So, will this settle doubts? Icrier?s much-awaited study on retail shows that organised trade in large format is good for consumers, producers and intermediaries. This is demonstrated by extensive empirical evidence marshaled by the report. Most important, from the political point of view, is that small retail is not about to be gobbled up by big stores. This is in fact true even for the West, where the retail revolution is decades old. But Western examples don?t sit well with Indian critics of big capital. Here?s now desi evidence and the Icrier?s study, which shows less than 2% of small retailers have shut shop since big retail took off, deserves wide dissemination. Another politically crucial point: big retail is good for farmers. Also, low-income consumers, as the report has pointed out, have been the biggest beneficiaries of organised retail because they have been able to bargain hunt. Big retail can improve price earnings in the agriculture sector by as much as 60%, according to the report. Benefits will be especially large in the case of perishables like fruit and vegetables. Wastage in these products is estimated to sometimes exceed more than half of the purchases. Farmers can also benefit from better quality inputs and new technologies provided by large buyers. Indeed, a massive expansion of big retail, which is possible the moment the government gives a clear signal and allows foreign investment, will probably do more to boost economic multipliers in the farm sector than all the government revival schemes, the loan waiver included.
Big retail is also important to capture the full effect of rising spending power. Discretionary spending by households is going up on the back of rising incomes. There?s in fact a paradigm shift underway in urban consumption levels and pattern. For the economy to benefit from this, retail trade needs to be big, modern and efficient. The report makes some useful recommendations. First, that the licensing regime should be simplified. Second, a private code of conduct to guide transactions with small suppliers should be established. This is important because small suppliers can become a source of political controversy if and when large retail expands and its sourcing activity takes on big dimensions. Whether or not foreign retail stores should open wasn?t part of the report?s brief. But the report nonetheless makes the answer obvious.
