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FDI in retail: To empower dalits, do away with India’s antiquated retail trading system-Chandra Bhan Prasad and Milind Kamble
-The Economic Times

A couple of months ago, the UPA government cleared Foreign Direct Investment (FDI) in retail. It is a politically risky step. But for once, Prime Minister Manmohan Singh showed both spine and spunk biting the bullet. Since then, both Left parties and the BJP have expressed serious reservations over the decision. The general view is that it will affect the lakhs of small, indigenous kirana stores spread across the country. Interestingly, nobody has spoken about the FDI effect on the fledgling class of dalit entrepreneurs in India.

With the debate on FDI in retail intensifying, members of the Dalit Indian Chambers of Commerce and Industry (DICCI) fanned out in Delhi's Azadpur fruit and vegetable mandi to find out if dalits become successful adhatiyas. Generally described as middlemen, adhatiyas preside over mandis (marts) and regulate trading in foodgrains, vegetables and fruits. From farms to kirana stores, they call the shots. Every apple we eat, every grain of wheat we crush into flour, every tomato we consume, must pass through the hands of some adhatiya or other. The Mandi Parishad rules make it mandatory for farmers to bring their products to adhatiyas. Kisans who bring their trucks full of apples from Shimla or vegetables from Meerut don't have the freedom to sell their produce to whosoever they want. It is some adhatiya who sells their produce for a commission.

It's not just this. Wholesale buyers, known as loaders, must also follow rules laid down by adhatiyas. Loaders are not expected to be seen even talking to kisans waiting for their payments. Most adhatiyas belong to a very distinct sub-group of upper castes. Functionally speaking, they are a closed community who control mandis all over India. They are a clan in themselves. In the Azadpur mart, a group of dalits has succeeded as transporters, fruit exporters and contractors. Their turnover runs into crores. But there is no dalit adhatiya. That's because the mandi system remains rooted in antiquity whereas Dalal Street has been digitised. It is this medieval mandi system that fears FDI.

In a study on dalit enterprise, led by Devesh Kapur of the Centre for the Advanced Study of India (CASI), University of Pennsylvania, most dalit entrepreneurs surveyed were first-timers who had started their business after 1991 when the process of liberalisation began. The DICCI has about 3,000 members nationwide and most of them are into caste-neutral businesses. Both the CASI study and DICCI experience agree: dalits are most likely to succeed in occupations that are new and caste-neutral in origins. CASI researchers have found dalit entrepreneurs of different shades engaged in manufacturing heavy duty cranes, constructing tunnels, building bridges and building machines. However, there is no evidence to show dalits succeeding as traders. The DICCI, too, is yet to find a dalit multimillionaire trader.

Why have most dalit entrepreneurs come into being post-1991 and not before that? The CASI researchers studying the phenomenon have found a reason not known before. Post-1991, most Indian businesses have to compete globally. Competitiveness starts with the price structure. To that end, the tradition of producing or selling one product under one roof has withered away and outsourcing of ancillaries has replaced it. Millions of new entrepreneurs, including dalits, have got opportunities. That's the trigger for growing dalit enterprise. 

Dalits don't succeed in traditional set-ups. They don't succeed in localised set-ups too. Caste is both traditional and local. The mandi system, too, is both traditional and local. FDI in retail, with foreign players, will usher in a new system of retailing. This new system will throw up opportunities to new players. Rishi Manu stood at the doors of gurukuls and leveraged tradition as a weapon. Gurukuls were forbidden for dalits. With the new ammunition of modernity, universities replaced gurukuls for good. Mandis are like gurukuls in character. FDI in retail will further boost India's industrialisation and give modernity a thumbs up. FDI lao, Manu bhagao. 

The tools of modernity will help India to progress faster. FDI is one such tool, which can rewrite India's retail story. Amongst segments of the Indian economy, trading is still regulated by tradition. Retail in particular is deeply rooted in antiquity. Not surprisingly, traders also double as moneylenders. This parallel banking system that traditional traders practise hurts the economy, discourages new players, and most often, blocks the circulation of currency.

FDI-propelled retail will provide job opportunities to thousands of food technologists. MBAs will have a field day. CAs will be in great demand. Makers of refrigerated food vans and refrigerators will be job generators. The new suppliers in meat/fish/chicken/eggs and vegetable/fruit/grain segments will be from the mandi system. New players might include dalits as well.

India has been changing. A colony not long ago, India earned the tag of a backward nation after becoming independent. Following the green revolution, India was described as a developing nation. The green revolution itself had FDI of a kind, when Norman Borlaug followed by hundreds of foreign agro-scientists turned India into a food surplus nation. Post-1990, India is now called a nation in transition. India should now aspire for and earn the tag of a developed nation.

But how can India ever become a developed nation with an ancient system of trading in place? How can India's retail trade gain by being mired in suspicion? All developed nations had mandi-style regulated retailing before modern retailing came into existence. How can India be an exception to the universal norm?

Chandra Bhan Prasad writes on dalit issues. Milind Kamble is chairman, DICCI.