Saturday, October 6, 2012

FDI in retail to reduce food inflation is it ?


FDI in Multi-Brand Retail .... to reduce food inflation is it ?

Today RBI Deputy Governor Subir Gokarn said that the only solution to controlling the food inflation in India is by allowing FDI in multi brand retail. 


Well the only thing which remains to be asked is that by allowing FDI in this sector, how can one be sure that the money can automatically start trickling in India into this sector. In this age and era
of recession any prudent business shall think twice before expanding leave alone new ventures that too in totally newer markets.

Think FDI in retail and people start talking about supply chain constraints, distribution channels etc. But even if the likes of Wall-mart step into India and start its operation, how can be one sure that these problems will be overcome very easily. What i mean is that the supply chain consists of various parts, out of which one basic part is to move the materials over roads / rails to connect various stores. Now if the roads in India aren't improved, the rail network/services aren't improved, how will the supply chain constraints be removed. Wall-mart or the likes aren't god. It is just that they have better back end systems running for them, but then the ground realty is the ill state of infrastructure in india.
  

It really humors me a lot when people of the stature of deputy governor of RBI start believing and professing that the entire problem of inflation shall be solved just by allowing foreign money into India in some industry.

No comments:

Post a Comment

Pls add comments here !