Topic– Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
5) There are gainers and losers from the growing formalisation of retail sector in India. Critically examine the statement in the light of the recent Flipkart-Walmart deal.(250 words)
Why this question
The recent acquisition of 77% stake in Flipkart, by the US retail giant Walmart has been often in news lately. There are however some inapparent but interrelated issues highlighted by the deal. These issues have a bearing on India’s rural as well as urban sectors as can be gauged from the fact that Indian retail sector is the second largest employment provider in India.
Key demand of the question.
The question wants us to dig deep into the question and bring out the causes of growing formalization of Indian retail market and the implications of the same. Our answer should have a special, but not an absolute focus on the Flipkart-Walmart deal, which is just a small albeit important part of the growing formalization process.
Critically examine- Here we have to dig deep into the given deal and growing formalization of retail sector in India and bring out the causes of the same as well as its implications for Indian economy and society at large.
Structure of the answer
Introduction– write a few lines about the recent Flipkart-Walmart deal and the growing formalization of the retail sector in India, which is the second largest employment provider in India after agriculture.
- Discuss the causes of the growing formalization of retail sector in India. E.g urbanization and sustained economic growth; GST and the inherent structure thereunder which favours formalization of the economy; entry of big national and multinational players in the retail sector e.g reliance, tata; entry of FDI in retail sector etc.
- Discuss the implications of increasing formalization of retail sector in India. Discuss the positive as well as negative effects.
Negative effects- effect on employment and economic equity; entry of multinational players will benefit the urban consumers with cheaper products but the agriculture sector could see a sharp increase in prices which will hurt badly the majority of the rural and urban poor etc.
Positive effects- bringing in state of the art technology and increased warehouse and cold storage facilities; reduction of waste and economics of scale; wider choice of products and lesser prices; infusing innovation and competition in the economy etc.
Conclusion- Based on your discussion and understanding, form a fair and a balanced conclusion on the above issue. Also write a few lines about the wayforward- e.g provide training and skills to small retailers so that they can be gainfully employed in the emerging big retail outlets; any tendency of rising food prices, especially in the rural areas, due to procurement by giant retailers has to be handled either by subsidising the poor or by making them a part of the supply chain, which delivers the procured food items.