india-map

FIND YOUR MP

Switch to Hindi (हिंदी)
Policy

Arguments regarding FDI in retail

Vishnu - December 4, 2012

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]

Legislation

Shortage of doctors may hit rural healthcare delivery

Kaushiki - November 26, 2012

Recently, the Standing Committee on Health and Family Welfare submitted its report to the Parliament on the National Commission for Human Resource for Health Bill, 2011.  The objective of the Bill is to “ensure adequate availability of human resources in the health sector in all states”.  It seeks to set up the National Commission for Human Resources for Health (NCHRH), National Board for Health Education (NBHE), and the National Evaluation and Assessment Council (NEAC) in order to determine and regulate standards of health education in the country.  It separates regulation of the education sector from that of professions such as law, medicine and nursing, and establishes professional councils at the national and state levels to regulate the professions. See here for PRS Bill Summary. The Standing Committee recommended that this Bill be withdrawn and a revised Bill be introduced in Parliament after consulting stakeholders.  It felt that concerns of the professional councils such as the Medical Council of India and the Dental Council of India were not adequately addressed.  Also, it noted that the powers and functions of the NCHRH and the National Commission on Higher Education and Research (to be established under the Higher Education and Research Bill, 2011 to regulate the higher education sector in the country) were overlapping in many areas.  Finally, it also expressed concern over the acute shortage of qualified health workers in the country as well as variations among states and rural and urban areas.  As per the 2001 Census, the estimated density of all health workers (qualified and unqualified) is about 20% less than the World Health Organisation’s norm of 2.5 health workers per 1000 population. See here for PRS Standing Committee Summary. Shortfall of health workers in rural areas Public health care in rural areas is provided through a multi-tier network.  At the lowest level, there are sub health-centres for every population of 5,000 in the plains and 3,000 in hilly areas.  The next level consists of Primary Health Centres (PHCs) for every population of 30,000 in the plains and 20,000 in the hills.  Generally, each PHC caters to a cluster of Gram Panchayats.  PHCs are required to have one medical officer and 14 other staff, including one Auxiliary Nurse Midwife (ANM).  There are Community Health Centres (CHCs) for every population of 1,20,000 in the plains and 80,000 in hilly areas.  These sub health centres, PHCs and CHCs are linked to district hospitals.  As on March 2011, there are 14,8124 sub health centres, 23,887 PHCs and 4809 CHCs in the country.[i]  Sub-Health Centres and Primary Health Centres

  • § Among the states, Chhattisgarh has the highest vacancy of doctors at 71%, followed byWest Bengal(44%),Maharashtra(37%), and Uttar Pradesh (36%). On the other hand, Rajasthan (0.4%), Andhra Pradesh (3%) and Kerala (7%) have the lowest vacancies in PHCs.
  • § Nine states do not have any doctor vacancies at all at the PHC level. These states includeBihar, Jharkhand andPunjab.
  • § Ten states have vacancy in case of ANMs.  These are: Manipur, Uttar Pradesh, Chhattisgarh,Gujarat,Goa, Himachal Pradesh, Tamil Nadu, Haryana, Kerala and Andhra Pradesh.
  • § The overall vacancy for ANMs in the country is 5% while for doctors it is 24%.

Table 1: State-wise comparison of vacancy in PHCs

 

Doctors at PHCs

ANM at PHCs and Sub-Centres
State Sanctioned post Vacancy % of vacancy Sanctioned post Vacancy % of vacancy
 Chhattisgarh 1482 1058 71 6394 964 15
 West Bengal 1807 801 44 10,356 NA 0
 Maharashtra 3618 1326 37 21,122 0 0
 Uttar Pradesh 4509 1648 36 25,190 2726 11
 Mizoram 57 20 35 388 0 0
 Madhya Pradesh 1238 424 34 11,904 0 0
 Gujarat 1123 345 31 7248 817 11
 Andaman & Nicobar Isld 40 12 30 214 0 0
 Odisha 725 200 28 7442 0 0
 Tamil Nadu 2326 622 27 9910 136 1
 Himachal Pradesh 582 131 22 2213 528 24
 Uttarakhand 299 65 22 2077 0 0
 Manipur 240 48 20 984 323 33
 Haryana 651 121 19 5420 386 7
 Sikkim 48 9 19 219 0 0
 Meghalaya 127 23 18 667 0 0
 Delhi 22 3 14 43 0 0
 Goa 46 5 11 260 20 8
 Karnataka 2310 221 10 11,180 0 0
 Kerala 1204 82 7 4232 59 1
 Andhra Pradesh 2424 76 3 24,523 2876 12
 Rajasthan 1478 6 0.4 14,348 0 0
 Arunachal Pradesh  NA  NA NA NA NA 0
 Assam  NA  NA NA NA NA 0
 Bihar 2078  0 NA NA NA 0
 Chandigarh 0 0 NA 17 0 0
 Dadra & Nagar Haveli 6 0 NA 40 0 0
 Daman & Diu 3  0 NA 26 0 0
 Jammu & Kashmir 750  0 NA 2282 0 0
 Jharkhand 330  0 NA 4288 0 0
 Lakshadweep 4  0 NA NA NA 0
 Nagaland  NA  NA NA NA NA 0
 Puducherry 37 0 NA 72 0 0
 Punjab 487 0 NA 4044 0 0
 Tripura  NA  NA NA NA NA 0
 India 30,051 7,246 24 1,77,103 8,835 5
Sources: National Rural Health Mission (available here), PRS.Note: The data for all states is as of March 2011 except for some states where data is as of 2010.  For doctors, these states are Bihar, UP, Mizoram and Delhi.  For ANMs, these states are Odisha and Uttar Pradesh.

 

Community Health Centres

  • § A CHC is required to be manned by four medical specialists (surgeon, physician, gynaecologist and paediatrician) and 21 paramedical and other staff.
  • § As of March 2011, overall there is a 39% vacancy of medical specialists in CHCs.  Out of the sanctioned posts, 56% of surgeons, 47% of gynaecologists, 59% of physicians and 49% of paediatricians were vacant.
  • States such as Chhattisgarh, Manipur and Haryana have a high rate of vacancies at the CHC level.

Table 2: Vacancies in CHCs of medical specialists

  Surgeons Gynaecologists Physicians Paediatricians
State

% of vacancy
 Andaman & NicobarIsland 100 100 100 100
 Andhra Pradesh 74 0 45 3
 Arunachal Pradesh NA NA NA NA
 Assam NA NA NA NA
 Bihar 41 44 60 38
 Chandigarh 50 40 50 100
 Chhattisgarh 85 85 90 84
 Dadra & Nagar Haveli 0 0 0 0
 Daman & Diu 0 100 0 100
 Delhi 0 0 0 0
 Goa 20 20 67 66
 Gujarat 77 73 0 91
 Haryana 71 80 94 85
 Himachal Pradesh NA NA NA NA
 Jammu & Kashmir 34 34 53 63
 Jharkhand 45 0 81 61
 Karnataka 33 NA NA NA
 Kerala NA NA NA NA
 Lakshadweep 0 0 100 0
 Madhya Pradesh 78 69 76 58
 Maharashtra 21 0 34 0
 Manipur 100 94 94 87
 Meghalaya 50 NA 100 50
 Mizoram NA NA NA NA
 Nagaland NA NA NA NA
 Odisha 44 45 62 41
 Puducherry 0 0 100 NA
 Punjab 16 36 40 48
 Rajasthan 57% 46 49 24
 Sikkim NA NA NA NA
 Tamil Nadu 0 0 0 0
 Tripura NA NA NA NA
 Uttar Pradesh NA NA NA NA
 Uttarakhand 69 63 74 40
 West Bengal 0 57 0 78
 India 56 47 59 49
Sources: National Rural Health Mission (available here), PRS.

[i].  “Rural Healthcare System in India”, National Rural Health Mission (available here).  

Recent Posts

  1. 1. A note of gratitude to Mr. N. Vaghul
  2. 2. What is Fuelling Power Sector Losses?
  3. 3. First no-confidence motion of the 17th Lok Sabha discussed today
  4. 4. Anti-cheating laws for competitive examinations
  5. 5. Uttarakhand Assembly concludes 2-day session; 13 Bills introduced and passed