To FDI or not to FDI in Retail

The feedback I get on AAP is that the decision makers have no business experience. Another criticism I have heard is that AAP does not have an economic policy. 

In my opinion, the anti-FDI stance taken by AAP is pro Kirana Stores, i.e. pro Chota Capitalists and anti Bada Capitalists with no regards for the customer who has benefited by Fast Moving Consumer Goods (FMCG) being sold at below MRP because of Big Stores. 

The following is an analysis of the FDI in Retail issue. 

http://deshbandhu.blogspot.in/2012/10/to-fdi-or-not-to-fdi-in-retail-is-debate.html

We can all agree that competition is good and that too much protectionism will lead to inefficiencies that affects the consumer's pocket. 

The discussion between who to protect and how to go about doing it is a never ending debate. In the absence of data there is a lot of conjecture. People cite trends abroad. Jobs are being lost due to increased productivity due to automation. Malls are closing down in the US. Internet commerce is chomping away at the Brick and Mortar store's market share. Many store fronts serve as "demo" centers to customers who often buy off the web from someone else. But India is different. Frankly I haven't seen lots of Kirana Stores vanishing. 

So I prefer the "pocket book" test. Customers vote with their pocket and that is an undeniable fact. So the debate ought to be on how can we promote a better customer experience without cratering our Forex situation and affecting sovereignty.

There are "multibrand retail stores operated by foreign companies. There was SPARS in Mangaluru - http://en.wikipedia.org/wiki/Spar_(retailer) now taken over by Auchan - http://en.wikipedia.org/wiki/Auchan

Interestingly a lot of goods sold at Auchan (nee SPAR) are made in India. That brings up the issue of repatriation of profits. 

So it seems this opposition is an aversion to WALMART probably because they are big and mired in controversy in the US. Low wages, contract workers, no health insurance, squeezing of suppliers, etc.

Please bear in mind that the "Chota Capitalists" also ignore worker benefits and many of their workers sleep on the streets. If AAP truly believes in Equality and Fairness, then regulate the "Chota Capitalist" as well. 

Regardless of "isms'. Left or Right, we can all agree that Jobs and Progress are directly proportional to the amount of Capital. And yes there can be bad progress and good progress as well as good and bad employment practices. And so Progress and Employment Practices have to be regulated. 

Capital can come primarily from from the State like in China or from Private Sources (that people tend to think) like in the US. Both US and China have State and Private Capital circulating in their economies. China has extended interest free loans to towns and cities, who are taking their own sweet time paying back. No interest means no repayment pressure. The US creates Capital literally from thin air and has pumped over 3 Trillion Dollars since 2008 to keep their economy afloat. Besides printing money, the Federal Reserve electronically transfers money at a very low interest rate to Banks. It is called Quantitative Easing, it is accomplished by a few key strokes at a computer and 85 Billion Dollars is pumped into the economy every month. Now there is talk of Tapering, which means the Fed intends to reduce the amount it creates from thin air.

So AAP has to figure out where the Capital is going to come from. The Indian Government does not have the luxury of creating Capital out of thin air like the US does and our Forex Reserves are not so high as China that we can print money either.