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The authorities in India's most populous state have ordered more than a dozen new supermarkets to close following demonstrations by activists who say the stores will destroy the livelihoods of traditional farmers and shopkeepers.
In a rare blow against the interests of big business in India, the state
government of Uttar Pradesh ordered that Reliance Industries and the RPG Group close the stores, many of which had been trading for only a few days.
The opening of the Reliance Fresh stores were met with violent protests in the cities of Lucknow and Banares.
"There has been widespread protest against the opening of retail shops by big corporate houses," said the state's Chief Minister, Mayawati, who uses only one name.
"Fearing further deterioration in the law and order situation, we have decided to close down such retail shops."
The decision by Mayawati, who was elected earlier this year, highlights one of the many faults in India's economic transformation. While the middle classes continue to prosper, the gap between the rich and poor is growing steadily wider.
Nothing highlights that tension more clearly than the battle over India's retail sector. Reliance Industries, which already has 250 stores throughout the country, is preparing to spend the equivalent of $7.7 billion on more stores in a move it believes will revolutionise the way Indians go shopping.
At the moment just 3 per cent of the retail sector is "organised" and most people buy their food from small markets or from the estimated 12 million small family-run shops.
There are potentially huge profits waiting for companies such as Reliance, as well as foreign corporations such as Wal-Mart and Tesco, which are very keen to enter the sector. Analysts have estimated that India's $482 billion retail industry could double by 2015 as the country's middle class enjoys an unprecedented purchasing power.
Reliance's well-heeled customers voiced their disappointment. One shop owner summed up the reasons he preferred shopping in the Western-style store: "In the street markets it's not hygienic, their weights don't work, and there's no air-conditioning.
"Everything is so convenient here. That's the word - convenient."
But many believe that stores such as Reliance Fresh will have a devastating impact on the livelihoods of countless traders who will not be able to compete with the prices, and that many farmers could see their profit margins get ever narrower. In the past 10 years many thousands of farmers have committed suicide as a result of poverty and hardship.
Groups such as Navdanya, a campaign and research group that was not involved in the recent protests, argue that the big stores will have a major impact on hundreds of millions of farmers and the 40 million people in the retail sector.
Navdanya said a recent survey showed that in areas where Reliance stores have opened, 88 per cent of retailers have seen sales drop - often by as much as 50 per cent.
"Indigenous retail is being falsely referred to as unorganised," Navdanya says. "However, Indian trade is highly organised and has existed for centuries on the basis of low cost and high efficiency.
"India needs the self-organised skills of our traders, shopkeepers, hawkers and vendors both to provide employment to millions and affordable friendly community service for basic needs to society."
Mayawati is setting up a committee to investigate the issues surrounding large supermarkets and the shuttered stores will remain closed until the group has completed its report.
Reliance company sources said they anticipated the stores would remain closed for at least 60 days.
Some groups believe the decision by the Uttar Pradesh government will encourage other states to take similar action, especially where left-wing parties are strong.
The Associated Chambers of Commerce and Industry of India said the decision would send adverse signals and might affect the state's progress.
- Independent
