Reforms or trap?"

Since the government announced that foreign companies will be allowed to hold 51% stake in multi brand retail, another name for large grocers such as Walmart, Tesco and Carrefour, the markets have gone berserk. The Sensex zoomed above 19,000 and the rupee gained 300 points against the dollar. Mr Kapil Sibal, our most revered minister with multi brand portfolios, wrote an article titled, " On The Right Side of History ", in the TOI of 4 October. In this he dismisses fears that these companies will drive local mom and pop stores, also called kirana stores, out of business. His point is that these companies will only be allowed to open stores in large cities, so will not be any danger to small retailers. He writes," Prices of urban land are far too high in most Indian cities and hence it would become an uneconomical venture." Again," The ' aam aadmi ' will not go to Delhi's outskirts on his two-wheeler or small car to buy supplies in bulk which cannot be stored in the small refrigerator in his house." He does not add that even the small refrigerator is not assured of continuous electricity supply. This is precisely the point we made earlier and so find it difficult to explain the market hysteria. No one is claiming that small shops will disappear from India but there is no doubt that wherever any of these giants opens an outlet local small shops will not be able to stand the competition. He then said that these companies will invest in supply chains directly from farmers to consumers, eliminating middlemen, and hence farmers will receive a higher price for their produce while consumers will pay less for food, thus reducing food inflation. That is hokum. In China a Chinese chain Sun Art is much more successful than Walmart because people find Walmart more expensive. Earlier this year milk producers in the UK protested because large retailers were competing to reduce the price of milk by paying less to farmers. Whether we stand to gain from this move remains to be seen but the Congress will definitely gain a lot. The rise in share prices will allow the government to sell off stakes in public sector companies to raise funds to bribe the electorate in next year's budget. The government has been trying to trap ordinary people into investing in shares. It has already reduced the Securities Transaction Tax and has allowed Rs 50,000 invested in shares to be deducted from taxable income. However, yesterday morning the Nifty crashed by 900 points because of " erroneous " trade orders worth Rs 6.5 billion by brokers, Emkay Global. Circuit breakers were supposed to come into operation after a fall of 570 points but failed. In April a " buy " order was wrongly punched as a " sell " order leading to a fall of 338 points, triggering stop losses which accelerated the fall and extended investor losses. The Indian stock market is totally manipulated and ordinary people have been burnt badly in the past. So, why are they trying to trap us? Black widow?