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How to sell an idea

No one needs to be mortified by the prospect of giant supermarkets across India driving lakhs of families tending to kirana shops to penury. Not even the kirana shop-owners, actually.

india Updated: Dec 03, 2011 22:53 IST

No one needs to be mortified by the prospect of giant supermarkets across India driving lakhs of families tending to kirana shops to penury. Not even the kirana shop-owners, actually.

I say this not to drown out the din raised by those opposing the Cabinet decision to allow up to 51% foreign direct investment (FDI) in multi-brand retail, but because the much-needed step-up in retail in India is far from a done deal even if the UPA government manages to push the deal through.

Since the beginnings of the giant supermarket era in the post-World War 2 West, what has remained unchanged is the concept of ‘Pile them high, keep them low’ — retailers buying in bulk and selling them at low prices. For food products, which make up the bulk of such a scaled-up retail model, this means farmers getting better deals than they do now at mandis where the selling price is fixed by wholesalers playing middlemen. This also means that bulk-buying will force companies to dramatically reduce wastage in transit and bad storage by setting up cold storages and better transportation facilities — not to mention encourage reduced distances for farmers to sell their wares — if they want to stay in business. As of now, in India, there’s little incentive to plug the 40% wastage of the total fruits and vegetables produced.

But with Indian consumers traditionally not bulk buyers, the standard pile-up-the-shopping cart Walmart, Tesco’s or Carrefour customer is likely to be elusive even when those retailers open shop. Why do you think that Indian players such as Kishore Biyani’s Big Bazaar outlets haven’t run local stores to the ground?

There’s also the issue of big retail stores actually getting off the ground. While an FDI go-ahead is a central subject, it’ll be the states that will have to have these supermarkets in their backyards. Rising inflation can easily be sourced to the door of New Delhi. But when shopkeepers and wholesalers go on a tirade against the scourge of supermarkets once they are up and running, they won’t be travelling all the way to Delhi but will be picketing outside state assemblies and ruling party headquarters in the states. Which is why with state governments providing licences and permits to retailers before they can throw open their automatic sliding doors to customers, I don’t expect the Big Retail Revolution to take off. In any case, the current opposition to FDI in retail provides one essential, self-preserving service: you can blame the Centre for all woes.

Take the parties opposing the Cabinet decision. The BJP’s reluctance is, at least, straightforward. Despite first seeking FDI in retail in 2004, its subsequent U-turn was logical when it realised that its fondness for the free-market didn’t sit well with its traditional support base of urban traders. So even if there was no multi-national supermarkets, the BJP would have had to invent this bogeyman.

The Left, being the Left, reaches for its gun whenever it hears the word ‘foreign’. So if foreign direct investment wasn’t bad enough with the likes of the American Walmart involved, no amount of Internationale-sounding French Carrefour outlets will stop the communists from insisting that a former ‘World Bank agent’ is cash-and-carrying the country to the doorstep of ‘neo-imperialist forces’. Like the VHP ‘intellectual’ who told me, “Walmart will bring sugar from Brazil, rice from Pakistan, clothes from China! Who will purchase products from Indian farmers?!”, a CPI(M) ideologue I spoke to is convinced that Manmohan Singh “struck a deal with Obama in Bali (on the sidelines of the East Asia Summit) to open up retail”.

Which makes me come to the most hypocritical party of the lot: the Trinamool Congress. Having come to power in West Bengal on an anti-industry, pro-farmer platform, Mamata Banerjee’s reluctance to see the farmer in her state benefit exposes her party’s ingrained belief in out-Lefting the Left and hitching on to the loudest bandwagon. But if it comes to the crunch of a vote on the issue, I reckon that Banerjee will put her money where her mouth isn’t.

As for the question that’s been puzzling everyone: why now? Why did the UPA decide to go ahead with the Cabinet decision with Parliament in session? Some have explained it as a big ticket response to earlier charges of ‘policy paralysis’. Some pundits even believe that Singh is being used by Congress chief Sonia Gandhi as a canary in the mineshaft. A humiliated UPA, if defeated in a vote in Parliament on the issue, will lead to Manmohan Singh offering to resign which Sonia Gandhi won’t decline. The sudden keenness of the ruling party to remain distinct from the government adds weight to this luscious theory.

But what if things come to a vote and the UPA manages to gather the numbers? What if this is to be Singh’s India-US Nuclear Deal Version 2.0? After all, unlike that ‘nuclear thing’ that remains gobbledygook to an overwhelming number of Indians, selling the idea of FDI in retail revitalising the whole agricultural landscape of India seems digestible — and far more electorally encashable. Just imagine what Rahul Gandhi, with his natural affinity to communicate with farmers, could do to pitch this as a gamechanger for the kisan. Especially the kisan in UP.