Tuesday, May 17, 2016

Modi goes into full subsidy mode :Wants us to remain a nation of farmers





At the risk of sounding like a  broken record Sabhlok on Modi who seems to have some odd personal vendetta against the PM, in this case he is proven right. For long subsidized crops at fixed prices were the bane of Indian farming which led to stagnation of small farmers and large farmers corruptly colluding with the central government where they will find a ready buyer and thwart competition from foreign markets regardless.U.S pretty much has the same story

Farm Subsidies Put India in a Bind (Wall Street Journal story which I wont link for reasons given in comments below)

“The market support…encourages farmers to produce much more of the subsidized commodities than they would have otherwise, exacerbating the global glut.”

In other words subsidized crops led to over supply which in turn led to low prices and this put a farmer in an uncomfortable quandry. What is the solution, well subsidize them some more of course as per Modi thus perpetuating poverty for the small farmer. The large zamindars can take a hit and recover.

“India guarantees minimum prices for certain crucial crops to protect its large population of poor farmers. When prices plunge, it has to buy more. It usually sells the commodities it collects at a loss—some to India’s needy and some on global markets. Some of the stockpile just rots in government warehouses.”

 Be it BJP, Congress , AAP or whichever character is in charge, our romanticized approach to agricultural leads to many wrong headed decisions. And oh god forbid the Indian consumer be exposed to crops from abroad! Cant let that, we have to protect our farmers, no matter what! Perhaps if farming was unprofitable for some folks, then they shouldnt be farming. At what point will the Indian government realize this?

I am reminded of some lunkheaded minister who was aghast the economic liberalization introduced by PM Rao may expose the Indian populace to that very agent of Satan- washing machines! Why , howled the minister, think of all the maid servants who will be unemployed. To which PVNR responded as he only he could "if we think like that, we would remain a nation of maidservants"
  

Similarly in his dimwitted RSS mindset wants us to remain a nation of farmers. But why single out the BJP , pretty all politicians suffer from this primitive mindset no matter how educated. The notion of the noble farmer as the backbone of the Indian economy is a hard one to displace.

To all these naysayers out there - I ask you what percentage of say U.S is involved in farming - a mere 5%! And yes they are self sufficient actually , thank you very much.

In the meantime......

“Government officials say they have no plans to reduce the subsidies….(India) even threatened to scuttle an important World Trade Organization agreement in 2014 unless it was given a guarantee that it could continue its subsidy and stockpiling programs. ‘Subsidies are meant to encourage productivity and better farming practices,’ said Sudhir Singh, an official at India’s agriculture ministry. ‘We are committed to our social-welfare programs.’”

Operation is successful- Patient is dead. That is the Indian government's mindset towards the economy.

17 comments:

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    1. Adam Smith is of course the obvious start. But his book Wealth of Nations can be quite dense. For a humourous and incisive take which also gives a readable condensed version of sorts, check out PJ O Rourke epymomous book.

      There is not much to agricultural economics except by observing the disastrous attempts of forced and coopted farming on collectivized large farms during the Stalin era. Interestingly the early Pilgrims in America embarked on a similar socialist project which failed and this gave rise to the small farms.


      Another book which will give you a clear picture is Thomas Sowell's Basic Economics. I recommend that highly. On the flip side(more leftist and statist approach) you may also check Thomas Picketty ,Joseph Stiglitz and Paul Krugman. Where these two meet is Robert Schiller sort of... Interestingly he along with Sowell predicted the 2008 crash. Sowell and other conservative economists did say government interevention in housing was a bad idea and its securitization even worse but Schiller was quite specific about the effect and timings. Though Forbes disagrees

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  2. That was a nightmare formatting effort. The article was behind a paywall at WSJ so I just copied and pasted a couple of relevant paras but not only did it come out with strange backgrounds and almost impossible to italicize and bold fonts but also I couldnt even delete the entire text(after copying to Word) by a simple select all and delete. I had to manually delete all 520 words. Only because WSJ doesnt people copying stuff that they PAID for.

    I refuse to link the article and and give them more traffic. Yes yes I know its equivalent of a kid selling lemonade not giving pedestrians directions to the nearest Walmart. But hey -death by a thousand cuts and all that...

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    1. It might help if you copy the text first into Notepad and then from Notepad to Word.

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  3. u have god gifted writing and insight YSV :) U are right in this whole topic,agriculture is profitable only when it is kept limited to a small segment of population.Precisely India today is mainly poor because 58% indians depend on agri which generates just around 15% of gdp.Rather if the % dependent of agri could be reduced to somewhere around 10% or like that,and the rest went into industries or other economic activities,not only our gdp would gallop ahead,but even the farmers would be richer by nearly 5 to 6 times.but even with all this ,I still cant blame Modi fully,INC saved its ass from getting fired in 2009 solely by the doleout of agri loan waiver given to farmers(70000 crore Rs if i recall correctly).So Modi ,by hook or crook,would need to give a similar doleout,whether one time or through subsidies,to keep this votebank intact.in the meantime,Modi can device proper plans to bring in a major shift of agri population to industrial sector,but that will have to spanned across a decade or more even.Modi shouldnt give any major shock to agri population as of now.It is a fact that farmers are very much attached to the idea of their land being like their own mothers,I often visit rural areas,and some of my close relatives are farmers,I have seen their attachment to their farms and their ways of life,whether they are earning huge bucks from it or not :)

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  4. @INiyavel

    I must acknowledge the fact that u were right on EURO 2016 predictions,Portugal went on to win the cup :) U shld start a psychic business now,because very few had guessed Portugal victory in the early part of the tournament like u :) But having said that ,the fact still remains,this portugal side is the worst performing side to win a Euro.2004 greece was far better than this portugal of 2016.ALso portugal brought back to limelight a long lost concept of defensive football.In the past teams used to work hard on defence,nowadays they focus aggressively on attack only and scoring.But portugal brought the lost case of defensive soccer back.

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    1. This comment has been removed by the author.

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    2. Happy Krishna Janmashtami to all of you!

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  6. captain is going to quit blogging , congratulation YSV, ITS BEACUSE OF LODURAMS AND CHOOTIYANANDS LIKE YOU JAM AND UR OTHER MINIONS, CAPTIAN HAS FINALLY DECIDED TO QUIT . U MUST BE MIGHTY PROUD OF UR ACHIEVEMENT GO AND JUMP IN TO CESSPOOL WITH UR PALS AND CELEBRATE UR VICTORY

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    1. remember now will face black clash from captains followers.

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    2. Well sir if this is true. It is indeed good news. I wont be so arrogant as to take the credit. As for you "amith mishra" you seem like a young fellow with your future ahead of you- why throw it away following cranks and frauds who know how to push your emotional buttons. So this is not just good news for me but for you as well.I hope all the best for you and recommend that not to avoid such blogs (though that would be best) but to be more open to other points of view.
      I wish you and yours the best.
      Regards

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    3. well ysv I will only apologize for harsh language ,but u have to admit
      there was something about that blogger that caught many peoples attention
      some detractors like ur self wrote a entire THESIS trying to expose vadkayail,

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    4. as more me personally I learned many things but I wont b crazy to blame everything evil for Rothschild ,

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    5. Amith it is the first time probably I saw a comment of urs that makes some sense,even though its still in vadakayils support :) since u have responded with some sense,let me respong equally.Whatever YSV has written about vadakayil is only to expose the latter's lies and hypocrisy,based on facts.vadakayil is just an online version of certain fraud gurus who demand complete authority over subjects.and add to that,the sheer amount of false facts he dishes out on his blog,will alter the thinking process of vulnerable minds.not all of what he says is wrong,but most of it is his imagination.YSV challenged only that.U need to understand that a person who extensively dished theories of Jesus having namboothiri wife,now retracts to say jesus didnt even exist,is not someone u should follow,assuming u are young,and somewhat vulnerable to false projections.

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  7. @YSV

    Also another question,I recall u had made an observation almost 2 years back,that free economy is unduely bashed for great depression of usa in 1930s.but as far as i can recall,u didnt elaborate on that later on,our discussions shifted to something else.would u mind putting ur views on the same now?To me this proposition of urs seemed pretty interesting regarding the great depression.

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