Anumeha \n Yadav, Scroll.in
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New \n Delhi, 21 August 2015 <\/i><\/p>\n
On \n Thursday, the Rajasthan government signed an agreement with Kishore \n Biyani’s Future Group, best known for its retail chains Pantaloons \n and Big Bazaar, to launch the new Annapurna Bhandar Yojana. Chief \n minister Vasundhara Raje described the scheme aimed at an upgrade \n of ration shops as the beginning of a \u201cnew era of public \n private partnership in the public distribution system.\u201d Raje \n had earlier in July announced that public schools and health centres \n will be handed over to private players under a PPP model.<\/p>\n
Ration or fair price shops provide wheat, rice, sugar, kerosene, \n and, in some states, edible oil and pulses to beneficiaries at \n subsidised prices. On Thursday, Raje said the tie-up with the \n retail giant will improve the lives of villages as the \u201cupgraded \n ration shop in villages will mean that beneficiaries can buy all \n goods at one store, like a shopping mall.\u201d<\/p>\n
While the government is yet to make the Memorandum of Understanding \n public, this is how the new scheme will work on the ground.<\/p>\n
Will the ration shops be replaced?<\/b>
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No. The agreement does not mean ration or fair price shops in \n Rajasthan will be replaced by rural and peri-urban versions of \n Big Bazaar, or that the Future Group will now own or its staff \n manage ration shops in villages.<\/p>\n
Subodh Agarwal, principal secretary, food and civil supplies \n department in Rajasthan, said that under the agreement, Future \n Consumer Enterprise Limited, a Future Group company, will be able \n to sell multi-brand consumer goods at ration shops. In the first \n phase of this experiment, Biyani’s company will supply processed \n food items, home care and hygiene products to one-fifth, or 5,000, \n of Rajasthan’s 25,000 ration shops in cities and villages. Ration \n shops will continue to be managed by existing ration dealers, \n Agarwal said. He added that the 5,000 shops had been selected \n on the basis of their existing capacity. In the next phase, more \n may be brought under this scheme.<\/p>\n
Currently, 4.5 crore of the total 6.8 crore or 67% population \n buys subsidised wheat at Rs 2 per kg, sugar at Rs 13.5 per kg, \n and subsidised kerosene from ration shops. They will continue \n to get these at the same rates, while new products will be made \n available. It will be the Future Group’s responsibility to stock \n and procure these through its own network, separate from the existing \n public distribution network, said officials.<\/p>\n
What’s in it for beneficiaries?<\/b>
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More availability and choice in consumer goods, at discounts.<\/p>\n
As per the agreement signed on Thursday, Future Group will make \n available 146 items in 48 categories at the new Annapurna Bhandar \n or the selected ration shops at discounted prices. As per a government \n statement, the products that will be added to the ration shops \n will include oil, ghee, pulses, jaggery, spices, flour, other \n processed food such as noodles, wafers, biscuits, chocolate, \u201cpersonal \n care products such as hair oil, shampoo, toothbrushes\u201d, \u201chome \n care products such as toilet cleaners, detergent bars, mosquito \n repellent”, and stationery such as pens and notebooks. The \n company will be required to stock products of multiple brands \n instead of only procuring their own products, as per the agreement.<\/p>\n
What will it do to retailers?<\/b>
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The entry of a large retailer with big pockets is expected to \n hit the existing small retailers. In several villages, farmers \n with small and medium size landholdings supplement their livelihood \n with self employment by running neighbourhood grocery stores or \n selling such items as soap and shampoo in small quantities. Their \n businesses may be affected, if not immediately, then over a period \n of three to five years.<\/p>\n
Retail experts say the entry of Biyani’s group may also have \n an effect on suppliers as any large retailer will prefer to transact \n with fewer large suppliers, rather than a high number of small \n suppliers.<\/p>\n
Officials said that though the government had been in talks with \n several companies \u2013 including Reliance, Sahara and Metro \n \u2013 before the launch of this scheme, when an expression of \n interest was invited in January, only Future Group applied.<\/p>\n
Retail experts said the move may open up a new market segment \n for the group. \u201cBy doing this, Biyani will be able to have \n critical mass in the market, build an understanding of the segment \n of the consumer serviced by this platform in Rajasthan, and potentially \n use this as a springboard for building a new company,\u201d said \n Devangshu Dutta, the Chief Executive of Third Eyesight, a retail \n and management consultancy.<\/b><\/p>\n
A retail expert working with a rival company, who did not wish \n to be named, said the experiment may or not work for Biyani since \n rural consumers prefer to buy in very small quantities, in the \n form of pouches, for instance, which is different from the Future \n Group’s current consumer base. This may require the company to \n re-engineer its processes to a significant extent.<\/p>\n
Is this a first?<\/b>
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NC Saxena, a retired Indian Administrative Service officer, said \n Kerala and Gujarat had already experimented with providing more \n consumer items at ration shops.<\/p>\n
Ashok Khandelwal, an activist with the Right to Food Campaign \n in Rajasthan, cited the case of Punjab, which provides 18 consumer \n items such as candles and low price cloth through ration shops, \n to demand that Rajasthan also provide more items at controlled \n prices to consumers. \u201cBetween 2011 and 2013, 21 items were \n offered at a few ration shops run by ration dealers who procured \n and sold them,\u201d Khandelwal said. \u201cSome items such as \n tea and salt worked fine, and were made available to beneficiaries \n at lower prices, but in the case of pulses, there were problems. \n The prices of pulses at ration shops went up higher than market \n prices because of irregularities in procurement.\u201d<\/p>\n
At present, local entrepreneurs apply to get the dealership of \n running ration shops. In some villages, the Gram Sewa Sahkari \n Samiti, or village level cooperatives, manage the ration shops. \n This new scheme, Annapurna Bhandar Yojana, was started on a pilot \n basis last August in six ration shops. Biyani’s company got the \n contract to run five ration shops in Jaipur, while the local cooperative \n Gram Sewa Sahkari Samiti has been operating one upgraded Annapurna \n Bhandar ration shop successfully in Udaipur.<\/p>\n
Khandelwal argued that the government could have worked on smoothening \n the procurement and allowed existing local entrepreneurs, ration \n dealers, village cooperatives to procure and sell more items at \n the upgraded ration shops.<\/p>\n
Amra Ram, a former MLA of the Communist Party of India (Marxist), \n said there was a risk that while the government might tightly \n control the prices of goods in the initial years, it will stop \n doing so later. “There is nothing to stop private players \n from charging higher prices in subsequent years to make more profits. \n The same pattern is visible in private hospitals and schools run \n on cheap land from the state,” Amra Ram said.<\/p>\n