Sito di Fabrizio Bottini in italiano
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Publishing date: 09.07.2008 |
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Government study kicks up the supermart vs small store debate: what’s better for economic development, the society and the environment?Down to Earth, July 2008
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At a time when efforts are being made in the West to bring back small retailers into the mainstream, the Indian government has come up with a study that lauds the role of big retail chains. It claims that the growth of supermarts in India will not harm street vendors and small shop owners, and will only spur a healthy competition in the retail sector.
“Both unorganized and organized retail are bound not only to coexist but also achieve rapid and sustained growth. Both will see a massive scaling up of their activities. In fact, the retail sector, left entirely in the unorganized and informal segment of the economy, could emerge as a major bottleneck to raising productivity in agriculture and industry,” states the study, Impact of Organized Retailing on Unorganized Sector, commissioned by the Department of Industries Planning and Promotion, commerce and industry ministry.
The government asked the Indian Council for Research on International Economic Relations (icrier) to carry out the study after protests in a few states last year against new grocery and fruits and vegetable retail chains. Several development observers and economists, however, do not agree with the study’s conclusions. They say small retailers are already being edged out by organized retail houses, especially because the government’s policies are biased against the unorganized retail sector that employs about 30 million people. After farming retail is the biggest occupation in India.
Study of contrast
The study estimates that the total retail business in India will grow at 13 per cent until 2011-12. The unorganized retail sector is expected to grow at approximately 10 per cent per annum. Organized retail, which constituted 4 per cent of the total retail in 2006-07, is estimated to grow at 45-50 per cent per annum and attain a 16 per cent share of the total retail by 2011-12, says the report. At the same time, it notes, 4.2 per cent of small retail shops close down every year and 1.7 per cent of them close down because of severe competition from retail chains. The study stressed that small shop and retail dealers will make losses initially and in five years will come up with innovative techniques to survive alongside organized retail.
“Even in the medium run I don’t see a positive spin-off,” says Praveen Jha, associate professor, Centre for Economic Studies and Planning, jnu, Delhi.
The study was conducted in 10 cities over 14 months and surveyed 2,020 small traders, 1,318 consumers, 100 intermediaries and 197 farmers. The organized retail chains studied include Subhiksha, Mother Dairy, itc Choupal, Trent ltd (Westside, Star India Bazaar), Futures Group and Spencer’s Retail, but none of the new ones, like Reliance Fresh, More and 6 Ten that have penetrated small cities, was included. Reliance Fresh was the target of protests in Uttar Pradesh that lead to the study.
Upsetting the apple cart
Advocacy group ACORN-India FDI Watch, which, with Navdanya, studied the Paharganj, Nangloi and Lakhshmi Nagar areas of Delhi, contends that supermarket chains have an immediate and considerable impact on small players. “Many could not compete even for a month,” says Dharmendra Sharma, director, ACORN-India FDI Watch.
“All these chains are following the Wal-Mart strategy of predatory prices, that is to sell at low prices initially and when you have established a monopoly, reverse the trend. Look at what they have done in India; they have introduced ‘predatory’ prices on things like onion, potato and tomato, while making other vegetables expensive, but the impression is that vegetables are cheaper in these shops.
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