Reclaiming retail democracy

By Richard Mahapatra
Published: Wednesday 29 February 2012

Rural haats offer solution for the logjam to foreign direct investment in retail sector


The high-profile debate over foreign direct investment (FDI) in India’s organised retail market has raised many questions. One of them is: can we make the market friendly and profitable for the country’s small producers who are also the sellers? Debates use the producers as the shield against FDI. Once big corporate houses join the business, the small traders will be wiped out. This is an inherent fear about free market. Is there an equitable model of retail? India’s much neglected rural periodic markets or the weekly haats could be the answer.

Studying the primary rural market in the new context is essential. For, it accounts for a large chunk of the retail consumer market and is growing faster than the urban market. Haats are the first point of contact between the rural consumer and the commercial market. Corporate houses too are increasingly focusing on haats for expansion. Soon the fear of takeover will spread to rural areas as well.

The haats are the world’s biggest rural market catering to 10 per cent of the world population. There are 47,000 of them in comparison to 35,000 supermarkets in the US, and its annual turnover, estimated in 1995, was Rs 100,000 crore. This is more than three times the turnover of the country’s organised retail sector in 2011.

The functionalities of haats make them the most democratic market. Small producers set up their shops 2.5 million times a year in over 600,000 villages in India. Sixty-two per cent of these villages are home to less than 1,000 people and a substantial number of them do not have retail shops in a fixed place. Thus, haats are the sole places for sale and purchase. Otherwise, the producers will have to travel to wholesale markets, which brings down their profit or results in distress selling. A haat depends on local ecology and deals with seasonal produces. There is no institutional mechanism to run a haat; only the vested interest of selling and buying goods. What’s more, it has place for the smallest producers (people with a kilogramme of vegetable from kitchen garden also set up shops). Its resilience to privatisation of the village market is high. People are getting fixed location ration shops. But the haats, offering multi-purpose shopping experience, have successfully fought this threat. The market as a concept can never be so equitable in opportunity. So, the retail democracy precedes the world’s largest democracy.

Unfortunately, haats have not caught the deserved attention. India has a long history of crafting programmes to create marketing infrastructure for local producers, mostly farmers. These efforts lead to a new set of market bodies. Laws are enacted to regulate them. The new market bodies cater to medium to big farmers, leaving out the small producers. As per an estimate by the Planning Commission, 21,000 haats do not have any support from bodies like panchayats and marketing committees that look after agricultural produce. So the weekly markets operate without any infrastructure. This discourages many potential buyers from coming to the markets.

Rural market development programmes suffer from a conceptual problem. They focus on increasing the agriculture production, assuming it would lead to automatic increase in income. While productivity is a condition, it alone does not enhance income. Analyse any of the case of distress sale of agriculture produce, the main reason would be access to an equal market. Improving the market access and infrastructure has to be an integral part of the overall agriculture redevelopment agenda. Haats can be made more competitive which will ensure high price for the produce.

In Jharkhand non-profit Swadhina has replicated the traditional markets in villages without access to them. It made self-help groups (SHGs) in charge of setting haats. With minimal investment, they created the infrastructure to start the weekly market. The sellers pay a small tax to the SHGs that look after maintenance. The impact has been phenomenal. Kitchen gardens fetch people enough money. In fact, residents earn more at haats than by working under public wage programmes. Starting from handicrafts to home-made candies, there is a buyer for everything. The villages have also got rid of exploitative traders.

It is time we reclaimed our retail democracy to ward off the threats of free market.

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