[Analysis] Essay topic trends in last 19 years (1993-2011) for UPSC civil service IAS exam

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I’m classifying all the essays asked in last 19 years, into 8 broad topics.
Topic [bracket shows # of questions asked so far]

1.    Economy (India vs Bharat theme) [12]
2.    Education [11]
3.    Culture [18]
4.    International issues [13]
5.    Philosophy [15]
6.    Polity & Administration [27]
7.    Technology [6]
8.    Women empowerment [10]

The Occurrence Table of Essay Topics

Now doing the interpretation based on the year-wise ‘occurrence’ of these essays. See this table

Chart: The occurance table of Essay topics for 1993-2011(if trouble viewing the photo, then download the pdf file)

The Observations & Speculations

1. Since last 5 years continuously, no essay on technology or women empowerment. (see the continuity of those black dots in the table) As we saw in the mains analysis, the Women empowerment topic seems to be shifted from Essay papers to GS Paper 1.
2. In the early 90s you were given 6-8 essays and you had to pickup one, they’ve gradually reduced the options to barely 4 essays!
3. Economy is under dry spell after a long time (2011), otherwise since 2006, there has been 1-2 essays each year.
4. ‘Education’ topic had atmost 2 continuous dry years during the entire 19 years period, otherwise they’ve been asking from it at a regular interval.
5. Indian culture is second most important topic after polity (total 18 essays)
6. Just like Education, culture too hasn’t seen lengthy dry years, same is true for Global/international issues.
7. Philosophical essays were ‘hot’ in the initial years: 1993 to 1996, two essays per year and then abruptly stopped for four years. I guess the paper-setter retired or perhaps UPSC changed their ‘trend’ in those years for some reason.
8. Polity /Administration has seen dry year only thrice.
9. Seems UPSC has some personal grudge against science professors, when It comes to framing the essay paper, Only 6 essays so far from S&T in last 19 years! Or perhaps, to balance the advantage enjoyed by Science graduates in GS paper-II and to provide level playing field to non-science graduates, they’ve stopped asking S&T essays since last 5 years.
10. 1993-2006, Women empowerment used to be a recurring essay topic, almost every year.

 Now what can be the speculations for 2012??

1. There will be 4 essays. (or 3?!)
2. UPSC continues its love for culture, one essay will be asked (since Art n Culture as a topic is not given as much importance in GS paper1)?
3. UPSC continues to ignore S&T and Women empowerment topic. (as they’re well covered in GS papers)?
4. You can share your own speculations in the comments below!

The Bar and Pie chart breakups

Bar and Pie chart breakups for Essay topics in last 19 years

Appendix- I (The topicwise Essay list of last 19 years (1993-2011)

Economy (india vs bharat theme)

1.    Protection of ecology and environment is essential for sustained economic development. -2006
2.    Bpo boom in india.   -2007
3.    Globalization would finish small-scale industries in india. -2006
4.    Economic growth without distributive justice is bound to breed violence. -1993
5.    Ecological considerations need not hamper development. -1993
6.    Multinational corporations - saviours or saboteurs -1994
7.    Special economic zone : boon or bane -2008
8.    Resource management in the indian context. -1999
9.    Should a moratorium be imposed on all fresh mining in tribal areas of the country? -2010
10.    Are our traditional handicrafts doomed to a slow death? -2009
11.    The focus of health care is increasingly getting skewed towards the ‘haves’ of our society. -2009
12.    Urbanization is a blessing in disguise. -1997

Education

1.    Modern technological education and human values. -2002
2.    Credit - based higher education system - status , opportunities and challenges -2011
3.    "Education for all" campaign in india: myth or reality. -2006
4.    Privatization of higher education in india. -2002
5.    Irrelevance of the classroom. -2001
6.    Value-based science and education. -1999
7.    Is an egalitarian society possible by educating the masses ? -2008
8.    Independent thinking should be encouraged right form the childhood. -2007
9.    Restructuring of indian education system. -1995
10.    Literacy is growing very fast, but there is no corresponding growth in education. -1996
11.    What is real education? -2005

Indian culture

1.    Indian culture today: a myth or a reality? -2000
2.    Modernism and our traditional socio-ethical values. -2000
3.    Youth culture today. -1999
4.    Mass media and cultural invasion. -1999
5.    The composite culture of india. -1998
6.    The indian society at the crossroads. -1994
7.    Does indian cinema shape our popular culture or merely reflect it -2011
8.    Geography may remain the same ; history need not. -2010
9.    From traditional indian philanthropy to the gates-buffet model-a natural progression or a paradigm shift? -2010
10.    Modernisation and westernisation are not identical concepts. -1994
11.    New cults and godmen: a threat to traditional religion -1996
12.    How has satellite television brought about cultural change in indian mindsets. -2007
13.    ‘ globlisation’ vs. ‘ nationalism’ -2009
14.    National identity and patriotism -2008
15.    Responsibility of media in a democracy. -2002
16.    Why should we be proud of being indians? -2000
17.    True religion cannot be misused. -1997
18.    Globalizations and its impact on indian culture. -2004

International issues

1.    India's role in promoting asean co-operation. -2004
2.    The masks of new imperialism. -2003
3.    As civilization advances culture declines. -2003
4.    The implications of globalization for india. -2000
5.    My vision of an ideal world order. -2001
6.    India's contribution to world wisdom. -1998
7.    The world of the twenty-first century. -1998
8.    Preparedness of our society for india’s global leadership role. -2010
9.    The global order: political and economic -1993
10.    Importance of indo-u.s. nuclear agreement -2006
11.    Good fences make good neighbors -2009
12.    Terrorism and world peace -2005
13.    Restructuring of uno reflect present realities -1996

Philosophy

1.    Discipline means success , anarchy means ruin -2008
2.    Attitude makes, habit makes character and character makes a man.  -2007
3.    There is nothing either good or bad but thinking makes it so. -2003
4.    Search for truth can only be a spiritual problem. -2002
5.    Spirituality and scientific temper. -2003
6.    Disinterested intellectual curiosity is the lifeblood of civilisation. -1995
7.    Our deeds determine us, as much as we determine our deeds. -1995
8.    Youth is a blunder, manhood a struggle, oldage a regret -1994
9.    Useless life is an early death. -1994
10.    He would reigns within himself and folds his passions and desires and fears is more than a king. -1993
11.    Compassion is the basic of all morality would -1993
12.    If youth knew, if age could. -2002
13.    The paths of glory lead but to the grave. -2002
14.    The pursuit of excellence. -2001
15.    Truth is lived, not taught -1996

Polity, administration

1.    Creation of smaller states and the consequent administrative , economic and developmental implication -2011
2.    Evaluation of panchayati raj system in india from the point of view of eradication of power to people.  -2007
3.    Justice must reach the poor -2005
4.    Water resources should be under the control of the central government. -2004
5.    The misinterpretation and misuse of freedom in india. -1998
6.    The language problem in india: its past, present and prospects. -1998
7.    Reservation, politics and empowerment. -1999
8.    When money speaks, the truth is silent. -1995
9.    How should a civil servant conduct himself? -2003
10.    Politics without ethics is a disaster. -1995
11.    Judicial activism. -1997
12.    The vip cult is a bane of indian democracy -1996
13.    Need for transparency in public administration -1996
14.    Whither indian democracy? -1995
15.    Politics, bureaucracy and business - fatal triangle. -1994
16.    How far has democracy in india delivered the goods? -2003
17.    What we have not learnt during fifty years of independence. -1997
18.    My vision of india in 2001 a.d. -1993
19.    In the indian context , both human intelligence and technical intelligence are crucial in combating terrorism -2011
20.    Is autonomy the best answer to combat balkanization? -2007
21.    The country's need for a better disaster management system. -2000
22.    Are we a ‘soft ’ state ? -2009
23.    Role of media in good governance -2008
24.    Judicial activism and indian democracy. -2004
25.    What have we gained from our democratic set-up? -2001
26.    Urbanisation and its hazards -2008
27.    Food security for sustainable national development -2005

Technology

1.    Computer: the harbinger of silent revolution. -1993
2.    The march of science and the erosion of human values. -2001
3.    The modern doctor and his patients. -1997
4.    Increasing computerization would lead to the creation of a dehumanized society. -2006
5.    The cyberworld: its charms and challenges. -2000
6.    The lure of space. -2004

Women empowerment

1.    Men have failed: let women take over. -1993
2.    Women's reservation bill would usher in empowerment for women in india. -2006
3.    The hand that rocks the cradle -2005
4.    If women ruled the world -2005
5.    Whither women's emancipation? -2004
6.    Empowerment alone cannot help our women. -2001
7.    Women empowerment: challenges and prospects. -1999
8.    Woman is god's best creation. -1998
9.    Greater political power alone will not improve women's plight. -1997
10.    The new emerging women power: the ground realities. -1995

Appendix II (Yearwise Essay Papers for UPSC mains 1993-2011)

2011	1. Creation of smaller states and the consequent administrative , economic and developmental implication 2. Does Indian Cinema shape our popular culture or merely reflect it 3. Credit – based higher education system – status , opportunities and challenges 4. In the Indian context , Both human intelligence and technical intelligence are crucial in combating terrorism
2010	1. Geography may remain the same ; history need not. 2. Should a moratorium be imposed on all fresh mining in tribal areas of the country? 3. Preparedness of our society for India’s global leadership role. 4. From traditional Indian philanthropy to the Gates-Buffet model-a natural progression or a paradigm shift?
2009	1. Are our traditional handicrafts doomed to a slow death? 2. Are we a ‘Soft ’ state ? 3. “The focus of health care is increasingly getting skewed towards the ‘haves’ of our society”. 4. “ Good Fences make good neighbors” 5. ‘ Globlisation’ vs. ‘ Nationalism’
2008	1. Role of Media in good governance 2. National Identity and Patritism 3. Special Economic Zone : Boon or Bane 4. Descipline means success , anarchy means ruin 5. Urbanisation and Its Hazards 6. Is an Egalitarian society possible by educating the masses ?
2007	1. Independent thinking should be encouraged right form the childhood. 2. Evaluation of Panchayati Raj System in India from the point of view of eradication of power to people. 3. Attitude makes, habit makes character and character makes a man. 4. Is Autonomy the best answer to combat balkanization? 5. How has satellite television brought about cultural change in Indian mindsets. 6. BPO boom in India.
2006	1. Women's Reservation Bill Would Usher in Empowerment for Women in India. 2. Protection of Ecology and Environment is Essential for Sustained Economic Development. 3. Importance of Indo-U.S. Nuclear Agreement 4. "Education for All" Campaign in India: Myth or Reality. 5. Globalization Would Finish Small-Scale Industries in India. 6. Increasing Computerization Would lead to the Creation of a Dehumanized Society.
2005	1. Justice must reach the poor 2. The hand that rocks the cradle 3. If women ruled the world 4. What is real education? 5. Terrorism and world peace 6. Food security for sustainable national development
2004	1. India's Role in Promoting ASEAN Co-operation. 2. Judicial Activism and Indian Democracy. 3. Whither Women's Emancipation? 4. Globalizations and Its Impact on Indian Culture. 5. The Lure of Space. 6. Water Resources Should Be Under the Control of the Central Government.
2003	1. The Masks of New Imperialism. 2. How far has democracy in India delivered the goods? 3. How should a civil servant conduct himself? 4. As civilization advances culture declines. 5. There is nothing either good or bad but thinking makes it so. 6. Spirituality and Scientific temper.
2002	1. Modern technological education and human values. 2. Search for truth can only be a spiritual problem. 3. If youth knew, if age could. 4. The paths of glory lead but to the grave. 5. Privatization of higher education in India. 6. Responsibility of media in a democracy.
2001	1. What have we gained from our democratic set-up? 2. My vision of an ideal world order. 3. The march of science and the erosion of human values. 4. Irrelevance of the classroom. 5. The pursuit of excellence. 6. Empowerment alone cannot help our women.
2000	1. Why should we be proud of being Indians? 2. The cyberworld: Its charms and challenges. 3. The country's need for a better disaster management system. 4. Indian culture today: A myth or a reality? 5. The implications of globalization for India. 6. Modernism and our traditional socio-ethical values.
1999	1. Women empowerment: Challenges and prospects. 2. Youth culture today. 3. Mass media and cultural invasion. 4. Resource management in the Indian context. 5. Value-based science and education. 6. Reservation, politics and empowerment.
1998	1. The composite culture of India. 2. Woman is God's best creation. 3.The misinterpretation and misuse of freedom in India. 4. India's contribution to world wisdom. 5. The language problem in India: Its past, present and prospects. 6. The world of the twenty-first century.
1997	1. What we have not learnt during fifty years of Independence. 2. Judicial activism. 3. Greater political power alone will not improve women's plight. 4. True religion cannot be misused. 5. The modern doctor and his patients. 6. Urbanization is a blessing in disguise.
1996	1. Literacy is growing very fast, but there is no corresponding growth in education. 2. Restructuring of UNO reflect present realities 3. New cults and Godmen: a threat to traditional religion 4. The VIP cult is a bane of Indian democracy 5. Need for transparency in public administration 6. Truth is lived, not taught
1995	1. Politics without ethics is a disaster. 2. The new emerging women Power: the ground realities. 3. When money speaks, the truth is silent. 4. Whither Indian democracy? 5. Restructuring of Indian education system. 6. Disinterested intellectual curiosity is the lifeblood of civilisation. 7. Our deeds determine us, as much as we determine our deeds.
1994	1. Youth is a blunder, Manhood a struggle, oldage a regret 2. The Indian society at the crossroads. 3. Modernisation and westernisation are not identical concepts. 4. Useless life is an early death. 5. Politics, bureaucracy and business – Fatal Triangle. 6. Multinational corporations – saviours or saboteurs
1993	1. My vision of India in 2001 A.D. 2. The global order: political and economic 3. He would reigns within himself and folds his passions and desires and fears is more than a king. 4. Compassion is the basic of all morality would 5. Men have failed: let women take over. 6. Economic growth without distributive justice is bound to breed violence. 7. Ecological considerations need not hamper development. 8. Computer: the harbinger of silent revolution.

[Economy] Foreign direct investment limits in various sectors of India (FDI caps)

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Foreign direct investment limits (FDI)in various sectors of India

Caution:

1. Some of the data might be outdated.
2. List is not exhaustive

0% FDI is permitted in

Agriculture (except Tea)
Housing and real estate [except NRI]
Lottery, Gambling

26% FDI is permitted in

Defence
Insurance
Newspaper and media
Petroleum refining

49% FDI is permitted in

Banking
Cable network
DTH
Infrastructure investment
Telecom

51% FDI is permitted in

Single Brand Retail
Petro-pipelines

74% FDI is permitted in

Atomic minerals
Science Magazines /Journals
Petro marketing
Coal and Lignite mines
Telecom

100% FDI is permitted in

Advertizement
Airports
Cold-storage
BPO/Call centres
E-commerce
Energy (except atomic)
export trading house
Films
Hotel, tourism
Metro train
Mines (gold, silver)
Petroleum exploration
Pharmaceuticals
Pollution control
Postal service
Roads, highways, ports.
Township
Wholesale trading

[Economy] On What basis 49-51% are calculated in FDI?

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Basheer asked,

what is this 51% and 100%...on what basis those percentages are allowed for fdi....i mean if 51% in multibrand is allowed thn how can they maintain tht 51 %.

Situation #1

• Anil Kapoor is running a mall in Mumbai (or a big retail-mall chain, having  presence in all big cities) and his total investment is 49 crores.
• Then Tom Cruise cannot invest more than 51 crores in this mall.

Situation #2

• Tom Cruise dreams to open a retail mall chain in India, he calculates it'd require total investment of 100 crores. 
• Even if he has 5000 crores, he can only put 51 crores from his side and he'll have to find one or more Indian players to invest the remaining 49 crores, else his dream will become a 'Mission impossible' (Ghost protocol)

Situation #3

• Anil Kapoor has a public listed company doing the retail business (i.e. they've shares in sharemarket)
• In this case Anil might issue extra shares on preferential basis to Mr.Cruise upto the limit of 51% in total investment
• On these shares, the dividend cannot be more than the limits given by Finance ministry.

Percentage Calculation

49-51 sharing percentage is calculated on total investment, which can be anything.

• Total investment 204 crore(100%)=Anil's 100 cr.(49%)+Tom's 104 cr.(51%)
• Total 1020 (100%)=500 (49%)+520 (51%)

[Economy] Cash and Carry wholesale trade meaning

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The term "Cash and Carry wholesale trade" has been appearing a lot in newspaper columns nowadays, because of that 'FDI in retail' issue.

Traditional wholesale trade

• An electronics store owner, Jethalal Champaklal Ghada, requests 20 LCD TVs from Sony wholesaler.
• Wholesaler arranges for the truck, sends the LCDs.
• Jethalal need not pay the entire cost-price of 20 LCDs at once.
• He'd keep paying it either in installments or entire sum before next-Diwali or next month or only when those LCDs are sold to a newly opening hotel. (i.e. deals made on credit)

Another example of traditional wholesale:-
sometimes you see a guy with a notebook, making rounds at your local kiranastore or dairy parlor. He'd note down the 'order' from that store owner and after some time, he'd come back in loading-rickshaw full of biscuit, softdrink and wafer packs. And the money is settled on monthly basis.

Cash and Carry wholesale trade

It is different from the traditional wholesale deals in following manner:

• Here Jethalal himself goes to that Wholesaler's warehouse (or sends his henchmen Nattu kaka or Bagheshwar).
• He pays entire cost of all 20 LCDs, at once. (Cash/Cheque/DD etc.)
• He arranges for the truck-transport by himself and takes it back to his shop. (Carry)

Cash n Carry wholesale in India

(here goes copy paste job from Financialexpress)

• In many big cities there are "Best Price Modern Wholesale stores" by Walmart Bharti venture, as 100% FDI is already allowed in wholesale.
• They stock about 6,000 items, including a wide range of fresh, frozen and chilled foods, fruits and vegetables, dry groceries, personal and home care, hotel and restaurant supplies, clothing, office supplies and other general merchandise items.
• These items are available at competitive wholesale prices, allowing retailers and business owners to lower their cost of operations.
• Over 90% of these goods and services are sourced locally, thereby helping keep costs to a minimum, adding to the growth of the local economy and creating job opportunities.

[Economy] A story of Forex, currency conversion, rupee depreciation, inflation, subsidies etc.

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Again in the fond memories of Dev Anand.
I’m writing this story so that the newcomers can get some idea about Forex, currency conversion, rupee depreciation, inflation, subsidies etc. (caution : full of technically not-so-correct examples, just to give you a broad idea of what ails Indian economy) Ok here it goes…..

Investor: Faith won and lost

Enter an American Mr.James. Thanks to American recession, he decides to invest outside USA, and comes to India with a bag full of green dollars, after he was assured by RBI and Commerce Secretary that environment in India is very conductive for business. Please come, give us your dollars, we convert it into rupees.
He (full of confidence) converts his dollars, at the rate of 1$=Rs.40
Now James searches for land to open office or factory somewhere near a big city in India. But price of land is so high thanks to the black money, it doesn’t make any sense buying a property.
He says ok, let me just ‘rent’ some readymade building and I’ll starting a small-scale i-phone production company.

But the electricity shuts down at random, for hours and days.
James: ok, I’ll buy a diesel generator like every other industrialist in this area.

Again price of Diesel also increasing, Profit margin shrinking.
Adding insult to the injury, his workers have gone on strike. Workers are demanding pay-rise because of the ever increasing prices of milk and petrol and James unable to settle the dispute so a lengthy (and expensive) legal battle is drawn. Meanwhile the factory remains closed for weeks and months together.

James: let me start a coffee house to pay lawyers' fees.


But the price of raw material (milk,sugar,gas) also increasing.
Add the bribe he has to pay to local goons, policemen, and municipality  corporators. If he raises the selling price of each cup, there will be drastic reduction in customers. Again Hardly any profit margin left.
Moreover frequently one political outfit or another, calls for a ‘strike/bandh’ for creation of separate state or to protest against inflation or corruption or lokpal or just because someone slapped their political leader.
James dares to open his shop on such 'Bandh day' and he is beaten up severely by the political goons, his coffeeshop is ransacked while police watches silently.

His calls his buddy Allen in America, cautions him not to invest in India.

Currency Speculations @ Forex Market

At the local beer-bar in California, Allen overhears some conversation between drunkards that soon IMF and world bank will give big financial aid to the ailing Greek and Portugal, and their economies will be back on right track. If one invests money at this point, in stock market or real-estate in those countries, he could get a handsome return of 40-50% a year.

Allen recalls a Bollywood movie he saw on youtube with English subtitles, the handicapped old-man in that movie had given a profound and universally applicable Management advice: “Lohaa garam hai maar do hathoda”
Allen immediately runs to Forex market, with his bag full of dollars to get them converted into Euro.

Crude Oil Bill

Curiously, Chairman of IOC (Indian oil corp.) is also waiting there @Forex market, with a suitcase full of rupees. He is in desperate need of dollar$ for King of Saudi doesn’t accept payment in Rupees for the crude oil sold.

IOC Chairman: dude got any dollars? Come on man. I need them, please.
Allen: How much?
IOC Chairman: You know the routine rate. 1$ for 40 rupees.
Allen: Hell NO!!! I ain’t selling. My best friend told me not to.
IOC Chairman: ok ok how about 45 rupees for a dollar.
Allen: Nope
IOC Chairman: 50
Allen:Nope
IOC Chairman: 52
Allen: ok, You got a deal.

The Solutions

Back in India

(upon knowing that at Forex market, Rupee is selling down at 1$=52Rs)
RBI Chief:  what in the god’s name is happening? 52 rupees for a dollar? How are we supposed to import crude-oil at this expensive rate?

Finance Minister (FM): hey look at the bright side, although our imports become costlier but now our exports will earn more money. It is Good for call-centres and textile exporters. And then they use that money for buying items in Indian market = it will create more demand= more jobs=boost in economy!!! Trickle down theory!!!

RBI: Wait a minute! Nobody is going to buy nothing under this high-inflation. So Whatever extra-profit the call centre owner makes thanks to this rupee devaluation, he’ll lock it in bank’s fixed deposit or pension funds and he’ll wait and watch for the prices to go down before making any big purchase. This trickle down theory isn’t that linear and straight forward as you’re thinking. Back to the point, We need dollars to finance the crude oil import..


Finance Minister: No problem. You’ve got more than 200 billion dollars Forex-reserve in your custody. Release them in the market.

RBI Chief: Never. I’m saving it for the rainy day. God forbid if situation gets even worse, we’d have our pockets totally empty. What if a war breaks out with Pakistan or China, how will we purchase extra-oil for our fighter-jets and combat-tanks during that crisis, if our Forex reserve is wasted like this?

Finance Minister: Damn it, if prices of petrol and diesel are increased because of this rupee depreciation, the truck-transportation cost will increase and so will the prices of milk,eggs,fruits and vegetables.  Spider-man's Uncle Ben before his untimely death, had said “With great power comes great responsibilities and for great Pawar comes great slappings” Please man, do something, we need green dollars to finance the oil bills. I’ve UP election to win.

RBI Chief: how about you stop MNREGA? That will stop a lot of corruption, black money generation and the resultant inflation and price rise.

FM:  You’re kidding, right? How am I supposed to win UP elections without MNREGA? Centrally sponsored welfare scheme is the only Brand-USP of our party!
RBI: Ok how about disinvestment? Sell a part of your shares from SAIL, Coal India and other public sector undertakings.
FM: Yes we can do that but wait Madam-ji & NAC said the disinvestment money is to go in National renewal fund from which it’ll be spent for more schemes like MNREGA.
RBI: ok lets recover the 2G and CWG corruption money from Raja and Kalmadi then use it to finance the oil-bill.
FM: lolz, come on man, be serious. Hey wait…. how about you print 10 suitcases of rupees in your printing press. Then I goto Forex market and get them converted into dollars.
RBI: Yes that could work. Only problem is that the guy how buys these suitcases from you in exchange of dollars…. He might come back, buy all the onions and potatos from our market using same printed rupees and takes them to his home-country. That would lead to even further inflation for there will be lesser produce left in our market.
FM: no no UP election…no more inflation.
RBI: Look I understand your constrains but I can’t release dollars from my reserve. But How about you arrange for dollars .....you know something like via FDI? How about 51% FDI in retail, that ought to attract a lot foreign players with bags full of dollars, they’ll get desperate to convert it into rupees.
Finance Minister: hmm…interesting.

*-*-*-*-*

Related to this:

FDI in retail: The pro-con analysis

update 10 January 2012:

Story of Forex Part II Click me

[Economy] The FDI in Retail business pro-cons Single brand vs Multibrand Retail

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In the fond memories of Dev Anand,

What’s the difference between Single brand vs Multibrand retail?

Single Brand retail

· Nike Company opens outlets in A’bad, Banglore, Delhi and Mumbai selling nothing but Nike Shoes, Nike wrist-watches and Nike t-shirts only.
· This is single brand retail.
· FDI in Single-Brand Retailing was permitted in 2006, to the extent of 51%.
· These were mostly outlets for sportswear, luxury goods, apparel, fashion clothing, jewellery, hand bags, life-style products.
· But neither the Political parties nor Local Kiranawala raised any voice against this,why? Because these are ‘high-end’ luxury items for brand conscious upper middle class and rich class people. It doesn’t hurt population at large. It was not like people would stop purchasing from local garment store to get Nike or Adidas.

Multi-brand retail

· Big Bazaar opens mall in above cities: selling t-shirts of multiple-brands such as Reebok, Nike, Adidas, Allen Solley, Van Huesen, Peter England etc. +and+ they also sell unbranded t-shirts (you know those buy one get three t-shirts free from unknown companies.)
· So this is multi-brand retail: when an outlet sells a product (tshirt, tie, shoes anything) of more than one brand.

 

Retail means when product is sold to the ultimate consumer (common man)

Argument against FDI

Anti #1: will lead to mass-unemployment

1. Retail sector in India is the second largest employer after agriculture. Almost 33 million people involved here.
2. Now the problem part: “Disguised unemployment”. Father and two Sons running a farm, producing 200 kgs of wheat. You take out any two members, the production still remains 200 kgs. Same problem goes with family owned-operated retail stores, the intermediaries and middle agents.

3. What should be done? Obviously one of the two sons ought to get himself in other sector (service, construction, manufacturing, industry, etc) But there is lack of opportunities, the manufacturing sector is not growing at the pace. So the argument=: Displaced retail-operators will not be absorbed in other sectors. This FDI will lead to unemployment.
Although this “unemployment” argument is flawed because
1. Walmart cannot open malls in every nook and corner of India. Their electricity, staff and security costs will surpass their profit margins.
2. Customers can’t goto Walmart on daily basis for ‘attractive discounts’ because the petrol cost (and time wasted in traffic) will negate the discount on small purchase. So they’ll be using local small-retailer for daily requirements of bread, milk, newspaper etc.
3. Did STD booth-operators become unemployed after advent of mobile phones with zero roaming charges and free incoming? Nope, they diversified and started running Xerox and cybercafés.
4. Did local Udipi owner ran out of business because of McDonald / KFC? Ofcourse not.

Anti #2: Predatory pricing

· Walmart or any other MNC retail mall, for the first 3-4 years they’ll give heavy discounts and seductive offers, even if they make loss in the deal. Result : all the customers in a particular city are hooked to walmart only.
· The smalltime retail players cannot run business giving such heavy discounts, they close down. Once all competition is eliminated with this ‘predatory pricing’ Walmart will slowly stop giving discounts and recover their losses by increasing the MRP.
· Since these big MNCs have deep pockets, they can affort this sort of loss. But in the long term, they recover everything.
· Same way Once the small time retailers are out of business, Wal-Mart will start exploiting farmers, paying them extremely low money for their produce, because now Wal-Mart is the sole retailer in the city.

counter arguments: ‘Predatory pricing’
1. Customer thinks of Traffic, time and petrol cost involved before visiting Walmart everynow and then. Not like someone would go 10 kilometers, just because the mall is giving Rs.3 discount on apple juice.
2. There is a Competition Commission of India to look into this matter. (earlier MRTP, Monopoly and restrictive trade practices act)
· (sidenote) Another example of Predatory pricing is our airline industry. One of the prime reasons why they’re making losses.

Anti#3: India will become dumping ground for Chinese products

· Dumping means, suppose a ballpen is sold for Rs.10 in China but they intentionally export it to India at the price of Rs.5, in order to ruin the business of local Indian pen-producers and to capture the Indian stationary market.
· China is notorious for this dumping tactic, earlier we had to impose Anti-dumping duty on their rubber products and tires.
· Some believe that entry of Foreign retailers will facilitate the Chinese scheme of dumping our market with their cheap products.

Arguments in favor of FDI in retail

Pro#1: No more wastage of agro-produce

· India is the second largest producer of fruits and vegetables,
· If we are the 2^nd biggest producers of fruits and vegetables, why are we not a ‘big name / exporter’ in world market? And more importantly, if we are second largest producer, then why is so much inflation in food items?
· Because Post-harvest more than Rs. 1 trillion worth farm produce, especially of fruits, vegetables and other perishables, is wasted due of lack of storage and transport facilities.
· More than 50% of this can be saved, if we’ve proper cold-storage facilities.
· Government is not doing much about this (duh they are unable to save even the wheat in PDS, let alone cold-storage) and the private Indian players donot have much money to invest in this cold-storage chain or those expensive big transport-trucks of America that we see in Discovery channel.
· So if FDI in retail is allowed, the MNCs would invest in cold-storage chains and those big transport trucks. Means lower wasted of produce. More supply of fruits and vegetables. According to supply-demand rule the prices will go down.
· Right now, 100% FDI Is allowed in Cold-storage chain, but foreign players are not coming there because they’re not allowed to sell it in retail malls. There is not much profit margin in operating a cold-storage alone. It’d take years to recover the investment. Only if MNCs are allowed to sell the produce as well in their retail malls, they’ll feel interested in investing in this cold-storage game.
· Similarly FDI in Wholesale trading was allowed upto 100% since 1997.

Pro#2: Farmer gets more money for his produce

· Indian Farmer doesn’t have cold-storage or transport facility, if he grew 200 kilos of carrots, he has no option but to sell it as soon as possible before it get spoiled. The middle agent buy this produce for as low as 2-4 rupees per kilo, but by the time it reaches market, the price jumps to 25-30 rupees per kilo. WHY?

Indian Truck Transport: Overloading and Bribes

· There is no organized truck- transport service, the truck operators are running in extremely competitive environment so they’ve to overload their trucks. Once this overloaded truck goes through checkpoint, policeman will demand bribe for flouting the road permit provisions.
· Since the truck is overloaded, engine efficiency is reduced. He has to get his truck repaired frequently.
· The road quality and traffic Management is bad, more diesel is consumed.
· Trucker will add all these costs (bribe, repair, extra diesel) in his service charge.
· Truck reaches the city, your local vegetable-vendor pays to offload the carrots but he gotta maintain his own profit-margin as well, (+ the bribe he has to pay to local policeman, municipality inspector etc) so the carrots that were lifted for 2 rupees, ultimately get sold for 25 rupees a kilo after cutting everyone’s Commission. 

When an organized MNC retailer gets in picture, he has his own extremely efficient and streamlined transport service. So there is no overloading of trucks, there is very systematic packing of goods. His truck maintenance cost is thus very low and there is low wastage during transport.
Second, He doesn’t have to pay so many bribes at every level, because
1. There is no overloading of trucks, papers are in order. Less chances for policemen etc to blackmail him into paying bribe.
2. He got deep pockets, he gives big annual donations for ‘election funds’ to the ruling party and Diwali gifts to the concerned district officers. That’s why small time petty officials such as police, municipality, food n sanitation inspector can’t dare to bother him every now and then, as they do to small time retailers.
So MNC retailer’s cost price is quite low compared to small-time retailers. Hence he can afford to give attractive discounts to customers as well.
Same reason why many political parties dislike MNCs in Retail, you can extract more election-funds from 1000 small time players compared to from one big player. Big player is less susceptible to arm-twisting compared to a small player.

No more intermediaries / Middle men in the chain= Lesser levels of Commissions

· Right now Intermediaries [middle agents] dominate the value chain. They often their pricing lacks transparency. They often run secret cartels, so even in open auctions, farmers don’t get good price for their produce.
· Wholesale regulated markets, governed by State APMC Acts, have developed a monopolistic and non-transparent character.
· These elected cooperative marketing societies and Mandis are more or less same BJP vs Congress fight for domination in university elections, there is hardly anything positive reform done for the students.
· According to some reports, Indian farmers realize only 1/3^rd of the total price paid by the final consumer, as against 2/3^rd by farmers in nations with a higher share of organized retail.
· A study commissioned by the World Bank : Why India doesn’t earn much money from exporting its Fruits and vegetable (even though we’re second largest producer) = Same reason, Non-competitiveness. Bad supply lines.
· A price that the farmer receives for a typical horticulture product is only 12–15 per cent of the price the consumer pays at a retail outlet.

Small and Medium scale industries

· Example small time cushions, toys, shoes, plastic wares maker. They don’t see much business because they don’t have the avenues to sell their products. Big mall with big floor space, provides them opportunity to market their products and get customer’s attention.

Assured quality, no adulteration

· Tune into Aaj Tak newschannel during afternoon, it is always somewhere in Uttar Pradesh, they caught adulterated Milk, Milk products or soft drinks produced using banned chemicals.
· More than 40% of the medicines sold in rural and semi-urban areas of India are of fake brands.
· For an MNC retailer you can atleast feel confident that it won’t be the case.

More competition = Better prices and products

· Remember once upon a time, Mobile calls used to cost 7 Rupees per minute and “incoming” wasn’t free. Why? Because there was low level of competition. Barely 2-3 players in the market. FDI can be a powerful catalyst to spur competition.

Trickle down Theory

· To open a big mall, walmart has to purchase land and construct a big building= lot of laborers, masons, plumbers, electricians employed.
· Same way farmers are getting more money so all these people have more money in their hands and they use it to purchase bikes, mobiles etc. so more demand and more employment.
· This is trickle down theory. Marxist and Vinod Dua (NDTV) disputes this theory.

Fear exaggerated

· Fears of large adverse effects on existing retailers are grossly exaggerated especially since modern domestic retailing has begun in any case via desi retailers such as Big Bazzar and Reliance. (10^th plan document)

Suggestions for safeguards

1. Entry of foreign players must be gradual with social safeguards so that the effects of labour dislocation can be analysed and policy fine tuned.
2. Foreign players should initially be allowed only in metros cities only.
3. Gradual opening of the retail sector over a period of 3-5 years to give domestic industry enough time to adjust to the changes.
4. More stringent Compulsory corporate social responsibility requirement (e.g. Ask them to open 1 school and 1 clinic in every city where they’re operating etc.)
5. Regular monitoring of mall-inventories to see that India is not used as dumping ground for Chinese products.

Some reports for mythbusting

***Ok now this is copy paste job***

  ICRIER STUDIES ON: (i) FOREIGN DIRECT INVESTMENT IN RETAIL SECTOR-INDIA (2005) and (ii) ‘IMPACT OF ORGANIZED RETAILING ON THE UNORGANIZED SECTOR’-2008 Based on their study

#1 : Not as much job loss as feared

1. Unorganized retailers in the vicinity of organized retailers experienced a decline in their volume of business and profit in the initial years after the entry of large organized retailers.
2. The adverse impact on sales and profit, however, weakens over time. There was no evidence of a decline in overall employment in the unorganized sector as a result of the entry of organized retailers.
3. The rate of closure of unorganized retail shops in gross terms was found to be 4.2 per cent per annum, which is much lower than the international rate of closure of small businesses. The rate of closure on account of competition from organized retail was found to still lower, at 1.7 per cent per annum.
4. There was competitive response from traditional retailers through improved business practices and technology upgradation.

#2 good for consumers

While customers from all income groups saved through organized retail purchases, the lower income consumers saved more. Thus, organized retail is relatively more beneficial to the less well-off consumers.

#3 Intermediate players

There was no evidence of an adverse impact by organized retail on intermediaries. There is, however, some adverse impact on turnover and profit of intermediaries dealing in products such as, fruit, vegetables, and apparel. Over two-thirds of the intermediaries planned to expand their businesses, in response to increased business opportunities opened by the expansion of retail.

#4 More money to farmers

Farmers were found to benefit significantly from the option of direct sales to organized retailers. The average price realization for cauliflower farmers selling directly to organized retail was about 25 per cent higher than their proceeds from sale to regulated government mandis. The profit realization for farmers selling directly to organized retailers was about 60 per cent higher than that received from selling in the mandis. The difference was even larger when the amount charged by the commission agent (usually 10 per cent of sale price) in the mandi is taken into account.

Scenario in other third world countries

· FDI is permitted in the retail sector in Brazil, Argentina, Singapore, Indonesia, China and Thailand without limits on equity participation (that is 100% FDI allowed)
· Thailand: Since 1997, 100% FDI. Positive result: Thailand has now become an important shopping and tourist destination.

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