One Walmart supermarket can displace over 1300 Indian small retail stores and thereby render around 3900 persons jobless!

Prasenjit Bose‘s Comment on the impact of the FDI in the Indian retail sector:

Prasenjit Bose

The Indian retail sector is the second largest employer in India after agriculture, employing over 4 crore (40 million) persons as per the latest National Sample Survey (NSS) 2009-10. Most of these are small unorganised or self-employed retailers, who are unable to find gainful employment in other sectors of the economy.

Image: Andrew North/BBC/twitpic

Despite the hype over the high GDP growth in India, NSS 2009-10 has confirmed the trend of jobless growth in the country. Total employment growth has slowed down from an annual rate of around 2.7% during 2000-2005 to only 0.8% during 2005-2010. Growth in non-agricultural employment fell from 4.65% to 2.53%. Among all the workers at the national level, about 51% were ‘self-employed’, about 33.5% were ‘casual labour’ and only 15.6% were ‘regular wage/salaried’ employees.

In this backdrop, the entry of MNC supermarket and hypermarket chains would cause severe displacement of the small and unorganised retailers. The sample survey of unorganised retailers done by the ICRIER in 2008 estimated the average size of an unorganised outlet to be around 217 sq.ft, excluding the pushcarts and kiosks operated by the hawkers (Impact of Organised Retailing on the Unorganised Sector, ICRIER, May 2008). The total annual business of unorganised retail in India was estimated in the ICRIER report to be $ 408.8 billion in 2006-07 and the total number of traditional retail outlets as 13 million (1.3 crore). The average total business per store per year for an Indian unorganised retail store therefore comes to around $31446 (Rs. 15 lakh). The survey found an average retail outlet employing 2 to 3 persons. (http://dipp.nic.in/english/publications/reports/icrier_report_27052008.pdf)

The average size of a Walmart supermarket in the US is 108000 sq.ft employing around 225 persons. In 2010, Walmart sold $405 billion amount of goods through its 9800 odd outlets 5 located across 28 countries, employing around 2.1 million (21 lakh) persons. (http://corporate.walmart.com/our-story/)

This implies that one Walmart supermarket can displace over 1300 Indian small retail stores and thereby render around 3900 persons jobless. The employment created against this in that supermarket will be 214 (or maximum 225, which is the average in the US). Clearly, there will be severe job losses if giant MNC supermarkets are allowed entry into the Indian market.

 

 

 

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