Retail reforms would have limited impact on small retailers: C.Rangarajan
Prime Minister Manmohan Singh's top economic adviser C Rangarajan has said that the opening of the retail sector to foreign supermarkets in the country would have a limited impact on small players.
Interacting with mediapersons at a news conference in Kolkata, Rangarajan explained the target market of FDI, and said: "Well FDI in retail in my view will have a limited impact on small retailers. First of all, under the regulations that the governments are now talking about is that it is being allowed only in the metropolitan city and the other is that, even now there is no prohibitions against the large corporate or anybody. Setting up the retail outlets, when we say FDI in retail is allowed, it is only the case of ownership pattern."
He also added that the presence of large retailers would be restricted to metropolitan towns.
Rangarajan also added that though small retailers enjoy benefits of location advantage and time convenience, the traders would act more business-like under the shadow of the large retailers.
"I think, the small retailers have not disappeared even in the US, the small retailers have the role advantage, they have a location advantage. People want something... all these large things will come far away, way outside. That is what the idea is that. I think the small retailers will have a location advantage, time convenience and so on. Therefore, they will in a way act also more business like under the shadow of these things but my own view that FDI in retail will not necessarily affect the small retail outlets in any serious way," said Rangarajan.
The CPI-M is pushing hard for a symbolic vote against the measure. If the government lost the vote, it would be an embarrassing setback for a policy on which it has staked so much political capital. It could also sap its political will to pursue more difficult reforms to cut high spending and reduce a ballooning budget deficit.
Most of the initiatives Singh has announced to date have required only an executive order, so this session of parliament poses the biggest test yet of his reform drive. If he fails to get key allies and the BJP on board, his reformist legislative agenda could stall.
Among the reform bills due to be introduced are measures to allow up to 49 percent foreign investment in local insurance companies and domestic pension funds. Currently, the cap for insurers is at 26 percent and foreign investors are barred from buying into pensions.
The economic bills can be passed in parliament's lower house with the support of two big regional parties - the Samajwadi Party (SP) and Bahujan Samaj Party (BSP) - which are not part of the ruling coalition but often give it support in parliament. However, the SP has previously opposed the pension and insurance bills while the BSP is keeping its cards close to its chest.