Walmart is going to kill your local economy.

See the $ rate from Dec2006 to June 2007…. an drastic drop in $rate, a good sign to INDIAN Economy. from nearly 45.2 droped to 40.40, awesome Indian Markets.

If i may add to that,

In the long run, Central govt. need to make sure that the wage-pressure of these retail-majors (very low salaries to workers to squeeze margins) won’t hurt the health of the economy and not keep these working-class always under the median-quality-of-life.

Enough is the suffering of consumers who were all these years served/exploited with ultra-inferior products at ridiculous-prices as these products travel through layers and layers of …parasite-intermediaries(brokers, middlemen). Whom do they (leftists, anti-FDI’ers) trying to protect by resisting FDI in retail?

Let’s welcome a marketplace where Direct FDI in retail in the next 5 yrs would eventually lead this economy to dsintermediated and effective chain mostly composed of producer, optional-trader and retail/wholesale groups.

It serves many purposes:
1) Keeps the CPI (consumer price index) and the inflation in constant check as consumer will have to spend less to get more as a result of world-class logistics/supplychains of these retail groups compete to get consumers into thier stores>

2) Will for sure benefit the producer as retails attempt to cut all the layers and go direct to producers for procurement in several ways (a)contract farming where you’re ensured of risk-free returns for your harvest, (b)smart traders making use of commodity futures to hook up the aggregated produce to retail-procurers at very good rates that will eliminate layers,keep them some markup, but at the same time benefits farmers and retail/wholesale procurers.

3) Will encourage farmers to start cultivation using up-to-date farming techniques for high-yields at low capital/operating costs as there is a clear danger of getting marginalized in this new context.

4) will lessen/status-quo the subsidization burden on federal/state coffers as improved productivity in the chain would more than compensate for the costs of WTO-forced integration of indian economy to global market where a farmer in Idaho could dump his well-subsidized and high-yield produce to countries like india and china.

5) Gradually helps to Scrap all these inefficient and corrupt state/federal agri. mktg agencies that barley accomplished thier stated objectives.

6) Encourages cooperative movement amongst farming community to collectively share the burden of improvisation techniques to compete well on global level.

But the question arises, who are the central player of this system and who are benefit from this. if we experience of this system, the small farmers, who are dominated in Indian agriculture, are discriminated by big business farmer. To explore the benefit form globalization and liberalization for small farmers, there is needed a suitable institutional frame work. without a proper frame work again we are encouraging the big business man like Mal-wart to enter in this sector. so this type of policy frame work will induce to increase the inequality in economy, which is not suitable for a healthy economy development.

I was reading the commments and I found some points quite interesting. A part of my course actually deals with analysing the business practices of Wal-Mart. In the Indian context, you can forget productivity, you can forget logistics and everything else. Wal-Mart is not worried about that and will not contribute anything to it. Things about FDI and the like is talking too tall. If you look closely, we have already identified some of the problems that the farmers face today; inadequate transportation of perishable goods being one of them. Wal-Mart isn’t bothered about that. All it will say is - “get it fresh for me, or not get it all”. Wal-Mart will not go to the farms and buy from the farmers, it will not build roads for the farmers, it will not provide transport vehicles to transport the perishable goods. The company is known to play hardball for minimal money. It buys goods in large qualtities, no doubt, but it will just dump the farmer and his goods when it finds other farmers who will be ready to supply for cheaper; then when it finds another, it will then dump the second farmer like a hot potato, and this goes on. Farmers, in their search for large sales, will begin to produce more, not realizing that an axe is getting ready to fall on them very soon. Remember Rubbermaid? This is no different. Smaller retailers don’t and cannot exert as much pressure on the suppliers as much as Wal-Mart can. Its Predatory pricing

Wal-Mart is also known to be a bad employer. Class action suits held in the USA will tell you the complete story.

That isn’t all the story. There are plenty of reasons why retailing is good in India, but Wal-Mart alone can bring the part down to nothing. Undocumented workers, unpaid workers, child labour, unhygeinic working condtions, Chinese goods blitzkreig into the market, the list goes on. If it can do these things in a country like USA where regulations are so powerful, doing the same things in India is definitely an incentive for Wal-Mart to setup their operations. That is where it sees a large part of its money, not so much in the retailing part.

The problems that I perceive are more at the grassroots level.

That’s my 2 cents. Criticisms are most welcome.

Prajwal

“Wal-Mart’s operation is different from the current Indian retailers, as they can completely take the entire supply chain from the field and factory to the customer.”

I entirely agree. This is what it is all about. An then the others will be forced to learn from them. This is what has happened to a large extent in Europe where WalMart has not had great success, but the likes of Carrefour have simply adopted the model. In a certain sense it just isn’t true that Europe hasn’t seen the benefits of the ICT revolution. It came later, that is all, and there is a thing called ’second mover advantage’ as well as the better know ‘first mover’ one. In India Wal-Mart are just giving things a mighty push.

“To me the retail growth is just a small part of the equation. What is at the forefront is goin to be the long awaited Agricultural revolution and Infrastructual growth than can result as a side-effect of the organized retail explosion.”

Yes, this is also the point, which is why the whole debate about trend growth and the investment rate in 2007 onwards is so important, since you now need to up the job-creation rate to soak up all the people who are going to be displaced from agriculture.

“Personally, judging from the Western media’s incessant focus on whether China is overheating…..”

Quite. The whole over-heating debate is misleading. Obviously there can be some overheating in areas like urban property (and only in some cities) and some areas of middle class indebtedness, but this is only a question of timing. With time property prices will rise and rise, and current debt levels (ex the farmers which is of course another issue) are sustainable if there are high levels of growth (Tobin called this the ’tilt’ effect, as the level of living standards rises in the future pushing up anticipated incomes by multiples of current ones on a 20 to 30 year time horizon looking forward).

So all this is one big circle which either feeds of itself or collapses back on itself. Personally I think what we are looking at is the former.This is why separating trend from cyclical fluctuation is so important.

“What is at the forefront is goin to be the long awaited Agricultural revolution and Infrastructual growth than can result as a side-effect of the organized retail explosion.”