-: [rti4empowerment] Fwd: Pl Think : It will hurt all of us in India

 
The Govt Wrong Doing due to 51% FDI in Retail
Prime Minister Manmohan Singh projects FDI in retail as a  boon for the agricultural sector. Unfortunately, if you examine the realities,  it will spell a death knell for farming. It will be the beginning of an end for  Indian farmers.
It has happened in the United States. Ever since big retail - dominated by  multi-brand retailers like Wal-Mart - entered the market, farmers have  disappeared, and poverty has increased. So has hunger.
Today, not more than 700,000 farmers remain on the farm in America. Poverty  has grown, and hunger has broken past 14-years record.
In Europe, despite the dominance of the big retail, every minute one farmer  quits agriculture. This is because farmer's income across US/EU is on a  downslide.
According to a report, farmer's income in France has come  down by 39 per cent in 2009, having already slumped by 20 per cent in 2008.
More recently, in Scotland, low supermarket prices are being cited as the  reason for the exodus of dairy farmers.
Low supermarket prices in Scotland have forced irate farmers to form a  coalition called 'Fair Deal Food' to seek better price for their farm  produce.
Studies have shown that Tesco has paid producers 4 per cent less price than  the average prevailing in the open market.
It is therefore futile to expect the supermarkets rescuing farmers in  India
Despite the destruction of farming globally by the  supermarkets, the Ministry for Commerce and Industry is gung-ho about the  virtues of foreign direct investment in multi-brand retailing, which means  allowing the big players like Wal-Mart and Tesco to swamp the Indian market.
"The agriculture sector needs well functioning markets to drive growth,  employment and economic prosperity in rural areas," says a discussion paper  drafted by the Department of Industrial Policy and Promotion.
I find a number of economists and researchers singing chorus of praise for  the role the supermarkets can play. But the entire hypothesis is based on a  deliberately prepared flawed basis.
Do the supermarkets really benefit? Since 2006, India has allowed a partial  opening up of the retail sector. Has these retail units benefited the Indian  farmers and for that the consumers? The answer is no
The argument is that the supermarket chains will squeeze  out the middlemen thereby providing higher prices to farmers and at the same  time provide large investments for the development of post-harvest and cold  chain infrastructure.
All these claims are untrue, and the big retail has not helped farmers  anywhere in the world.
Even in Latin American countries, including Brazil, Argentina, Uruguay and  Colombia, where supermarkets, most of them owned by multinational giants, now  control 65 to 95 per cent of supermarket sales, farmers have been forced to quit  agriculture.
If the supermarkets were so efficient and provided  dynamism, I would like to know why the US is providing a massive subsidy for  agriculture.
After all, the world biggest retail giant Wal-Mart is based in America and it  should have helped American farmers to become economically viable.
But it did not. American farmers have instead been bailed out by the  government, providing a subsidy of Rs 12.50 lakh-crore between 1995 and 2009,  and this includes direct income support.
And that is why the American farmers are being supported in the form of  direct income support by the American government.
It is the massive farm subsidy that supports agriculture in the US. If this  subsidy, classified under Green Box for WTO calculations, is withdrawn (as  analysed by UNCTAD-India), US agriculture collapses.
A latest 2010 report by the Organisation for Economic  Cooperation and Development (OECD), a group comprising the richest 30 countries  in the world, states explicitly that farm subsidies rose by 22 per cent in 2009,  up from 21 per cent in 2008.
In just one year in 2009, these industrialised countries provided a subsidy  of Rs 12.60 lakh crore to agriculture. And it is primarily for this reason that  the farm incomes appear lucrative.
Left to big retail alone, European farmers would have packed up by now.
In India, it is markets that sustain the farmers and not subsidies. We are  therefore importing a failed model from America
Regarding farm incomes, let me illustrate. Till 1950, a  farmer in America used to receive about 70 per cent of every dollar spent on  food.
In 2005, it had come down to not more than 3 to 4 per cent. If the middlemen  have been squeezed out, as is being made out, farmer's income should be  increased.
Why it has instead gone down drastically is because farmers' income is being  devoured by the new battery of middlemen swamping on him like a vulture.
That is why the US/EU governments are providing subsidy support to keep  farmers alive.
Big fish is known to eat the smaller ones. Supermarkets exactly perform that  function. They replace the plethora of small middle-men.
An illusion is therefore created as if the supermarkets  have removed the middlemen from trading.
But in reality, the big boys now share the commission between them. The new  battery of middle-men, who replaces the traditional middle-men, are the quality  controller, certification agencies, packaging industry, processors, wholesalers  etc.
Do supermarkets help remove poverty? Based on biased studies by the  consultancy firms and some institutes, the government believes that supermarkets  will create employment and therefore help in ameliorating poverty.
This too is flawed assumption. Lessons need to be drawn from a 2004 study  done by Stephen J Goetz and Hema Swaminathan of the Department of Agricultural  Economics and Rural Sociology, at Pennsylvania State University in the United  States.
The authors measured the impact of Wal-Mart's massive retail boom on poverty  in various American states.
In this eye-opening study, entitled "Wal-Mart and  Poverty", the comprehensive study clearly brings out that those American states  that had more Wal-Mart stores in 1987, had higher poverty rates by 1999 than the  states where fewer stores were set up.
"Equally important, the counties (districts) which built new Wal-Mart stores  during the period 1987 to 1998 also had high poverty rates," the report  concludes.
Interestingly, increased poverty growth from Wal-Mart operations comes at a  time when poverty rates nationally in America were otherwise going down.
Claims by the big supermarkets to be driving economic growth by creating  thousands of jobs have been exposed as a sham.
In UK, it has now been shown that supermarket chains like Tesco and Sainsbury  have failed to live up to their promise of creating thousands of jobs and  thereby driving up the economy.n the past two years, Tesco had promised to  create 11,000 jobs and Sainsbury another 13,000.
Tesco had created only 726 jobs, while Sainsbury actually terminated the  services of 1600 of its existing employees, leaving 874 people unemployed.
How do we expect Tesco/Sainsbury to create additional employment in India  when they have failed to stand up to their commitment back home?
Big retail does not create additional employment but actually destroys the  existing employment. Here is a comparison which should help remove the wool from  your eyes.
The Indian retail market is estimated to be around $ 400 billion with more  than 120 million retailers and employing over 400 million people.
On the contrary, the US-based giant Wal-Mart, a global  leader in big retail, also has a turnover of US $400 billion and employs only  2.1 million people. Which one of these retail systems provides employment is  crystal clear.
If you think Wal-mart is here to create employment opportunities you must be  living in a fool's paradise. Simply put, they are investing in India to make  money.
I don't know how therefore economist, policy makers and the ministers can  think that big retail will provide employment while the evidence from across the  world shows that big retail has displaced millions who are already employed.
Are we not deceiving the nation by presenting wrong facts?
At stake is the livelihood security of tens of millions  of hawkers, small traders and farmers.
How can any sensible government that claims to work for the aam aadmi  actually bring in massive destruction of livelihoods in the name of foreign  direct investment?
Why is our government so keen to pull out the US/EU economy from recession  and in turn push India into a headlong depression?


  