In 1984, Arthur Hailey wrote a novel called Strong Medicine, which described the American pharmaceutical industry. Two-thirds through the book, the main protagonist, along with her family, goes on a round-the-world trip, and over a page or two describes her experiences and impressions of the different places. These descriptions obviously mirror Hailey's own impressions, so the Middle East is described as oil rich, Greece is described as idyllic, and India is described as "the giant subcontinent, the land of savage contrasts, pictures of wealth and beauty contrasted with scenes of appalling filth and degradation."

22 years on, that probably remains the most apt description of the sub continent ever written.

In 2005, India had more billionaires than anywhere else in Asia, and yet at the same time, 1 in 5 children did not have access to clean drinking water. The economy grew at 8% during the year, yet 380 million Indians continue to live on less than a dollar per day.

Since India opened up in 1991, the GDP has doubled to $745 billion, and per capita income has touched $728. Today, the Indian economy is poised on the threshold of a spectacular take-off. Yet, despite this, the issues of taking the benefits of growth out into the hinterlands, to create mass employment, and to create a number of international standard second-tier cities, remain significant and pressing challenges.

Organized retailing is India's best opportunity in decades to aggressively tackle these problems, and really broad-base India's development.

India's economic boom over the past 15 years or so has been restricted to a few cities across the country, driven mainly by IT, services and, to a limited extent, manufacturing. Three factors have been driving this - the talent and expertise within the country in these sectors, the global demand for these from India, and the relative lack of regulation in these sunrise industries.

Put differently: in these pockets, India took rapid strides towards a market economy, but in the much larger, rural sections of India, the presence -- and benefits -- of a market economy are non-existent.

The key towards creating a market economy in rural India lies in creating a demand for the products of rural India. 28,000 crores (approximately US $7 billion) worth of fruit and vegetable produce from rural India is wasted every year. This is largely on account of a lack of cold infrastructure in the country and the inability of the farmer to get the product to the market place in time, and get remunerative prices for their products.

Allowing investment in retail would address this problem to a great measure and has the potential to substantially change the face of rural India. Major international retailers such as Wal-Mart, Metro and Carrefour derive a large portion of their sales from agricultural value-added products such as jams, sauces, and packaged soups. In the case of Wal-Mart, the share of such products is especially high, with estimates ranging from 40% to 60%. If retailers can enter into contracts with farmers for sourcing agricultural produce, the Indian farmer, the bulk of whose output is currently wasted, would be assured of a buyer for his product at stable prices. He would not be subjected to the vagaries of seasonality and the volatility of market prices as he is at present. He would also be able to obtain access to cold infrastructure, thereby reducing wastage through better storage facilities.

In addition, given India's large industrial manufacturing base, and high levels of technology and manufacturing, the value-addition industry will be based, for the most part, out of India. The ancillary benefits for India would be tremendous.

Growth in the retail sector would create wealth in Rural India, thereby broad-basing India's growth and creating huge job opportunities in our villages. IT and services can only take India up to a point, and if India is to be a prosperous society, a wealthy hinterland is an absolute must.

But what happens to the Indian consumer? If a Wal-Mart feels that there is more to be gained from exporting the value-added products outside, India could be faced with a situation where its own people are deprived of cheap, high-quality products. Considering the huge wastage at present, this is not a justifiable fear.

Moreover, the Indian middle class, which now matches international standards in terms of consumption levels, is already at 400 million, and is growing by 40 million every year. To put that in perspective, the current size of the middle class equals the combined population of the United States and Japan, and yearly addition of 40 million equals the population of Argentina. Thus, for most retailers, India would continue to be the primary market.

Organized retailing can lead to lower prices, greater availability of goods, and trigger a massive cycle of consumption and creation. India's biggest strength lies in the fact that the bulk of our markets are domestic, and consumption from India alone can drive rural growth. A facilitator is needed to connect the buying power of urban India with the selling power of rural India, and organized retail could be the facilitator.

Worldwide, organized retailing is big business. Four out of ten of America's richest people are from the Wal-Mart family. Wal-Mart is as much a symbol of the American landscape as the chai-walla and the sabzi wala dots are of the Indian landscape. Organized retailing can do for India what electronics did for Japan, low-cost manufacturing did (or claims to have done) for China, and what gold and oil did for the Middle East. It can help the weaker and poorer sections of society leapfrog years of conventional development, and create large amounts of wealth.

Challenges remain but we as Indians must harness the power of free trade.