Millennium Post

FDI in food can hurt traders: PMEAC

FDI in food can hurt traders: PMEAC
Once the share of overall modern retail in food reaches about 25-30 per cent, it is bound to affect kirana and small traders, Prime Minister's Economic Advisory council chairman C Rangarajan said on Friday.

Organised retail out-competes traditional retail on prices, variety and quality and offers greater convenience, he said.

Rangarajan, however, sought to allay apprehensions over the government move to allow FDI in multi-brand retail, saying that kirana stores will survive and can become part of modern retail by organising themselves and getting assimilated into the organised sector.

Rangarajan's comments come a day after the government notified its last week's decision to allow 51 per cent FDI in multi-brand retail despite widespread political opposition. 'Once the share of overall modern retail in food reaches about 25 to 30 per cent, it is bound to affect the kirana traders first and then the small and marginal traders,' Rangarajan said in his inaugural address at a seminar on 'Organised Retailing Vis-a-vis the Farm Economy of India'. He said, however, 'They [small retailers] will continue to remain. In fact, the international experience shows that even in advanced countries where there are large scale department stores operating, the 'mom and pop' stores have not disappeared. They continue to exist.' 'These kirana stores and street hawkers can also become part of the modern retail change story if they can be assimilated into organised retail, organise themselves under their banner through franchisees, upgrade through infusion of capital, better training,' he added. Later, he told the media that large retail outlets probably will come in major cities and Tier-II cities. 


HIKE IN DIESEL PRICE MAY PUSH UP INFLATION: PMEAC

The hike in diesel price may push up inflation in the short run but the Indian government’s move is expected to help contain fiscal deficit, leading to gains in the long run, Indian Prime Minister’s Economic Advisory Council Chairman C Rangarajan said here Friday.

 He also sought to allay apprehensions over the government move to allow FDI in multi-brand retail, saying that kirana stores can become part of modern retail by organising themselves and getting assimilated into the organised sector.

‘The immediate impact of increase in any administered price like this will push the price index up. But we need to look at from long term point of view. ‘We also need to look at from the angle that in the absence of such a measure fiscal deficit would have been higher,’ Rangarajan said in a press conference.

The government had recently increased the price of diesel by Rs 5 a litre and capped the use of subsidised LPG cylinder to six in a year per family, evoking sharp protests all over the country.

‘Immediately, it can produce raise in the price index but over the year I think over the medium term it is the best thing to do,’ Rangarajan added.

On the government decision to allow FDI into multi-brand retail, he said it will create an opportunity to improve infrastructural facilities in the agricultural marketing field which may ultimately lead to price reduction.

‘The present marketing arrangements are not on sound lines. Therefore, induction of organised retail, more particularly foreign investments in to retail, can lead to an improvement of the marketing system and therefore will lead into some sense of softening of prices,’ he added.

To a query, Rangarajan said that some of the foreign entities which are currently invested in the wholesale business may show interest in investing retail also. He added, however, that it will take some months before they take decision on investing in the retail business.
PTI

PTI

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