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]


Mr. Ramnath Kovind completes his tenure as President in July.  With the Election Commission of India expected to notify the election dates this week, we look at how India will elect its next President.  

As the Head of the State, the President is a key part of Parliament.  The President calls the two Houses of Parliament into session on the advice of the Council of Ministers.  A Bill passed by the Lok Sabha and Rajya Sabha does not become a law unless assented to by the President.  Further, when Parliament is not in session, the President holds the power to sign a law with immediate effect through an Ordinance.

Who elects the President?

The manner of election of the President is provided in Article 55 of the Constitution.  Members of Parliament and Members of Legislative Assemblies (MPs and MLAs) including elected representatives from the Union Territories (UTs) of Delhi and Puducherry form the electoral college, which elects the President.  At least 50 elected representatives must propose a candidate, who must then be seconded by 50 other electors to run for the President's office.  Members of Legislative Councils and the 12 nominated members of Rajya Sabha do not participate in the voting process.

The history behind having proposers and seconders 
The requirement of having a certain number of electors propose a candidate was introduced after the experience of the first five Presidential elections.  It was common then for several candidates to put themselves up for election when they did not have a remote chance of getting elected.  In the 1967 Presidential elections, 17 candidates contested, but nine of them did not win a single vote.  This repeated again in the 1969 elections, when out of 15 candidates, five did not secure any votes.

To discourage the practice, candidates had to secure at least 10 proposers and seconders each to contest the elections from the 1974 election onwards.  A compulsory security deposit of Rs 2,500 was also introduced.  The changes were brought in through an amendment to the Presidential and Vice-Presidential Act, 1952

In 1997, the Act was further amended to increase the security deposit to Rs 15,000 and the minimum number of proposers and seconders to 50 each.


How are the votes calculated?

The Presidential election uses a special voting to tally the votes.  A different voting weightage is assigned to an MP and an MLA.  The value of each MLA's vote is determined based on the population of their state and the number of MLAs.  For instance, an MLA from UP has a value of 208 while an MLA from Sikkim has 7 (see Table 1).  Due to a Constitutional Amendment passed in 2002, the population of the state as per the 1971 census is taken for the calculation.

The value of an MP's vote is the sum of all votes of MLAs across the country divided by the number of elected MPs.  

How will the numbers look in 2022?

In the 2017 Presidential elections, electors from 31 states and the UTs of Delhi and Puducherry participated. However, in 2019, with the Jammu and Kashmir (J&K) Reorganization Act, the number of states were reduced to 30. The J&K Assembly was dissolved as per the Act and a new legislature for the UT of J&K is yet to be reconstituted. UTs with legislatures were not originally part of the electoral college for the election of the President. The Constitution was amended in 1992 to specifically include the UTs of Delhi and Puducherry. Note that for MLAs from J&K to participate in future Presidential elections, a similar Constitutional amendment would be required to be passed by Parliament.

Based on the assumption that J&K is not included in the 2022 Presidential election, the total number of votes of MLAs in 2022 elections will have to be adjusted.  The 87 Jammu and Kashmir MLAs must be removed from the total number of MLAs of 4,120.  Jammu and Kashmir’s contributing vote share of 6,264 must also be reduced from the total vote share of 549,495.  Adjusting for these changes, 4,033 MLAs will participate in the 2022 elections and the combined vote share of all MLAs will add up to 543,231.

Table 1: The value of votes of elected MLAs of different states at the 2017 Presidential Election

Name of State

Number of Assembly seats

Population (1971 Census)

Value of vote of each MLA

Total value of votes for the state (B x D)

A

B

C

D

E

Andhra Pradesh

175

2,78,00,586

159

27,825

Arunachal Pradesh

60

4,67,511

8

480

Assam

126

1,46,25,152

116

14,616

Bihar

243

4,21,26,236

173

42,039

Chhattisgarh

90

1,16,37,494

129

11,610

Goa

40

7,95,120

20

800

Gujarat

182

2,66,97,475

147

26,754

Haryana

90

1,00,36,808

112

10,080

Himachal Pradesh

68

34,60,434

51

3,468

Jammu and Kashmir

87

63,00,000

72

6,264

Jharkhand

81

1,42,27,133

176

14,256

Karnataka

224

2,92,99,014

131

29,344

Kerala

140

2,13,47,375

152

21,280

Madhya Pradesh

230

3,00,16,625

131

30,130

Maharashtra

288

5,04,12,235

175

50,400

Manipur

60

10,72,753

18

1,080

Meghalaya

60

10,11,699

17

1,020

Mizoram

40

3,32,390

8

320

Nagaland

60

5,16,449

9

540

Odisha

147

2,19,44,615

149

21,903

Punjab

117

1,35,51,060

116

13,572

Rajasthan

200

2,57,65,806

129

25,800

Sikkim

32

2,09,843

7

224

Tamil Nadu

234

4,11,99,168

176

41,184

Telangana

119

1,57,02,122

132

15,708

Tripura

60

15,56,342

26

1,560

Uttarakhand

70

44,91,239

64

4,480

Uttar Pradesh

403

8,38,49,905

208

83,824

West Bengal

294

4,43,12,011

151

44,394

NCT of Delhi

70

40,65,698

58

4,060

Puducherry

30

4,71,707

16

480

Total

4,120

54,93,02,005

 

5,49,495

Source: Election Commission of India (2017); PRS.

The value of an MP’s vote correspondingly will change from 708 in 2017 to 700 in 2022. 

Value of one MP's vote =   Total value of all votes of MLAs      =   543231     =    700 
                                              Total number of elected MPs                 776

Note that the value of an MP’s vote is rounded off to the closest whole number. This brings the combined value of the votes of all MPs to 543,200 (700 x 776). 

What is the number of votes required to win?

The voting for the Presidential elections is done through the system of single transferable vote. In this system, electors rank the candidates in the order of their preference. The winning candidate must secure more than half of the total value of valid votes to win the election. This is known as the quota. 

Assuming that each elector casts his vote and that each vote is valid:

Quota = Total value of MP’s votes + Total value of MLA’s votes + 1                                                        
                                                        2

= 543200 + 543231 +1     =   1086431 +1     =    543,216 
                2                                   2

The anti-defection law which disallows MPs from crossing the party line does not apply to the Presidential election. This means that the MPs and MLAs can keep their ballot secret.  

The counting of votes takes place in rounds. In Round 1, only the first preference marked on each ballot is counted. If any of the candidates secures the quota at this stage, he or she is declared the winner. If no candidate secures the quota in the first round, then another round of counting takes place. In this round, the votes cast to the candidate who secures the least number of votes in Round 1 are transferred. This means that these votes are now added to the second preference candidate marked on each ballot. This process is repeated till only one candidate remains. Note that it is not compulsory for an elector to mark his preference for all candidates. If no second preference is marked, then the ballots are treated as exhausted ballots in Round 2 and are not counted further.  

The fifth Presidential election which elected Mr. VV Giri is the only instance when a candidate did not secure the quota in the first round.  The second preference votes were then evaluated and Mr. Giri secured 4,20,077 of the 8,36,337 votes and was declared the President.

The only President of India to win unopposed 
India’s sixth President, Mr. Neelam Sanjiva Reddy who served from 1977 to 1982 was the only President to be elected unopposed.  37 candidates had filed their nominations for the 1977 elections, however on scrutiny, the nomination papers of 36 candidates were rejected by the Returning Officer and Mr. Reddy was the only candidate standing.