Tuesday, August 28, 2007

War against supermarkets that destroy the economy of the poor

» 08/28/2007 13:10
War against supermarkets that destroy the economy of the poor
by Nirmala Carvalho
In West Bengal and Uttar Pradesh the opening of new Reliance Retail supermarkets is met with violence. For many these big stores undermine India's traditional small-scale economic operators. The large retail company temporarily shuts down its operations to better prepare to re-enter the market. Analyst tells AsiaNews that if the government does not defend the population, India's economy will be destroyed.

Kolkata (AsiaNews) – An Indian supermarket chain was forced to close its stores in West Bengal and Uttar Pradesh a few hours after opening as a result of violent protests, clashes with police and appeals to local governments. Many in the local populations fear that this type of store would ruin the local farming sector and small-scale retail businesses.

Reliance planned to invest some US$ 500 million opening more than 100 such supermarket stores, five distribution hubs and 14 collection centres across West Bengal, said company representative Raghu Pillai, but stores had to be shut down temporarily to protect the firm's properties and its employees.

Although the biggest party in Bengal's ruling Communist coalition, the Communist party of India (Marxist), agreed to allow the stores to operate, one of its allies, the Forward Bloc, joined hands with opposition parties to oppose the plan.

"This is a victory for the working class, the toiling peasants and the small traders involved with retail of agricultural products," said Forward Bloc leader Ashok Ghosh.

"More than 100,000 poor people in our state make a living from retail of agricultural products," said Mamata Banerjee, leader of the state's main opposition Trinamul Congress party that also opposed the stores.

Protests were even more violent in Uttar Pradesh. Last week, the government in this northern Indian state ordered the shutting down of 30 Reliance stores, citing reasons of law and order.

The opening of 20 other Reliance stores in the city of Varanasi was also put on hold whilst the government reviewed the policy.

According to the Industrialists' Association of Uttar Pradesh, traders will not allow retail chains to function.

''We are against the entry of Reliance and other big companies in the retail sector as it will directly affect about 40 million people in the state,'' a spokesman for the association said.

Mr. Lenin Raghuvanshi, director of the People's Vigilance Committee on Human Rights in Varanasi and 2007 Gwangju Prize laureate for Human Rights, told AsiaNews that "in states in which many poor people were involved in selling agricultural produce, corporate giants who opened large malls had a very bad impact on the economy and subsequently on the lives and dignity of the common man."

These corporate giants tend to reduce produce costs. Because of their huge economic resources they can set wholesale prices, create monopolies and impose their retail prices. Small producers are wiped out.

This has two consequences: the elimination of small producers and retailers and the reduction of consumers' purchasing power because suppliers will set monopolistic prices.

India's markets tend to be small-scale, people-based at both centre and periphery. Big retailers are anti-people, destroying the livelihoods of thousands of people without due consideration for their needs. They do not take into account changes taking place in the wider society which they do serve.

Never the less, India's retail industry is expected to double in size by 2015. For this reason, both local and foreign companies are keen to enter the market. Currently about 3 per cent of India's market is organised retail, tiny compared with other large economies.

Access to foreign retailers is hampered by laws restricting multi-brand retailers to cash-and-carry and franchise operations, affecting giant operators like Wal Mart, Mark & Spencer, Tesco and Carrefour, but analysts believe that obstacles will be eventually removed and soon.

For Raghuvanshi, the problem is essentially political. There is a clash between two wills with the government siding with the strongest. On the long run, India's internal market will be destroyed and this is not worrying anyone. It seems that no one is interested in preserving the interest of the Indian population.

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