FDI ON RETAIL TRADE MIRAGES AND MODEST TRUTHS By S.

Srinivasan President NUBE

FDI ON RETAIL TRADE : MIRAGES AND MODEST TRUTHS

Preamble Given the democratic polity that we have in India we need to educate our public mind on vital issues to enable them to make right choices at all levels. No democracy can afford an ignorant public mind. An ignorant public mind is more dangerous than an invading army. The true defence of democracy is informed public opinion.

Our people should be educated on issues of consequences. As they hold the sovereignty and elect their representatives who shape their course of their destiny, awareness about vital issues of socioeconomic life of the nation is indispensable.

Rightly said, attitudes are more important than facts. Lincoln was right when he said that nothing could succeed without public support and nothing could fail with it.

Indian economys midnight hour is here. India is rediscovering herself under a new economic paradigm. This has brought us all under a massive socioeconomic transition that is essentially painful.

We, the nation, must understand and face this rather wrenching phase of transition to tame its ill effects. The issues are essentially confusing and common people simply do not understand them.

Companies in hundreds are getting closed down, many companies are being privatized. This is causing loss of employment. We all hear the talk of Job less growth, Labour displacing growth, etc. The air is replete with terms like new Economy, Global Recession, Stagflation, demand pull recession, walmartization ( the new euphemism for deuniosation ) etc.

This is a dangerous decade but it is equally pregnant with great opportunities and potential. Already India is recording a very high, sustained rate of growth. This is the period of becoming all that one can become.

That is why people must understand the vital issues and their possible consequences. This understanding must go beyond short-term benefits. In fact, ours is a democracy of the illiterates. Very few seem to be discussing critical issues facing the nation. Most of the time our politics is misfocussed or trapped in non-issues. This is lethal for the future of the country. Many countries like China are racing ahead of India.

Sadly, our media too is not paying required attention to educate our public mind. There is definite need to go beyond reporting. Given the massive, pervasive illiteracy there is an urgent need to educate our public mind under an all-out effort on war footing.

Nothing is more powerful than an informed public mind able to take quick decisions of consequences. Basic knowledge of economy is essential for right decision making in all fields. People should be able to understand implications of economic changes. You do not have to be a mechanic to learn driving. Thus, to understand and analyse the changing economic environment one need not be a trained economist. Sadly, economics is taught not as a common sense subject but as a very complex, academic subject. Economists too talk of some other worldly language full of jargons. Economic Literacy is very important for right, informed decision making in all fields. Common people find economics very mysterious and confusing. They do not understand GDP, Inflation, stagflation, Current Account Deficit, the intent of FDIs FIIs etc and the ones to be blamed for this plight are our economists. This is because they talk in the esoteric language of economy full of jargon.

Economics must be demystified and should made easy for the common man to understand and put to use. At last, everything boils down to economics.

Economics is the most important science directly impacting lives of the people -one and all. It should be explained in the language our people can understand.

Even those who invest their hard earned money in stock market also do not understand even basic concepts of economics.

Many social networking sites like yours have , made some humble attempt in bringing to quip scorers of readers , public mind to understand many issues and demands beyond bank portals, unions charters & borders touching the chord of bank employees trade union/social activists, students, journalists and the public alike. .

MIRAGES AND MODEST TRUTHS

Government won FDI vote in Lok Sabha and Rajyasabha scripted by slippery arithmetic of political parties. The protagonists project FDI as boom and antagonists as doom. the goal of our dissertation in this article is to enhance the awareness to generate inquiring minds on FDI in retail, of not only the bank employees, but also to galvanize peoples movements for devising new tools of analysis and action without any political overtones, leanings and moorings to ensure that global finance capital serves the interests of citizens and democratic states and not the avarice of owners and managers of capital. With this above perspective a modest attempt ahs been made by me in unveiling the mirages and modest truths of implications of FDI on retail trade. If you examine the realities, it will spell a death knell for farming and millions of people engaged in retail trade it will be the beginning of an end for them MIRAGES AND MODEST TRUTHS Having paved the way for MNCs to penetrate the economies of the global South, the globalization of the region's retail sector is rapidly underway with mega retailers vying with each other for the choicest markets. Their recent forays have been in China, and now India. Retailers, as brands, are already supplanting many of the small local business enterprises and traditional manufacturer brands of India. Partnership and trade deals are being worked out between TNCs and local firms.

FDI: HOLDER IN DUE COURSE As the latest hub of FDI investment on retailing, India is on the

verge of being captured by the corporate giant, Wal-Mart and other foreign retailers like Tesco (UK), Carrefour (France), Metro (Germany). As the world's largest retailer, Wal-Mart has already launched its wholesale store, Sam's Club, in India. (In 2004, WalMart clocked annual sales of $288 b. with 5,332 stores under its control). According to corporates, "India represents a $250 b. retail market, growing (at) 7.2 per cent a year, but modern retailing is just starting to emerge. This shows us that India is a huge organic growth opportunity.. A.T.Kearney 2005 Global Retail Development Index describes India virtually a gold mine for retail trade owing to the rising wealth of the consumer (middle) class, with close to a quarter of the population being in the 20-34 age group considered prime game for global marketing agencies. It has listed India as the 6th largest FDI beneficiary, up from 15th position recorded in 2004. Little wonder then, for investors, both MNCs and Indian corporates alike, this reality translates into a market value estimated to be around Rs.9,00,000 crore. Currently, the organised retail trade is estimated around Rs.28, 000 crore and expected to grow to Rs.1, 10,000 crore by 2010. THE INDIAN CONSUMERIST CLASS The reality indicates the threat Indian retailing faces from organized retailers keen on capturing India's middle and higherincome consumer-class, risen rapidly over the last decade to over 10 per cent per annum even as the large low-income base has shrunk. During the reform period the top most income class has been around 19%. The middle classes have also risen with a population around 300m.active consumers which is higher than the entire population of Europe orthe US. On the other hand the low income class has shrunk considerably .reports confirm that there has been a decline of 15 percentage points in the share of lowincome households in Karnataka, Punjab, Haryana , Kerala and Tamilnadu. This consumer class evolution is characterized by

some major structural changes such as increased, product availability (in terms of both quality and quantity) increased competition, increased media penetration and control and high profile impact advertising. The propensity to consume is facilitated by the surge in finance products owing to steady financial sector reforms in the economy and innovative marketing. Other social and demographic changes and macro economic factors such as rising income level, a large segment of the younger generation, a nuclear family structure, increased media penetration and entry of global consumer products are also responsible for this change. The increased globalization of economy which has led to growing exposure to foreign markets through business and commercial travel and tourism sparking a yearning for global shopping experience. With the rate of interest reduced to over 500 basic points the saving spending pattern underwent a major change. Since then there has been unprecedented housing and automobile boom fueled through finance or credit. Car sales rose by 16.6% since 2003. The retail trade has become a biggest industry in the world with sales of $7.2t. This rising class of consumers aptly dubbed the consumerist (Seabrook) is naturally considered highly critical to the growth of organized retailing in India. (In a CIlMcKinsey report, this class represents households with an annual income of over Rs.60,000) that a Wal-Mart representative in Delhi corroborated as also roughly in line with China with the Indian consuming class growing from 35 m. families in 1996 to an expected 80 m. in 2005."That's roughly in line with the US...This is a big opportunity for us". The rise of this class is embedded in the deliberate strategy in the 80s to cater to their affluence, a "part of the overall effort to induce growth by and for the affluent".

INDIAN RETAILING Indian retailing is largely unorganized representing 98%, spread

out unevenly across the country. It affects every type of product of daily consumption - ranging from vegetables to electronics and from stationery items to textiles - with elaborate well-established supply chains, starting from the village level and ending up to the city. It is the largest industry - the fourth largest in the world contributing 10% to the GDP. It is second largest employer after agriculture employing over 40 m. people (about 7% of total employment) with the highest density of retail outlets. At least 3 crore people are engaged in this retail workforce both in rural and urban areas. This includes small traders in 'Kiranas', 'pan/beedi' shops, hardware stores, convenience stores and bazaars numbering around 15m, making up the 98 percent. The entry of foreign retailers has affected the Indian grocery trade too. At $90 b. the grocery trade is a big business constituting 50 per cent of India's retail market that global retailers are desperate to tap. (See table below). (Source opening the Retail trade for FDI by R.Dutta Mainstream weekly Delhi) Growth of Outlets in Retail Trade (million)3 NonFood Food Total Retailers Retailers 1996 2.77 5.77 8.54 1997 2.94 6.04 8.98 1998 3.12 6.33 9.45 1999 3.30 6.67 9.97 2000 3.48 7.05 10.53 2001 3.68 7.48 11.16 Source: FICCI The rationale is that the economy would not grow unless the betteroff sections were permitted and encouraged to consume more that foreign retailers are in position to provide Indian consumers with a

wide variety' of products services etc. Little wonder, then, that institutions like the ICICI and IL & FS (Institution of Leasing and Finance Services) are also now favoring the extension of loans to retailers. The Government too is opening up this sector to foreign investors. Its department of consumer affairs to commissioned the Indian Council for Research on International Economic Relations (ICRIER) to carry out a study on retail trade for it to make a final decision. In its report, FDI in Retail Sector: India", ICRIER virtually endorsed FDI in the retail trade with merely a few cosmetic cautionary notes. FDI in retailing has however adverse implications. It substitutes domestic investment, displacing local industry and domestic entrepreneurship. This is particularly disturbing as much of the FDIs are by MNCs. Other concerns are for the long-term balance of payment effects of FDIs when profit repatriation begins to outweigh new capital inflows. There is also the fear that a high level of dependence on FDIs by MNCs could lead to erosion of national sovereignty. Known for its anti-unionism and anti-labour practices Wal-Mart and the other mega retailers and their control over small retailers represents a serious threat to Indias food sovereignty. That is, its control over food resources and peoples' health. Recently, WalMart workers on four continents united and sued this mega retailer in California, in failing to pay them their due wages and denying them their other labour rights. The entry of corporate giants and expansion of their business ventures in the region will also be at a high social cost. The MNCs introduce their own systems of managerial skills, trading ethics and other extraneous inputs that collide with local traditions and way of life of trading communities in particular and to the people generally. The reach and influence of these foreign firms on the shopping habits for their products with all their associated values of shopping, lifestyles, etc., results in a convergence of and

consumerist attitudes among the middle classes, and youth seduced into high spending binges ('Shop Till You Drop') and conspicuous consumption. Such rapidly changing consumer habits, tastes and lifestyles that Wal-Martization induces among the middle classes has also serious environmental implication. Gradually, the MNCs will fuel rapid internationalization of the retail trade. Once they establish themselves in the South mega retailers like Wal-Mart, as is their practice in other countries, will remake shopping in India in its own image, building giant 100,000 sq.ft shopping malls. It is already demanding changes in Indian planning laws to accommodate its future ambitions. The internationalization of the retailing industry and opening up of protectionist barriers to trade are the work of global institutions the WTO, World Bank and IMF. The subsequent implementation of new foreign investment policies has allowed Foreign International Institutions (FIls) to operate in Indian capital markets. The FDI on retailing, however, facing tremendous opposition with public dissent against organised retailing by foreign investors. A number of countries including those in the industrial North have placed severe restrictions on FDI in retail trade. Among the many objections is that these retailers do not source their supplies from local suppliers; indulge in unethical practices, predatory pricing and other monopolistic measures motivated mainly to grab a chunk of the local market. The concern over the so-called WalMartisation of India is, thus, real; its entry will sound the death knell of unorganized retailers to a large extent. The need therefore is to prioritize food security for the majority poor and low income groups food that is nutritious, accessible and culturally acceptable rather than a food culture based on the wants of the middle and rich class that Wal-Mart and corporate retailers generate and promote. The experience of protest movements in other countries against these mega retailers opposing their predatory practices and their

human rights abuses is a major guide in the demand to prioritise food security. It is however necessary to first dispel claims on the so called benefits of the retailing practices of the mega retailers unlimited choice of products they offer consumers with the illusion of the "Good Life" and the 'so-called "Happy Consumer". With this perspective we give below the corporate mirages and our modest truth on food retailing .Our aim, objective and focus is food security for the people and not Wal Mart culture for the rich. MIRAGE: The entry of the foreign retailers into India in the long run benefits not only consumers but even small retailers providing them with a positive impact on the supply chain in different sectors of the economy. MODEST TRUTH: Not so! Local suppliers and traders forming part of the traditional supply chain in countries of the South have to face a number of problems of adjustment. For instance in Thailand they continued to fade dislocation. The foreign owned retailers grabbed a big share of the retail market, often through unethical means. Reportedly, small retailers demonstrated against the unfair trading practices by these mega retailers. The Thai Government was forced to impose restrictions on their expansion and promised the protesters to take up their cause with the WTO at the coming Hong Kong meet. It further introduced a package of safety nets consisting of measures to strengthen the marketing of the products sold by small retailers, provision of easy loans and a state funded agency, Allied Retail Trade Co., (ART) to moderate on behalf of the small retailers. Another case is that of Indonesia where riots (in Jakarta) against the mega a retailer in 1997-98 had erupted.. Contrary to the

assurance given to the small local retailers that they would gain a great deal by linking themselves to the global markets only a handful of such traders short listed and selected from among these by the mega firms-derived any benefit. The majority of the local suppliers, on the other hand, were rejected as they failed to quickly adjust to the strict quality standards and specifications laid down by these mega retailers. A study by the FAO showed that foreign mega retailers were often blind and insensitive to the transitional problems that small retail shops experience when forced to link up with these foreign retailers. These problems include rejection of their supplies, difficulties in disposing of rejected quantities, inability to invest in the risky forms of supplies, delayed payments, denial of loans or credit facilities by the organized retailers, etc. Furthermore, due to its adverse implications, FDI in the retail trade is a highly problematic. As such, even the developed industrial North have imposed restrictions on FDI retailing and not merely by countries in the South: France enacted the Raffairins Act of France in 1996 that regulated the growth of hypearmarkets larger than 300 sq.ft. Germany has introduced more stringent regulations; On May 6, 2005 in the town of Jonquiere, Quebec, Canada, Wal-Mart employees forced the closure of a Wal-Mart store following its victory to form a union. At this same time hundreds of Canadians demonstrated against this mega retailer for sacking its 200 employees under a false pretext. China has restricted FDI in retailing to only joint ventures and at specified locations subject to a ceiling on the number, limiting foreign equity holding to less than 49 percent, etc.

 Malaysia demands that FDI should be routed through joint ventures, with a minimum of 30 percent of the equity held by the bhumiputras. There are minimum capital requirements for foreign retailers in Sri Lanka. The Philippines has imposed sourcing and reciprocity requirements on foreign retailers; Thailand has zoning restrictions for mega retail shops. Apart from restrictions being imposed on these organised retailers, there have been widespread protests and demonstrations against Wal-Mart. For instance, September 2005, at Peterdam, Holland, residents rallied in protest against Wal-Mart setting up shop in the Burdeck Street Route 7 corridor that will involve a rezoning of a plot of land for the purpose. In 1994 in a number of States of the US a decade-old campaign against Wal-Mart exploded. Demonstrators chanted One, Two, Three, Four we dont want your WalMart Store opposing the opening of new mega stores; In China, our international affiliates UNI(union Network International)report that the Wal-Mart factory employing 10,000 mostly young girls went on strike in an attempt to form a union. Issues at the factory-included lack of sick leave and medical care, child labour, long work hours and lack of enforcement of minimum wage laws. Nearly 7 months later these workers still do not have a union and the same issues prevail. In recent years, citizens groups and some governments are

beginning to wake up to some of the mal-practices of these mega retailers. In 2000, the UK Government's Office of 'Fair Trading launched at) inquiry, the Competition Inquiry,' info the price competition among 24 supermarkets within its terms of reference. The Commission questioned whether price trends in the UK compared with abroad and if fall in wholesale prices were fully reflected in prices charged to consumers. The Commission identified 27 practices by supermarkets that were against the public interest. (It recommended that a code of practice between retailers and suppliers be enforced). These business practices, it stated gave the UK's mega supermarkets substantial advantages over other smaller retailers whose competitiveness would suffer as a result. Exposed regular selling, by all the 5 mega supermarkets, has some regularly purchased products below cost: the so-called Known Value Items (KVls). 'Price flexing' (that is the way supermarkets sell the same product, but at different prices depending on the location in the UK) was found to practiced by the MNCs Safeway, Sainsbury and Tesco, thus distorting competition in the supply of groceries); Over-ordering goods at a promotion price from a supplier which are then sold into retail at a higher price without compensating the supplier; Charging compensation from a supplier when the multiple's profit on a product is less than it expects; Seeking discounts from supplier retrospectively which reduce the price of the product agreed at the time of sale. Requiring suppliers to purchase good for services from designated companies, such as labeling companies from whom the supermarkets often also received a commission.

Further, in 2005, two American1nvestigative reporters using a hidden camera in a garment factory doing business with a number of American firms like Wal-Mart, Kohls in Bangladesh producing Sara Lee brand of sports pants exposed how these firms employed cheap Bangladeshi labour to produce these branded garments (* in http://msqbc.msn.co}ll/id/8243331/) Finally, whatever benefit consumers will acquire, it is at best a short-term measure. In the long run they will be forced to pay dearly as a result of the creation of monopoly. The former director of the mega retailer; TESCO, warned "Indian retail business should not be fooled by partnership offers by global retail giants because they want 100 percent control and eventual ownership". Their strategy is in tune with the infamous 3 Cs marketing ethics; convince, confuse corrupt .In the Initial stages they keep their prices low, offer free gifts to consumers so as to drive out competitors. This may continue even for 2-3 years, since these retail giants have high financial reserves. Once, the local retailers are forced to close their shops, these mega retailers raise the prices. In the UK retail firms operated by MNCs, charged 40 percent higher prices, but in the absence of any alternative, the consumers have to pay higher prices. Once a monopoly or an oligopoly situation is created; -these MNCs buy cheap and sell dear. A similar situation prevails in the agriculture sector. These retailers are encouraging contract farming and a s a consequence, they will be able to force farmers to sell cheap to the MNCs, which will in turn sell them at higher prices to consumers. This is generally referred to as predatory pricing' which the retailers claim "benefits the consumer" - but the interests of the farm producer, small groceries, etc. are cast aside. In short, opening of the retail trade to FDI will not" benefit the consumer. Thus, India does not need Wal-Marts! It has a business model so dependent upon squeezing workers and suppliers that it is inimical to economic well-being.

MIRAGE: The current worldwide retail revolution will certainly lead to some retailers losing out but this is nothing serious as this is just the normal operation of economic forces unleashed due to the introduction of innovative shopping culture that global retailers like Wal-Mart, J. P. Penny contribute to the economy of the South along with such advantages of consumer choice, etc. MODEST TRUTH: However, in business and trade there are other interested groups that get affected. Consumers and suppliers are the most closely involved stakeholders, but there is also the question of the wider environment, and of people as citizens. Firstly, however, is the question: Are shoppers completely happy with everything? The response from these mega retailers is: "True! Nothing is perfect! So, why expect mega stores to be providing consumers with the perfect shopping experience!" However, one study identified over 150 possible problems with the total shopping experience. These range from the existential (what do I actually need?') to the closely operational ('Aisles too narrow'), and the like. Apart from wiping out small grocery shops who fail to match the standards or services provided by mega shopping malls like Shoppers' Stop, etc., there is the pertinent question: How genuine is consumers' choice? When the range of goods and the general price level are very similar across the main competitors, there is really very little to choose from, except location. More importantly, once the shopper is inside the store, the switching costs become very high for that trip. The MODEST TRUTH is that a favorite brand or variety is not in stock may be a nuisance, but most consumers will not abort the trip with the shopping half-completed, and commute, or drive to another store to go through the process again. Consumers may argue about whether to shop at Shopper's Stop or at D-Mart because one stocks Sri

Lankan Tea and the other does not, but they are unusual. Again, though these super stores offer consumers an astonishing range of choice, this comes at considerable environment cost -long-distance trucking, excessive energy use. In urban India in especially cities like Mumbai where land is at a premium, the construction of such mega stores are already leading to the destruction of mangrove forests in certain parts this City already threatened by local land sharks appropriating this scarce property resource to construct mega housing estates for the middle classes. In short, the freedom of choice that drives people into these excesses actually abridges people's choice, for the predation on the resource-base extinguishes biodiversity. The imagery of effortless luxury through money spreads, not richness and variety, but a true monoculture, in which the pluralism, tolerance and diversity which the West flaunts as its proudest gifts to the world, are increasingly difficult to discern. Do the new shopping culture that these mega stores introduce and created by the out-of-center superstores contribute to increased road traffic and pollution? According to one US study of estimated additional driving costs of Super centers in the San Francisco Bay area concluded that there would be up to an additional 238 m. miles traveled per year. This could cost communities in the Bay area up $256 m. in additional costs for infrastructure repair and environmental degradation. Thus, the question: who bears the costs of the externalities, as economists call them, created by increased road use - by trucks carrying goods to central warehouses and to stores, and by cars traveling and to and from these stores? Further monocropping on intensive farms - as well as the health costs of obesity, diabetes and other degenerative diseases. Are the poor and the old disadvantaged? Have the mega superstores and supermarkets, etc., helped to kill off the age-old, traditional town centres which in the North is well documented and attributed, at

least in part, to the growth of such centres? The big retailers' claims to efficiency in transport are bogus. Much freight transport is unnecessary- produce could be sold locally. Over a third of the rise in freight transport since the late 70s has been for food, drink and tobacco - which together account for less than 1/10th of the economy. No wonder the mega retailers are such lavish supporters of the British Road Federation. This same problem applies to packaging! According the British Government' "the stocking policies of supermarkets, largely contributed to non-returnable (packaging) attaining (its) present share of the market", while another report states that an EU directive to reduce packaging was "the most lobbied issue in the (EU) Parliament's history" MIRAGE: The Wal-Mart is a job creation retailer. In the US it creates 100,000s jobs per year. In India, it will generate employment for atleast 10,000 persons at a turnover of Rs. 8030. MODEST TRUTH: Not so! Adding 100,000 people to WalMart's work force does not in any way mean adding 100,000 jobs to the US economy. On the contrary, as and when Wal-Mart expands it also destroys at least as many jobs as it creates and drives down even worker's wages. As and when it opens its giant shopping malls, it takes away sales from shops that are already in the local area resulting in these shops having to layoff workers and even closing down. Since this mega giant employs fewer workers per dollar of sales than the smaller shops it replaces workers and overall retailing employment goes down. A recent study, (sited by Klugman) by D. Neumark of the University of California at Irvine and researcher from the Public Policy Institute of California, "The effects of Wal-Mart on Local Labour Markets" concluded that average wages indeed fell and workers ".. ..earn less following the opening of Wal-Mart... ," in the area.

Thus this claim is no big deal! Even if Wal-Mart open its stores in each of the 35 cities of India it plans, with this turnover, employing 10,000 persons (assuming that the per employee turnover is $1 , 75,000. In a Wal-Mart store in India, each store with a turnover of $51 m). It has been estimated that even if mega retailers were to cover 20 per cent of India's retail trade, which is not an overestimate, they will employ only 1.8 lakh persons, driving nearly 8 m. persons out of the unorganised retail sector. The employmentdisplacing effects-on retail trade is clearly very high. To sum up the implications of FDI on retail trade is outlined as under: It has happened in the United States. Ever since big retail dominated by multi-brand retailers like Wal-Mart - entered the market, farmers have disappeared, and poverty has increased. So has hunger. Today, not more than 700,000 farmers remain on the farm in America. Poverty has grown, and hunger has broken past 14-years record. In Europe, despite the dominance of the big retail, every minute one farmer quits agriculture. This is because farmers income across US/EU is on a downslide. According to a report, farmers income in France has come down by 39% in 2009, having already slumped by 20% in 2008. More recently, in Scotland, low supermarket prices are being cited as the reason for the exodus of dairy farmers. Low supermarket prices in Scotland have forced irate farmers to form a coalition called Fair Deal Food to seek better price for their farm produce.

 Studies have shown that Tesco has paid producers 4 per cent less price than the average prevailing in the open market. It is therefore futile to expect the supermarkets rescuing farmers in India. Despite the destruction of farming globally by the supermarkets, the Ministry for Commerce & Industry is gung-ho about the virtues of foreign direct investment in multi-brand retailing, which means allowing the big players like Wal-Mart & Tesco to swamp the Indian market. The agriculture sector needs well functioning markets to drive growth, employment and economic prosperity in rural areas, says a discussion paper drafted by the Department of Industrial Policy and Promotion. I find a number of economists and researchers singing chorus of praise for the role the supermarkets can play. But the entire hypothesis is based on a deliberately prepared flawed basis. Do the supermarkets really benefit? Since 2006, India has allowed a partial opening up of the retail sector. Has these retail units benefited the Indian farmers and for that the consumers? The answer is no. The argument is that the supermarket chains will squeeze out the middlemen thereby providing higher prices to farmers and at the same time provide large investments for the development of postharvest and cold chain infrastructure. All these claims are untrue, and the big retail has not helped farmers anywhere in the world.

 Even in Latin American countries, including Brazil, Argentina, Uruguay and Colombia, where supermarkets, most of them owned by multinational giants, now control 65 to 95 per cent of supermarket sales, farmers have been forced to quit agriculture. If the supermarkets were so efficient and provided dynamism, I would like to know why the US is providing a massive subsidy for agriculture. After all, the world biggest retail giant Wal-Mart is based in America and it should have helped American farmers to become economically viable. But it did not. American farmers have instead been bailed out by the government, providing a subsidy of Rs 12.50 lakhcrore between 1995 and 2009, and this includes direct income support. And that is why the American farmers are being supported in the form of direct income support by the American government. It is the massive farm subsidy that supports agriculture in the US. If this subsidy, classified under Green Box for WTO calculations, is withdrawn (as analysed by UNCTAD-India), US agriculture collapses. A latest 2010 report by the Organisation for Economic Cooperation and Development (OECD), a group comprising the richest 30 countries in the world, states explicitly that farm subsidies rose by 22 per cent in 2009, up from 21 per cent in 2008.

 In just one year in 2009, these industrialised countries provided a subsidy of Rs 12.60 lakh crore to agriculture. And it is primarily for this reason that the farm incomes appear lucrative. Left to big retail alone, European farmers would have packed up by now. In India, it is markets that sustain the farmers and not subsidies. We are therefore importing a failed model from America. Regarding farm incomes, let me illustrate. Till 1950, a farmer in America used to receive about 70 per cent of every dollar spent on food. In 2005, it had come down to not more than 3 to 4 per cent. If the middlemen have been squeezed out, as is being made out, farmers income should be increased. Why it has instead gone down drastically is because farmers income is being devoured by the new battery of middlemen swamping on him like a vulture. That is why the US/EU governments are providing subsidy support to keep farmers alive. Big fish is known to eat the smaller ones. Supermarkets exactly perform that function. They replace the plethora of small middle-men.

The arhtiya (commission agent) clad in a dhoti-curta, is replaced by a smartly dressed up middlemen. An illusion is therefore created as if the supermarkets have removed the middlemen from trading.

But in reality, the big boys now share the commission between them. The new battery of middle-men, who replaces the traditional middle-men, are the quality controller, certification agencies, packaging industry, processors, wholesalers etc. Do supermarkets help remove poverty? Based on biased studies by the consultancy firms and some institutes, the government believes that supermarkets will create employment and therefore help in ameliorating poverty.

This too is flawed assumption. Lessons need to be drawn from a 2004 study done by Stephen J Goetz and Hema Swaminathan of the Department of Agricultural Economics and Rural Sociology, at Pennsylvania State University in the United States. The authors measured the impact of Wal-Marts massive retail boom on poverty in various American states. In the past two years, Tesco had promised to create 11,000 jobs and Sainsbury another 13,000. Tesco had created only 726 jobs, while Sainsbury actually terminated the services of 1600 of its existing employees, leaving 874 people unemployed. How do we expect Tesco/Sainsbury to create additional employment in India when they have failed to stand up to their commitment back home? Big retail does not create additional employment but actually destroys the existing employment. Here is a comparison which should help remove the wool from your eyes. The Indian retail market is estimated to be around $ 400 billion

with more than 120 million retailers and employing over 400 million people. On the contrary, the US-based giant Wal-Mart, a global leader in big retail, also has a turnover of US $400 billion and employs only 2.1 million people. Which one of these retail systems provides employment is crystal clear.

If one thinks Wal-mart is here to create employment opportunities it is rather otherwise. Simply put, they are investing in India to make money.

I dont know how therefore economist, policy makers and the ministers can think that big retail will provide employment while the evidence from across the world shows that big retail has displaced millions who are already employed. Are we not deceiving the nation by presenting wrong facts? At stake is the livelihood security of tens of millions of hawkers, small traders and farmers. How can any sensible government that claims to work for the aam aadmi actually bring in massive destruction of livelihoods in the name of foreign direct investment? Why is our government so keen to pull out the US/EU economy from recession and in turn push India into a headlong depression? When we see what is happening in our country now days, we stand confused. Sometimes as to which direction the country is heading to. One is being reminded of the last stanza of an anonymous poem about a perennial sea farer. Sailor! Sailor! Where do you come from From a distant land, I do not recall, Sailor! Sailor! Where are you headed to To a distant land, I do not know,

This is perhaps the story of globalization which will be narrated to future generation in similar fashion some decades later. Just as we need to protect ourselves from invasive species to protect our biological diversity, we need to protect our food cultures and livelihoods from the invasion of supermarket chains. Free trade for Wal-Mart and TESCO is the end of freedom for farmers, hawkers and vendors who constitute a population of more than 800 million in India. W.T.O. might be dying, but corporate hijack of our livelihoods in food and farming is more intensive than ever. And governments have become instruments and facilitators in the promotion of corporate farming and corporate retail. Citizens must take the lead in shaping societies that protect the earth, give work to all hands and enrich our communities and societies. Our slogan Our world is not for sale must move to every farm and every street in every society. Our freedoms and our very lives are at stake. The net impact of this emerging shopping culture is externalized social and environmental costs: the bread and beans might be cheaper at the hypermarket but the food travels further and the consumer travels further to meet it. In the UK half the food consumed by the countrys 60m. mouths is sold from just 1000 stores, with village stores and overall diversity threatened and with some communities becoming food deserts, where there are no or few shops ..Quoted in Food Wars The junk merchant doesnt sell his product to the consumer; he sells the consumer to the product. He does not improve and simplify his merchandise. He degrades and simplifies the client .. Quoted in The Naked Lunch by William Burroughs