Re engineering Retail in India. II

Re-engineering Retail in India. II

FDI in retail, the effect on Indian retail market will be by allowing the foreign giants to enter is simply replacing the Indian middle man to a foreign one and not giving a fair chance to the millions of Kirana stores owners as leaders in the field of small businesses, and help harness their creativity. Either small or big, let them do it on their own and let us guide them to achieve this goal by giving whole hearted support. By allowing foreign giants in the areas (like retail) which does not require complicated technical expertise, we will not be doing justice to the aspiring Indian youth, who may be forced to take up jobs in the large outlets rather than explore and exploit their entrepreneurial capabilities. The following paragraphs will indicate the role of the cooperative societies, in the Indian retail market.
 

Network of retail cooperatives may help tame food inflation.

The government's key policymakers are drawing up plans to tackle the problem of stubborn

food prices and may rope in the cooperative entities to set up standalone stores to sell vegetables and other food products across the country.

The race to tackle the inflation problem, identified as one of the factors for the rout of the Congress in the recent state elections, has gathered momentum in the run-up to the 2014 national polls. Double digit food inflation and spiraling prices of vegetables have hurt households across the spectrum and triggered anger and unease among voters.

C Rangarajan, who heads the Economic Advisory Council to the Prime minister, has floated the idea of a "government organized initiative" involving the cooperative sector and states to ease the pain of high food prices. "We should create a network of retail outlets in our country and these networks should focus on a limited number of commodities. I think that will have a salutary effect on the market prices," Rangarajan told TOI. 'The cooperative institution is the most ideal for it. And what we should focus on is not cooperative retail outlets catering to a very large number of commodities... I think that is not what is required. Actually the focus has to be on perishables, certain kinds of grain, certain kinds of dal," he added.

The idea is at a preliminary stage and would require massive cooperation. Building the infrastructure to support the initiative would also be an enormous task. The former RBI governor and a veteran policy maker said these retail outlets should be modeled on the lines of Apna Bazaar, Kamdhenu stores or Mother Diary's Safal initiative but should be implemented through cooperatives. "If we focus on major towns in our country, then it will have a moderating impact," he said, adding that states must play their part in containing prices and promote the setting up of such cooperative institutions.

Top government officials welcomed the idea but said there were several implementation issues that would need to be worked out. Several cooperative entities such as the National Agricultural Cooperative Marketing Federation of India (NAFED) and the National Cooperative Consumers Federation of India have intervened in the market during crisis to help ease supplies and moderate prices. But officials said massive storage facilities would need to be set up to implement the idea.

"It is a good idea but has come a bit too late," said Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices. Rangarajan said the long-term solution to high food prices would require efforts to raise farm productivity, rework the farm marketing set up and a shift in the production of the basket of agricultural goods. "It is said that how can we not offer remunerative prices to farmers. Yes we should offer remunerative prices to farmers but at the same time it must be matched by productivity increase in agriculture, otherwise the remunerative prices to farmers will eventually result in the headline inflation rising," Rangarajan said.

"We need to amend some aspects of the APMC Act to enable retailers and others to have direct access to farmers. The mandi system is not necessarily working to the advantage of either the farmer or the consumer. I believe the present marketing arrangement particularly relating to perishables is very archaic. We need to change it," he said.

TIMES VIEW

It may be a good idea to open stores retailing select commodities to rein in food inflation. But these measures can really address only the symptom and not stamp out the problem. There is an urgent need to increase supplies, raise the productivity of agriculture, create a credible supply chain and build cold storages for perishables such as fruits and vegetables. That is the real, lasting solution to food inflation. The cooperative sector has sometimes been used for price intervention, but enabling it to emerge as a credible retail chain requires massive investment and effort. Building consensus among states to involve them in taming prices would also require leadership. But the focus has to be on building the infrastructure needed to ensure hassle-free supplies and reforming laws that benefit neither farmers nor consumers but serve vested interests in the trade.

The Times of India