)
Walmart will be a ‘speck’ in India’s retail market says P. Chidambaram; India’s Harvard educated Finance Minister who is famed for his alleged arrogance about matters myriad. His reputation notwithstanding, many would call this, extreme hubris.
Consider this.
In fiscal 2012, Walmart registered $444 bn in sales. That’s $20 bn more than Austria’s GDP, and about a third of India’s. It is also equivalent to the annual sales of India’s entire retail sector – organized and unorganized combined.
In effect what Chidambaram is suggesting then, is that a single brand that is almost the size of India’s entire retail market, including the mom & pop shops and corner side kirana wallahs that dot our landscape will but be, a little fleck, a tiny drop in the giant Indian retail ocean. And that its exit shouldn’t create too many ripples.
“India’s retail market is driven by millions of standalone stores. India’s retail market has been strengthened by Indian retail chains. So why assume that Walmart will make a huge difference to India’s retail market?” asked Chidambaram in a television interview yesterday.
ALSO READ: Bharti and Walmart call off their retail JV
Isn't this exactly what critics of the government's FDI policy have been saying all along? That the benefits of retail FDI were being oversold?
Chidambaram has given them more ammunition. They will now say, because the government hasn’t been able to attract a single dollar, the finance minister has been forced to echo what skeptics were shouting from the roof tops all this while.
Also, if Walmart isn't important enough, nether are the other more diminutive 'specks' presumably?
After all, the concerns that Walmart battled, are exactly the fears that numerous other players like Tesco, Carrefour etc continue to habour about the existing multi brand FDI rules on mandatory sourcing, investment norms and state permissions. Rather than allaying their fears, isn't the FM by dismissing Walmart's exit as a non event, sending out a message that they aren't significant enough either?
At one point, not so long ago, the all important amendments in retail FDI were almost a proxy to the government's reform drive. "All will be benefited. Farmers will get the right price for their produce. New employment opportunities will emerge " a combative Manmohan Singh had said when the opposition was crying hoarse about the ills of allowing foreign retailers into the country.
Presumably, Chidambaram disagrees with the PM now? Presumably, he thinks problems of employment, supply chains and farmer incomes will be fixed irrespective of Walmart and foreign FDI?
ALSO READ: More FDI reforms on cards: PM
In all probability they will, given that many have come to believe that both the benefits and the ills of big retail have been blown out of proportion, and it is really fixing the structural issues that are a solution to India's supply chain woes. But if so trifling was Walmart's exit, it begs the question - why did Chidambaram's government jeopardize its position in the parliament, wrangle with other parties despite widespread opposition to get the FDI proposal passed, and lose an ally in bargain?
It should serve well to remind the finance minister that it is he who had urged us to believe that the economy would tank, if not bolstered by the kind of reforms that his government was undertaking on FDI rules.
He must decide once and for all if he still stands by that belief. In all probability he does, exuding confidence that 1-2 FDI proposals will come by this year. But talking down the exit of the single company that had entered, doesn't do much good for that belief.
Meanwhile, India's organized retailers continue to bleed. Heavily. And if for no other merit, we need that speck of a Walmart to stop this bloodletting.
