The pros and cons of FDI in retailing

The Cabinet has approved 51 per cent FDI in multi-brand retail, a decision that will allow global mega chains like Wal-Mart, Tesco and Carrefour to open outlets in India.

The Cabinet also increased the foreign investment (FDI) ceiling to 100 per cent from the present 51 per cent in single-brand retail.

The following are the main issues raised by those in favour of foreign equity in multi-brand retailingand those opposed to it:

Those against:
- It will lead to closure of tens of thousands of mom-and-pop shops across the country and endanger livelihood of 40 million people
- It may bring down prices initially, but fuel inflation once multinational companies get a stronghold in the retail market
- Farmers may be given remunerative prices initially, but eventually they will be at the mercy of big retailers
- Small and medium enterprises will become victims of predatory pricing policies of multinational retailers
- It will disintegrate established supply chains by encouraging monopolies of global retailers

Those in favour:
- It will cut intermediaries between farmers and the retailers, thereby helping them get more money for their produce
- It will help in bringing down prices at retail level and calm inflation
- Big retail chains will invest in supply chains which will reduce wastage, estimated at 40 percent in the case of fruits and vegetables
- Small and medium enterprises will have a bigger market, along with better technology and branding
- It will bring much-needed foreign investment into the country, along with technology and global best-practices
- It will actually create employment than displace people engaged in small stores
- It will induce better competition in the market, thus benefiting both producers and consumers

Cabinet clears 51% FDI in multi-brand and 100% in single-brand retail

Paves way for global chains to open mega stores in 53 major cities

New Delhi, November 24
The Union Cabinet today cleared 51% foreign investment in multi-brand retail and 100% in single-brand retail, throwing open the country’s estimated $590 billion (Rs 29.5 lakh crore) retail market to global supermarket giants, despite differences between the UPA allies on the issue.
It also approved the Companies Bill, 2011 that seeks to tighten norms on insider trading, prevent corporate frauds and introduce new concepts like class action suits. Once approved by Parliament, it would replace a 55-year-old old legislation.
The decision on FDI, taken at a meeting of the Cabinet presided over by Prime Minister Manmohan Singh, will pave the way for global chains like WalMart, Carrefour and Tesco to open mega stores in 53 major cities. Currently, India allows 51% FDI in single-brand retail and 100% FDI in the cash-and-carry format of the business.
Besides the main Opposition BJP, the Left and UPA partner Trinamool Congress along with Congress ministers Veerappa Moily and Mukul Wasnik had opposed the FDI proposal saying it could create major problems for the country.
"We will make a statement in Parliament," is all Commerce Minister Anand Sharma said after the meeting, given the sensitivities involved. But some ministers and officials confirmed the clearance to FDI.
While the BJP feels that the FDI in retail would lead to unemployment, the Left parties feel it would lead to further inflation and price rise. However, the government is of the view that this biggest reform in years could boost sorely-needed investment in Asia's third-largest economy.
Sources said there are also some caveats proposed in the policy, notably to protect the interests of mom-and-pop shops, farmers and small and medium enterprises. There are some 40 million people involved directly in running these neighbourhood kirana stores.
Earlier, a panel headed by Cabinet Secretary Ajit Kumar Seth had recommended 51% FDI in multi-brand retail but with certain riders.

The panel had suggested that at least 50% of the investment and jobs should go torural areas. Besides, entities with FDI should source at least 30% of their requirements from the micro, small and medium enterprises sector. A foreign player would also have to commit an investment of at least $100 million.

Other recommendations included allowing such mega stores to sell non-branded items. Such entities would be allowed only in towns with a population of over 10 lakh.

In another decision, the Union Cabinet also cleared the Companies Bill, 2011 which, once approved by Parliament, will replace a half-a-century-old Act. The Bill, which has already been vetted by the Parliamentary Standing Committee of Finance and also by different ministries, seeks to update company law in line with the best global practices.

The Bill has introduced ideas like corporate social responsibility (CSR), class action suits and a fixed term for independent directors.

Among other things, it also proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.

Follow procedure while acquiring individuals’ properties, SC to states

New Delhi, November 24
Slapping a cost of Rs 2.5 lakh on Haryana for illegally acquiring a farmer’s land in Sonepat, and quashing the acquisition as null and void, the Supreme Court has issued a fiat to all the states to desist from taking over the properties of individuals, particularly farmers, except in cases where it is “absolutely necessary.”
The SC pointed out that in the recent past various state governments had resorted to “massive acquisition of land and that too without complying” with the mandatory legal procedures in the name of public purpose only to “confer benefit upon private parties.”
Such reckless acquisitions depriving ordinary people of their agriculture land, houses built with life-time savings or small industrial units set up with great difficulty were “wholly unjust, arbitrary and unreasonable,” a Bench comprising Justices GS Singhvi and SJ Mukhopadhaya ruled.

In the present case, the Bench noted that the affected farmer, Raghbir Singh Sehrawat, was shown as dead on the relevant documents, while his wife’s signature had been forged and she was described as a widow. Further, it was wrongly contended that the state had taken physical possession of the land and handed it over to the Haryana State Industrial Infrastructure Development Corporation(HSIIDC) on November 28, 2008, while village records showed that Sehrawat was still cultivating the land and there was a standing crop at the relevant time.

“Before acquiring private land, the state and/or its agencies/instrumentalities should, as far as possible, use land belonging to the state for the specified public purpose. If the acquisition of private land becomes absolutely necessary, then too, the concerned authorities must strictly comply with the relevant statutory provisions and the rules of natural justice,” the Bench noted in the 25-page verdict, written by Justice Singhvi.

The Bench noted that several state governments and their functionaries were adopting a “very casual approach” in dealing with matters relating to the acquisition of land in general and “the rural areas in particular and in a large number of cases” the acquisitions had been quashed by the judiciary for not following the mandatory procedure.

“It is difficult, if not impossible, to appreciate as to why the state and its instrumentalities resort to massive acquisition of land and that too without complying with the mandate of the statute,” the SC said.

While diversion of farm land in the name of planned development or industrial growth would seriously affect the availability of food in future, depriving people of their only assets like a small house or a small industrial unit would amount to denying them of a “semblance of dignity” they have been struggling for, the apex court observed.

The owners, whose land was being acquired, should be given a chance to raise all sorts of objections, either by pointing out that the land was not suitable for the proposed purpose or by suggesting that an alternative piece of land was available or through other means.

“In other words, the recommendations made by the Collector must reflect objective application of mind to the objections filed by the landowners and other interested persons,” the Bench clarified.

The apex court also noted that since independence, the administrative apparatus of the State had neither invested enough in the rural areas nor educated and empowered the farmers to adopt alternative sources of livelihood.

“It also appears that the concerned authorities are totally unmindful of the plight of those sections of the society, who are deprived of their only asset like small house, small industrial unit etc. They do not realise that having one’s own house is lifetime dream of majority of population of this country,” they observed.

UK Cabinet nod to madarsa board

OTHER DECISIONS              n Separate directorate for minority affairs to be formedn Area of spending under the MLALAD fund increasedn The Uttarakhand Urban Street Vending and Business on Pavement (Regulation and Management) Rules, 2011, approvedn Nagar panchayat status to Purola and Gairsainn Free bus travel for girls in government busesn Award of Rs 50,000 for students getting admission to prestigious medical, management and engineering institutions

Dehradun, November 22

At the third Cabinet meeting held in November, the Uttarakhand Government gave its approval to the creation of a madrasa board, a separate directorate for minority affairs, an increase in the area of spending under the MLA local area development (MLALAD) fund along with the Uttarakhand Urban Street Vending and Business on Pavements (Regulation and Management) Rules, 2011.

At a press briefing held last night, Chief Secretary Subash Kumar said the Muslim Education Mission would be merged with the new board. This would sort out the problem of 500 madarsas and their issue of affiliation. The board would comprise a total of 13 officials, including the director, chief registrar and the accountant.

The government also gave its approval to the creation of a separate minority affairs directorate that would play a role in the implementation of the minority welfare schemes. The main office of the directorate, which is to be located in Dehradun, would have the services of 11 officers, including the director.

The Uttarakhand Urban Street Vending and Business on Pavement (Regulation and Management) Rules, 2011, approved by the Cabinet call for demarcating separate space for vendors and also allowing them to do business legally. It will be implemented in three Municipal Corporations of the state.

Now, under the MLA LAD fund, the MLAs would be able to allocate Rs 10 lakh towards equipping yoga centres and fitness centres by the Yuva Mandal Dals as also towards providing office furniture for the Mahila Mangal Dals.

In another important decision, the Cabinet also gave its nod to according the nagar panchayat status to Purola and Gairsain and also gave approval for making “nazul” land free hold on the basis of the rates that prevailed in 2000.

The Cabinet approved the populist announcements made by Chief Minister BC Khanduri in early November, including free bus travel for girls in government buses, award of Rs 50,000 for those students getting admission to the prestigious medical, management and engineering institutions.

To further improve the government’s image and usher in transparency, the Cabinet also gave approval to signing an agreement between the government and the parties undertaking supplies and other works to ensure no bribes are taken.

3-day police remand for visa fraudsters

Chandigarh, November 22

The two immigration fraud accused were produced in a local court today and sent to three-day police remand. The accused, Vikram Sharma of Chandigarh and Vinay Chadha of Zirakpur, were arrested on November 18.

They used to assist their clients, especially those whose visa applications had been rejected earlier, by locating local residents with similar names and then applying for visa by using their names and addresses.

These facts came to light following the arrest of the duo, who used to operate in the name of the Sector-32 Atlantic Overseas Consultancy and charge between Rs 6 lakh and Rs 8 lakh each per tourist visa.

Immigration shifts west from Ontario

Canada's immigration patterns are changing, experts say, and western provinces are the beneficiary.

Only a decade ago, Ontario took in the lion's share of Canada's immigrants, with half going to Toronto and 60 per cent to Ontario as a whole. Last year, only 42 per cent of all immigrants went to Ontario, statistics show.

At the same time, immigration to Western Canada has surged, especially in Alberta, Saskatchewan and Manitoba.

One of the biggest reasons is a booming western economy, particularly in the farming and resource sectors, according to B.C.-based immigration expert Nick Noorani.

"Immigrants are going where they get jobs," Noorani told CBC News.

The change has also been fuelled by the provincial nominee program, which allows provinces to choose a certain number of immigrants each year, Noorani said. The program ensures those who come to Canada enter the workforce immediately, he said.

"What's happening is a lot of immigrants are coming in with prearranged employment," Noorani said, "and that's good because then you're reducing the unemployment or underemployment rate that immigrants seem to have."

The system is a far cry from previous decades, when the federal points system for skilled workers kept many aspiring newcomers waiting for years to immigrate and failed to meet the need for skilled tradespeople in the provinces.

The provincial system has resulted in economic payoffs for communities, Noorani said.

"From an economic perspective," he said, "let's remember every time you get people coming into a new community, business increases. So suddenly you'll have people putting up stores where they're going to have ethnic foods. Real estate has been bolstered tremendously by immigrants and their desire to own homes, more than Canadian-born."

Nevertheless, challenges remain, according to the University of Ottawa's Peter Showler.

Not all temporary foreign workers get the same level of support to become permanent residents, the former chairman of the Immigration and Refugee Board of Canada said, something that could leave too much power in the hands of employers.

"When you have very positive, future-looking employers, that works very well," he said. "If you have abusive employers, they can use that as a kind of threat or control to sometimes sustain improper labour practices."

As well, Showler said, the federal government needs to reduce wait times: The current immigration backlog has grown to more than a million people.

House passes resolution to divide Uttar Pradesh

State assembly adjourned amid pandemonium

New Delhi: The Uttar Pradesh state legislative assembly yesterday passed a resolution seeking division of the state into four smaller states amid pandemonium and slogan shouting.

The resolution for creation of new states, namely Purvanchal Pradesh, Pashchim Pradesh, Awadh Pradesh and Bundelkhand was passed by voice vote while the opposition was shouting slogans seeking discussion on their no- confidence motion in the Mayawati government.

The House was adjourned sine die with adoption of vote on account for the first three months of the new financial year starting April and what was supposed to be the two-day special session of the assembly ended within minutes, thwarting the opposition move to grill the Mayawati government on various issues. "The resolution to divide the state has been passed. This is not a political move by BSP [state's ruling Bahujan Samaj Party]. We took this step after the Central Government did not take any action on our proposal. The Uttar Pradesh assembly has fulfilled its duty with regards to splitting of Uttar Pradesh for the benefit of the state," Chief Minister Mayawati said while addressing a press conference in the state capital Lucknow.

According to indications, yesterday's could have been the last session of the current assembly since there are suggestions that Mayawati could recommend dissolution of the assembly so that fresh elections are held earlier than the scheduled polls in April-May next year.

Uttar Pradesh was earlier divided in 2000 when Uttaranchal, now called Uttarakhand, was carved out of it.

What next?

• Resolution seeking division of Uttar Pradesh does not lead to creation of four states. It is the prerogative of the federal government.
• The resolution will now go to the federal government to be placed before the federal cabinet. The cabinet has the right to either reject or approve it. Once approved, the resolution will be placed before Parliament.
• The resolution must be passed by both Lok Sabha and Rajya Sabha with two-thirds majority.
• Once adopted by Parliament, it goes for President's approval.
• The entire process may take many months and the new Uttar Pradesh assembly after elections has the right to recall the resolution.