Thursday, October 18, 2007

Is it a pipe-dream?

Just read the news headlines in any international journal. The season's flavor is India. Take a look at some of them: India will be the next super power. India will play a major role in the world of tomorrow. India will surpass the US with its technological & economic superiority. The list just goes on and on.
But have you ever wondered that to turn all those things into reality, how much reform needs to be brought into India? Right now, I do not see that happening.
We as a nation are open to new ideas, but just in theory. When it comes to practical implementations, we get cold feet.
Take the example of the retail industry. The world-over, retail has been known to create millions of jobs. Sure, some of you will say that Wal-Mart is the saddest thing that happened to the US. I would say, go grab a copy of Mr. Thomas Firedman's The World is Flat and read it without any pre-conceived notions. You will come to admire the efficiency of the company.
Coming back to retail in India, Reliance, ITC, Bharti etc are in the process of opening up number of stores across the country. I have visited a Reliance store in particular and noticed that the fruits and veggies stocked there were fresh and very very affordable. The secret of this it seems is to eliminate the middle men involved in this trade. These middle men would earlier buy the produce from the farmer at a very low rate and then sell the same in the city markets at a much higher rate. Big retailers like Reliance and ITC buy the produce directly from farmers, while giving them a substantial cut out of the actual selling price and still manage to keep the prices low. These low prices allow the poorest of Indians to get fruits and vegetables at very affordable prices. So is it a win-win situation? Well not quite. What about the livelihood of the middle men?
ITC understood this and brought about a plan in which the out-of-work middle-men would start managing its storage and procurement from the farmers, but under the watchful eye of the professionally managed company. So now is everything fine.
Not yet, as what about the livelihood of the neighborhood mom and pop store owners? There is no real threat to them, as in India, people do not want to drive 5 miles to buy grocery for the house. Why do I say 5 miles? Because the size of the stores is huge and space in the residential areas is scarce. Hence the big stores are located mostly outside residential areas. Due to the distance not everyone will travel because not everyone has a car and petrol is also very expensive. So for most stuff, people go to the neighborhood grocer. But the neighborhood grocer goes to the superstore once a week to buy lots of stuff at less that retail rates. He sells the same to end consumers at a little more cost. So all is well, right?
Yes, except for the mindset of certain state governments. Take the case of state of UP, in which the dynamic chief minister (CM) Mayawati ordered the closure of all Reliance stores in UP. West Bengal has asked the big retailers to just forget about setting shop. No wonder that, as they have a reputation to live up to. After all, they are the communists. Did I mention that these two states are the laggards in terms of job creation and human development?
The retail business had the potential to create a huge number of jobs in these states. But the old foe of development, came in the way. Petty politics that is. Is this the kind of reform that we want to show the world? Is this the kind of reform that we plan to keep doing? Is this our plan of getting India to a super-power status?
Somehow India the future super-power rhetoric feels like a pipe-dream.

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