Budget Woes

Written by: Nithin Narayanan

 Nowadays there are quite a few researches that I come across about retail. One such study is about the impact of organized retail on small retailers. This study is conducted by ICRIER-Indian Council for Research on International Economic Relations. In all probability this study would be submitted in the month of March.

 
The result of the study would indeed affect long term policies of the government concerning retail. At present the government allows 51% FDI for single brand retail while multi brand retail stores are not allowed entering the domestic scene. Due to this retail giants like Wal-Mart is resorting to cash and carry format.

 

Like always there are great expectations associated with the Budget. As far as retail is concerned, many feel that retail sector should be liberalized. That is 100% Foreign Direct Investment. FDI would mean will usher investments thus creating situation where consumers would have access to better quality products at cheap prices.

 
Another aspect is granting industry status for retail. This would facilitate establishment of regulatory agencies and thus enhancing quality and thus streamlining process in the sector.

 
Besides this, 100% FDI would create employment in India. Organized retail is growing at 35% annually and unorganized retail at 6%. Hence organized retail would create a large number of opportunities for the youth of the country.

 
Finally Service tax is a major concern. Service tax is levied on rentals paid for immovable properties occupied by retails.  This results in goods becoming expensive for the customers. This is one of the reasons why retail is operating under thin margins.

 
Let's hope that this Budget would change the situation for the common man and also for the businesses across the country.