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Politics sends retail into tailspin

Raghavendra Kamath & Nayantara Rai  |  Mumbai/New Delhi 

A day after the Uttar Pradesh government ordered organised retailers of fresh produce to down shutters, bemused morning shoppers at a Reliance Fresh store in Ghaziabad were being urged by the store staff to hurry up and complete their shopping. A little before noon on Friday, the stores shut down.
The ban, although described as temporary, is being seen as a knee-jerk reaction by the state government following the attacks on Reliance Fresh and Spencer's stores and has raised several questions over its farm policy.
It also raises questions about the precise reasons for the attack, allegedly carried out by members of the opposition Samajwadi Party, which was in government when Mukesh Ambani's Reliance Industries opened fresh produce stores in Noida. But, as with many other things in UP, the situation on the ground is mired in confusion.
The Reliance Fresh stores in Noida and Ghaziabad reopened at about 4 pm.
A Reliance Industries executive pointed out that Noida and Greater Noida do not have municipal authorities and are governed by local administrative bodies. "We have all the requisite clearances (from the latter)," he said.
On the whole, the retail industry expects the ban will be lifted.
Subhiksha Managing Director R Subramanian said: "I think it is a local issue. The government's step is aimed at merely setting right the law and order situation in the state. I do not see any long-term implications." Subhiksha has 13 stores in Ghaziabad and six in Noida.
The retail sector, which was enthused by UP's recent farm policy declarations, is now wondering whether that was just a show.
"The state had said that farmers should benefit through contract farming and get more money for their produce. Direct procurement from farmers by organised retail benefited them," said an industry source.
"Didn't the state intelligence know that the opposition Samajwadi Party was planning trouble? And if it did, why was Reliance allowed to open seven stores in Lucknow on August 22?"
In the middle of all this, KSA Technopak Chairman Arvind Singhal believes that the confusion regarding organised retailing was getting highly politicised.
"I believe that farmers are the biggest beneficiaries of organised retail. But, since the government has not come out with a clear policy on organised retailing, it has given a chance to politicians to arm-twist retailers," he said.
The Confederation of Indian Industry and the Associated Chambers of Commerce and Industry of India have also criticised the government move and said that farmers and consumers would suffer as a result.

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First Published: Sat, August 25 2007. 00:00 IST