Whither the Small Trader?

Economic liberalisation in India is a story of contrasts and the deepening of divides. On the one side, it exudes “excellence” and “efficiency” fuelling prosperity for a few, while the flip side is of squalor and misery, heightened for many, without commensurate state action to mitigate the same. The recent debate on corporatisation of retail trade has to be seen in the same context. In a nutshell, corporatisation of retail trade in India ostensibly entails, on the one end, speeding up of the supply chain and reduction of the number of “middlemen” between the producer and endconsumer. On the other end, it will mean the loss of livelihood for millions of small retailers, many of whom (as pointed out by researchers) are involved in this activity because of the absence of alternate livelihoods.

While the argument against entry of foreign direct investment (FDI) and foreign players in retail (the current overall restrictions are limited to multi-brand retailing, with 51 per cent FDI allowed for the single brand variety) has been well laid out and has forced the government to be cautious, the corporatisation of retail trade in India has not been well debated in the public sphere. Only one political party – the CPI(M) – has come up with a list of tentative policy recommendations pertaining to this issue, which talk of giving local government institutions the power to license large entities, and bringing in other stringent regulations to prevent monopolisation of retail trade as well as in procurement. Studies made by independent researchers indicate the threat of large-scale displacement of and distress to small retailers (shopkeepers and hawkers) following corporatisation. On the other hand, big retail owners promise a better deal for farmers and manufacturers because of corporate support to the production process as well as the creation of an efficient supply chain. They also promise to help lower the price of goods sold by scaling up retail operations thereby benefiting the customer (although this conversely can actually jack up prices, for example, in the case of perishables).