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LATEST NEWS UPDATES | No Walmart, Please by Rajindar Sachar

No Walmart, Please by Rajindar Sachar

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published Published on Feb 6, 2012   modified Modified on Feb 6, 2012

If the combined Opposition had sat down for weeks so as to find an issue to embarrass the UPA Government and make it a laughing stock before the whole country, they could not have thought of a better issue than the free gift presented to it by the UPA Government by initially insisting that it had irrevocably decided to allow the entry of multi-brand retail leader superstores like Walmart, USA and then, within a few days, withdrawing the proposal with a whimper.

As it is, even initially this decision defied logic in view of the Punjab and UP elections and further the known strong views against it of the BJP/Left and the many States that had all the time opposed the entry of Walmart which would affect the lives of millions in the country.

Retail business in India is estimated to be of the order of 400 billion dollars but the share of the corporate sector is only five per cent. There are 50 million retailers in India including hawkers and pavement sellers. This comes to one retailer serving eight Indians. In China it is one for 100 Chinese. Food is 63 per cent of the retail trade, according to the information given out even by the FICCI.

The claim by the government that the Walmart intrusion will not result in the closure of small retailers is a deliberate mis-statement. The Iowa State University study in the USA has shown that in the first decade after Walmart arrived in Iowa the State lost 555 grocery stores, 298 hardware stores, 293 building supply stores, 161 variety stores, 158 women apparels’ stores and 153 shoe stores, 116 drug stores and 111 men and boys apparels’ stores. Why would it be different in India with lesser capacity for resilience by the small traders?

The fact is that during 15 years of Walmart entering the market, 31 supermarket chains sought bankruptcy in 15 years. Of the 1.6 million employees of Walmart only 1.2 per cent makes a living above the poverty level. The Bureau of Labour Statistics, USA is on record with its conclusion that Walmart’s prices are not lower than anyone else’s when compared to a typical family’s weekly purchases.

In Thailand, supermarkets led to 14 per cent reduction in the share of ‘mom-and-pop’ stores within four years of the FDI permission. In India, 33-60 per cent of the traditional fruit and vegetable retailers reported 15-30 per cent decline in footfalls, 10-30 per cent decline in sales and 20-30 per cent decline in incomes across the cities of Bangalore, Ahmedabad and Chandigarh, the largest impact being in Bangalore, which is one of the most supermarket-penetrated cities in India. The average size of the Walmart stores in the United States is about 10,800 square feet employing only 225 people. In that sense is not the government’s claim of increase in employ-ment a canard? The government’s attempt to soften the blow is by emphasising that Walmart is being allowed only 51 per cent in investment upto US $ 100 million. Prima facie the argument may seem attractive. But is the Walmart manage-ment so stupid that when its present turnover of retails is 400 billion dollars, it would settle for such small gain. No. Obviously, Walmart is proceeding on the maxim of the camel being allowed to put its head inside a tent and the occupant finding thereafter that he is being driven out of it by the camel occupying the whole of the tent space. One may substitute Walmart to the camel in order to understand the danger to our millions of retailers.

The tongue-in-cheek arguments by the government that allowing Walmart to set up its business in India would lead to a fall in prices and increase in employment is unproven. A 2004 Report of a Committee of the US House of Represen-tatives concluded that “Walmart’s success has meant downward pressures on wages and benefits, rampant violations of basic workers’ rights and threats to the standard of living in communities across the country.” By what logic does the government say that in India the effect will be the opposite? The only explanation could be that it is a deliberate mis-statement to help the multinationals.

Similar anti-consumer effects have happened by the working of another supermarket enterprise, namely, Tesco of Britain.

A study carried out by Sunday Times shows that Tesco has almost total control of the food market of 108 of Britain’s coastal areas, that is, 7.4 per cent of the country. Supermarkets like Walmart and Tesco have a compulsion to move out from the territory of England and the USA because their markets are saturated and they are looking for countries with larger population and low supermarket presence, according to David Hogues, Professor of Agri-business at the Centre for Food Chain Research at Imperial Collage, London, because they have got nowhere else to go and their home markets are already full. Similarly a Professor of Michigan State University has pointed out that the retail revolution causes serious risks for the developing country farmers who traditionally supply to the local street market.

In Thailand, Tesco, the foreign owned super- market, controls more than half the Thai market. Though Tesco when it moved into Thailand promised to employ local people, it is openly being accused of unfair trading practices and conflict with local businesses. As for the claim that these supermarket dealers will buy local products, this is belied because in a case filed against Tesco in July 2002 the court found them charging slotting fees to carry the manufacturers’ products, and charging entry fee for suppliers. In Bangkok, the grocery stores’ sales declined by more than half since Tesco opened a store only four years earlier.

In Malaysia, seeing the damage done by the supermarket Tesco since January 2004, a freeze on the building of any new supermarket was imposed in three major cities and this when Tesco had only gone to Malaysia in 2002.

It is worth noting that 92 per cent of every-thing Walmart sells comes from the Chinese owned companies. The Indian market is already flooded with Chinese goods which are capturing it with cheap goods and traders are already crying foul because of the deplorable labour practices adopted by China. Can the Indian Government, in all fairness, still persist in keeping the retail market open to foreign enterprises and thus endangering the earnings and occupations of millions of our countrymen and women?

The author, a retired Chief Justice of the Delhi High Court, was the Chairperson of the Prime Minister’s high-level Committee on the Status of Muslims and the UN Special Rapporteur on Housing. A former President of the People’s Union for Civil Liberties (PUCL), he is a tireless champion of human rights. He can be contacted at e-mail: rsachar1@vsnl.net/rsachar23 @bol.net.in

Mainstream Weekly, Vol L, No 6, 28 January 28, 2012, http://mainstreamweekly.net/article3247.html

Tagged with: Retail FDI



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