Reasons for FDI
1. New jobs
· Over a crore new jobs will be created
· FDI backed retailer will source 30% of all their products from small scale retailer
· New manufacturing opportunities for S.M.E’s.
2. Relief to consumers (Better quality of products at lesser prices).
3. At least 50% of total foreign investment will be in villages for infrastructure creation.
4. Transform rural India through improved agro processing and cold chain.
5. Farm produce will reach store directly thereby reducing wastage, maintaining good quality and lowering prices.
6. Farmers will get their due in the form of higher prices.
NON GOVERNMENT BODIES
Reasons against FDI
1. Foreign owned projects are capital intensive and labor efficient, and not invest much in wage. Skilled workers get paid well above local norms. Most multinationals employ and these haul entire workforce across the continents. The natives rarely benefit, though they find a job in short term but badly paid.
2. Small retailers in US have been wiped out. Large retail outlets control the retail sector, they work in vey less margins. They may be huge employment rise but with only low quality of life.
3. A company like Wall Mart uses about 22 lakh employees for its turnover equal to that of the Indian retail market. What is the rationale behind the 1 crore jobs. These rely heavily on technology to leverage operational efficiency.
4. These companies can pressurize for large discounts and with bulk purchases can buy out all stocks available in the market and may cause a price rise in food and essential commodities.
5. Small retailers will not be able to compete with huge companies in cities because in cities people are more prone to go to malls and not small stores. The power, turnover and size of the companies will control the retail sector.
6. Most of the huge companies sell products made in China. If one visits a store in Canada, Mexico or North America everything they sell is made in China and this will of course reduce the business of Indian manufacturers.
In India only 5% of the retail sector is organized and the rest 95% is unorganized.
When Mr. Rajiv Gandhi spoke of introducing computers, people cried about 1 computer will unemploy 10 people but more people got jobs. When insurance bill was introduced, people said LIC will perish but LIC is flourishing. When private sectors bank were given a nod the again people shouted PSU banks will close but they are more competitive now. When private telecom companies came, people shouted again that BSNL will fail but it’s now friendlier. When automation in industries came, we lost jobs in manual sector and got jobs in industries. When computerization came, we lost manual jobs but got jobs in computerized areas. Changes do have risk but we cannot block them even if we don’t like them. If we had used bullock carts the price hike of petrol and diesel would not have bothered us, but then we changed to vehicles. This is how things work, we go forward. Now we read news digitally and print media is going down, so printers lose their jobs and digital people get jobs. So whether we oppose or not change will happen in retail sector. Some people will lose jobs but others will get jobs.
People do not buy stores or brands, they buy convenience. If Wall mart, Tesco, Carrefour comes to India then there’s no chance that the local stores/kiranas/grocery stores will lose sales because their nearness is their strength.
Myths and Myth Busters - A Government of India view.
1. Kiranas and retailers will lose – Retailers will benefit from existing policy of sourcing their requirements from wholesale cash and carry stores at a discount. In countries such as Brazil, Thailand, Indonesia, China and Argentina there are no caps on FDI and there are no conditions small retail stores have flourished leading to more employment.
2. The retail sector will be controlled by foreign stores – The FDI backed stores can only operate in cities and every state has the freedom to allow or disallow FDI backed retail investment.
3. Farmers will be exploited and will lose their fields and crops to foreign investors – On the contrary, farmers will receive better remuneration for their product and will benefit from additional job opportunities resulting in overall improvement of their quality of life.
The question is: why did the UPA do this when the benefits, if any, will be long in coming?
What Big Retail does is eliminate middlemen in the supply chain. But the net gains accrue more to the retailer (and consumers) than producers. As Yogi Aggarwal wrote in Firstpost, quoting a Mint article by Himanshu of the JNU: “One of the studies commissioned by the US Congress in 2008 was on the linkage between farm gate and retail prices. The average value of farm share (the share of total retail price received by farmers) declined from 41 percent in the 1950s to around 35 percent in the 1970s, and then declined sharply after the 1980s to only 18.5 percent in 2006…. For the record, an Indian farmer gets anywhere between 60 percent and 70 percent of the retail price for rice and wheat. The percentage varies, but it is upwards of 50 percent for most of food items, including eggs and poultry.”
If farmers are going to get only a small increase in benefits, why did our politicians bite the bullet on FDI in multi-brand retail?
The answer to this question according to me relates to narrow self-interest, and helping cronies out. Consider who will benefit first.
Firstly, the big Indian retail companies like Pantaloons (Big Bazaar, Food Bazaar) are drowning in debt. Allowing FDI in retail will enable these companies to reduce debts by selling stakes to the Wal-Marts of the world. Subhiksha went under due to debt. In recent months, Kishore Biyani of Future Group has sold stakes in Pantaloons (the garments part) and Future Capital to raise money and reduce debt. Other retailers with high debts too will be happy for foreign capital. FDI is thus a partial bailout for Indian Big Retail.
Secondly, banks have been lending too much to Indian retailers. Allowing FDI will enable them to rescue their loans from turning into non-performing assets. Since most of these banks are public sector ones, it is a benefit to P Chidambaram’s fiscal deficit efforts too.
Thirdly, FDI in retail – currently restricted to big cities – means commercial real estate will start stabilizing in prices. While actual investment in malls and stores may be some years away, there is little doubt that FDI is required to lift sentiment in the depressed realty markets of the big cities. Not to forget: politicians are often the biggest “Benami” owners of retail assets. And in election years, these assets have to be encashed to finance re-elections. FDI will bail some of them out too.
Fourth, the only way Chidambaram can raise revenues is by selling household silver like public sector shares when tax revenues are weak and the economy is into a cyclical slowdown. But this can’t happen if market sentiment is weak. FDI in retail is a huge sentiment booster, since it not only rescues Indian retailers from debt, but also boosts bankers and, more importantly, makes foreign investors more interested in Indian stocks. (President Obama, for example, battled for Wal-Mart). Chidambaram cannot even begin his fiscal correction with more disinvestment – and only FDI in retail can help.
The reforms by UPA are all important for the economy, but they are as much driven by the short-term self-interest of UPA politicians, big industry and bankers as by the need for big ticket reforms.
The reason why the reforms will not do much ultimately is this: to make FDI in retail work, you have to make Indian industry itself more competitive, or else the Wal-Marts will be importing Chinese goods to sell in domestic stores.
Only way to create more jobs to replace the ones lost by kirana stores will be to have more flexible labor laws – so that industry and service sector companies employ more people.
By: Sachin Mitruka
I came across an article .. spoke about “Replacing Keynes with Gandhi” was taken aback by the heading..
Did Gandhi ever have a view on the economy? why wasn’t it recognised as the others were..?
The usual philosophy for business is , put forward by Keynes “ For atleast another 100 years,we must pretend ourselves and to everyone that fair is foul and foul is fair, for foul is useful and fair is not.” Is it ?
Gandhi’s line of reasoning is in direct opposition he felt that “trusteeship” in a system is what was required as it made profit as a means of a business and not an end in itself. The end according to him should be higher human faculties- like sense of responsibility , love , compassion.. which would ultimately lead to enriching lives and society.
This does seem to idealistic in this mad world of cut-throat competition, but isn’t there a need for this to sustain what we have created. The companies that have become world leaders aren’t they known more on the basis of their image , their relationship with customer, their long term visions and missions. It is too risky to be different , to lose a hold on the profits, but I feel that once these values are in place , the customer will only turn to this business, pulling in more. Profits will come as a gift for the services rendered to society.
By Margaret Lawrence
PGDM 2012 - 2014
Nikki a 10 year old girl, steps out of the bus runs desperately towards the shop
of her Mafatlal chacha, who give her candies. But the day govt announces entry
of FDI’s in Retail sector the cloud of uncertainty start grooming out. Nikki asks
her father will chacha's shop will be close? A question many intellectuals tried to answer but still unanswered.
What is Retail? It is the sale of physical goods or merchandise sold from a fix location such as departmental store, boutique, mall etc. It is further divided in to 2 sections: - Organized retail and Unorganised retail.
Organized retail where all items are segregated and bought under one roof like a mall and unorganized retail where there are different things sold at different shops.eg local kirana shop(like Mafatlal shop). Organize retail bring structure in to the system. Its purpose is to bring maximum number of different brands together.
FDI in organized retail in India are presently allowed in partnership with the Indian company or residence, through franchise agreement, strategic licensing
agreement, or through manufacturing and wholly owned subsidiaries. But in recent proposal by govt in parliament 51% FDI investment is directly allowed without any government intervention and also no need of partnership required
with any Indian company. Govt. also proposed 100% ownership of FDI in cash & carry wholesale and export trading. But right now govt. is restricting its proposal for single brand retail, multi brand is still not allowed. Single brand retailer can manufacture and sell one brand only.eg. A Reebok shoe retailer can sell Reebok shoe only not allowed to sell Nike or other brands. Though, govt proposal didn’t define the term Single brand retailing or Multi brand retailing. Multibranding stands for selling multi brands under one roof like Wal-Mart,Tesco etc.
All this bring us to the basic question why India should allow FDI in retail. Production and supply chain is the major problem of India. Better infrastructure, transport, preservation facilities warehousing facilities, latest technology are few of the objectives we can achieve allowing FDI in retail. They help us in reducing wastage i.e. help us in utilising our resources productively. How?
India is a capital deficient economy, we don’t have sufficient capital to meet our infrastructure and other needs, and hence allowing FDI is a one step towards that direction as they would bring more capital with them, which our economy need.
Taking in economics terms, it increases the Aggregate supply of goods and services in the economy. As a result people would able to buy more goods and services at lesser value (as prices decrease). Hence there consumption level and saving rate increases which in turn reduces the cost of capital and affect the investment patterns because due to reduce cost of capital and increasing saving rate more loanable funds are available at cheaper rate, which increases the investment rate in the economy. So according to economics this whole event is a win - win situation which help in growing the economy at a faster rate.
Few other objectives will be achieved like farmers will be incentivising better for their production. Agents/middle men concept will be abolished. Also it will
help in generating huge employment. But most important consumer would be given right value of the money.
Now question arises why so Kolaveri in spite of all these advantages. Besides political agendas , few protagonist believe allowing FDI’s may back fire Indian economy because it would take the job of unorganized sector retailers(Local kirana store), as a result huge unemployment created in economy.
Also retailers like Wal-Mart practised the strategy of giving better incentive to
farmers during their initial days, to finish their competition. But this strategy put them in to huge losses, but looking at the global revenue and their capacity these retailers can afford looses for first 5-6 years and when they feel now producers, distributors etc depend on them and market is in their control they start restricting and enforce their laws and strategy i.e. they now control the “food chain” of your country.
So what could be the possible solution to this problem because we know allowing FDI in retail will be a big boost for our economy but at the same time we fear it could back fire also. So, in my opinion we can stop the bill for now and declare the retail sector to be Infant Industry (Infant Industry Argument) i.e. domestic companies under this sector will be directly help by government. Make our domestic retailers strong so that when FDI will come we can stand in competition with them. But all this must be done with a proper plan and time limit.
With the Euro zone being on the verge of a crash in its economy, the paralysed banking systems of the European Union nations have been disclosed to rest of the world. The financial crisis of European Union has brought in front the underlying problems and the erroneous tendencies of the various countries of Europe. It also exhibited the weaknesses that occurred in the structure of the monetary union which was the prime reason behind worsening the situation. The financial crisis of the Euro Zone has brought with it a plentiful of lessons to be learnt by the policymakers.
Strong Institutional Framework & Policies are Important :
It is of utmost importance in today’s scenario to have the good financial policies laid down strongly in the system. It is distinctly understood from the current crisis that the countries which had the unstable fiscal policies were undermined by the economic turmoil before any other nations. One example of the unsustainable policies was exhibited when the financially strong nations were burdened with the financial obligations of the weaker nations. This further weakened the whole of the Euro Zone by weakening the financially strong nations as well in spite of easing out the situation by balancing the debts. Also, the policies once set should be consistently kept under the check. The expenditures should be monitored on a con-stant basis even if it is a boom time for the economy.
Foreign Owned Banks Come to a Rescue :
Although the topic is highly conten-tious in many emerging markets, the foreign banks help in creating a more efficient financial sector. This enhances the competition in the market which lays the foundation for fortifying the domestic banks. For example, PKO BP and Sberbank, the domestically owned banks of Po-land and Russia respectively, braved out the crisis outstandingly because of the copiousness of the foreign banks in these countries. On the other hand, the domestic banks of countries like Parex in Latvia and OTP in Hungary could not cope up with the trouble because of the absence of the sustain-able and strong business model.
An Increase in Savings Ratio Is Required :
There has been a remarkable hike in the personal debts of the people living in Europe and US. This culture has proved out to be extremely dangerous for the economies of these nations as it further enhances the current account deficit and creates more imbalances in the economy. Also the Western nations usually do not have the tendency of saving. However, the crisis calls for the increase in the saving ratio of the nations. The savings ratio has been very low for the European countries as the saving ratio of UK sank down below 0% in mid 2008.
The current crisis requires fundamental decision making by the leaders of the European Union. The learning from this financial crisis can be taken ahead to bring out the breakthrough changes in the current financial systems and improvise the situation. In addition, the support is required at both, domestic as well as international levels.
On 7th dec. morning , I found an interesting 'BELIEF' in 'The Economics Times' which is under the heading 'RATING AGENCIES CAN WORSEN CRISIS: NOYER' . Mr. NOYER, policymaker of European Central Bank believes that rating agencies can actually worsen the crisis.The question is , when everybody believes that rating agencies are in existence to protect the interest of investors by making them aware of the riskiness associated with the bonds issued by the government of some nation, by giving them some 'alphabets' or so called 'credit ratings' , why this man believes that these ratings would make the present economic condition even worse? Well I believe that this has something to do with the 'EXPECTATION' of investors . If an investor believes that investing in some nation's bond will fetch him returns , he invests in that nation's bond. But if there is somebody ( ofcourse the 'credit rating agency') that tells the investor that parking funds in this nation's bond is no more 'safe' , he might or most probably will change his decision of investing even if the economic fundamentals of that nation are strong.This happens because investor generally makes decision on the belief that ratings given by credit rating agency truly reflects the economic scenario and credit worthiness of the bonds offered to him which might not always be the case.
In Economics, a recession is a period of economic slowdown. One of the causes for recession is widespread drop in spending followed by a supply shock. Recession has many ill effects on the macroeconomic level which in turn affect the microeconomic economy. In Macroeconomics, cumulative effect of recession can be seen through fall in, production, as measured by gross domestic product (GDP), employment, investment spending, capacity utilization, household incomes, business profits, and inflation. Various methods are adopted by adopted and employed by government to respond to recessions such as increasing government spending and decreasing taxation etc.
But as a proverb states, every cloud has a silver lining, in the same way even the so negatively perceived period of recession has some positive effects in the economy which will be further explored in this paper.
Regardless of what people or media say, recession is a good time to get into the business. Just take a look at last economic slowdowns throughout history you’ll find recession last for an average of 10 months than followed by growth period of approx 4 years, which could be very beneficial for a start-ups .
Some reasons to justify why recession is considered as a good time period would be
1). CHEAP RESOURCES
The time of recession is right time for fantastic deals in every category be it be land, equipment, offices, raw materials, labour, etc. At this time every asset price goes down and there is no better time to get into real estates or heavy equipments as it involves huge cash inflows
2). HIRE BETTER QUALIFIED PEOPLE CHEAPLY
Imagine a period of recession where even Microsoft is laying off, there would be no better time where you can hire highly qualified people and at a rate which you can’t get during normal period. Highly qualified People from engineers to accountants are all waiting to get a job
3). COMPETITORS ARE WEAKEND
Because of the recession, your competitors are not only weakened but perhaps even closing up and selling out. Maybe some owners are retiring. All are tightening their belts. There may be a niche for you to slip into if a hole is developing in the marketplace.
4). BETTER INTREST RATES DUE TO BETTER CREDIT RATING
During a recession banks are typically less thrilled about lending money out. However, if your company already exists and has a better credit rating you’ll have your pick of interest rates and other loan features to finance moving your new business forward if it makes sense to do so during the recession.
5). SUPPLIERS ARE GIVING BETTER CREDIT.
Because the credit markets have virtually shut down, the B2B credit flows are keeping money circulating out of sheer necessity. That means a bullish outlook for companies looking for good terms on stock and/or inventories. The main advantage is that all parties have more incentive than ever for finding true win-win situations that allow for cash and stock flow. When everyone is looking to survive, great deals can be had.
6). FINANCE YOUR BUSINESS
If you are starting a business during a recession, you are starting with a very limited budget. Chances are, you don't have access to angel investors or venture capitalists. You may have access to funds from your family or friends since, in a recession, they may not be investing in the stock market or other financial instruments.
7). BETTER PUBLIC IMAGE
The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your "alternative" view of the market.
8).RECESSION TOUGHEN UP COMPANIES
A recession is a great time to start a company, but it isn't the easiest time to incubate a business. That doesn't mean entrepreneurs should back away from the challenge, however. Adversity brings out qualities that every entrepreneur needs to succeed - guts, problem-solving, strength and perseverance. Starting a company in the lean times helps develop those qualities more quickly, which will help the startups in the long-run.
SOME FAMOUS COMPANY WHICH STARTED DURING RECESSION
It might seem counterintuitive to start a new business when the economy is in the dumps. But a recession can actually be the ideal time for launching a company. In fact, many well-known and successful organizations were born during an economic slump.
Why do these companies succeed? Usually it's because the founders recognized a market need and filled it. Identifying that need — whether it’s related to entertainment, travel or even streamlining how businesses operate — is the key to any thriving enterprise, regardless of the economic climate in which it begins. The following major corporations made it big during recessions by doing just that.
Hyatt Corp. opened its first hotel’s doors at the Los Angeles International Airport during the Eisenhower recession (1957 to 1958). The chain rose to worldwide fame in the following decades and now operates more than 365 hotels in 25 countries with premium services such as wifi hotspots.
Burger King Corp., with its flame-broiled burgers, is another recession start-up. The company began in 1954 when James McLamore and David Edgerton opened a Burger King restaurant in Miami, Fla. During another recession in 1957, the company introduced its successful signature burger — the Whopper. Today, the company operates more than 11,100 locations in 65 countries.
FedEx Corp. began operations on April 17, 1973 as Federal Express, a nod to the Federal Reserve, with whom founder Frederick W. Smith had hoped to get a contract. He didn't, but the company that delivered 186 packages to 25 cities on its first night of operations now manages more than 7.5 million shipments everyday worldwide.
Microsoft Corp. wasn't always the jaw-dropping enterprise it is today. In 1975, when it was created by Harvard University dropout Bill Gates, Microsoft was just a little company in Albuquerque, N.M. It dealt in rudimentary computing languages and began its climb to business stardom with the success of MS-DOS, which was sold and marketed to IBM Corp. and then-IBM clones. Today, the company is estimated to earn more than $60 billion in revenue per year and is branching into new areas including VoIP and CRM.
CNN might be a news giant now, but in recession-plagued 1980, it was a little-known station called The Cable Network News. It revolutionized how people received information when it premiered as the first 24-hour all-news channel. Today, 1.5 billion people across the globe watch CNN.
MTV Networks brought something new and different to the music scene when it debuted in the economic slump of 1981. Intended to be an all-music-video channel, MTV used VJs (video jockeys) to host programs and facilitate transitions between videos. Today, MTV is a global brand with dozens of shows, music-related and not.
Wikipedia Foundation Inc. was born during the recent post-9/11 recession. Established in January 2001, the online encyclopedia had more than 100,000 entries by 2003. Today it is home to more than 2.5 million articles and continues to grow.
Sports Illustrated magazine was launched on August 16, 1954, at the tail-end of a recession. The magazine benefitted from fortunate timing as a boom in professional sports exploded soon after its founding. Sports Illustrated now sells about 3 million copies in the U.S. each week.
GE (General Electric Co.) was established in 1876 by famed American inventor Thomas Edison. In the middle of the Panic of 1873, a six-year recession, Edison created one of the best-known inventions of all time — the incandescent light bulb. In terms of market capitalization, GE is now the third largest company in the world. The enterprise has evolved from a manufacturing-strong business to an enterprise earning more than 50 percent of its revenue from its financial services division.
HP (Hewlett-Packard Development Company LP) was inauspiciously born in a Palo Alto garage at the end of the Great Depression. The electronic company, initially supported by a mere $538 investment, has grown into the first technology business to exceed $100 billion in revenue, earning $104 billion in 2007. It now operates in nearly every country in the world.
Recessions, however, aren’t advantageous only to start-ups. Pre-existing companies can also make incredible gains in years where the economy is down. Some of the most recent success stories are those of Google, PayPal and Salesforce.com Inc. From 2000 to 2001 each of these companies thrived, leading PayPal to go public in 2002, followed by Google and Salesforce.com in 2004.
“Once in a while recession can also turn into an opportunity which can be proved to be a boon for the upcoming businesses”.
WHAT ARE SHARES? Capital market investments are of different kinds. Each investment has certain features, provides specific benefits and serves specific purposes. One of the common ways of making an investment is through purchase of shares in a company. Shares are a mode of holding ownership in a company. Holding shares means becoming a part owner of a company. One can enjoy all the benefits that come with ownership keeping in mind the consequent risks. In common parlance, investment activities are referred to as buying of shares and those who hold the shares are known as shareholders. Alternatively, it is also known as buying equity in a company and shareholders are also known as equity holders or equity shareholders. Shares are also known as scripts traded on the stock exchange. DEALING IN SHARES The term shares are used in relation with a company and there are two ways in which the shares are usually purchased and sold. There are companies, which are listed on a stock exchange. Shares of such companies can be bought and sold on the exchange. An investor can buy or sell the shares by undertaking a trade on the stock exchange through a broker. When the shares are not traded on the exchange, they are bought either from an existing shareholder or directly from the company. A company is said to make an initial public offer, when it is making an issue of new shares to the public for the first time. Subsequent issues are known as follow on public offers. The shares offered can either be newly issued shares or shares of the existing holders that are being offered to the public. Shares are instruments through which companies raise funds from a large number of investors spread across the world. Since the capital requirement of several businesses is quite large, it is not possible for a small number of people to raise this kind of capital. It makes good sense, therefore, to have a corporate structure where a large number of people get together and pool their money through the purchase of shares. Buying shares in listed public limited companies is a good option because the number of members is more than 50 and there is no restriction on the selling of the shares. So, the investor can buy a holding in the company to earn some returns and sell it off when they feel they are getting a good price or they want to switch their investment to a better option. Shares entitle a person to earn a dividend from the company. They also carry a risk in that if the company winds up business, the shareholders will be the last ones to get their money. This means equity shareholders will be paid only when there is some money left after all the outsiders like creditors have been paid their dues. Thus, it is possible that there might not be anything left for the equity shareholders when the distribution of the assets takes place. The liability of the shareholder is limited in the sense that he is required to pay only the amount of the value of shares. The company cannot, under any circumstances, ask the shareholder to pay any sum in excess of this amount for any reason. Overall, the highest risk in the investment is for the equity shareholders because there might not be any sum coming back to the shareholder when the company shuts its business. In terms of day-to-day investment, the risk is seen differently as it might happen that the value of the equity shares on a stock exchange will fall after a person has purchased it leading to a loss when this is sold. This might result in the investor actually earning negative returns from the investment. The upside is that the gains can be huge resulting in the value of the investment rising quite sharply in a short period.
There was a time when there was no plastic money (i.e., debit cards, credit cards etc) and also there was a time when there were no phones which we could carry around. Over the years the way we pay for our purchases have changed and more often than not we all use plastic money to pay. Similarly with the advent of mobile phones we remain connected everywhere we go. So now how about combining the above two and allowing the people to do both using a single device. Yes that's what Google is planning to do and with the launch of an app called Google Wallet, would allow the users to wave their mobile phones at the retailer’s terminal to make payment instead of cash or credit card.
Google is currently testing it in USA(as of May 2011) and starting this summer they plan to make this available on Nexus S phones. The Google Wallet is powered by Near Field Communications which is incorporated into a chip and this was one of the high points of the Google Nexus S when it was launched. This would allow the users to swipe their mobile phones literally at around 124000 outlets. This service would be in collaboration with MasterCard and will also work at some 300000 merchant locations outside USA as well.
The vision of making this reality globally will surely take a lot of doing. Fir the success of this project there is a need for collaboration between the various stakeholders. In this case it would be cellular carriers, banks, credit card issuers, payment network, mobile phone manufacturers and retailers. Over the last few years various companies have tried to make this a reality but with little success. But now with Google being involved, we can be pretty sure that it would form some shape which can be expanded by others in the future.
So how does Google make money from this app? With Wallet, Google plans to offer promotions and deals to consumers. For example it plans to introduce "Google Offers" which are basically advertising deals from businesses which tie up with them. This is similar to the ones offered by Groupon , Snapdeal etc. Google will take a certain fee from the participating retailers every time a purchase happens through those coupons. So how does MasterCard make money, the same way in which it would in case of credit card transactions. So it would be a win-win situation for all the stakeholders as none would be impacted as their revenues would be protected and with the growing Internet population it would actually increase in the future.
Google Wallet is actually a new concept and for it to be accepted and functional worldwide would take some time. The regulations in different countries would also be a hindrance for the rollout throughout the globe. Also there needs to be a tie up with various retailers to actually accept such kind of payments. The security issues also need to be addressed. With some business intelligence in place it would actually benefit the customer’s making their selection of items the next time they enter the store. The concept is indeed a path breaking one and would dictate the way the shopping and payments happen in the future.
Huge outcry in parliament, Politicians warning the government, Threats from various quarters…. These activities are not new in our nation but we have a very new reason this time. It’s not lokpal, neither is it telangana issue. It’s “FDI in Retail”….. Recently cabinet approved the proposal for allowing 51% FDI in retail and thus opening doors for the retail honchos such as Wal-Mart. But the politicians including the allies of the ruling party failed to digest it (God knows what these allies were doing when the proposal was in cabinet as they also have their representatives in cabinet). As far as the development of any nation is concerned, it is impossible till a nation opens up its economy but at the same time guard its own interest against exploitation by foreign companies. FDI will obviously solve some of the major problems of our nation such as inflation and poor standard of living. Its needs may also force the much needed improvement in the supply chain system and infrastructure of our nation. Fears are there that small traders and kirana shops will cease to exist and thus leading to huge unemployment. This is obvious to a certain extent but we need to sacrifice something and change ourselves for our development. These fears are not as damaging as it looks like as the retail chains are not going to just flow over the entire nation as soon as the barriers are pulled up. They would first settle their grip in the 53 cities which according to them satisfies their criteria in terms of population, area etc. It is only after that they would think of expanding to smaller cities. The time in this entire process will be enough for the population to slowly transform themselves to adapt the changing scenario. In a country like ours we need to think beyond the goods and bad for some specific community or political party. What should matter is aam aadmi. FDI in retail will be a boon for economy as a whole. Though there are some small issues but they can certainly be worked out by wrapping the decisions effectively under our laws so as it does not harms us. Today its retail, tomorrow it can be airlines. We need to prepare ourselves to face the challenges of the world economy and make decisions that are in favor of economy as a whole. Only then can we achieve the vision2020 of Dr. Kalam to make India a superpower by 2020.
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