Thursday, December 6, 2012

A country of salesgirls and salesboys? Really Mr. Jaitley????

The thrust of Arun Jaitley’s speech in the Rajya Sabha yesterday was on the magnificently bizarre theory that India would become a nation of salesgirls and salesboys, were FDI to be allowed into the retail sector. Even after trying very hard for several days (Jaitley first propounded his theory to media a few days back), I simply cannot understand this. Several questions come to mind; and maybe Jaitley is such a genius that mere mortals like me have failed to understand. Can he please help clarify?

Firstly, I would like to ask the question if it is bad at all if millions of our youngsters become salesboys and salesgirls? What would they do otherwise, if not work in the Walmarts and Carrefours? It’s not like they are all so highly educated, or speak such good English, that they can be employed in the services sector. Nor unfortunately can they work in large numbers in the manufacturing sector since much of that has moved out of urban areas. So, are we saying that our urban children must necessarily leave their hometowns and travel to far off industrial townships for employment? It’s one thing to do this voluntarily (and I entirely support internal migration for jobs), but its quite another to be compelled to do so. Worldwide, retail offers the most jobs in a country after agriculture. And in urban areas, it is the number one job spinner. It’s the same in India even today, with 14% employment being generated in the sector.

So does Jaitley not know the above fact? Or does he just not want to accept it? Besides, has this made India some sort of a less respectable nation? And what does he think of all other countries where also retail provides the bulk of the urban employment? Are they all less respectable? But this is only the first reason why Jaitley’s argument is so completely bizarre.

Here’s the second. Given the fact that retail provides such high levels of employment, is it better our young generation works in professional and modern retail shops or in dirty, low-level kirana shops? Large professional shops are far more regulated by government rules. They have to comply with minimum wages and have to provide minimum standards of employment. They offer fixed working hours, free time for lunch and refreshments, and a certain dignity that kirana stores cannot. A young lad would be happy to say he worked at the local Reebok shop or a McDonald’s, but would he have the same pride if he said that he worked at the local Vijay Stores or at Nathu’s? Even the sons and daughters of kirana store owners don’t want to work in their own shops. It appears from Jaitley’s theory that he would prefer that our young continued working in kirana shops.

Third reason why Jaitley’s argument is bizarre. I have never never heard Jaitley or the BJP complain about the meteoric growth the domestic retail players have seen in the last decade – the Big Bazaars, the Mores, the Spencers and the Reliance Freshes. At last count, there are some 4-5000 of these shops strewn not only around the 1 million plus towns (as ordained for foreign retailers) but all over the place. How come Jaitley didn’t think about his salesgirls and salesboys theory when these shops were mushrooming all over? Or is it Jaitley’s contention that if India had to become a nation of salesgirls and salesboys, then it would somehow be OK if they worked in Indian stores rather than foreign ones? Incidentally, I doubt if foreign retailers will open more than a hundred stores. They have no plans to become majority players.

The last reason why it looks like Jaitley has lost his marbles is that he says that Chinese goods will flood the Indian market. Now Jaitley should know that India dismantled most import restrictions long long back – and his NDA government only aided that process. Large Indian retail chains have all the capability and scale they need to import from China. And yet, as Rajan Mittal of Bharti Walmart said, 97% of the items in his stores are Indian. Jaitley should remember that as part of opening up of our imports, we extracted similar concessions from foreign nations for our exports. Its not out of thin air that India has pulled off its explosive exports performance!

And while I am on it, let me also rubbish one of Sushma Swaraj’s bizarre arguments as well (looks like all BJP leaders specialize in bizarre arguments!). Swaraj said that the Walmarts will initially come in with low prices, but later they will raise prices and adopt predatory prices. Usually in business, predatory pricing means low prices which are meant to kill competition and increase market shares, but let’s forgive Swaraj her ignorance on the subject for now! The counter to this was provided by Deepinder Hooda in the LS when he reminded Swaraj of the MRP regime in our country. No one is allowed to sell beyond the MRP. Most of Swaraj’s favorite kirana stores sell their wares at MRP; most large format retail stores sell way below MRP. Hooda’s argument is good for packaged goods which come with MRPs marked. But it is also true of loose items like foodgrains, vegetables etc. In every single case, large format stores offer cheaper prices than the neighborhood kirana store. Large format stores also provide a better experience to their customers. This does not mean that kirana stores are finished. It only means that they will have to innovate. Focus on their core strengths – relationships with customers, credit at times, door delivery and so many more. And when they do that, they will thrive. In the process, consumers will gain everywhere. There is no threat to anyone. There is only a change in the way we shop.

The real truth is that if only the BJP removed its blinkers; and practiced its retrograde politics a little less; India would progress. And though it may seem otherwise, if they were a little less obstructionist and helped the Government push reforms, they would actually get more votes, not less. No one wants to touch the BJP. Not the opposition; very soon, not even the people of the country.


  1. But what growth have we got in the past 60 Years under the congress rule, where they btw would have enjoyed the lions share of the government. And in most cases with complete majority. If we look at the economics of the politics, India used to be enjoying a per capita income of 3.2% against US in 1950 which today stands at 2.01% with the lowest touching around 1.2%. In actual fact we have become poorer as a society with flawed structures as ideated by Congress... Hope somewhere they will want to correct the recourse and give us some sense that we as a country are progressing and not just a handful.

  2. It is better to be a nation of sales people than lawers (jaitley/sushma like); it is not for nothing that India was the most prosperous country in the world when it controlled half of world's trade! Our economic power decreased corresponding to our ability/inability to particpate in trade, first by Britishers and later by our own governments. Let us get back to our trading ways, Jaitley or no Jaitley.