The government has passed a policy which may jeopardize the livelihood security of 12 million small retailers, 40 million hawkers and at least 200 million (of the 600 million) small farmers – a small sacrifice to be made for ensuring success of the organised retail boom. While media, corporates and politicians are busy calling FDI a reform, among many other arguments, a common argument made for FDI is that it is greatly successful in the USA. Well, is it?
Organised retail occupies 92 per cent of the retail business in the United States (and 70 per cent in Britain). The people justifying FDI are tossing out all kinds of statistical figures by the retail industry and its marketing consultants to justify the entry of organised retail. While these statistics hide more than they reveal, a research paper, entitled Walmart and Country-Wide Poverty, clearly brings out that those American states which had more Walmart stores in 1987, had higher poverty rates by 1999 than the states where fewer stores were set up. Also, the districts which built new Walmart stores between 1987-1998 had high poverty rates.
Interestingly, increased poverty growth from Walmart operations came at a time when poverty rates nationally were otherwise in decline. The study cites three major reasons for the growth in poverty in relation to the growth in Walmart retail-
- Poverty rates increased because workers displaced from small shops (known as ‘mom and pop stores’ in America) had no alternative. They were forced to work in big retail stores at relatively lower wages.
- Big retail destroyed local entrepreneurship, thereby destroying the ability of local talent in many areas to earn an independent livelihood.
- Big retail transferred income from taxpayers and welfare programmes only to its stockholders and consumers. In other words, the retail giant did not bear the social and economic cost of its nation-wide operations.
While India, having recently passed FDI in retail, continues to live the big bright American dream, FDI in USA (Walmart’s own country) has come at a heavy social, economic and environmental cost, and big retailers have added to poverty. It is unfortunate how the mainstream media, run by corporates and governments, has made us deaf towards the the real voices of reason. The biggest irony is that we continue to hope that FDI in Retail will fix our policy failures. Well, it is the publicly elected government’s job to fix that, and not that of a profit seeking corporate business like Walmart or Tesco.