January 10th, 2018
Political implications of entry of big retailers in India
The political implications of the entry of the retailers vary widely. Entry of such retailers for instance influences government policies and legislation concerning land acquisition and taxation (Business Monitor International Ltd 2012b). Their influence on land acquisition arises from the fact that the big retailers would require substantial amount of land to set up their retail stores yet India faces pressures concerning land ownership due to high population. Acquisition of large tracts of land by the retailers in a country where locals face challenges in acquiring small parcels of land could lead to conflict in society. For instance, conflicts of such a nature in Uttar Pradesh have influenced the land reform bill leading to a requirement in the bill for investors to “pay twice [the] market value for urban land and six times for rural development” (Business Monitor International Ltd 2012b, p. 80).
Big retailers could also influence tax legislation by negotiating for better terms in exchange for hiring more people. This would have positive effects where local investors also have the capacity to meet the requirements for tax relief thus facilitate increased employment in the entire retail sector (Business Monitor International Ltd 2012). However, where the large retailers lead to the exit of the smaller retailers, the outcome of such legislative reforms would largely be negative. For instance, such tax reliefs would low government income without enhancing the employment level thus reducing government’s capacity to engage in programs that reduce inequality in society. Persistent social inequality in turn would facilitate conflicts in the community hence affecting India’s stability.
Go to part four here.