India’s strict restrictions in allowing the expansion of Wal-mart into its population is one of the avenues that the nation of India has used to ensure the protection of its small-scale retailers, ensuring stability among small entrepreneurs(Bhattacharyya, 2012).
Although there are different limits imposed by the government of India to the expansion of Wal-mart, Nath’s plan in allowing a limited number of Wal-mart stores into India is a plausible proposition. This is because in allowing just enough stores in the country, it is likely that healthy competition is likely to be brought about among the large retailers in India such as the Big Bazaar. Due to the monopoly that the big retailers such as the Big Bazaar have, they are likely to bring about a few disadvantages to the economy (Stigler, G. J. (1982). First of all, such monopolies permit the related stakeholders to set their prices without being lenient enough to consider the implication of such prices on the consumers. Also, such monopolies do not encourage innovativeness as they are unlikely to see the need to be better in each of their undertakings. Also, such monopolies are likely to create inflation in the economy, a factor that is either directly or indirectly negative. Nath’s plan hence is likely to positively affect the above segment.
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The impact of Wal-mart expansion into India is likely to have a few effects on local businesses. First of all, depending on the number of stores that are allowed into the country, there are both positive and negative outcomes. Small businesses are likely to be derailed if Wal-mart stores dominate the economy. Their ability to prosper under low capital is likely to be lowered, hence, most are likely to do poorly, a factor that can lead others to shut down. On the other hand, however, expansion of Wal-mart into India is likely to moderate monopoly while at the same time bringing India foreign exchange, an aspect that positively affects the economy.
References
Bhattacharyya, R. (2012). The opportunities and challenges of FDI in retail in India. IOSR Journal of Humanities and Social Science , 5 (5), 99-109.
Stigler, G. J. (1982). The economists and the problem of monopoly. The American Economic Review , 72 (2), 1-11.
