There are a few sections in India who would love to see a Walmart store in their neighbourhood. The reason being it would be a very cool way to shop, it would offer a range of goods, there would be no waiting and shouting, the goods would be neatly packaged, no bargaining, nice ambience, while the prices will be lower than the regular kirana shop. 

Then there are economic pundits who would tell you that competition is good, and competition would always bring you good quality and better prices. The government is now telling us that it would generate jobs, ensure better prices for producers and consumers, eliminate middlemen and help in the growth of GDP through higher consumption of goods.

If a mere 51% of FDI in retail brings us so many benefits, why do we need Five-year plans, SEZs, land acquisitions, PPP projects in infrastructure, give more than Rs.5,00,000 crore subsidies to corporates, spend so much money on business conferences? FDI in retail, if one believes the governments and industry bodies, seems to be the panacea to all chronic problems. Wonderful.  Maybe, Walmart logo can be the election symbol of the parties that support FDI in retail.

But then we should also be told why Walmart and the other retail chains could not do the same in the US, or wherever there are such large retail chains. How happy are the consumers while accessing goods, cheap and of good quality?

People with loads of cash are obviously the supporters of such huge stores. It is no wonder they would not bother with the implications of such a chain of stores in the country. They would love to benefit all ways - live a foreign life in India. Of course, they would not bother whether the rice they buy in the store comes from Texas or Tekulapalli.

However, the most amazing support comes from the government, when it says FDI in retail would help producers. So far there is no answer about how it happens. Is Walmart going to be an angel? The most ridiculous argument comes from the self-styled economists and rationalists. A big retail store, with thousands of square feet of floor space, becomes the symbol of progress, even though in the process if it has 'crushed' thousands of small retailers under its feet.

Except, the Lok Satta Party in Andhra Pradesh, no other party has taken a clear pro-FDI in retail stance. This stand of the LSP is against its grain and philosophy. One would not know if the party has followed its avowed principles of democracy internally while taking such a stand. It perhaps reflects the penchant of its unquestioned boss for western-kind of governance.

The hidden costs are not understood. Experience shows that mega-chains do not pay farmers enough. In US, farmers are dependent on government subsidies. People expect direct buying from farmer would reduce costs by elimination of middlemen. But, normally, they do not factor the costs of procurement (HR, transport, etc) of a single buyer. A big corporate will usually have big overheads, which would replace and add to the current costs of market intermediaries. These costs would not be limited to one particular chain of procurement, say rice in one area. It would include costs of all procurement chains across the globe. And, then, 'bad' business decisions. For example, big corporate decides buy huge stocks of 'x' product, and the market for such 'tanks', they would end up with losses, sometimes notional and sometimes real. These losses would again be spread across, and would not be limited to that particular product.

Expectation that big corporates would pass on the 'intermediary' costs of the farmer is more a wish, than a fact. Big stores would rather 'store-up' the surpluses for bad times, than pass it onto the farmers. In fact, big retailers, in recent years, have failed to control quality of agri-products, and also could not prevent pilferage, corruption, product dis-uniformity and price standards.

FDI in retail would also take out 'liquid' currency out of India, and would become a route of 'extra' economy, ably facilitated by the government. It would also lead to spiral of consumerism, and result in mountains and mountains of packaging waste. These retail spaces would include 'shopping' addiction and wastage of precious environmental resources.

Information on Wal-Mart

Wal-Mart is is the largest corporation in the world, with total revenues of Rs.12,82,500 crores in 2005. In comparison, Indian government budget in 2011-12 is Rs.12,57,729 crores. But, it employs only 12 lakh workers in the United States, at about 3,600 stores. According to 2001 Census, there are 38 lakh government employees, without adding another 50 lakh workers in public sector units. Wal-Mart is the largest and biggest company, but is not so in employment. In the US, Wal-Mart is reported to be the nation’s largest kirana retailer, with a 19 percent market share, and its third-largest pharmacy, with a 16 percent market share. During the past two decades, as Wal-Mart sharply expanded its number of stores in the United States, it increasingly encountered resistance from local communities. Opponents of Wal-Mart have tried to block its entry on many grounds, including the prevention of urban sprawl, preservation of historical culture, protection of the environment and “main-street” merchants, and avoidance of road congestion. Yet two of the most commonly-heard criticisms are that Wal-Mart eliminates more retail jobs than it creates for a community, and that it results in lower wages, especially in retail.

A study by researchers at Loyola University found that, two years after a Wal-
Mart store opened on Chicago's West Side, more than 80 local businesses within a four-mile radius (nearly one-quarter of the total) had closed and about 300 people had lost their jobs.

There are estimations that for every Wal-Mart Store, which employs 100 persons, there would be displacement of 140 retail workers. In India, this would mean that not only loss of employment, but it would mean shift in employment from illiterate or lower educated to literate and higher-than-poor families. As a less skilled work, there are many illiterate, rural youth who get employed in small kirana stores across the country, whose jobs are at stake.

Wal-Mart stores cause job losses was also the conclusion of a study by the University of California, which tracked Wal-Mart's expansion across 3,000 counties. The study found that the opening of a Wal-Mart store resulted in a net loss of 150 jobs on average. For every 5 people hired at a new Wal-Mart store, the results showed, 7 people lost their jobs at existing businesses.

Economists have also found that Walmart's arrival reduces wages and exacerbates poverty. According to a study by Stephan Goetz, an economist at Pennsylvania State University, counties that have more Wal-Mart stores have higher poverty rates (even after accounting for other factors that contribute to poverty)

Many Wal-Mart employees must rely on public assistance. In Massachusetts, nearly 5,000 Wal-Mart employees were enrolled in MassHealth, as of 2008 (the most recent data available), at a cost to taxpayers of $15.5 million a year.

Even as the evidence mounts of the harm Walmart does to local economies, other research has found that choosing the opposite path yields many benefits. For example, communities that are home to lots of small, locally owned businesses have experienced significantly higher income growth than those whose economies are largely in the hands of big out-of-state companies.

Wal-Mart has been trying to enter India. It has by its own admittance in US Congress has spent more than Rs.75 crores lobbying to get into India. Details of how this money was spent and on whom is not available. But, nevertheless it shows the benefits for Wal-Mart is hoping to get from entering Indian retail market.

In 2004, US Congressman Anthony Weiner (D-Queens & Brooklyn) did a study on Wal-Mart. According to this study, Wal-Mart jobs pay low wages, come with poor benefits, and frequently involve pressure to work long hours - without pay. When workers try to fight back by speaking out or unionizing, Wal-Mart goes to almost any length to shut them down.

And Wal-Mart’s reliance on cheap foreign labor gives it an unfair competitive advantage over its local competitors.  One Wal-Mart can be the death knell for local supermarkets, clothing retailers, and hardware stores.

HIGHLIGHTS OF THE WEINER WAL-MART STUDY:

• The average Wal-Mart worker makes Rs. Rs.95.40 less per hour than the average supermarket worker (Rs.374.40 per hour vs. Rs.470.20) nationwide, and takes home less than Rs.45,000 a month.

• Health care premiums for Wal-Mart workers have increased by over 200% since 1993.

• 38 state and federal lawsuits have been filed against Wal-Mart for systematically forcing employees to work long hours without pay.

• For every Wal-Mart that opens in a community two supermarkets close.

• Since 1995, the federal government has filed 60 National Labor Relations Board complaints against Wal-Mart for trying to intimidate employees who want to unionize. 

• Not one Wal-Mart store in the United States is represented by a union.