Tuesday, December 13, 2011

Is FDI in retail in India beneficial?

From the economist point of view, if you consider FDI in retail, it is really a good and commendable step. FDI in India is a must, considering the economic crisis following India. India till now has not been affected by recession like the European countries faced it, Its now the second major recession in just three years including the recession on 2008. But India due to its strict economic policies survived both the recessions.

But its not a moment to be happy for India, as though recession of west did not hurt India largely, but the recession which is now approaching and ready to engulf India on its own is the inherent policies of Indian govt.
If by the end of 2012 govt of India don't take some bold steps to invite foreign investment, then there may be chances that India will too be engulfed into another recession created by his own inherent policies.

Govt of India need to take bold and strong steps like inviting major MNCs and manufacturing sectors who are waiting for Indian govt's approval to enter and start their large manufacturing unit in India, due to the large prospects they see in India. Almost all the major brands of the world, including Ferrari, apple, Walmart and Motorola want to enter Indian market and provide their service to India.

The manufacturing units like Walmart, Harley davidson will help India to collect enough foreign exchange that, the ratio of US Dollar to INR (Indian rupee) will dip down to the lowest. More the investment, more will be foreign cash inflows, more capacity to buy things. That is the importing capacity of India will be almost double through FDI. Petrol prices will dip down and hence the prices of all other commodities will decrease substantially. This all are directly or indirectly related to the FDI.

FDI in retail particularly will help to reduce the commodities prices to go down to very low as it will minimize the extra charges levied by the wholesaler, distributor and retailers in the process. This FDI in retail will also save many lac tons of foods and grains from being rotten, due to cold storage facility.

If we go through the words of retailers of India, that this FDI will affect the 5 crore retailers, then this is simply baseless, as it will never affect to that extent, though it will surely affect some of the retailers in the big cities of India, which has by now the population of 1 million+. So, on an average 30 to 40 lac people will be affected and they may need to change their course of earning revenue.
But only due to these 30 to 40lac people, we can't ignore the rights of 118 crore consumers who has the right to buy the commodities at the lowest possible prices.

Now its on the UPA govt to decide, whether it should go for vote bank tactics or take a bold decision like Indira Gandhi used to take her decisions.
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