"No multi brand hyper stores in Tamil Nadu," decreed a fuming Tamil Nadu chief minister J Jayalalithaa on Sunday. Hitting out against the union government for taking important decision without consulting the state government, she demanded the reversal of the "ill-advised and unilateral" FDI decision.
In a hard-hitting press statement, Jayalalithaa said the move would gobble up countless neigbourhood mom and pop stores throwing thousands of people into penury.
Citing anecdotal evidence from across the globe, she said MNCs gobble domestic retailers and added millions of people in India; ill educated and unskilled in anything else can never become employed anywhere else."
As against talk of 10 million new jobs over 40 million, Jayalalithaa let out a hard-hitting critique of Manmohan Singh's management of the economy.
When parliament is in session, government's announcement of a major policy decision without consulting state governments is "unprecedented and indicates the overweening arrogance of the UPA government," Jayalalithaa said.
"My government will not allow the multi brand global payers as permitted under the new policy to set up their hyper markets in Tamil Nadu," Jayalalithaa declared giving reasons for her decision.
Describing the union government move as a rude shock to the millions of retail vendors she questioned the purported intent of the move to bring in FDI to improve market efficiency and bringing down double digit inflation. Inflation, she said, was mainly due to the series of policy blunders made by the Congress led UPA government.
"The central government should realise that constraints on farm products, on the supply side, which is one of the contributory factors to food inflation, cannot be addressed through the FDI route, but only by addressing the infrastructural constraints through appropriate policy support," the chief minister said.
Whenever local governments opened up the retail sector, local prices went up sky high instead of curbing price level. Further, such invasion by MNCs leads to monopolisation of the market, exploiting both farmers and consumers.
In the UK, only 3 retail chains control 65% of the entire retail market. In Thailand over 30% local shops were forced to shut shop within 10 years of entry of foreign retailers. In India, there is a fear of 40 million people being thrown out of employment as against a claim of creation of 10 million jobs in the next three years, Jayalalithaa said.
She also argued that the traditional market system, once broken, cannot be rebuilt, if the MNCs adopt a predatory pricing policy. In India, with reported 90% retail business in the unorganized sector, the FDI move is even more dangerous for the domestic population and economy, she asserted, ruling out entry of multi-branded hyper markets in Tamil Nadu.
As it would completely destroy small departmental store owners and destroy the unorganised retail sector, I strongly oppose the move of the government of India to open up retain trade to Foreign Direct Investment, Jayalalithaa said urging the central government to "reverse the decision" as it would neither bring down inflation nor would it improve the market efficiency."