trillion. But you also have 172 countries which have a GDP less than India’s, including Australia, Canada, Switzerland, South Korea and Denmark. The point is that India’s GDP is 9th in a list of 183 nations.

Now I know that as a ratio of GDP/Population, the figures rankings will be very different. But I don’t see many readers worrying about the relatively low GDP of China as compared to EU and the US. The GDP/Population Ratio of India is 0.114 and that of China is 0.124. That of US is 5855 and Brazil is 0.604.

US and Europe are facing severe recession, yet our economy is nowhere near them. In terms of technology, infrastructure and capital, they are far ahead and it will not be an easy task to catch up, forget overtake them.

All things take time. The recession in the West is about 5-10 years old. The growth in India and China is about 15-20 years old. To lament that “we are nowhere near them” shows a deep-seated inferiority, and unrealistic expectations. The old Malthusian paradigm, - too many people, too few resources, therefore poverty – is no longer true. If you just consider each human being as an asset and not a burden, you can get a different perspective. You can find out how to create and manage domestic markets, how to develop technologies and services geared to such markets, how to create indigenous knowledge systems and so on.

Coming to FDI, guess what? India ranks 22nd in terms of FDI received with 190 billion. China gets 575 billion, Brazil gets 350 billion. Even tiny Hong Kong attracts nearly a trillion.

I consider that a blessing. The lesser FDI in a country, the more it can do to raise its own resources. FDI is like sugar, a sweet poison. BTW, India is actually at No. 35 in the rankings and gets 76 billion :-)

We are nowhere on the world map. Because of the backward state of our economy, our growth rate is high but all talk of becoming a superpower is pure hype. We need an investment of 2 trillion USD in infrastructure alone. which means about Rs.One lakh per head. Such amounts cannot be raised through internal accruals.

To be somewhere on the world map is not the primary need. As DLN himself points out, health care, nutrition, shelter, jobs, roads etc are the higher priority. It is also necessary to know from where DLN cites the figure 2 Trillion, one lakh per head etc. There is supposedly USD 1.4 trillion Indian black money in Swiss banks. Add the amount of black money in India ( Rs 61,64000 crore), and that’s more than enough money to ferret out and utilize.

For all our greatness, we have 40 % of the world's malnourished children, the world's worst mortality rates for pregnancies, the world's biggest concentration of illiterate folk. This is totally unacceptable in the 21st century.

No arguments regarding the goals and direction. All I am saying is, just because we are thirsty in a desert, we cannot mistake a mirage for an oasis. This happens all too often. The right way is to make the desert bloom, one tree at a time.

It is not about a mindset that everything foreign is superior. I have spent a considerable period of time outside India and I know about their weaknesses and our strengths. We are not pushovers to be taken for a ride by western capitalists. Yet, we need their capital and their expertise. If we create an environment conducive to business, we can attract capital. If we stick to our old ways of doing things, then poverty cannot be tackled.

Unfortunately, not everyone is so wise in weighing the options. We HAVE been pushovers earlier, and have been ruled by traders who plundered this land to benefit their society. We invited them in the first place, as mere traders and then as soldiers. We should learn at least from our own history, if not from that of South, Central and even North America (or South Africa).

This is my opinion. I am not a decision maker. I am just an ordinary Indian who is frustrated at the huge mismatch beween our potential and our achievements. I am upset that millions of my countrymen are still living in the stone age even though we have the ability to produce nuclear weapons and launch satellites into geosynchronous orbits. I am disappointed that people who claim to speak on behalf of the poor have a vested interest in ensuring that they remain poor.

I applaud the sentiment, but only question the way to get out of our current situation.

This is my last post on this subject. Thanks to all who have taken the trouble to read my comments and to those who responded to it.

Thanks for a good debate.

 Let the MNCs with bags of money enter the housing sector building quality flats not more than 1+2 to help the poor if MNCs will be quality conscious and are service minded in order to sweep out all our corrupt contractors. Let them bring cheap building materials, cement, steel and labour also. Why not they do it? Let them enter the service sector of electrical distribution to prevent theft of power and providing new services at the earliest saving public from the corruption dens of electricity boards? Why not they do high class six lane highways  offering low tariff check posts? Why not help farmers improve soils conditions for better crops to help indians get good quality pulses, grains, vegetables etc., Elsewhere it is told that the push through for FDI is only an attempt to milk corrupt money for congress to fight the impending elections. putting two and two together it is always four.

 There are two extremes to the FDI argument. One side speaks as though FDI is the panacea to all our problems - inflation, unemployment, poor infrastructure, farmer exploitation etc. The other side clamours that it would only create problems - small retailers would be put out of business, will be another East India company, cause loss of livelihood to millions etc.

The truth, as usual, is somewhere in between.

Some pro agruments:

a) Farmers would benefit: Recently on a TV channel the head of a farmers' co-op said that a farmer typically loses about 25% of his revenue when he takes his produce to the local market. If a price of 100 has been set for his produce by the pricing mechanism, a farmer shells out 5 for transport, 10 to the middle man and 10 as some sort of price for "quality". However, if a huge retail chain would come to the farmer's door step (not sure if logistics permit this, but this was the argument), the middle-man is more or less eliminated and since produce is collected on time, quality is not compromised. Thus if a retail chain pays the farmer even 90, he would be getting 15 more than what he is getting right now.

b) Consumer would benefit: Better storage facilities would lead to better quality of goods (especially perishables), better pricing as middle-men have been eliminated, better choice (most goods available under one roof) etc.

c) Tax revenues would increase: It is a well known fact that most of the small retailers fudge their books to evade taxes. You just need to walk around Delhi's markets to see this. Small retailers would be driving the fancy cars (may be not the luxury brands, but definitely better than Maruti 800), live in huge houses while earning an income of around RS.100,000 per annum from their businesses. Since most retail chains have electronic tills and all sales are recorded, the revenues are accurately recorded and taxes revenues may increase (by what %age cannot be determined, but will definitely increased).

d) Social improvement of youth: In a typical "lalaji" shop we have one or two underage kids working and helping the shop owner. These chaps often work in dingy conditions, do not have any employment benefits like a regular income (they're often paying-off their parents debts to the lalaji - am I stating a stereotype?), health insurance, provident fund etc. When youth are employed by a large retail chain, they would definitely be better off (the underage ones would not benefit, though).

Some con arguments:

a) Scarcity of goods: The local markets where the farmers would take their produce to cater to not just the cities or towns but also to smaller towns and villages. So when the retail chain turns up at a farmer's door-step and mops up the produce, the farmer would not go to the local market and some other town or village that depends upon the local market for supplies would not have access to the same. This may lead to a shortage of goods in the smaller towns and villages and may cause prices to go up there.

b) Change crop behaviour: Retail chains may change crop behaviour by forcing farmers to cultivate crops that have more demand and provide more margins in the markets in which they operate. This may lead to farmers to discontinuing crops that are "not in demand" and would lead to shortage of those crops and increase in prices.

c) Put the squeeze on farmers: This is the ultimate communist argument (or conspiracy theory) - once the retail chain makes the farmer totally dependant on it, it would start putting the squeeze on him to lower prices with the threat of rejection of produce. so, though the farmer may benefit initially, in the long term he may suffer.

d) Retail does not mean farmer alone: While there are arguments that the farmer would benefit, a typical lalaji does not sell vegetables alone. He also stocks and sells FMCGs etc. Due to their high volumes, retail chains would be able to negotiate better prices for their purchases with manufacturers and suppliers who would trade-off their margins for volumes. The retail chain can then sell below the MRP also and still make a profit. The lalaji would not have that negotiating power with the manufacturer/supplier and would have to buy at a higher price and sell at MRP. The lalaji would slowly but surely outprice himself from the market.

Both the parties arguing this out should acknowledge the pros and cons and work out mechanisms / regulations to maximise the benefits and minimise the ill-effects.

As for me, I vote in favour of FDI. My main motivation is that I am a salaried person and hate to see all those lalajis evading tax while I keep seeing 33% of my salary taken away upfront.

>> "Gurumurthy follows up with another excellent article on the subject" - Ganesan

Three fundamental flaws with that article.

ONE: India's retail penetration is about 1 per 75, not 1 per 8, as claimed by Gurumurthy. I am not sure where he got those numbers from. So, it is quite comparable with other developing economies like China and Brazil. So, the 5% job penetration claim is not as far off the mark as Mr. Gurumurthy would like us to believe.

TWO: The article gives an impression that all smal retailers will be wiped clean by FDI. That is, at best, misleading, and worst, falsification. FDI in retail is being allowed to operate only in large metros. So, the rural retailers will remain protected. In fact, rural India could benefit from better price and volumes once the multiple layers of dalaals are gotten rid of.

THREE: Mr. Gurumurthy's taunts on Walmarts building the roads is misleading as well. Retail infrastructure and logistics is more than just roads. Storage and supply/ distribution network are more critical components. Both the government and the private sectors have failed miserably on this front.

If Mr. Gurumurthy is advocating "relation-friendly market economy" (whatever shit that means), why only for retail? By that logic, why should the Pantaloons and Big Bazaars continue to operate? Why should that approach not be applicable for manufacturing, IT etc? Let the local lads drill oil instead of a devlish Reliance doing it. Or, why not encourage/ ask the US IT industry to go for that instead of outsourcing to India? 

DL Narayan,

Post # 14 was marvellous.

I don't know if FDI is good for us or not. From the little that I have read on the issue, I think it shall do us more good than harm. So yes, I wish that political parties supported it.

However, as far as politics on the issue goes, I'm not sure if BJP genuinely is against it, or wants it, but is scared of alienating the trader lobby. It's quite possible that there are sections amongst it, that support it, but on the whole, the party is not certain, which is why it has taken different positions at different times, and never moved towards implementing it, when in power.

If the fear of the trader lobby, or a need to oppose the govt, is forcing the BJP to oppose a decision it otherwise supports, I wish it would get over such fears, and support it. However, no political party goes against the very basic interests of its core constituency.

 Let us agree to disagree, but let us have a healthy debate. We are a democracy and we have the right to express our views. Nobody is advocating unbridled capitalism and India of today is not the India of the 18th century. What we need is a pragmatic approach. We have to protect our interests but that does not mean shutting all doors because of events that happened a couple of centuries ago.

First, we need to put things in perspective. Hype is what politicians indulge in. Debate should not stoop to their level. One might have valid concerns but the answer is to seek a middle ground, not reject anything out of hand because of unfounded fears.

The GDP of the US is $ 14.5 trillion, Western Europe\s is over 10 trillion, China's is nearly 6 trillion, Brazil's is over 2 trillion and India's is about 1.7 trillion. (One trillion is Rs. 50 lakh crores). US and Europe are facing severe recession, yet our economy is nowhere near them. In terms of technology, infrastructure and capital, they are far ahead and it will not be an easy task to catch up, forget overtake them.

Coming to FDI, guess what? India ranks 22nd in terms of FDI received with 190 billion. China gets 575 billion, Brazil gets 350 billion. Even tiny Hong Kong attracts nearly a trillion.

We are nowhere on the world map. Because of the backward state of our economy, our growth rate is high but all talk of becoming a superpower is pure hype. We need an investment of 2 trillion USD in infrastructure alone. which means about Rs.One lakh per head. Such amounts cannot be raised through internal accruals.

For all our greatness, we have 40 % of the world's malnourished children, the world's worst mortality rates for pregnancies, the world's biggest concentration of illiterate folk. This is totally unacceptable in the 21st century.

It is not about a mindset that everything foreign is superior. I have spent a considerable period of time outside India and I know about their weaknesses and our strengths. We are not pushovers to be taken for a ride by western capitalists. Yet, we need their capital and their expertise. If we create an environment conducive to business, we can attract capital. If we stick to our old ways of doing things, then poverty cannot be tackled.

This is my opinion. I am not a decision maker. I am just an ordinary Indian who is frustrated at the huge mismatch beween our potential and our achievements. I am upset that millions of my countrymen are still living in the stone age even though we have the ability to produce nuclear weapons and launch satellites into geosynchronous orbits. I am disappointed that people who claim to speak on behalf of the poor have a vested interest in ensuring that they remain poor.

This is my last post on this subject. Thanks to all who have taken the trouble to read my comments and to those who responded to it.

 Gurumurthy follows up with another excellent article on the subject

   http://expressbuzz.com/opinion/columnists/market-economy-or-market-society/340201.html

 Nonsensical argument. We do not have money to fund our economic growth.

The nonsensical argument is by DLN. We do not need FDI money to fund growth. Our GDP is grwoth is between 7 to 8%. Europe and US are down to 1 to 2%. They will start experiencing negative growth soon. That's why international capital is looking for places to deposit and then withdraw whenever it feels like. Rememeber the run on the Thai Baht or the Malaysian ringgit?

Google it. Nobody will finance a business model if its not viable ....

What an enlightened advice, too difficult for DLN to himself do it. Of course he has to just wave his hand and the viability will be found by yours truly. Who financed the risky home loans, using derivatives called credit default swaps, CDO and synthetic CDO.? Where did the Savings and Loans crisis come from? What happened to Meryll Linch and Lehman Brothers?

Nobody will put their money into harebrained schemes.

Yes, thats what they say when they sell Ponzi Schemes.

No, we don't. About 40 % of the food we produced is lost due to poor SCM. Look at the performance of the FCI and PDS....

This is the mindset which starts with "West is best, India is corrupt". I gave examples earlier about how public-private partnerhsip could modernize and streamline SCM, just as we have done with National highways, Railway reservations etc. It is a matter of will. But DLN would like to sit back and let international capital take care of it for us, since he knows that we are irredeemable. This was what the Kings and Nawabs thought when then hired European armies to fight their wars.

Anyone who has travelled abroad can see the huge difference in the standard of infrastructure.

And I suppose they did it by importing capital from the rich Indians, Chinese and Koreans of that time. They loved us and our money. No, they financed it themselves, and showed the kind of will that DLN "knows" we don't have.

If we do not learn from the mistakes of our Socialist past, we are doomed to eternal poverty.

Agreed. But we should also learn from the present crisis in the developed world, and their possible future journey downwards. By the way, India was NOT eternally poor. Before the British Raj began, we had 22.6% of the world trade, and was down to 3.8% by the end of it.

Tearful London

Mr.Lalchang Bajjan Bhai Long time but we need to start from somewhere all the ruckus created by BJP walls and every one else has no substance you know very well just because you had a rubbish pint of beer at a pub in london not necessary mean all pubs are bad or you should stop drinking. Coming to this case the simple facts are retails thru FDI creates more jobs so the retailers themselves and the people they employ come under TAX radar more tax unlike now the kirana shop walls do not have taxes and they employ peole in most inhuman conditions and like slaves to be blunt as i know you like truth which is always blunt. Do reply from the snowny slopes

So, by allowing FDI in retail, we get back the money stashed away in Swiss banks?

Nonsensical argument. The point being made is that we do not have money to fund our economic growth. Return of stolen wealth is something that needs political will, not FDI. Nobody is advocating opening up the country for foreigners to loot us. Everyone will take advantage of fools. We have to be diligent in protecting our interests.

What is a validated business model?

Google it. Nobody will finance a business if it is not viable. The viability is determined by sophisticated tools developed for validating a project. Nobody will put their money into harebrained schemes.

To do accounting and auditing we need Arthur Andersen or Ernst & Young?

The reason we have so many scams is because our accounting standards are far below international standards (GAAP or Generally Accepted Accounting Principles). To achieve these standards, we need an army of CA's and we need the procedures developed by these international consultants. Same with insurance, It is no longer limited to life, cars and health. It is a highly complex and specialised business and there is an immense shortage of actuaries. In a modern economy, Insurance plays a key role.

What about Supply Chain Management, we don't have the experience?

No, we don't. About 40 % of the food we produced is lost due to poor SCM. Look at the performance of the FCI and PDS.  Badly stored food is rotting in warehouses while at least 40 to 50 % of our children are suffering from acute malnutrition. Farmers are committing suicides but we do not hear of middlemen going bankrupt.

Anyone who has travelled abroad can see the huge difference in the standard of infrastructure. We need investments in infrastructure without which we cannot maintain a minimum growth rate of 8%,  which is a must if we aim to remove poverty in a couple of generations.

We should not say no to FDI. We need it to finance our future. We should learn from our past mistakes and also from our successes. Status quo in a fast moving world means moving backwards and that is not what our masses expect. If we do not learn from the mistakes of our Socialist past, we are doomed to eternal poverty.

So, by allowing FDI in retail, we get back the money stashed away in Swiss banks? And what is a validated business model, is that decided by the self-same investors looking to multiple money, no matter which society gets waylaid?

And to do UID, we need the expertise provided by multi-nationals? To get electricity, we need investment by  Enron? To do accounting and auditing we need Arthur Andersen or Ernst & Young? What about Supply Chain Management, we don't have the experience? For insurance, AIG has to be invited with folded hands?

I repeat, this fetish needs to be re-examined.

 "Do we lack capital? Is it impossible to develope expertise on our own?"

Yes, we lack capital as most of it is stashed away in Swiss Banks. Foreing capital will not come in unless an entrepreneur has a validated business model.

Expertise? Yes, we have talent but expertise is gained from experience. No point in re-inventing the wheel. Walmart and others need Indian talent to modify their business models to suit Indian conditions. It is about synergy of ability and experience. This way India will gain experience and one day we might ending up setting up retail chains all over the world. Look at Tata Steel, for example. Then there is Bharti Airtel. Remember the state of the Indian car market in the pre-Suzuki-Maruti era? Hindustan Motors is older than Toyota, but look at where Toyota is today and where HM is. Why do Indians will Nobel Prizes after going abroad? Why can't they win them in India?

It is not about talent; it is about how it is managed. We need systemic changes to correct structural defects. That is what FDI brings to the table, not just capital.

 @D.L.Narayan.

Anything that we need, can be created inland. Do we lack capital? Is it impossible to develope expertise on our own? Why should we alway look outside for any of our needs? If a UID project is possible, so is a national SUpply Chain Management System. If a PDS needs modernization, it can be a joint enterpsie between GOI, the state govts, and the private sector. We have done it with roads, shipping and information management. We can do it by sourcing capital, invetsments, expertise and raw matterial doemstically as well.

Our colonial hangover is responsible for this fetish with getting things and technology from abroad. It is a matter of will and attitude.

India is a huge country and there is place for everyone. If a handful of giants enter the market, can they penetrate every nook and corner of the country? Have the mega-budget Hollywood movies prevented the emergence of our indigenous cinema? Has the entry of foreign chains like KFC, McDonalds and Pizza Hut sent our Udipi restaurants out of business? Has the computerisation of Banking and ATM's led to job losses in the Banking sector?

Hundreds of years of subjugation has fostered in us a deep suspicion of foreigners, especially their traders  The sooner we shed such complexes, the better. If we do not attract FDI, it will go to others like Vietnam and the Philippines, maybe even to Sri Lanka and Bangladesh. It is this regressive mentality which has kept India backward, while smaller peers like Japan, Malaysia and South Korea have zoomed ahead. If the same attitude persists, even Bangladesh will overtake us and we will be competing for the wooden spoon with the likes of Pakistan and Afghanistan.

India has everything going for it: rich mineral resources, a talented, young and hard-working workforce and a dynamic entrepreneurial class. We are shackled by antiquated ideologies and a lack of visionary political leaders. That is the reason why the country is ranked so low on important indices such as GDP and HDI. That is the reason why our best talent is migrating abroad.

We need capital. We need expertise. We need the economies of scale. If we say no to every reform, middlemen like traders will continue exploiting our poor and farmers will continue committing suicide, and rapacious politicians will be stashing away our wealth in Swiss Banks.

For the elimination of poverty, we need to create wealth. Wealth cannot be created without influx of capital. China would have remained poor had it not jettisoned ideology in favour of pragmatism. By pigheadedly opposing liberalisation and reforms, we are only ensuring the persistence of poverty and misery for our masses.

>>>Safeguards in place<<< in India???? You must be joking. Indian Govt Employees- Coustoms, Sale Tax, Income Tax,  IAS, IPS etc etc are not exactly known for their honesty. All the Govt rules and regulation for retail FDI will remain on books and India will be slowly turned into a BANANA REPUBLIC by the multinational retail companies. 

If Govt Rules could make any country good, India would be the best country in the world as it has rules galore- anti-dowry, anti-corruption, anti-child marriage, anti-ragging, anti-child labour anti-terror, etc etc etc. Name one area India does not have law and is not broken with total disdain.   

Is it that  if Wal Mart, Carrefour, Tesco, etc do not enter India, India won't improve and no infrastructure could be made available?  If the black monies illegally stashed in Swiss and other banks are brought in, can we not do wonders in our Nation?  Instead doing that first, why this Congress is making all sorts of hypes with its adamant autocratic decisions on FDI now, when the winter session is on?  Whatever the Congress does seem to be fishy! Better leave both the issues - JLP and FDI - for a referundum.  Let the mandate givers decide.

If India's per capita income is to rise from a little over $ 1,200 to $ 5,000, the old ways of doing business will have to change for everyone. The dragon's ascent to greatness started with shoes, garments and toys, three sectors we had reserved for small scale industries. The pendulum has swung too far towards equity, it needs to be nudged back towards efficiency.

There are opportunities and risks in FDI in retail. Corner stores and small enterprises will have some tough competition but most of them will survive. Measures will need to be taken to assure farmers optimum return for their produce and to protect the employees of retail giants from unfair employment practices. On balance FDI in retail would be a positive in India's story of growth.

The crux of “FDIsation” of Indian Retail Market can be easily understood through one example that it is an attempt to strip ‘CORN’ – the ‘Daraupadi of Food’ of her traditional ‘SARI’ called ‘HUSK’ and drape in a  ‘TRANSPARENT WESTERN OUTFIT ‘ called ‘POLYTHENE’ to attract the Glad Eyes.”

The crux of “FDIsation” of Indian Retail Market can be easily understood through one example that it is an attempt to strip ‘CORN’ – the ‘Daraupadi of Food’ of her traditional ‘SARI’ called ‘HUSK’ and drape in a  ‘TRANSPARENT WESTERN OUTFIT ‘ called ‘POLYTHENE’ to attract the Glad Eyes.”

There are opportunities and risks in FDI in retail. Corner stores and small enterprises will have some tough competition but most of them will survive. Measures will need to be taken to assure farmers optimum return for their produce and to protect the employees of retail giants from unfair employment practices. On balance FDI in retail would be a positive in India's story of growth.

If India's per capita income is to rise from a little over $ 1,200 to $ 5,000, the old ways of doing business will have to change for everyone. The dragon's ascent to greatness started with shoes, garments and toys, three sectors we had reserved for small scale industries. The pendulum has swung too far towards equity, it needs to be nudged back towards efficiency.

Is it that  if Wal Mart, Carrefour, Tesco, etc do not enter India, India won't improve and no infrastructure could be made available?  If the black monies illegally stashed in Swiss and other banks are brought in, can we not do wonders in our Nation?  Instead doing that first, why this Congress is making all sorts of hypes with its adamant autocratic decisions on FDI now, when the winter session is on?  Whatever the Congress does seem to be fishy! Better leave both the issues - JLP and FDI - for a referundum.  Let the mandate givers decide.

>>>Safeguards in place<<< in India???? You must be joking. Indian Govt Employees- Coustoms, Sale Tax, Income Tax,  IAS, IPS etc etc are not exactly known for their honesty. All the Govt rules and regulation for retail FDI will remain on books and India will be slowly turned into a BANANA REPUBLIC by the multinational retail companies. 

If Govt Rules could make any country good, India would be the best country in the world as it has rules galore- anti-dowry, anti-corruption, anti-child marriage, anti-ragging, anti-child labour anti-terror, etc etc etc. Name one area India does not have law and is not broken with total disdain.   

India is a huge country and there is place for everyone. If a handful of giants enter the market, can they penetrate every nook and corner of the country? Have the mega-budget Hollywood movies prevented the emergence of our indigenous cinema? Has the entry of foreign chains like KFC, McDonalds and Pizza Hut sent our Udipi restaurants out of business? Has the computerisation of Banking and ATM's led to job losses in the Banking sector?

Hundreds of years of subjugation has fostered in us a deep suspicion of foreigners, especially their traders  The sooner we shed such complexes, the better. If we do not attract FDI, it will go to others like Vietnam and the Philippines, maybe even to Sri Lanka and Bangladesh. It is this regressive mentality which has kept India backward, while smaller peers like Japan, Malaysia and South Korea have zoomed ahead. If the same attitude persists, even Bangladesh will overtake us and we will be competing for the wooden spoon with the likes of Pakistan and Afghanistan.

India has everything going for it: rich mineral resources, a talented, young and hard-working workforce and a dynamic entrepreneurial class. We are shackled by antiquated ideologies and a lack of visionary political leaders. That is the reason why the country is ranked so low on important indices such as GDP and HDI. That is the reason why our best talent is migrating abroad.

We need capital. We need expertise. We need the economies of scale. If we say no to every reform, middlemen like traders will continue exploiting our poor and farmers will continue committing suicide, and rapacious politicians will be stashing away our wealth in Swiss Banks.

For the elimination of poverty, we need to create wealth. Wealth cannot be created without influx of capital. China would have remained poor had it not jettisoned ideology in favour of pragmatism. By pigheadedly opposing liberalisation and reforms, we are only ensuring the persistence of poverty and misery for our masses.

 @D.L.Narayan.

Anything that we need, can be created inland. Do we lack capital? Is it impossible to develope expertise on our own? Why should we alway look outside for any of our needs? If a UID project is possible, so is a national SUpply Chain Management System. If a PDS needs modernization, it can be a joint enterpsie between GOI, the state govts, and the private sector. We have done it with roads, shipping and information management. We can do it by sourcing capital, invetsments, expertise and raw matterial doemstically as well.

Our colonial hangover is responsible for this fetish with getting things and technology from abroad. It is a matter of will and attitude.

 "Do we lack capital? Is it impossible to develope expertise on our own?"

Yes, we lack capital as most of it is stashed away in Swiss Banks. Foreing capital will not come in unless an entrepreneur has a validated business model.

Expertise? Yes, we have talent but expertise is gained from experience. No point in re-inventing the wheel. Walmart and others need Indian talent to modify their business models to suit Indian conditions. It is about synergy of ability and experience. This way India will gain experience and one day we might ending up setting up retail chains all over the world. Look at Tata Steel, for example. Then there is Bharti Airtel. Remember the state of the Indian car market in the pre-Suzuki-Maruti era? Hindustan Motors is older than Toyota, but look at where Toyota is today and where HM is. Why do Indians will Nobel Prizes after going abroad? Why can't they win them in India?

It is not about talent; it is about how it is managed. We need systemic changes to correct structural defects. That is what FDI brings to the table, not just capital.

So, by allowing FDI in retail, we get back the money stashed away in Swiss banks? And what is a validated business model, is that decided by the self-same investors looking to multiple money, no matter which society gets waylaid?

And to do UID, we need the expertise provided by multi-nationals? To get electricity, we need investment by  Enron? To do accounting and auditing we need Arthur Andersen or Ernst & Young? What about Supply Chain Management, we don't have the experience? For insurance, AIG has to be invited with folded hands?

I repeat, this fetish needs to be re-examined.

So, by allowing FDI in retail, we get back the money stashed away in Swiss banks?

Nonsensical argument. The point being made is that we do not have money to fund our economic growth. Return of stolen wealth is something that needs political will, not FDI. Nobody is advocating opening up the country for foreigners to loot us. Everyone will take advantage of fools. We have to be diligent in protecting our interests.

What is a validated business model?

Google it. Nobody will finance a business if it is not viable. The viability is determined by sophisticated tools developed for validating a project. Nobody will put their money into harebrained schemes.

To do accounting and auditing we need Arthur Andersen or Ernst & Young?

The reason we have so many scams is because our accounting standards are far below international standards (GAAP or Generally Accepted Accounting Principles). To achieve these standards, we need an army of CA's and we need the procedures developed by these international consultants. Same with insurance, It is no longer limited to life, cars and health. It is a highly complex and specialised business and there is an immense shortage of actuaries. In a modern economy, Insurance plays a key role.

What about Supply Chain Management, we don't have the experience?

No, we don't. About 40 % of the food we produced is lost due to poor SCM. Look at the performance of the FCI and PDS.  Badly stored food is rotting in warehouses while at least 40 to 50 % of our children are suffering from acute malnutrition. Farmers are committing suicides but we do not hear of middlemen going bankrupt.

Anyone who has travelled abroad can see the huge difference in the standard of infrastructure. We need investments in infrastructure without which we cannot maintain a minimum growth rate of 8%,  which is a must if we aim to remove poverty in a couple of generations.

We should not say no to FDI. We need it to finance our future. We should learn from our past mistakes and also from our successes. Status quo in a fast moving world means moving backwards and that is not what our masses expect. If we do not learn from the mistakes of our Socialist past, we are doomed to eternal poverty.

Tearful London

Mr.Lalchang Bajjan Bhai Long time but we need to start from somewhere all the ruckus created by BJP walls and every one else has no substance you know very well just because you had a rubbish pint of beer at a pub in london not necessary mean all pubs are bad or you should stop drinking. Coming to this case the simple facts are retails thru FDI creates more jobs so the retailers themselves and the people they employ come under TAX radar more tax unlike now the kirana shop walls do not have taxes and they employ peole in most inhuman conditions and like slaves to be blunt as i know you like truth which is always blunt. Do reply from the snowny slopes

 Nonsensical argument. We do not have money to fund our economic growth.

The nonsensical argument is by DLN. We do not need FDI money to fund growth. Our GDP is grwoth is between 7 to 8%. Europe and US are down to 1 to 2%. They will start experiencing negative growth soon. That's why international capital is looking for places to deposit and then withdraw whenever it feels like. Rememeber the run on the Thai Baht or the Malaysian ringgit?

Google it. Nobody will finance a business model if its not viable ....

What an enlightened advice, too difficult for DLN to himself do it. Of course he has to just wave his hand and the viability will be found by yours truly. Who financed the risky home loans, using derivatives called credit default swaps, CDO and synthetic CDO.? Where did the Savings and Loans crisis come from? What happened to Meryll Linch and Lehman Brothers?

Nobody will put their money into harebrained schemes.

Yes, thats what they say when they sell Ponzi Schemes.

No, we don't. About 40 % of the food we produced is lost due to poor SCM. Look at the performance of the FCI and PDS....

This is the mindset which starts with "West is best, India is corrupt". I gave examples earlier about how public-private partnerhsip could modernize and streamline SCM, just as we have done with National highways, Railway reservations etc. It is a matter of will. But DLN would like to sit back and let international capital take care of it for us, since he knows that we are irredeemable. This was what the Kings and Nawabs thought when then hired European armies to fight their wars.

Anyone who has travelled abroad can see the huge difference in the standard of infrastructure.

And I suppose they did it by importing capital from the rich Indians, Chinese and Koreans of that time. They loved us and our money. No, they financed it themselves, and showed the kind of will that DLN "knows" we don't have.

If we do not learn from the mistakes of our Socialist past, we are doomed to eternal poverty.

Agreed. But we should also learn from the present crisis in the developed world, and their possible future journey downwards. By the way, India was NOT eternally poor. Before the British Raj began, we had 22.6% of the world trade, and was down to 3.8% by the end of it.

 Gurumurthy follows up with another excellent article on the subject

   http://expressbuzz.com/opinion/columnists/market-economy-or-market-society/340201.html

 Let us agree to disagree, but let us have a healthy debate. We are a democracy and we have the right to express our views. Nobody is advocating unbridled capitalism and India of today is not the India of the 18th century. What we need is a pragmatic approach. We have to protect our interests but that does not mean shutting all doors because of events that happened a couple of centuries ago.

First, we need to put things in perspective. Hype is what politicians indulge in. Debate should not stoop to their level. One might have valid concerns but the answer is to seek a middle ground, not reject anything out of hand because of unfounded fears.

The GDP of the US is $ 14.5 trillion, Western Europe\s is over 10 trillion, China's is nearly 6 trillion, Brazil's is over 2 trillion and India's is about 1.7 trillion. (One trillion is Rs. 50 lakh crores). US and Europe are facing severe recession, yet our economy is nowhere near them. In terms of technology, infrastructure and capital, they are far ahead and it will not be an easy task to catch up, forget overtake them.

Coming to FDI, guess what? India ranks 22nd in terms of FDI received with 190 billion. China gets 575 billion, Brazil gets 350 billion. Even tiny Hong Kong attracts nearly a trillion.

We are nowhere on the world map. Because of the backward state of our economy, our growth rate is high but all talk of becoming a superpower is pure hype. We need an investment of 2 trillion USD in infrastructure alone. which means about Rs.One lakh per head. Such amounts cannot be raised through internal accruals.

For all our greatness, we have 40 % of the world's malnourished children, the world's worst mortality rates for pregnancies, the world's biggest concentration of illiterate folk. This is totally unacceptable in the 21st century.

It is not about a mindset that everything foreign is superior. I have spent a considerable period of time outside India and I know about their weaknesses and our strengths. We are not pushovers to be taken for a ride by western capitalists. Yet, we need their capital and their expertise. If we create an environment conducive to business, we can attract capital. If we stick to our old ways of doing things, then poverty cannot be tackled.

This is my opinion. I am not a decision maker. I am just an ordinary Indian who is frustrated at the huge mismatch beween our potential and our achievements. I am upset that millions of my countrymen are still living in the stone age even though we have the ability to produce nuclear weapons and launch satellites into geosynchronous orbits. I am disappointed that people who claim to speak on behalf of the poor have a vested interest in ensuring that they remain poor.

This is my last post on this subject. Thanks to all who have taken the trouble to read my comments and to those who responded to it.

DL Narayan,

Post # 14 was marvellous.

I don't know if FDI is good for us or not. From the little that I have read on the issue, I think it shall do us more good than harm. So yes, I wish that political parties supported it.

However, as far as politics on the issue goes, I'm not sure if BJP genuinely is against it, or wants it, but is scared of alienating the trader lobby. It's quite possible that there are sections amongst it, that support it, but on the whole, the party is not certain, which is why it has taken different positions at different times, and never moved towards implementing it, when in power.

If the fear of the trader lobby, or a need to oppose the govt, is forcing the BJP to oppose a decision it otherwise supports, I wish it would get over such fears, and support it. However, no political party goes against the very basic interests of its core constituency.

>> "Gurumurthy follows up with another excellent article on the subject" - Ganesan

Three fundamental flaws with that article.

ONE: India's retail penetration is about 1 per 75, not 1 per 8, as claimed by Gurumurthy. I am not sure where he got those numbers from. So, it is quite comparable with other developing economies like China and Brazil. So, the 5% job penetration claim is not as far off the mark as Mr. Gurumurthy would like us to believe.

TWO: The article gives an impression that all smal retailers will be wiped clean by FDI. That is, at best, misleading, and worst, falsification. FDI in retail is being allowed to operate only in large metros. So, the rural retailers will remain protected. In fact, rural India could benefit from better price and volumes once the multiple layers of dalaals are gotten rid of.

THREE: Mr. Gurumurthy's taunts on Walmarts building the roads is misleading as well. Retail infrastructure and logistics is more than just roads. Storage and supply/ distribution network are more critical components. Both the government and the private sectors have failed miserably on this front.

If Mr. Gurumurthy is advocating "relation-friendly market economy" (whatever shit that means), why only for retail? By that logic, why should the Pantaloons and Big Bazaars continue to operate? Why should that approach not be applicable for manufacturing, IT etc? Let the local lads drill oil instead of a devlish Reliance doing it. Or, why not encourage/ ask the US IT industry to go for that instead of outsourcing to India? 

 There are two extremes to the FDI argument. One side speaks as though FDI is the panacea to all our problems - inflation, unemployment, poor infrastructure, farmer exploitation etc. The other side clamours that it would only create problems - small retailers would be put out of business, will be another East India company, cause loss of livelihood to millions etc.

The truth, as usual, is somewhere in between.

Some pro agruments:

a) Farmers would benefit: Recently on a TV channel the head of a farmers' co-op said that a farmer typically loses about 25% of his revenue when he takes his produce to the local market. If a price of 100 has been set for his produce by the pricing mechanism, a farmer shells out 5 for transport, 10 to the middle man and 10 as some sort of price for "quality". However, if a huge retail chain would come to the farmer's door step (not sure if logistics permit this, but this was the argument), the middle-man is more or less eliminated and since produce is collected on time, quality is not compromised. Thus if a retail chain pays the farmer even 90, he would be getting 15 more than what he is getting right now.

b) Consumer would benefit: Better storage facilities would lead to better quality of goods (especially perishables), better pricing as middle-men have been eliminated, better choice (most goods available under one roof) etc.

c) Tax revenues would increase: It is a well known fact that most of the small retailers fudge their books to evade taxes. You just need to walk around Delhi's markets to see this. Small retailers would be driving the fancy cars (may be not the luxury brands, but definitely better than Maruti 800), live in huge houses while earning an income of around RS.100,000 per annum from their businesses. Since most retail chains have electronic tills and all sales are recorded, the revenues are accurately recorded and taxes revenues may increase (by what %age cannot be determined, but will definitely increased).

d) Social improvement of youth: In a typical "lalaji" shop we have one or two underage kids working and helping the shop owner. These chaps often work in dingy conditions, do not have any employment benefits like a regular income (they're often paying-off their parents debts to the lalaji - am I stating a stereotype?), health insurance, provident fund etc. When youth are employed by a large retail chain, they would definitely be better off (the underage ones would not benefit, though).

Some con arguments:

a) Scarcity of goods: The local markets where the farmers would take their produce to cater to not just the cities or towns but also to smaller towns and villages. So when the retail chain turns up at a farmer's door-step and mops up the produce, the farmer would not go to the local market and some other town or village that depends upon the local market for supplies would not have access to the same. This may lead to a shortage of goods in the smaller towns and villages and may cause prices to go up there.

b) Change crop behaviour: Retail chains may change crop behaviour by forcing farmers to cultivate crops that have more demand and provide more margins in the markets in which they operate. This may lead to farmers to discontinuing crops that are "not in demand" and would lead to shortage of those crops and increase in prices.

c) Put the squeeze on farmers: This is the ultimate communist argument (or conspiracy theory) - once the retail chain makes the farmer totally dependant on it, it would start putting the squeeze on him to lower prices with the threat of rejection of produce. so, though the farmer may benefit initially, in the long term he may suffer.

d) Retail does not mean farmer alone: While there are arguments that the farmer would benefit, a typical lalaji does not sell vegetables alone. He also stocks and sells FMCGs etc. Due to their high volumes, retail chains would be able to negotiate better prices for their purchases with manufacturers and suppliers who would trade-off their margins for volumes. The retail chain can then sell below the MRP also and still make a profit. The lalaji would not have that negotiating power with the manufacturer/supplier and would have to buy at a higher price and sell at MRP. The lalaji would slowly but surely outprice himself from the market.

Both the parties arguing this out should acknowledge the pros and cons and work out mechanisms / regulations to maximise the benefits and minimise the ill-effects.

As for me, I vote in favour of FDI. My main motivation is that I am a salaried person and hate to see all those lalajis evading tax while I keep seeing 33% of my salary taken away upfront.

 Let the MNCs with bags of money enter the housing sector building quality flats not more than 1+2 to help the poor if MNCs will be quality conscious and are service minded in order to sweep out all our corrupt contractors. Let them bring cheap building materials, cement, steel and labour also. Why not they do it? Let them enter the service sector of electrical distribution to prevent theft of power and providing new services at the earliest saving public from the corruption dens of electricity boards? Why not they do high class six lane highways  offering low tariff check posts? Why not help farmers improve soils conditions for better crops to help indians get good quality pulses, grains, vegetables etc., Elsewhere it is told that the push through for FDI is only an attempt to milk corrupt money for congress to fight the impending elections. putting two and two together it is always four.

 Let us agree to disagree, but let us have a healthy debate. We are a democracy and we have the right to express our views……..First, we need to put things in perspective. Hype is what politicians indulge in. Debate should not stoop to their level….

I don’t see the need for these sermons here. First ,DLN writes that since we lack capital that is stashed away in Swiss banks, we should get capital from the FDIIs When a counter-point is made, he calls it nonsensical. He does not illustrate any point that he makes by citing sources or statistics. And he blandly talks about googling to validate a business model. Are these his ways of having a healthy debate?

The GDP of the US is $ 14.5 trillion, Western Europe\s is over 10 trillion, China's is nearly 6 trillion, Brazil's is over 2 trillion and India's is about 1.7 trillion. (One trillion is Rs. 50 lakh crores).

Generally correct. European union has a GDP of 16.2 trillion USD. China is 5.87 trillion. But you also have 172 countries which have a GDP less than India’s, including Australia, Canada, Switzerland, South Korea and Denmark. The point is that India’s GDP is 9th in a list of 183 nations.

Now I know that as a ratio of GDP/Population, the figures rankings will be very different. But I don’t see many readers worrying about the relatively low GDP of China as compared to EU and the US. The GDP/Population Ratio of India is 0.114 and that of China is 0.124. That of US is 5855 and Brazil is 0.604.

US and Europe are facing severe recession, yet our economy is nowhere near them. In terms of technology, infrastructure and capital, they are far ahead and it will not be an easy task to catch up, forget overtake them.

All things take time. The recession in the West is about 5-10 years old. The growth in India and China is about 15-20 years old. To lament that “we are nowhere near them” shows a deep-seated inferiority, and unrealistic expectations. The old Malthusian paradigm, - too many people, too few resources, therefore poverty – is no longer true. If you just consider each human being as an asset and not a burden, you can get a different perspective. You can find out how to create and manage domestic markets, how to develop technologies and services geared to such markets, how to create indigenous knowledge systems and so on.

Coming to FDI, guess what? India ranks 22nd in terms of FDI received with 190 billion. China gets 575 billion, Brazil gets 350 billion. Even tiny Hong Kong attracts nearly a trillion.

I consider that a blessing. The lesser FDI in a country, the more it can do to raise its own resources. FDI is like sugar, a sweet poison. BTW, India is actually at No. 35 in the rankings and gets 76 billion :-)

We are nowhere on the world map. Because of the backward state of our economy, our growth rate is high but all talk of becoming a superpower is pure hype. We need an investment of 2 trillion USD in infrastructure alone. which means about Rs.One lakh per head. Such amounts cannot be raised through internal accruals.

To be somewhere on the world map is not the primary need. As DLN himself points out, health care, nutrition, shelter, jobs, roads etc are the higher priority. It is also necessary to know from where DLN cites the figure 2 Trillion, one lakh per head etc. There is supposedly USD 1.4 trillion Indian black money in Swiss banks. Add the amount of black money in India ( Rs 61,64000 crore), and that’s more than enough money to ferret out and utilize.

For all our greatness, we have 40 % of the world's malnourished children, the world's worst mortality rates for pregnancies, the world's biggest concentration of illiterate folk. This is totally unacceptable in the 21st century.

No arguments regarding the goals and direction. All I am saying is, just because we are thirsty in a desert, we cannot mistake a mirage for an oasis. This happens all too often. The right way is to make the desert bloom, one tree at a time.

It is not about a mindset that everything foreign is superior. I have spent a considerable period of time outside India and I know about their weaknesses and our strengths. We are not pushovers to be taken for a ride by western capitalists. Yet, we need their capital and their expertise. If we create an environment conducive to business, we can attract capital. If we stick to our old ways of doing things, then poverty cannot be tackled.

Unfortunately, not everyone is so wise in weighing the options. We HAVE been pushovers earlier, and have been ruled by traders who plundered this land to benefit their society. We invited them in the first place, as mere traders and then as soldiers. We should learn at least from our own history, if not from that of South, Central and even North America (or South Africa).

This is my opinion. I am not a decision maker. I am just an ordinary Indian who is frustrated at the huge mismatch beween our potential and our achievements. I am upset that millions of my countrymen are still living in the stone age even though we have the ability to produce nuclear weapons and launch satellites into geosynchronous orbits. I am disappointed that people who claim to speak on behalf of the poor have a vested interest in ensuring that they remain poor.

I applaud the sentiment, but only question the way to get out of our current situation.

This is my last post on this subject. Thanks to all who have taken the trouble to read my comments and to those who responded to it.

Thanks for a good debate.

Allowing FDI in retail which means big super market chains like Wal Mart arriving in India with 50% partnership with local big tycoons will affect our own wholesalers.

That segment of wholesalers  would be hit. Though retail kirana stores need not worry much because, these big supermarkets have already been there, which includes Reliance,Spa,Spencers and Futures and also very much  local big super markets which confine to a perticular city, for example in Hyderabad we have central,tri-netra etc., but these are not famous for any brand promotion as such.

The big talk about farmer getting immensely benefitted is quite an exaggeration bacause we already have big supermarkets and we can see how much they are a benefit to our farmers at least proportional to theie  size for example Reliance ? It will not be much.

Job creation , we can say  Yes but even  that will not be at the scale of BPO. It is just too much of a comparison. Profits , will be carried away by foreign companies to their countries, the moment rupee value goes down , or our country goes to war, or in an emergency like internal disturbance  these people , first of all take away their money,profits and close down shop causing sudden job losses aggravating  the existing problem.

Still as the world is moving forward we will also move and allow FDI in retail which mainly promotes certain brands like softdrinks, fruit drinks,noodles,clothes,vanity bags,perfumes,hair oils, and all types of decoratives etc., These they will import , source them from cheaper markets like China and they are not going to source these from our  farmers.

Even the food grans, fruits which they may ultimately source from indian farmer would be very limited to certain vareits only like Basmati rice, Alphanso mango etc.,

So, we can allow FDI but only limited to  fewer than 25 maga cities of India , that is all with 50% partnership. Anything more than that would kill demand for desi goods ,desi brands and finally kill our wholesale markets.

Inflation is high in India becuase the infrastructure is shoddy. The urban population is growing and needs to be supplied from greater distances.  Fruit and vegetables need to be moved quickly otherwise they rot. There is a great deal of spoilage.

What we need are roads, good transportation links, economies of scale, adequate power supply and so on. FDI in retail will not solve these problems. It will not build power plants or roads. The reason why these aren't built is due to deeply rooted problems like corruption and political paralysis.

Growth in modern retailing will happen slowly, and there is no particular need for FDI. But it should not be feared. It can be introduced to increase competition, but it brings no particular technology. If a foreign retailer imports goods from China well thats already a reality. Manufacturing in India is a headache and most Indian businesses prefer to import anyway.

UPA is right - FDI in retail is going to get rid of middle men and benefit farmers at one end of the spectrum and the consumer at the other end.

But this middle men include millions of small traders, dealers, distributors and the like. While there is no denying that there are sections of middle men - greedy and unscrupulous, UPA is seeking to replace this large section by a handful of MNCs. If middle men are got rid of today, nothing prevents a cabal of MNCs from holding the nation to ransom at a later date, when both suppliers and consumers are at their mercy.

 Which countries are more troubled with economic recession or are at the verge of bankruptcy? These are those countries where these giant retailers are already doing their business. Then what makes anybody think that we should welcome them. We don't need those billions of dollars for 5% population at the stake of 95% population. We don't need a dummy economist Prime minister whose favourite pastime is playing with figures. Prime Minister must be one who is the leader of the ruling party, who has direct communication and has struggled with people of the nation. A pseudo economist who does not know how to curb inflation, who does not know how corruption takes place in ministries, Who does not know what impact hoarding and black marketing have on inflation. who does not know the plight of 95% population, who does not know how to fill enthusiasm & energy in people for nation building, who reads written speach word by word, who does not know the sanctity of the constitutional post (CVC, Thomas), who does not know what is happening in PMO ( S-Band & 2G scam), who does not know how to talk with a straight eye to eye contact ( rather talks with a straight face), Who has put the nation 'on sale' in the international market on the false threat of GDP. Don't panic India has had many PM before MMS but none of them was a puppet. MMS is a shame on the country as PM. As a citizen, he is ok as he may be knowing many other things better than we do.

India has expertise in every feild and do not need WALL MART to teach us anything. All that Indians needs to be is LAWS to force dis-honest to be honest.-- Stop police and Goons from collecting money from all trucks.-- Allow Indian private firms to establish storage for food grains and perishables. Allow private firms to buy, transport and store food items all over India by withdrawing all restrictions.

Capital??? Obvious is to get the INDIAN LOOTED BILLIONS from SWISS BANKS. Else reduce interest rates on bank loans. It is plain stupid of RBI to push up interest rate to 12% in India while allowing FDI be brought in from USA which has just 2-4% interest rate blaming capital shortage.  Last resort should be pass a LAW liquidate the GOLD holdings of Govt- invest it in infrastructure.

The "back-door entry" of the world's biggest retailer WAL-MART not only sparks fears of destruction of the livelihoods of millions who eke out a living from retailing but also spell disaster to the whole social fabric of this country.

Wal-Mart, the largest corporation in the world and even larger than the entire Indian retail market can displace lacks of small and medium businesses, farmers, hawkers, vendors and consumer cooperative stores. Their business model drives out competition and drives down wages and labor standards.

Even in country like US, thousands of small and medium businesses have closed down because of Wal-Mart's aggressive Low Price Strategy. Many workers are forced to work off the clock without getting paid, which is why workers in over 30 states across the US sued Wal-Mart and won! Is Indian retail sector mature enough to face world's most powerful retail giant?
To dig further into the question, pls browse the article "Corporate hijacking of the Retail must be Stopped", vide the link http://www.youthejournalist.com/article.php?aid=2213&sid=19 

 just hark back to the 80's and 90's when india crowned itself with glory in the software industry.  we can create our own model of retail suited to our conditions.  in fact, our retailers can buy out the wall marts of the world.  just see what the tatas did with corus and jaguar. indians are all over the world and calling the shots.  all that the government should do is to get the illegal money stashed abroad and release it to the indian farmers and industries.  

 At the heart of the debate is a simple question: are we good enough to compete with the rest of the world ? Since 1991, the answer has been largely in the affirmative.

FDI in multi-brand retail is the best way forward to improve quality and remove the middlemen who cheat both the producers and the consumers. However the local produce, variety and innovation should not die out.

Hence it should be mandatory for all foreign companies to source locally to atleast a declared percentage based on the goods category. The law should spell out clearly in which areas should one source locally minimum 100% (eg: fruits, vegetables) and in which areas minimum 75% (textiles), 50% (electronic goods), 25% (cosmetics) etc. Tax breaks should be given to companies which fund growth of local enterprises. Care should be taken that local sourcers do not serve as a conduit to cheap imports and themselves become middlemen.

 This is propaganda for Walmart & co. witting or unwitting , it doesn't matter.

Look at the below paragraphs,

"Farmers? Visible lack of support for the naysayers speaks volumes about the potential gains to farmers—provided legislative and other safeguards are quickly put in place

"For consumers and producers to really benefit, though, further reforms, carefully thought out, will have to be pushed through."

As you know, Manmohan Singh and Ahluwalia and Chidambaram & others care so much for ordinary farmers. They work for the welfare of poor with so much dedication. 250,000 farmers who committed suicide over the last decade , that is only an insignificant detail.

Manmohan singh & co will surely push legislative and other safeguards to protect the farmers and other reforms , carefully thought out, will also be pushed through, at least as quickly as pigs will start flying in the skies of India.

 If FDI in multi brand retail is really so beneficial to the country, why is the government afraid of discussing it in the parliament? Why does it do it only at the back of the Parliament? Don't they have "faith" in the wisdom of the people's representatives? Do they have no respect for the parliamentary committees which examine threadbare all such issues in the greatest possible terms, consult professionals and experts, undertake social-cost benefit analysis and then help taking a fair decision? Only the lobbyists are making cacophony in the name of "reforms" and "growth"? Talking reforms without social-cost benefit analysis is the worst form of dishonesty and simply a "trap" to harm people and the country. This hurry by a government known for corruption and scams will inflict untold miseries on the country and destroy the poor economy of India built so assiduously by our nationalist leaders.