Micro Solutions To India'S Macro Problems - Part 2
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Micro solutions to India's Macro problems - part 2

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Senior Technical Writer
The previous blog in this series was the result of the Mid-day meal horror that unfolded last year. Since then a lot has happened on the political and disaster front (though one would be tempted to think that the first is also a part of the second!!). The print media and the 24 hour news channels have been having a hay-day with the spectacle that is Indian Politics.

One of the topics, which now seems to have faded into the background is the FDI in retail issue. A hot topic of debate just a few months back, no one seems to be interested in pursuing it to any logical conclusion. Both, proponents and opponents have their views and to some extent at least, both have valid reasons for their views. As the general public, with little or no knowledge about how FDI works, we are often dazed and confused by the ferocity of the two sides, when it comes to airing those views.

Distilling the concerns of both sides through the sieve of common sense, two things become apparent - the first is that, the farmer (the producer) is the focus of the nay sayers as well as the yeah sayers. The second is that the benefits the FDI will bring (according to the yeah sayers) and the drawbacks (according to the nay sayers) are also in some ways related.

The contentious issue with the opponents is that the big players in this field would undercut and eventually destroy the small ones - the corner grocer types and thereby cause a bigger disaster than the benefits of infrastructure that they would likely bring. On that same line, the proponents argue that the huge losses that are incurred due to the lack of good storage and processing, would be minimized because of the infrastructure these big retailers will bring.

Frankly, I cannot understand why both sides are arguing.

All one needs to do is to take both the arguments head-to-head and follow them to the logical conclusion.

The crux of the matter is that the farmer - the producer - bears the brunt of losses at every turn. The onslaught of unseasonal rains that destroys standing crop, the year with a bumper crop with not enough quality storage, both mean disaster for the farmer. Loss of produce, whether as crop or after harvest means higher prices for the consumer too. A viable solution that helps both the producer and the consumer is what the proponents say FDI in retail will bring.

This same solution, on the other hand will lead to a monopollistic situation, decimating a link in the current retail world - the small grocer - say the opponents. And once this link is destroyed, the big players would be kings and consumers would be at their mercy - is the fear that the opponents have.

So the seeming conundrum is that the benefit that these big boys are expected to bring is what could lead to the next big problem - the problem of a large section of society that makes its living from small grocery shops.

But is that really so? The same arguments were put forward against the coming up of these large stores in malls. However, when I go to the traditional shopping areas of Bangalore today, even with several malls now running successfully around the city, there does not seem to be a shortage of shoppers at all! Granted, there is a huge crowd in the large departmental stores in malls, but the crowds in the traditional shopping areas do not seem to have diminished. The local grocer is also smart. He has the advantage of proximity and knows how to develop relationships with neighbouring residents to ensure business.

Crowds aside, if we go to the root of the benefits that the supporters of FDI in retail profess, it is clear that there is truth in their claims. A better storage infrastructure for raw produce, a widespread availability of processing capability to utilize the excess produce and create value from it are sorely required in India today.

The first benefit of the availability of adequate godown and cold storage would go to the farmer. The second would be that the losses caused by faulty storage could be minimized. Coupled with processing plants that converted these raw items to finished consumables before they had a chance to rot would add value to a bumper crop rather than reduce value because of lack of takers.

Creating good storage and utilization of excess produce are therefore the needs of the day. The question that begs to be asked here is - are we Indians incapable of pursuing these solutions indeginously? Do we NEED FDI to build the infrastructure?

Surely not!

The deficit is not in the ability but in the intention. All it would take is for some enterpreneur with a social conscience and the will to create world class infrastructure - and we could have everything the yeah sayers propound and none of what the nay sayers predict....