Sunday, November 20, 2011

Dr. JP welcomes FDI in Retail sector

Lok Satta Party President Dr. Jayaprakash Narayan has said the Union Government move to permit foreign direct investment in the multi-brand retail sector is “great news and long overdue”. It will benefit the farmer and the consumer, and stimulate the economy, Dr. JP said in a media statement issued here today.

The Union Cabinet is expected to approve the note prepared by the Department of Industrial Policy and Promotion (DIPP) on allowing 51 percent FDI in the retail sector. The Union Finance Ministry has cleared the proposal.

Dr. JP said the fears that foreign retail chains will displace grocery stores and street vendors are misplaced. Experience the world over shows that foreign retail chains did not displace mom & pop stores.

“Retail trade grows faster than the economy in early stages. The new business goes to retail chains, leaving traditional vendors their share.”

Dr. JP recalled that sections of employees had opposed computerization of banks for decades saying it would lead to large-scale displacement of employees. “Now we know these fears had no basis.”

Dr. JP pointed out that under the present dispensation the farmer gets a low price for his produce even as the consumer pays a high price. Both the farmer and the consumer will gain with the advent of multi-brand retail chains.

“Now a farmer gets Rs.18 a kg for the rice he produces while a consumer pays Rs.30 – 35 a kg. A farmer gets only 35% of the consumer price of vegetables & fruits.

“Retail chains will remove middlemen, add value, eliminate wastage and shortages, ensure stable prices and help farmers and consumers. Let us shed fears and welcome FDI in the retail sector.”


  1. well said sir. We like the examples you give which will help us in understanding the issues easily.

  2. i truly agree with jp , but is jp are our govt so dum that they are not seeing that our wealth is been taken away by some foreigner n if it comes to eliminating the middle men , then y can our govt try to do it with our own people, i was a fan of jp till nw but nw i hav to think over it ,

  3. Till a moment back, I was into opposing stand on basis that FDI into multi brand retail would displace small players. The examples of other countries' still alive mom & pop stores is apt. Banks hitherto resistance to computerization is good example for difficulty in accepting change. well reasoned. But, backing the well known fact that the present failure is a political/methodological failure than an economic one, isnt it imp to have supporting reforms in kin areas of state owned procurement/distribution mechanisms to avoid monopolistic conditions tomorrow..?

    1. well said.. It clearly proves that the government is incompetent in doing such changes.. so they were stressing that the present economic condition needs FDI for its growth.. To reduce the responsibility and also not to get blame because of their incompetency in making economic reformation FDI would be a great idea for them, the government..
      I agree with JP in this.. the farmers and consumers will benefit because of the price.. but what is the reason for today's price hike and a huge difference between production and end user price (agro products)? it is because of government not taking care on the storage facilities available for the agriculture goods.. Why farmers still want to go to a middle man to sell their products instead of directly going to government facility for bids? again here comes lack of care by government and also corruption pays a major role in this..

      FDI in retail will greatly help the farmers as the service and facilities provided by private body will be such a excellent.. but considering the net outflow of cash from india to the foreign companies (in terms of profits).. I am saying if government do things right what it ought to do then economy will increase double the amount as it would be with FDI in retail.. (as there will be no outflow of cash)..

  4. To Anon above, eliminating middlemen involves huge investment, deep knowledge of supply chain which helps understand demand & supply. Both of which will from these large foreign players.

  5. Sir we need clarifications from u for all the doubts raised by protesters. please explain us. regarding fdi in india

  6. Thanks a lot. I was in a dilemma about this FDI.
    I hope whatever the analysis you gave will be correct.

  7. Sorry JP , but i request you to think again.
    Instead of thinking about computerization in our country , Please think and do research on what wallmart and similar companies have done in other countries. Why cant government do anything about logistics by itself? why cant it fix some rates etc? Why cant government start the initiative instead of asking foreign companies to do it?
    It will not solve the problem of farmers, but it will increase. Because , you havent studied the corrupt practices of these companies. They create disaster.