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April 05, 2018

April 05, 2018 @ 06:03 PM

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Will FDI in retail open gates for more job opportunities?

Post MBA exam results, Group Discussion will be crucial for MBA admission so it is advised to read and practice with variety of topics. In following GD you will be getting some points with divergent views which you can pick up and develop.  Today, you will read GD topic:

  Will FDI in retail open gates for more job opportunities?
 
An issue which compelled the Indian Parliament to stay dissolved for almost a month must be important enough from all angles- financial, political, economical etc. 
 
The country is divided into two different schools of thoughts: the first one believes that FDI in retail will open gates for development and increased job perspectives for the unemployed youth; the other believes that FDI will kill the small market retailing which is the backbone of Indian Economy in smaller areas.
 
To balance acts between the two school of thoughts in difficult; to choose one is even more difficult but let us try and draw logical arguments. 
 
To start with, it is believed that opening FDI in retail will create many job opportunities in many sectors such as agro-processing, sorting, marketing, logistics industry, front-end retail. A large number of job opportunities will be created when big marketing enterprises such as Wallmart, Kmart etc.
 
If FDI is allowed, the foreign players will make huge investments in the economy which will lead to an increase in the demand for educated unemployed people. In China, opening the economy to Foreign Direct Investment caused the employment level to rise by manifold times. The supporters of increasing FDI suggest that India can emulate the example of China by opening up FDI in the retail sector.
 
On the other hand, some people are also right in believing that opening Foreign Direct Investment will kill a number of small jobs. India presents an example of highest small area shopping density. A study shows that some 11 shops cater to the need of every 1000 people. In India, about 1.2 crore shops employ over 4000 crore people and cater to the need of approximately 95% of the Indian population.
 
If the FDI is pushed into Indian retail, these small shops will suffer a major setback. In most countries where FDI was pushed, most of the small scale markets were exterminated. Thus, though an increase in Foreign Direct Investment may cause the creation of new jobs, it will also lead to the destruction of a number of multiple jobs. 
 
There is only one way to solve the FDI issue- to gauge the net gain. If the number of jobs being created are more than the numbers of jobs that will be destroyed, the government should approve of an increase in FDI or else, the issue should be put to rest. 

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