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After months of discussion,  the issue of FDI in retail is being deliberated in the Lok Sabha today.  In September 2012, the Cabinet had approved 51% of FDI in multi-brand retail (stores selling more than one brand).  Under these regulations, foreign retail giants like Walmart and Tesco can set up shop in India.  Discussions on permitting FDI in retail have focused on the effect of FDI on unorganised retailers, farmers and consumers. Earlier, the central government commissioned the Indian Council for Research on International Economic Relations (ICRIER) to examine the impact of organised retail on unorganised retail. The Standing Committee on Commerce also tabled a report on Foreign and Domestic Investment in the Retail Sector in May, 2009 while the Department of Industrial Policy and Promotion (DIPP) released a discussion paper examining FDI in multi-brand retail in July, 2010.  Other experts have also made arguments – both in support of, and in opposition to, the move to permit FDI in retail sales. The table below summarises some of these arguments from the perspective of various stakeholders as collated from the above reports examining the issue.

Stakeholder

Supporting arguments (source)

Opposing arguments (source)

Unorganised retail
  • No evidence of impact on job losses (ICRIER).
  • The rate of closure of unorganised retail shops (4.2%) is lower than international standards (ICRIER).
  • Evidence from Indonesia and China show that traditional and modern retail can coexist and grow  (Reardon and Gulati).
  • Majority of small retailers keen to remain in operation even after emergence of organised retail (ICRIER).
  •  Unorganised retailers in the vicinity of organised retailers saw their volume of business and profit decline but this effect weakens over time (ICRIER).
  • Other studies have estimated that traditional fruit and vegetable retailers experienced a 20-30% decline in incomes with the presence of supermarkets (Singh).
  • There is potential for employment loss in the value chain. A supermarket may create fewer jobs for the volume of produce handled (Singh).
  • Unemployment to increase as a result of retailers practicing product bundling (selling goods in combinations and bargains) and predatory pricing (Standing Committee).
Farmers
  • Significant positive impact on farmers as a result of direct sales to organised retailers.  For instance, cauliflower farmers receive a 25% higher price selling directly to organised retailers instead of government regulated markets (mandis).  Profits for farmers selling to organised retailers are about 60% higher than when selling to mandis (ICRIER).
  • Organised retail could remove supply chain inefficiencies through direct purchase from farmers and investment in better storage, distribution and transport systems.  FDI, in particular, could bring in new technology and ideas (DIPP).
  •  Current organised retail procures 60-70% from wholesale markets rather than farmers. There has been no significant impact on backend infrastructure investment (Singh).
  • There are other issues like irrigation, technology and credit in agriculture which FDI may not address (Singh).
  • Increased monopolistic strength could force farmers to sell at lower prices (Standing Committee).
Consumers
  • Organised retail lowers prices. Consumer spending increases with the entry of organised retail and lower income groups tend to save more (ICRIER).
  • It will lead to better quality and safety standards of products (DIPP).
  •  Evidence from some Latin American countries (Mexico, Nicaragua, Argentina), Africa (Kenya, Madagascar) and Asia (Thailand, Vietnam, India) reveal that supermarket prices for fruits and vegetables were higher than traditional retail prices (Singh).
  • Even with lower prices at supermarkets, low income households may prefer traditional retailers because they live far from supermarkets, they can bargain with traditional retailers and buy loose items (Singh).
  • Monopolistic power for retailers could result in high prices for consumers.

Source: ICRIER [1.  "Impact of Organized Retailing on the Unorganized Sector", ICRIER, September 2008]; Standing Committee [2.  "Foreign and domestic investment in retail sector", Standing Committee on Commerce, May 13, 2009]; Singh (2011) [3. "FDI in Retail: Misplaced Expectations and Half-truths",  Sukhpal Singh, Economic and Political Weekly, December 17, 2011];  Reardon and Gulati (2008)  [4. "Rise of supermarkets and their development implications," IFPRI Discussion Paper, Thomas Reardon and Ashok Gulati, February 2008.]; DIPP [5. "Discussion Paper on FDI in Multi-brand Retail Trading", Department of Industrial Policy and Promotion, July 6, 2010]


As of May 5, Assam has 43 confirmed cases of COVID-19.  Of these, 32 have been cured, and 1 person has died.  In this blog, we summarise some key decisions taken by the Government of Assam until May 5 for containing the spread of the pandemic in the state.

Movement Restrictions

For containing the spread of COVID-19 in the state, the Government of Assam took the following measures for restricting the movement of people in the state.  On March 19, the Department of Health and Family Welfare issued an order for closure of all museums, libraries, coaching centers among others until March 31.

Lockdown: To further restrict the movement of individuals, in order to contain the spread of the disease, the state government enforced a state-wide lockdown from March 24 to March 31.  The lockdown involved: (i) sealing the state borders, (ii) suspension of public transport services, (iii) closure of all commercial establishments, offices, and factories, and (iv) banning the congregation of more than five people at any public place.   Establishments providing essential goods and services were excluded from the lockdown restrictions.  Limited rituals were allowed in places of worship without any community participation.

This was followed by a nation-wide lockdown enforced by the central government between March 25 and April 14, now extended till May 18.  Starting from May 4, based on the Ministry of Home Affairs guidelines, the state government has allowed certain activities with restrictions in green zones of the state.  Activities such as e-commerce for all commodities, construction activities in urban areas, functioning of government and private offices among others are being allowed in green zones.

Health Measures

The Assam COVID-19 regulations, 2020: On March 18, the government issued the Assam COVID-19 regulations, 2020.   These regulations are valid for one year.  Key features of the regulations are as follows: 

  • All government and private hospitals should have separate corners for the screening of COVID patients.  Further, they should record the travel history of such persons during screening,

  • No hospital can refuse the treatment of suspected/ confirmed COVID-19 cases,

  • People travelled through affected areas must voluntarily report to the authorities, and

  • District administration can take necessary measures to contain the spread of COVID-19, such as (i) sealing a geographical area, (ii) restricting the movement of vehicles and people, and (iii) initiating active and passive surveillance of COVID-19 cases.

The Assam COVID-19 Containment Regulations, 2020: On March 21, the government issued the Assam COVID-19 Containment Regulations, 2020.  These regulations detail the measures to be taken in case of community transmission within a geographical area.  These include enhanced active surveillance, testing of all suspected cases, isolation of cases and home quarantine of contacts, among others. 

Guidelines to Airports:  On March 18, the government issued instructions regarding procedures to be followed at the airports for the screening of passengers.  The guidelines allocate responsibilities such as thermal screening of passengers, counselling, transportation of passengers among others to various teams at the airports.

Medical colleges and Hospitals: On March 23, the Department of Health and Family Welfare directed all medical colleges and district hospitals to set up isolation wards.  On March 27, the Department of Health and Family Welfare released measures to be followed in medical colleges and hospitals.  These include: (i) seven days of training on critical care to all doctors, nurses, final year students of bachelor programs and Postgraduate students, (ii) Principals should set up a core team in every college for managing COVID-19 patients, among others.

Welfare measures

Food distribution: On March 28, the government decided to provide gratuitous relief such as rice, pulses among others to all wage earners, slum dwellers, rickshaw pullers, homeless, and migrant labourers living in municipal towns for seven days.

Minor Forest Produce (MFP): For enhancing the income of tribal farmers, the government revised rates of 10 MFPs such as honey, hill broom and added 26 new MFPs for Minimum support price in the state. 

One-time financial assistance for persons stranded outside India: On March 22, the government announced one-time financial assistance of $2,000 to residents of Assam stranded in foreign countries.  People who went abroad 30 days before the stoppage of international flights (on March 22) and are unable to return will receive this financial assistance.

Administrative measures

  • On March 21, the government constituted the task force at the State level and District level for implementation of various measures for containment of COVID-19 in the state. 

  • On April 2, the government constituted a committee for monitoring and checking of fake news across all forms of media.

  • On April 29, the Department of Finance announced certain austerity measures in the context of the fiscal situation that arose due to COVID-19. These include suspension of MLA area development funds from April to July 2020, reduction in establishment expenditure, and a ban on the purchase of vehicles by the government (except ambulances and for policy duty).

For more information on the spread of COVID-19, and the central and state government response to the pandemic, please see here.