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]


In the recent past, there has been a renewed discussion around nutrition in India.  A few months ago, the Ministry of Health and Family Welfare had released the National Health Policy, 2017.[1]  It highlighted the negative impact of malnutrition on the population’s productivity, and its contribution to mortality rates in the country.  In light of the long term effects of malnutrition, across generations, the NITI Aayog released the National Nutrition Strategy this week.  This post presents the current status of malnutrition in India and measures proposed by this Strategy.

What is malnutrition?

Malnutrition indicates that children are either too short for their age or too thin.[2]  Children whose height is below the average for their age are considered to be stunted.  Similarly, children whose weight is below the average for their age are considered thin for their height or wasted.  Together, the stunted and wasted children are considered to be underweight – indicating a lack of proper nutritional intake and inadequate care post childbirth.

What is the extent of malnutrition in India?

India’s performance on key malnutrition indicators is poor according to national and international studies.  According to UNICEF, India was at the 10th spot among countries with the highest number of underweight children, and at the 17th spot for the highest number of stunted children in the world.[3]

Malnutrition affects chances of survival for children, increases their susceptibility to illness, reduces their ability to learn, and makes them less productive in later life.[4]   It is estimated that malnutrition is a contributing factor in about one-third of all deaths of children under the age of 5.[5]  Figure 1 looks at the key statistics on malnutrition for children in India.

Figure 1: Malnutrition in children under 5 years (2005-06 and 2015-16)

NFHS Survey

Sources: National Family Health Survey 3 & 4; PRS.

Over the decade between 2005 and 2015, there has been an overall reduction in the proportion of underweight children in India, mainly on account of an improvement in stunting.  While the percentage of stunted children under 5 reduced from 48% in 2005-06 to 38.4% in 2015-16, there has been a rise in the percentage of children who are wasted from 19.8% to 21% during this period.[6],[7]  A high increase in the incidence of wasting was noted in Punjab, Goa, Maharashtra, Karnataka, and Sikkim.[8]

The prevalence of underweight children was found to be higher in rural areas (38%) than urban areas (29%). According to WHO, infants weighing less than 2.5 Kg are 20 times more likely to die than heavier babies.2  In India, the national average weight at birth is less than 2.5 Kg for 19% of the children.  The incidence of low birth-weight babies varied across different states, with Madhya Pradesh, Rajasthan and Uttar Pradesh witnessing the highest number of underweight childbirths at 23%.[9]

Further, more than half of India’s children are anaemic (58%), indicating an inadequate amount of haemoglobin in the blood.  This is caused by a nutritional deficiency of iron and other essential minerals, and vitamins in the body.2

Is malnutrition witnessed only among children?

No.  Among adults, 23% of women and 20% of men are considered undernourished in India.  On the other hand, 21% of women and 19% of men are overweight or obese.  The simultaneous occurrence of over nutrition and under-nutrition indicates that adults in India are suffering from a dual burden of malnutrition (abnormal thinness and obesity).  This implies that about 56% of women and 61% of men are at normal weight for their height.

What does the National Nutrition Strategy propose?

Various government initiatives have been launched over the years which seek to improve the nutrition status in the country.  These include the Integrated Child Development Services (ICDS), the National Health Mission, the Janani Suraksha Yojana, the Matritva Sahyog Yojana, the Mid-Day Meal Scheme, and the National Food Security Mission, among others.  However, concerns regarding malnutrition have persisted despite improvements over the years.  It is in this context that the National Nutrition Strategy has been released.  Key features of the Strategy include:8

  • The Strategy aims to reduce all forms of malnutrition by 2030, with a focus on the most vulnerable and critical age groups. The Strategy also aims to assist in achieving the targets identified as part of the Sustainable Development Goals related to nutrition and health.
  • The Strategy aims to launch a National Nutrition Mission, similar to the National Health Mission. This is to enable integration of nutrition-related interventions cutting across sectors like women and child development, health, food and public distribution, sanitation, drinking water, and rural development.
  • A decentralised approach will be promoted with greater flexibility and decision making at the state, district and local levels. Further, the Strategy aims to strengthen the ownership of Panchayati Raj institutions and urban local bodies over nutrition initiatives.  This is to enable decentralised planning and local innovation along with accountability for nutrition outcomes.
  • The Strategy proposes to launch interventions with a focus on improving healthcare and nutrition among children. These interventions will include: (i) promotion of breastfeeding for the first six months after birth, (ii) universal access to infant and young child care (including ICDS and crèches), (iii) enhanced care, referrals and management of severely undernourished and sick children, (iv) bi-annual vitamin A supplements for children in the age group of 9 months to 5 years, and (v) micro-nutrient supplements and bi-annual de-worming for children.
  • Measures to improve maternal care and nutrition include: (i) supplementary nutritional support during pregnancy and lactation, (ii) health and nutrition counselling, (iii) adequate consumption of iodised salt and screening of severe anaemia, and (iv) institutional childbirth, lactation management and improved post-natal care.
  • Governance reforms envisaged in the Strategy include: (i) convergence of state and district implementation plans for ICDS, NHM and Swachh Bharat, (ii) focus on the most vulnerable communities in districts with the highest levels of child malnutrition, and (iii) service delivery models based on evidence of impact.

[1] National Health Policy, 2017, Ministry of Health and Family Welfare, March 16, 2017, http://mohfw.nic.in/showfile.php?lid=4275

[2] Nutrition in India, Ministry of Health and Family Welfare, 2005-06, http://rchiips.org/nfhs/nutrition_report_for_website_18sep09.pdf

[3] Unstarred Question No. 2759, Lok Sabha, Answered on March 17, 2017, http://164.100.47.190/loksabhaquestions/annex/11/AU2759.pdf

[4] Helping India Combat Persistently High Rates of Malnutrition, The World Bank, May 13, 2013, http://www.worldbank.org/en/news/feature/2013/05/13/helping-india-combat-persistently-high-rates-of-malnutrition

[5] Unstarred Question No. 4902, Lok Sabha, Answered on December 16, 2016, http://164.100.47.190/loksabhaquestions/annex/10/AU4902.pdf

[6] National Family Health Survey – 3, 2005-6, Ministry of Health and Family Welfare http://rchiips.org/nfhs/pdf/India.pdf

[7] National Family Health Survey – 4 , 2015-16, Ministry of Health and Family Welfare, http://rchiips.org/NFHS/pdf/NFHS4/India.pdf

[8] National Nutrition Strategy, 2017, NITI Aayog, September 2017, http://niti.gov.in/writereaddata/files/document_publication/Nutrition_Strategy_Booklet.pdf

[9] Rapid Survey On Children, Ministry of Women and Child Development, 2013-14, http://wcd.nic.in/sites/default/files/RSOC%20National%20Report%202013-14%20Final.pdf