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 initially by the UPA Government by insisting that it had decided irrevocably to allow the entry of multi brand retail leader super stores like Walmart, USA and then within a few days, with a whimper withdrawing the proposal.
As it is even initially this decision defied logic in view of the Punjab and UP elections and further known strong views against it of BJP / left and many states who 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 a 400 billion dollars but the share of the corporate sector is only 5%. There are 50 million retailers in India including hawkers and pavement sellers. This comes to one retailer serving 8 Indians. In China it is 1 for 100 Chinese. Food is 63% of the retail trade, according to the information given out even by FICCI.
The claim by the Government that Walmart intrusion will not result in the closure of small retailers is a deliberate mis-statement. IOWA State University study in 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 super market chains sought bankruptcy in 15 years. Of the 1.6 million employees of Walmart only 1.2% 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 when compared to typical families’ weekly purchases.
In Thailand supermarkets led to 14% reduction in the share of ‘mom and pop’ stores within four years of FDI permission. In India, 33-60 percent of the traditional fruit and vegetable retailers reported 15-30 percent decline in footfalls, 10-30 percent decline in sales and 20-30 percent decline in incomes across 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 sq. feet employing only 225 people. In that view is not the Government’s claim of increase in employment a canard.
Governments attempt to soften the blow by emphasizing that Walmart is being allowed only 51% in investment up to US$ 100 million. Prima facie the argument may seem attractive. But is Walmart management so stupid that when it’s present turnover of retails is 400 Billion Dollars it would settle for such small gain. No, obviously, Walmart is proceeding on a 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 the cheek arguments by the Government that allowing Walmart to set up its business in India, would lead to fall in prices and increase in employment is unproven. A 2004 Report of a Committee of US House of Representatives 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 Super Market 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 i.e. 7.4% of the country. The Super Markets like Walmart and Tesco have a compulsion to move from the territory from England and USA because their markets are saturated and they are looking for countries with larger population and low super market 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 retail revolution causes serious risks for 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 but it is openly being accused of unfair trading practices and conflict with local businesses. As for the claim that these super market dealers will buy local products is belied because in a case filed against Tesco in July 2002 the Court found them charging slotting fees to carry manufacturers products, charging entry fee of suppliers. In Bangkok, 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 super market Tesco since January 2004 a freeze on the building of any new super markets was imposed in three major cities and this when Tesco had only gone to Malaysia in 2002.
It is worth noting that 92% of everything Walmart sells comes from Chinese owned companies. Indian market is already flooded with Chinese goods which are capturing the Indian market with cheap goods and traders are already crying foul because of the deplorable labour practices adopted by China. Can in all fairness, Indian Government still persist in keeping retail market open to foreign enterprises and thus endangering the earnings and occupation of millions of our countrymen and women.