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| Is J&K jumping to ruinous gamble by supporting FDI in retail trade? | | | Early Times Report
JAMMU, Sept 21: The State Government in contrast to all other States in the country seems to be in a hurry in allowing FDI in multi-brand retail trade without analyzing the pros and cons of its decision.
There is no doubt that investments from foreigners in any sector of the State's economy would apparently come handy for the State, but its implications are not to be viewed so simplistically. Thousands of families are associated through tradition with the retail trade in the State and these have been contributing viably to the local economy and also helping employment generation by creating a huge segment in the self-employment generation.
Following the family line, some of the highly educated youth in the State have been carrying forward the family tradition of engaging themselves in retail trade across the State thereby lessening the burden on Government jobs.
From the small retail trade outlet in the farthest village to some of the comparatively better stocked outlets, retail trade is a very significant sector of the local economy. Once FDI is allowed in multi-brand retail trade in the State the big fish will enter the market. They will trade in locally procured goods and after value addition, sell them to the local consumers. To begin with, it is quite possible that the primary sellers like farmers might get better prices for their produce, but once packaged and marketed, the same goods would be priced at will by the multi-brand traders hitting the consumers hard.
One basic practice of trading in modern economies is to declare discounts and price rebates to ease out competitors from the market. This is a practice followed by multi-national retail traders the World over. The economically less strong competitors who cannot support their sales in competition to the economically stronger competitors would finally have to bow out of the trade.
Once the decks are cleared and competition eliminated, the FDI run multi-brand retail outlets would hold an absolute monopoly on trade. They could dictate prices not only for the consumers but also for the producers. The huge influx of Chinese goods in Indian markets is a case in point. Although these goods are not durable and long lasting yet their rock bottom prices have created a huge market for these products which are finally beneficial to neither the consumers nor the Indian companies who produce same goods of better durability and quality.
The State Government should have given sufficient thought to the fact that UP, Punjab and West Bengal, where the populations is much more than Jammu and Kashmir, where the bringing in of FDI in multi-brand retail trade would definitely pump in much higher investments, are opposing the investment.
It cannot be argued that just because the FDI in multi-brand retail trade has been proposed by the UPA Government that is why these States are ignoring the interests of their citizens by opposing the decision. The fact is that allowing FDI in multi-brand retail trade is a gamble whose far reaching consequences will have to be thoroughly analyzed before jumping to any conclusion. J&K would be letting itself fall into a ruinous gamble if we allowed FDI in retail trade without looking at its far reaching consequences. |
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