FDI in retail will lead to unemployment - K.N. Govindacharya

Published: Thursday, Nov 24,2011, 22:56 IST
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Retail Sector, FDI, Wallmart in India, K.N. Govindacharya, IBTL

Union cabinet has cleared 51% Foreign Direct Investment (FDI) in Multi-brand retail sector. Even though a minimum limit of 100 million US Dollars has been recommended by the committee of secretaries, it doesn't alleviate the risk on retail sector due to this decision. The government is claiming that this move will create employment opportunities, but anyone with some understanding and knowledge of how FDI or the arrival of corporate houses in retail sector has affected employment in other countries, can judge how false this claim is. It'll only raise the unemployment rate.

Is is a mere coincidence that when US' Foreign Minister Hillary Clinton came on her India visit, then only the committee of secretaries approved this proposal of FDI is multi-brand retail. Wallmart is the biggest company in this field and Hillary has served on the Board of Directors of this company for long years, since when her husband Bill Clinton used to be the governor of a state. Wallmart has exploited its relations with Hillary to make India allow this FDI. Wallmart has been known to sabotage the retail business in so many countries, but Hillary praised it in 2004 while addressing National Retail Federation saying that she learnt a lot from her association with Wallmart.

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हिंदी में पढ़ें : खुदरा क्षेत्र में एफडीआई से बढ़ेगी बेरोजगारी - केएन गोविंदाचार्य
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It is noteworthy that Mrs. Clinton got financially benefited from Wallmart. She used to get 18000 USD annually as fixed sum and additional USD 1500 per meeting that Hillary attended. Till 1993, Hillary had in possession of shares worth USD 100,000, as per the reports published in US media. This proves the point that the relations of Hillary and Wallmart have paved the way to this decision by Indian government so that the  interest of US companies are secured no matter if Indian small retailers suffer due to it.

This decision will potentially create unemployment as many small scale retailers will have to shut down their business due to not being able to compete with the prices offered by these foreign big retailers. Once their monopoly is established, these foreign companies will do as they desire and will hurt the economic structure of the country. The fact that the retail business is worth Rs. 400 billion USD is India and is growing at an annual rate of 13%, is the reason why Wallmart and other foreign players are interested in India.

Now, how is Wallmart a threat? Because Wallmart's own business is worth USD 400 billion, i.e. equal to the business of entire Indian retail market. Wallmart employs 2.1 million people worldwide. No wonder, its coming to India will pose a direct threat to the 40 million Indians who are employed in retail sector. They'll potentially go unemployed. Not only that, even the micro, small and medium scale enterprises of India will suffer due to this decision. They currently have a good growth rate but with the arrival of FDI, it will become a challenge for them to secure their survival.

When organised retail was allowed in retail sector, even at that time government had made tall claims of benefiting farmers and consumers, but the truth is there for all to see. Indians rejected the move largely. Some players had to wind up their business. Even then the government wants the foreign players to come here to serve US interests. Undoubtedly, this move is not only insulting the opinion of a majority of Indians, but also creating fresh troubles for a large number of people. It must be opposed at every level.

Article courtesy: K N Govindacharya
Translation: IBTL

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