FDI in Multi-brand Retail and Bihar

R K P Singh*

(BiharTimes):In most of Asian countries, organized retails are providing cheap goods to consumers and facilitating producers’ access to modern technology. But our politicians have made FDI and organized retail as dreaded system of marketing whereas organized retail and FDI are not new for our country. Wal-Mart-Bharti is operating in single brand retail and there is no report about adverse effect of the chain on our economy. All oppositions are based on politically based assumptions.

In Bihar, agricultural marketing is completely unorganized and both farmers and consumers are losers. Farmers get only 20- 30 per cent of consumers price in vegetables . Procurement system is still ineffective and we can not afford to compare our performance to neighbouring states like; Odisha and Chhattisgarh which are much ahead to Bihar in procurement of foodgrains. In the last season, farmers sold paddy in less than Rs 900/quintal. in Bihar.after repeal of Bihar Agricultural Produce Market Act in 2006,State Government is trying to make some headway in organized agricultural marketing including establishment of terminal market and collection centres but nothing moved. If we are not in position to perform in the field of agricultural marketing, there is no logic to oppose a move which is likely to benefit farmers and consumers of the state. In single brand retail (Wal-Mart-Bharti)is importing only 3 per cent of its goods but we assumed without any base that multi retail will import from out side and our farmers will be loser which is not true. Agricultural produce are bulky and perishable and it will be costly to import agricultural goods. Organized retail not only purchase agricultural goods locally but help farmers by providing new production technology. About 50 per cent of investment of FDI will be incurred in infrastructure development which is an urgent need in Bihar, particularly for cold storage and warehouse facility. Despite huge subsidy for establishment of cold storage and warehouse, the progress in establishment of these infrastructure has been quite slow.

The adverse effect of multi-brand FDI on small traders and retailers has been an important issue of opposition which has no any base.There is no instance of closure of any shop after establishment of Reliance Fresh in several cities in the country.In Bihar also, no shop was closed after establishment of Big Bazar ,Nine to Nine, and Vishal retail shop in Patna.One can see Vegetable Thela near Reliance Fresh out let in Delhi. They are competing to organized retail and it is good for consumers.

Most of leaders are much concerned about retailers and traders who are exploiters of farmers and consumers.They are purchasing Tomato at the rate of Rs. 5/kg from farmers and selling at the rate of Rs 20/kg to consumers.The majority of these retailers and Traders are economically much better than our 90 per cent of farmers and 50 per cent of consumers. If they are adversely affected due to organized marketing ,we are trying to save comparatively rich on the cost of poor people .

In Bihar,Multi-retail shop can be established in only Patna and not more than 20 per cent of Patna population will have access to Multi-retail shop,if established.Traders and retailers of whole of Bihar who are catering need to more than 93 per cent state population is not going to be affected,Then why hue and cry?Is it not politically motivated?

-----------------------------------------------------------------------------------------------

Dr R K P Singh, FORMER ADVISER,, STATE FARMERS COMMISSION, BIHAR