Andhra Pradesh to convert 29,000 fair price shops into village malls

Upmarket stores are set to open in Andhra Pradesh’s countryside as the government plans to convert the existing 29,000 fair price shops across the state into mini-malls.

Christened as “Chandranna Village Mall” after chief minister N Chandrababu Naidu, these stores will sell not just subsidised rice, but also over 500 grocery items and fast-moving consumer goods.

To begin with 6,500 mini-malls will be launched in the third week of November. The entire scheme is expected to be rolled out by January.

“At present, only rice is being supplied to the consumers through public distribution system (PDS). By converting these fair price shops into village malls, the government wants to improve the lifestyle of rural population by giving them access to high-quality grocery and nutritious food products, cosmetics, stationery items,” commissioner of civil supplies B Rajasekhar told Hindustan Times.

At present rice is being supplied through state civil supplies corporation at Re 1 a kg. To supply grocery and FMCG products at a cheaper rate to these village malls, the Andhra Pradesh government in July called for open tenders from reputed retailing companies.

It has engaged noted consultant KPMG to conduct the bidding process. The technical bids were opened on August 28 and financial bids on September 8.

“After the bidding process, we have short-listed two major companies – Reliance Retail and Future Group as suppliers for village malls. The final decision will be taken by the chief minister shortly,” a KPMG spokesman said.

According to official sources, Reliance Retail has grabbed the bid for supply of commodities in 10 districts and the Future Group, which operates the retail store chain under the name of Big Bazar, in the remaining three districts.

“The bidding period is three years. The two companies will extend their logistic support to the malls through their supply chain management, IT systems, manufacture linkages,” a source said.

While a Reliance group spokesman refused to comment on the concept saying the company was yet to get the confirmation, an official spokesperson of the Future Group confirmed that it participated in the bidding.

The fair-price shop dealers can order products from around 350-550 food brands and 250-300 non-food brands.

The dealers will be provided products at up to a maximum of 30-40% below MRP on food items and 25-45 % below MRP on non-food items. The dealer can retain 40 % of the negotiated margin and pass on the remaining 60 per cent to the consumer.

“The consumers can expect to get the commodities at least at a 20 % lesser rate than the market price,” minister for civil supplies Prathipati Pulla Rao said.

He said to set up the malls, FP shop dealers will have to pay 50% of the total investment. The government will bear 25% of the investment and remaining 25% will be mobilised through Pradhan Mantri Mudra Yojana or other bank loans.

“The loan can be used by the dealers for undertaking civil work for physical facelift of shop and for working capital requirement to purchase items from the two suppliers,” an official source said.

As per the bidding agreement, the suppliers will bear 50% cost of fixtures, branding, decoration etc, the source added.

In the coming days, the government aims at extending more services and products through village malls such as banking, telecom, medicines, electronics etc, the sources added.

The opposition parties are, however, not amused by the concept. They said it was a ploy to do away with the PDS and also alleged some underhand dealings.

“It looks like Naidu has chosen Reliance Retail and Future Group in a calculated manner, because his family concern Heritage Foods has business links with both these group,” YSR Congress party MLA Ramakrishna Reddy Alla alleged.

While Heritage Foods sold out its retail wing to Future group, retaining a 3.65% stake last year, it has recently taken over the dairy wing of the Reliance Retail.

“Essentially, the village mall concept appears to be meant for helping these business groups to expand their activity in the entire state at the cost of FP shops and local retail markets,” Reddy said.

Former MP and CPI (M) leader P Madhu said the village malls will completely destroy the PDS and corporatise the rural markets.

“In the long run, they will also monopolise the village markets and convert the FP dealers into their workers,” he alleged.