With increasing number of corporate and retail chains, independent retailers who contribute significantly to the Indian economy and generate more employment opportunities are losing their position in the domestic market  Retail, the second largest employment generating sector and lying at the crossroads of India’s changing economy, needs policy intervention. Including wholesale trade, the sector makes up 15% of the country’s GDP and accounts for 27% of the services sector, which is driving the country’s economic growth. As per the latest National Sample Survey Organisation (NSSO) 64th Round, in 2007-08 retail trade employed 7.2% of the country’s total workforce, thereby providing job opportunities to 33.1 million people.For a long time retail was known to be a refuge for the otherwise unemployed hawkers, offering low start-up costs, making the barriers to entry relatively low. There are signs however, that retail is no longer the refuge that it was earlier. A study by the New Delhi-based Economic Research Foundation along with the International Labour Organisation (ILO) includes alarming findings on the status of retail employment at present. Based on analysis of NSSO data, the Economic Research Foundation-ILO study found that between 2000 and 2005, fewer jobs were created within the industrial category of ‘trade, hotels and restaurants’ than almost any other sector of the Indian economy. This is despite the fact that this category increased its GDP share during the said period.
While employment in retail continues to grow nationally, there are a number of signs indicating that independent retail is on a declining trajectory. Maximum growth in retail employment is occurring in rural areas, as distressed farmers are turning to petty retail in order to earn more cash. In urban areas however, it is retailers who are in distress. The number of workers employed or self-employed in retail has declined for both men and women, and it can safely be assumed that they are not leaving the trade for more higher-paying jobs. The decline in women’s employment in retail, for example, is paralleled by a corresponding rise in women’s employment in domestic work, which is known to pay less. The question then arises: why are women and men leaving retail?
Factors affecting retail employment
According to an India FDI Watch study, a majority of hawkers and shopkeepers are being adversely affected by the new corporate and retail chain outlets. Significantly, as these corporate and retail chain owners squeeze out their independent competitors, they do not show signs of creating comparable numbers of jobs. Rather, theEconomic Research Foundation-ILO study found that employment generation by corporate and retail chains is low. It was at its highest standing at around 0.9 crore in the late 1990s, but has been declining since then.
The government should formulate policies for the promotion of independent retailers, who contribute more to the economy and employ more people than corporate and retail chains. A good example in this regard would be the National Policy on Urban Street Vendors of 2004, with an objective to provide and promote an environment that would help the street vendors to earn their livelihood as well as maintain hygienic conditions and prevent any congestion on streets. The policy calls for decriminalisation of hawking through amendments of various laws, regulation of trade through local democratic committees and promotion through social security and credit schemes. Unfortunately, the policy remains unimplemented outside a handful of cities.
If such policies are not implemented, corporate and retail chain expansion will continue to liquidate independent retailers’ livelihoods, while the government is not likely to realise much tax benefit either.
Dharmendra Kumar, director of India FDI Watch, an association comprising of street vendors and small retailers based in New Delhi |
