First it was the threat of large foreign retailers who would replace small Indian ones and so: No entry to foreign retailers like Wal-Mart. Now, it’s the threat of large Indian retailers who would replace small Indian ones and so: No entry to Reliance Fresh, and Spencer. Mayawati is not the first politician to fight organised retail outlets and she’s not going to be the last. When small traders and politicians, therefore, organised themselves into armies of violence, the new chief minister predictably ordered closure of the outlets and bought time by constituting a “high level” committee. She and Mukesh Ambani await its green signal.

The economic argument behind the closure is complex. It rests on the premise that there are hundreds of thousands of small traders (they’re known as mom and pop shops in the West), selling goods that range from low-end commodities like vegetables and matches to high-end luxury goods like branded pens and imported after shave lotions. Being small, they cannot play the volumes game that large retailers can. And so, the prices they charge are high. Once large retailers set up shops, their higher prices will push consumers away and they will lose business. Currently operating at 30-50 per cent gross margins, this group of traders include regular vendors on streets as well as their high street cousins. All of who will lose livelihoods and should be protected, the argument concludes.

Sad as that may be, I’d like Mayawati and her ilk — left or right — to answer one question. What is a larger number — hundreds of thousands or hundreds of lakhs? You don’t need to be an economist to know that the difference is of two zeroes (between 1,00,000 and 1,00,00,000). Somehow, those opposing reforms in retail are unable to see these two zeroes. Everyone knows that the larger zeroes comprise consumers who have been buying trading inefficiencies for six decades now and going forward, because they have no political voice, will continue to buy these inefficiencies, higher prices for goods and increase cost of living.

... contd.