Where Are The Indian Innovations?

Why seek retail FDI for cold storage?

The region is home to a third of Nigeria's population of over 150 million people. The people are mostly small farmers and cattle-rearers. The area suffers from poor roads and power shortage, making cold storage difficult (a description that applies to vast tracts of India).

Consequently, farmers had to sell their produce at low prices, since they could not hold the produce.After studying the problem in depth, Mohammed Bah Abba, an enterprising lecturer at the Jigawa State Polytechnic, Dutse, came up with a unique solution. Hailing from a family of potters, he invented the pot-in-pot system of cooling (calledzeerin local language).

The pot-in-pot technology consists of two earthenware pots of different diameters, one placed inside the other. The space between the two pots is filled with wet sand that is kept constantly moist, thereby keeping both pots damp. Fruit and vegetables are put in the inner pot, which is covered with a damp cloth. The phenomenon that occurs is based on a simple principle of physics: the water contained in the sand between the two pots evaporates towards the outer surface of the larger pot where the drier air is circulating.

The evaporation automatically produces cooling, causing a drop in temperature of several degrees in the inner container, extending the life of the perishable foods inside. In tests conducted, the temperature in the inner pot was reduced by 6-8 degrees C in 12 hours, and could be maintained by keeping the sand moist.

The shelf life of the produce improved significantly, as shown in the table.

The impact of the pot-in-pot was a reduction in the wastage of fresh fruits and vegetables. Farmers could hold the produce longer and sell on demand at higher prices. The cost of a pot-in-pot unit is around $5 (less than Rs 300).

So where are the innovations in India?  What are our hug business conglomerates doing to help the common people?

USA Pushing For FDI in Multi-Brand Retail

Many people believe that the recently deceased FDI in multi-brand retail was taken purely to help India's farmers and consumers.  They should read this.

India to take up visa rejections issue with US

On its part, the US is expected to push for opening up of India's multi-brand retail trade to Foreign Direct Investment; raise its concern over certain proposals that could ‘curb' FDI in brown field pharma projects and the proposal for mechanism for an oversight by the Competition Commission of India to look at the impact of acquisitions; take up their complaint against the 30 per cent local sourcing requirement in India's solar power generation programme; India's restriction on US diary imports; as well as reduction of tariffs in industrial products in general.

A Different View of APMC Mandis

Interesting insights into the role of APMC mandi system, which has been criticized for keeping the farmers from getting a fair price for their produce.  All in the name of the farmer:

A closer analysis also brings out a fundamental difference between mandis and private procurement channels. For instance, since ITC necessarily operates its choupals according to the corporation's changing business strategy, its procurement volumes change from season to season, and in some years may barely make an appearance in a particular market. Choupals also essentially function as post-harvest buying locations, procuring a single commodity at a time on the basis of variety and quality specifications. What is true for ITC is also true for government wheat procurement operations, which are limited in duration and location, and vary in volume. In contrast, the mandi stands out as the only physical marketplace currently open to all farmers around the year, dealing simultaneously with the sale of multiple commodities of variable quality by bringing together a range of licensed buyers of different sizes in an open auction. 

FDI in Multi-Brand Retail Will Hurt Farmers

How FDI in retail will hurt farmers

A prominent TV channel featured the story of a few farmers in Punjab highlighting how direct purchases of produce by a retailer had given them a higher yield. This is a type of faulty reasoning described in college textbooks as “the fallacy of composition”. The fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some part of the whole.

The channel had obviously hand-picked a few farmers who suited its conclusion. The only way to assess the impact on farmers is to look at countries where big retailers dominate the market, and see how the entire farming community has fared.

And it has fared quite badly.  Take a look at the following picture and then read the whole analysis for the numbers.

Is The Government Sidelining Parliament?

Yes, says Prakash Karat in this The Hindu report:  Government unwilling to abide by tenets of parliamentary democracy: Karat

Referring to the Cabinet decision of allowing 51 per cent foreign direct investment in multi-brand retail, Mr. Karat said Parliament got stalled on the issue as the government refused to accept the adjournment motion of the Opposition as it was not willing to face any censure, with partners Trinamool Congress and Dravida Munnetra Kazhagam opposing the policy and uncertainty about neutralising the Samajwadi Party and the Bahujan Samaj Party.

Certain Congress ministers advanced absurd arguments that policy decision was the right of the executive and a parliamentary vote was an encroachment on its legitimate right. While conceding that executive had the right to take decisions in certain policy matters, he said how can the Parliament's right to scrutinise such policy decisions and for the Opposition to seek to reverse such a decision through a parliamentary vote be denied.

“It goes against the elementary principle of the accountability of the executive to Parliament in our political set-up. If the government wishes to push through an unpopular and harmful policy, it must be willing to face the consequences of that in Parliament.”

Job Creation by FDI in Retail - Smoke and Mirrors

Prem Shankar Jha crunches some figures for us: Smoke and Mirrors

How many livelihoods are lost, will depend on the rate of growth of the economy and the speed of penetration by retailers.

At the centre of the storm of protest that arose over the cabinet’s decision to allow FDI in multi-brand retailing, lay one question: will it cause a loss of employment, not to mention the investment made in about 15 million stores and kiosks by the petty bourgeoisie? 

The government knew this would arise. For in  2004 the Delhi-based Centre for Policy Analysis had estimated that if FDI were to take over 20 per cent of retail trade in India, around 8 million people could lose their livelihoods. It, therefore heralded  the lifting of the ban with an unprecedented  blast of propaganda. 

For reasons that are explained below, the CPA’s estimate is greatly exaggerated. But the threat of a loss of employment is real.

He comes up with a minimum figure of 4-5 million jobs being lost.  That is only in the retail trade itself, leaving out job losses due to any replacement of indigenous goods with imported consumer goods.  

FDI in Multi-Brand Critics are Retail Luddities

Says the FICCI Secretary-General, this sorry piece:  Beat back the retail Luddites.  He would, wouldn't he. 

A mere 10 million owners of traditional and self-organised retail and wholesale trade have held the country of 1.2 billion people to ransom and thwarted progress. 

No, it wasn't them.  Most political parties barring the Congress put up a front to get it suspended.

It is yet another demonstration (like ‘central planning is more efficient than a regulated market') of how untruth can triumph when repeated often and loudly enough. The retail sector is destined to almost double in size in the next 10 years by simply keeping pace with growth. By 2022, the size of the unorganised retail sector is estimated to reach nearly $1,000 billion. Of this, the ‘mom and pop stores' are expected to have a market share of 84 per cent, giving them a business volume of $840 billion — a huge expansion from their current market of $450 billion!

Note the almost subliminal reference to a certain ideology which starts with 'S'.  Also note the numbers he throws with such gay abandon to prove a point.  $1000 billion in ten years!  84% of this will still be claimed by 'mom and pop' stores.  If 84% is guaranteed to be cornered by the local shops, then what exactly is the need for FDI in multi-brand retail?  Isn't there an assumption that the local shops will still be around?

These are the only other criticism of the FDI decision he addresses : India becoming re-colonised by foreign powers.  Bah!  Who in their right senses makes that argument?  

Then this:

This reflects a very low opinion of our abilities and indeed very poor self-esteem. Can a country whose people have such a poor opinion of themselves really rise to assume global responsibilities? ... We have to show to the world and more importantly prove to ourselves that we can determine our own destiny. This is to be achieved not by denying ourselves the progress that is possible by working with foreign investors but by acting with sagacity, foresight and resolve when and if foreign investors diverge from our national priorities.

Exactly.  We should do that.  Why assume that we can determine our destiny only with foreign investors?  Isn't it possible otherwise?

Fix things like the APMC laws, local taxes, and the transport infrastructure first.  Then lets see if things improve or  not.  Then we can think of FDI in multi-brand retail.

"Market economy? Or, market society?"

Market economy? Or, market society?  S Gurumurthy takes on the FDI in multi-brand retail question.

"Reasons to be wary of retail giants"

Reasons to be wary of retail giants.  Points to ponder.

OMG The Sensex Will Crash by 500 Points!

So hurry and allow FDI in retail!  Yes, this is how decisions are taken in the largest democracy.

Cabinet divided over FDI in retail sector

Several of the anti-FDI ministers took serious objection to clearing the issue in a hurry, demanding that more discussion was needed in the cabinet on controversial provisions. Some were opposed to clearance given to the FDI before the Uttar Pradesh elections. To this, a senior minister shot back saying that all newspapers have written that the proposal would be cleared. If it is not done, sensex will drop by 500 points. “Are we prepared for that?”, he is learnt to have asked.

Whatever the spin doctors come out with to sell the policy,  as they will - Govt launches campaign to sell FDI in multi-brand retail, one thing is clear.  This is nothing to do with any of those reasons.  It is for big-business.  I remember how opening up retail to Reliance etc was supposed to remove the middle man and make things better for the consumers and farmers.  The price rise never stopped since then.  Even if it didn't cause the price rise, it for sure didn't keep/bring down prices.