Retail Regulation: Commie Circus

Retailers who are planning to set up stores which occupy more than 10,000 sq ft will have to get an approval from a local body first. This is a huge step backward to the ‘License Raj’ days and a kick in the teeth to the millions of middle class consumers who were looking forward to lower retail prices with the advent of large and efficient retailers.

It’s not difficult to see who is at the helm of this ridiculous legislation. The commie rats that hold the remote control to the incumbent government claim that this is to ensure the livelihood of the 12.5 million kiranas who will be hit by the ‘unfair’ practices of large retailers. What about the hundreds of millions of consumers who are suffering from the ‘unfair’ trade practices of these ‘kiranas’? The commies are trying to protect the same people who hoard, sell goods at prices above MRP, exploit the workers they employ, avoid taxes and cause billions in losses to the government and consumers.

Let’s look at a few numbers, starting with taxation. Retail is the biggest industry in India accounting for almost 10% of GDP. Only 3% of this is organized, where the government can enforce taxation. The rest of the business is done by the 12 odd million mom and pop stores where the government has near zero visibility. Just imagine the loss of tax revenues to the government. For that reason alone, the government should have supported organized retail.

Even when it comes to creation or protection of jobs, which is why the commie bandicoots are raising a hue and cry, the case is dicey. A ‘kirana’ employs 2.5 people on an average. It means that there are about 31.25 million people employed by the kiranas in India. We must remember that these are mostly low skilled workers with absolutely no job security who probably earn a couple of thousand rupees a month at best. A good portion of these are likely to be over worked child workers. On the other hand, according to projections, if organized retail touches 20% of the total retail business by 2010, it is expected to generate about 4.5 million jobs. This means that organized retail will still retain about 70% of the jobs when it replaces the inefficient ‘kiranas’. Even on a pure jobs generation basis, both organized retail and ‘kiranas’ are almost equals. Add to that the fact that most jobs in organized retail come with better training, skills, pay and security than at a ‘kirana’.

After poking holes all over the commie argument, let’s come to the biggest shocker of it all. Large multinational retailers who enter India, whom the rabid commies are supposedly targeting, probably won’t even compete with the kiranas consciously. A consumer will in all probability choose a neighborhood ‘kirana’ for impulsive purchases and visit a large retailer for his planned purchases. Of course, the mushrooming of ‘kiranas’ at every nook and corner will probably stop but they won’t be erased totally.

So, with all logic pointing towards the contrary, why is the government still going ahead with this legislation? Simple, old habits die hard and the babus and netas just want to increase their avenues to harass businesses and extract more moolah!