SPEAKING
FREELY India should beware
superstores By Brian Cloughley
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please
click hereif you are interested in
contributing.
Sometimes we stay
with friends in an inner London suburb where there
used to be a number of family-run stores. They
weren't perfect models of modern commercial
skills, but they were havens of courtesy, quite
well-stocked, and, of course, convenient. They
provided a decent living for many people and were
very much part of the community.
A
supermarket recently appeared and all the mom and
pops vanished overnight. In a matter of days after
the big store opened
it was obvious they hadn't a
hope of survival, so now they're boarded up and
will never reopen. It's difficult to see who
benefits. There is a much wider range of
foodstuffs (such as 43 different types of
biscuits), but the prices, after an attractively
low beginning, now seem to be creeping up, there
being no competition anywhere.
Superstores
may be good for some people, but it is open to
discussion that they should be totally embraced by
India. Last time we were in Delhi, we went to one
with friends Rana and Dolly and I was amazed and
shocked at the massive energy use. Nothing was too
small to be illuminated, and the strip lighting
must have measured miles. Heaven knows what
electricity consumption must be in India's
supermarkets and malls.
Given the dismal
state of affairs in rural areas, where 400 million
people have no electricity, it seems that energy
provision priorities might be improved a bit.
Further, if the planned expansion in electricity
generation is achieved, it might be advisable to
give emphasis to the needs of industry as well as
to domestic provision in the 20 (of 28) states
that have such a dearth of power. According to
the International Energy Agency, access to
electricity by all citizens of India will require
investment of at least US$135 billion. That's less
than a third of what America has spent on its war
in Afghanistan, but in India it's an awful lot of
money. And you might wonder what proportion will
be invested to the advantage of urban areas where
it is intended there be many mega-stores, almost
all of them foreign in origin.
In
December, India's parliament voted to open the
country's retail sector to overseas competition.
They welcomed admission of firms such as Walmart,
which already has 17 stores in association with
Bharti Enterprises, based in Gurgaon.
Walmart welcomed the government's
decision, but there was much adverse comment. Ravi
Shankar Prasad of the Bharatiya Janata Party said
Walmart had spent $3 million in 2012 "for entering
the Indian market", and noted that "Lobbying is
illegal in India ... If Walmart has said that
hundreds of crores of rupees were spent in India,
then it is a kind of bribe."
This was not
a biased political rant: it was a statement of
unpalatable fact. And when the past machinations
of Walmart are examined, Mr Prasad's concern is
understandable, given that some most unpleasant
details have been exposed. The New York Times
conducted an analysis of Walmart that should make
us all sit up and think about the enormous power
of these giant companies. Its December 17 report,
"The Bribery Aisle: How Wal-Mart Got Its Way in
Mexico" is a well-researched, excellently written
but deeply depressing description of how these
people conduct business disgracefully and
deceitfully. [1] 1. The
Bribery Aisle: How Wal-Mart Got Its Way in
Mexico, New York Times, December 17, 2012.
It was reported that "Wal-Mart de Mexico
was an aggressive and creative corrupter, offering
large payoffs to get what the law otherwise
prohibited. It used bribes to subvert democratic
governance - public votes, open debates,
transparent procedures. It used bribes to
circumvent regulatory safeguards that protect
Mexican citizens from unsafe construction. It used
bribes to outflank rivals."
Walmart is the
largest commercial employer in Mexico, with
221,000 people working in the 2,275 stores,
supermarkets and restaurants it owns. Is this
really the way India wants to go?
Walmart
had to admit to a US Senate committee that the
company spent a total of $25 million on obtaining
"enhanced market access for investment in India".
And following independent observations about
Walmart's intriguing activities, India's
Bharti-Walmart company suspended what they called
"a few associates" - which is an odd description
of such a figure as their chief finance officer,
Pankaj Madan, who was one of the six people
fingered.
In addition to the imaginative
commercial maneuvers that seem to have been going
on in India, there is the matter of the influence
of global mega-stores on their unfortunate
suppliers in many countries. In Britain, as one
bankrupt dairy farmer put it, "In 1997, we got 25
pence (40 US cents) a liter at the farm gate.
We're getting 26p now. But the price in the shops
then was 42p a liter and now it's anything from
70p to 1 pound."
The Asda supermarket
chain in Britain is a subsidiary of Walmart, much
like Bharti but enormously larger (542 stores;
over 200,000 employees), and last year was fined 9
million pounds (US$14.5 million) for
"coordination" with other enormous chains in
price-fixing of dairy products. In 2010, it was
fined 14 million pounds for a similar scam
involving tobacco sales, and although these
amounts are the smallest of pocket-change to
Asda-Walmart, given its colossal profits, you have
to wonder what might be in store (pun intended)
for Indian producers who supply supermarket
chains.
In Britain the shelf prices of
some 65% of all food consumed in the entire
country are controlled, brutally and sometimes
spitefully, by four gigantic and astronomically
profitable supermarket companies. They set prices
and destroy farmers who try to complain about
their tyrannical - but entirely legal - commercial
capers.
Every new supermarket destroys
whole networks of independent shops and their
suppliers, and tax avoidance by these companies,
especially Walmart's Asda, is practiced on a
colossal scale. Indeed, there are some notable
beneficiaries of the expansion of superstore
chains - the legions of highly paid lawyers and
tax-avoidance experts who design amazingly
imaginative methods of reducing or annulling tax
payments.
Given India's understandable
concern over the high level of corruption in the
country, it would be advisable to consider the
straight bribery angle, as distinct from the
lobbying that concerns the BJP's Mr Prasad.
As the New York Times recorded, "Wal-Mart
de Mexico officials did not themselves pay bribes.
Records and interviews show that payoffs were made
by outside lawyers, trusted fixers ... to deliver
envelopes of cash without leaving any trace of
their existence. Wal-Mart de Mexico's written
policies said these fixers could be entrusted with
up to $280,000 to 'expedite' a single permit. The
bribe payments covered the payoffs themselves, a
commission for the fixer and taxes."
India, beware.
Brian
Cloughley, who now lives in France, has
studied South Asian affairs for over 30 years and
he is South Asia defense analyst for IHS/Jane's
Sentinel, Country Risk. His website is
www.beecluff.com.
Speaking Freely
is an Asia Times Online feature that allows guest
writers to have their say.Please
click hereif you are interested in
contributing. Articles submitted for this section
allow our readers to express their opinions and do
not necessarily meet the same editorial standards
of Asia Times Online's regular contributors.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
