My views on FDI in retail

A little digression from my past few blogs on travel. I will get back to travel soon!!!

The question of FDI in retail has divided people all over India. There are various views both for and against the move. I believe that FDI in retail is a good move. Those who are against it feel differently for some or all of the following reasons:

a) Farmers will be hurt more
b) Will increase dependence on foreign bodies (why are MNCs needed? why can't Indian retail giants do the same?)
c) Agriculture reforms are needed, not FDI
d) Government should set up cold chains, if they are so much needed
e) Middlemen would become unemployed

In this lengthy post, I will try to address these points one by one. And reason as to why FDI in retail would be helpful to the Indian economy.

Let us analyze the system in its present condition and probably we would be able to find a reasoning as to why the Indian retailers weren't able to build efficiencies needed. I am basically looking at the farmers (the producers) and the final customers. If a newer system is able to give them a chance to be well off, then I would like to take that chance. As for the middlemen, I will address them later.

As of now the produce of the farmer passes through multiple traders and then to the final consumer. Is there a value-add in the chain? No. There is simply a transfer of goods. Let us try and first understand why the Indian chains haven't been able to develop a sustainable supply chain. The Indian companies who have entered the segment have no prior exposure of operating in this segment. So, they are basically competing with the traditional system which doesn't force them to develop an independent supply chain. All firms respond to competitive environment. And when a firm is faced with such heavy investments, only an external force can make them move. When an international chain steps in, things will change. Why? Coz they have a certain way of operating. They work on the system of independent supply chains to lower their procurement costs. Such a competitor would force the Indian retailers into action and look at supply chain optimization leading to better market control.So, it is not a point of dependency on the foreign investors but its about triggering the system into action.

Now to the point of them further dominating the farmers. For simplicity, let us assume that there are two middlemen in the system, between the farmer and retailer who sells it to the end consumer. The price earned by the farmer is say x, the price paid by the end consumer is z, the price paid in between being say, y1 and y2. (x < y1 < y2 < z). Is there any value addition taking place which justifies the rise in the price? No. Is there anything stopping a retailer who is ready to make investments in a supply chain from paying the farmer a price greater than x but less than y1 (keeping in mind the investment costs)? No. Would the farmer benefit? Yes. Can the free market ensure this? I believe so.

For a self-sufficient supply chain, a firm needs to have all links in sync. The supply chain that exists now doesnt share in the risk-return part of the producer. They take part in the return but not in the risk. As crops are harvested seasonally, the middlemen walk away with huge gains at the expense of the farmer and the end consumer, coz the farmer cant store the produce and needs to sell asap. And the consumer needs the produce through out the year. I expect the international players to be ready to make contracts with the farmers to have reliable supply, especially because they would have the supply chain ready to take advantage of the seasonal variations.

Coming to agriculture reform. An agriculture revolution is desperately needed. Coz cultivable land in India is very high. But productivity per hectare is very low coz of the primitive methods being used. So, first of all we produce less than we should and second, we waste a good part of it coz we cant store it. This results in high cost to the end consumer and low revenue to the producer. There are many techniques available in the modern world (and no, I am not referring to GM crops. I can give references of pioneers in this if anyone needs) which can raise productivty. A farmer's revenue depends on how much he can sell and at what price he can sell. The government can only provide cheaper loans to the farmers. The part about improving productivity is left to the farmers or to some NGOs. If a firm is interested in developing a robust supply chain, then I believe that at some point of time, it would be inevitable that such practices would be implemented. There is more possibility of this change happening through a firm with business interests rather than in the existing system. And again, if there is a chance, then I would risk taking it.

Onto government developing supply chains. This is an idea that I have heard often in the recent past on many forums and to put it bluntly, it is ridiculous. Have we forgotten the inefficiencies that exist in all government machinery? Why do we want to create another such demon? Have we forgotten how the FCI functions? And most importantly, the government must realize its role. Its role is to make the economic environment conducive for investments, not to make investments where it has no expertise. In some ways, the last decade has seen some measures taken in this regard. Our national and state highways have improved and are closing in on world class levels. A system is being pushed for wherein transportation vehicles need not wait for hours at octroi points. Efforts are on to improve irrigation facilities. These are the measures that the government needs to take. To cut the red tape. Not think of investing in cold chains. It will end up being more inefficient and just increase the burden on the tax payers.

Now to the middlemen. The growth of an economy happens when its citizens are engaged in gainful employment. Adding more people to a system just increases its inefficiency, not its productivity. The middlemen in this system are not doing any value-addition to the products. And when there is no value-add, you are simply inflating the final cost for transfer of products. Employing 5 people to do the job of one is not a way to improve the economy of the country. You are just reducing the value of that job. Yes, the government must have plans for employment for these middlemen. But just because of them, it doesn't make sense to drop the idea. Entry of multi-nationals brings forth lot of opportunity. For example, there is a shortage of industry level cold storage builders in India. They can find an opportunity there. They would have good people skills. And these businesses just need management of the technical people. Or else, they can enter into cold storage themselves. There is not dearth of opportunity, if one cares to look for it. But it will surely drag them out of their comfort zone, which no one likes.

It would be ideal if agricultural reforms can occur without any intervention. But it won't. It should have taken place a decade back but its still waiting in the wings. And I believe that without an external impetus, this won't happen.

Do you really travel??? Wanna try something different?

Travelling to a new destination is always supposed to be different, different from what we have done before and different from what we have seen. But do we really do anything different? Its always a list of locations to see and sites to be clicked at. Only the location varies. How much of the destination do we really see? How much ofnthe place are we able to really take in? On my trip so far, I would say very little. A few chalked out locations of the city and that is it. Surely, I havent really explored the city. And in the limited time that one has as a tourist, it isn't even possible. But I have tried and succeeded a little coz of the help from the people that I have met.

So, setting the world list, or for that matter even the India list aside, how can one explore a destination, or a region? I, for one, would love to just rent a car and drive around. Drive around the region, stop at random locations, and try and see if I am able to take in the culture of the place. Let alone foreign locales, I havent done it even in India. It has always been a destination, very rarely the road. The travel part is also enjoyed, but not in a sense that I am trying to put across now.

So, as another must-do, I would like to do a road trip everywhere. But let me start with India. A week long road trip, with some markers on the way so that the road trip lasts only a week!! A little planning won't be bad as long as it is flexible. As of now, I don't know when and where. But if you want in, just drop me a message and we shall try and plan something!! If not a week, maybe four or five days, flexibility being the key. And it would help a lot if you could drive a little!!!

The way ahead - India!!!

As I undertake the journey from Madrid to Barcelona by bus (lots of idiocy included in it), I have the luxury of some free time. And as I look around the scenic countryside, my thoughts wander to the India list. On my conversations with the people I have met on this trip, I have painted a very beautiful picture of India. A picture filled with colors, history and natural beauty. At the same time it got me thinking as to what all I myself have done in India and what I should do! I have travelled quite a bit around India but still a lot remains to be seen and done. So, here goes my Indian list. The Indian list is a little less demanding in terms of finance and even in terms of time needed, which makes me wonder why I have held myself back for so long!! The preferences are in no particular order.

a) Kashmir, the valley, Dal lake, valley of flowers, etc.
b) The Golden temple at Amritsar
c) Taj Mahal on a full moon night
d) White water rafting at Hrishikesh or Dandeli
e) Benares on one of the holy days just to see what the hype is about!!
f) Night safari on Jim Corbett sanctuary
g) Khajuraho temple
h) Backpack across the North east.
i) Week in Sikkim
j) Drive along the Konkan coast (from Mumbai to Goa) stopping at the beautiful         locations on the way
k) Jog falls at full flow
l) Three days in Hampi
m) Hoggenakal waterfalls
n) Konark Temple
o) Andaman & Nicobar Islands
p) Lakshwadeep Islands
q) Athirapally waterfalls
r) Dussehra at Mysore Palace
s) Munnar
t) Trek across Ladakh and Leh
u) Backwaters in Kerala

As expected, this list is bigger than the world one, probably because I know much more about India than the world!! Most of the trips mentioned above would just need to be planned a month in advance and a weekend to cover. No wonder then that it still surprises me as to why I haven't done them, atleast the easy ones. I need to start striking them off my list, and soon!!

On the road... And the way ahead...

Catching a small break in my Europe tour. I am half way throught my tour and the entire trip has been a refreshing experience.The places have obviously been unique but the people I have met on the trip have made it really worthwhile. I had a small list of places-to-visit and things-to-do, and this trip has added to the list. It feels lovely talking to new people and learning more about the world from them.

A new country, a new place makes you think as to why things are the way they are there and why not in my country. Being in Europe and interacting with people here has made me realize that its much more to do about people along with the systems in place rather than the systems alone. Hmmm, about that topic, I better reserve another blogpost!!!

As to the list, there are many places that appeal to you. Some may be coz of just the appeal of the region, some coz of the physical challenges,  and some coz they just seem thrilling!!! Thats why every person would have a really different list!!

Here goes the tiny list. I am not addding anything from India here. And it is definitely a long one as well

a) Trek to Mount Everest base camp
b) A liesurely trip to Newzealand
c) MachuPicchu
d) A fortnight in Egypt.
e) Hike through a forest region to the top of a peak
f) Climb to the crater of a volcanic peak.
g) Angkor Wat
h) Drive a 400+ bhp car at over 250 kmph on the Autobahn
i) Travel to an icy region to see polar bears.
j) Scuba diving among the coral reefs.
k) Sky diving

Of these, many are restricted as of now coz of me being a student and many coz of physical constraints!!! But I am gonna be doing everything I can from now on to do all this. Life would have been worth it if I am able to do this! I will put up the Indian list soon as well. And ofcourse, both lists are subject to changes as and when I meet more people.

I know tha the list looks too ambitious. And I am pretty sure that for most of these trips, it would be me alone!! But I have loved traveling alone and I wouldnt mind doing it for all of the trips!!!

Thats it for now, cya all later!!!

P.S. Had written this on my way to Madrid but found the means to post it only now!! Not a big deal!

Travel and Me

After a long time, I am on the road as a tourist. A small break in between my travels at Brugges has given me a window to pen my thoughts.

I have loved travelling to new places. And frankly as I stand now, there is nothing better that I would rather do. The exhilarating feeling of seeing new places, taking pics, meeting new people, making new friends just doesn't die down. I only wish that I could get some job where I would do only this... Would do anything for such a job!! Well... Who wouldn't!!!

Earlier, I associated trips with places. This time I am learning that its much more than just places. In a foreign nation, with just yourself to depend on, teaches you a lot of things about yourself, some of which may truly astonish you. And being alone helps, as you aren't tied down to some other person's likes and dislikes.

Being in discrete touch with the world (social networking...blah blah blah...) doesn't feel weird. It actually feels better!!! Those who are important to you would find a way to communicate somehow, if they need to!!!

Okies now, see ya all later.. dunno when and how .. and to be true, I don't give a damn!!!

Walls ...

Two persons meet

With smiles on their lips

But their walls raised high

Fiercely guarding their space

Familiarity tears down the walls

brick-by-brick

Closeness arrives

And with it the trust

The guard goes down

Letting the other

To his deepest secrets ...

The secrets about ...

what makes him happy ...

what makes him sad ...

what makes one ecstatic ...

what puts one in despair...

Secrets, a must for a friend ...

To help in need...

Secrets, a tool for a person ...

To hurt one and succeed...

Once the walls are down

And he irreparably hurt...

Would the walls again ever come down ??

Or put one forever on the alert ???

A pause .. an indeterminate .. unbearable pause

A period of lovely bliss

where smiles didn't need a reason

happiness was everywhere ...
When ended by an error in judgement
lost a lot ...

lot more than ever thought ...

Hope hung on .. like a dangling sword ...

only to be cut down by a single word ...

Now under a pause ...

an indeterminate pause ...

an unbearable pause ...

Heart sinks as the memories flash by..

Now waiting for a breath of fresh air ...

Looks for a new beginning ...

a hesitant phase ...

As the heart thinks ...

What if a new start

has the same end?