Ambivalent attitude towards big business entry into retail trade

THE Communist Party of India (Marxist), which heads the ruling Left Democratic Front and is an integral part of the power structure in Kerala, is often caught in contradictions on the issue of globalisation.

It was an LDF government that allowed Coca Cola and Pepsi Cola to set up plants in the State. When the tribal population built up a powerful movement against exploitation of their water resources by the multinationals, the CPI (M) found it necessary to modify its position.

The party now finds itself in a similar situation on the issue of entry of Big Business into retail trade.

Wal-Mart, the American retail giant, having established itself firmly in China, has been eyeing the Indian market for some time. While the Government of India is agreeable to foreign direct investment in retail trade, it has not created a framework acceptable to multinationals.

Wal-Mart, therefore, decided to enter the market as a partner of a local business group. Even before it could piggy-ride into the Indian market, domestic companies like Reliance and Birlas began setting up retail chains in different parts of the country.

These retail chains are able to operate without hindrance in most States, including Left-ruled West Bengal. The Samajwadi Party government of Uttar Pradesh allowed them to operate but Bahujan Samaj Party's Mayawati, who became Chief Minister after the recent Assembly elections, has asked the Reliance group to close down its stores.
Mayawati's directive followed violent protests in Lucknow against the opening of a new Reliance outlet.

It is quite possible that the close links between Reliance boss Anil Ambani and Samajwadi Party chief Mulayam Singh Yadav influenced her decision. Yadav is her bete noir.

The CPI (M) raised no objections when Reliance made preparations to open retail stores in Kerala. In fact, two local leaders of the party accepted the invitation to open its outlets in Kochi. Later some party members pointed out that the entry of retail giants is part of the globalisation process, to which the party is opposed. The State leadership then distanced itself from the two leaders, forcing them to acknowledge that they had erred in attending the Reliance function.

The CPI (M)-controlled Thiruvananthapuram City Corporation is now obstructing Reliance's plan to open a huge store in the capital. The company's efforts to get a licence to run the shop have not succeeded so far.

Apparently the Reliance plan calls for the establishment of a supermarket sprawling over 10,000 square feet. The civic body has a valid reason for denying licence: adequate parking facilities are not available in the vicinity.

The chances are that Reliance will approach the courts if officials and politicians stand in its way. Since the company is already operating stores in Kochi and Kollam, there is no justification for trying to keep it out of Thiruvananthapuram.

The fact is that supermarkets already exist in the State in the private sector as well as in the public and cooperative sectors. In the circumstances, the civic body may find it difficult to refute the charge that the Thiruvananthapuram corporation is discriminating against it.

Retail trade is the means of livelihood of hundreds of thousands of small traders in the State. They fear that the entry of the big corporations with predatory instincts will endanger their existence. The consumer's interest is a factor which the government and the judiciary cannot ignore. But it is not easy to determine what is the interest of the consumer.

Critics of corporatisation of retail trade argue that big companies with immense resources, will drive the small shopkeepers out by offering lower prices. Supporters of corporatisation claim that big companies can offer lower prices as they make bulk purchases directly from the producers. They point out that Wal-Mart has not been displace retailers in America or China. Another factor that needs to be taken into account is the changing character of the consumer.

Kerala is now a vast consumer society. The Malayalee middle class has had national and international exposure and is familiar with the concept of supermarkets. The growing popularity of the existing retail chains is indicative of a craving in a section of the middle class for modern shopping facilities. --Gulf Today, Sharjah, September 3, 2007.