how to save indian agriculture: some freely traded ideas

How did Malawi turn from a nation that had 1,500 starvation deaths in 2002 to a nation that in 2007 is exporting 400,000 tonnes of maize for emergency operations in neighbouring Zimbabwe?

bhupinder has the answer:

Malawi said goodbye to the ‘wisdom’ of free market economy, and re- introduced subsidies for its farmers.

the implication, of course, is that this would save indian agriculture too. dweep has an equally convincing solution: cut indian subsidies even if the americans and the europeans don't reduce their own farm support budgets.

Farm subsidies take attention away from the very serious failure of the government, through its monopoly on procurement and intervention in distribution, to provide a supply chain and market that work. This, in fact, explains why the Indian government is so keen to fight for farm subsidy cuts - because it involves little effort to keep a major vote bank happy. Actually doing something about the pitiable state of Indian agriculture is a far less enviable proposition.

malawi is a small african country which supports a population slightly less than mumbai's. and america spends around 57,000 dollars a year on each of its 7 lakh farmers while india spends less than a 100 dollars a year on subsidising agricultural inputs for each of more than 50 million farmers in the country (as i pointed out in this comment on this post which tried to justify dweep's earlier argument).

this picture is worth a million shiv sainiks

organized sector employment in bombay in 1961 was 8,82,000. it rose to 11,82,000 by 1991. that's a statistic- now think of the abolition of the privy purses, the nationalization of banks, the green revolution, the land ceiling legislations, the five-point, twenty-point programmes to sweep away garibi. think of all the measures, schemes, policies and emergencies that were deemed necessary for ushering in socialism and making india secure for its workers. and its poor. in mumbai, india's economic capital, all those measures yielded an additional, secure, 3 lakh jobs over a thirty year period. while the population of the city nearly tripled.

now look at the chart at the beginning of this post- that picture is worth a million shiv sainiks (because it was in the sixties that the congress *first started sleeping around with the shiv sena and, simultaneously, *professing and practising socialism more vigorously than ever before). what do we see? let me draw the conclusions for you: since the sixties, most of mumbai's workforce has been progressively pushed into the insecure informal sector while most of its citizenry has been driven into an increasingly insecure sena raj.

chosen people - india and the camel (2)

(this is the second part of the post i'd published yesterday.)

there is no place for stupid people in delhi. delhi recorded a literacy rate of 82% in 2001- bihar remained content with 48%, madhya pradesh- 64%, uttar pradesh- 57%, jharkhand-54%, and rajasthan- 61%. the delhi government's website (page 4) displays all those figures..perhaps, to show us how smarter delhi is? but it ended up telling me the people of u.p., bihar, jharkhand etc., are somehow paying the price for delhi's education. all the states are paying for it. i am convinced around one third of the higher education budget (you think it's less? well, i plan to probe this more.. and discuss it in later posts) of the central government goes into maintaining various universities and other institutions of learning and research that dot delhi (how many central universities would you find in madhya pradesh, rajasthan, bihar, jharkhand, chattisgarh?)- this goes to ensure that all stupid people who enter delhi get a decent education. but the overwhelming majority of those who flock to delhi are the smartest people from the neighbouring states, and to a lesser extent from other parts of the country. what'd all these people do? are there enough jobs for all of them? there is enough work for all of them. the million or two million steady job-holders, and their families constitute a huge market (for all kinds of goods and all kinds of services). not only because of their disposable incomes but also (mostly) because of the undisclosable part of their incomes.

a market guaranteed by the government

let's look at the figures: the delhi state government website (page 11) says there were around 6.24 lakh (central government + government of delhi + quasi government + local bodies) employees in the state in 2001. that's the organized public sector. and that's a grossly underestimated figure, in my view. look at what this census of central government employees (page 11) says: the number of central government employees in delhi was 2,67,000 in 2001. that's around 25% more than the figure quoted by the delhi government- who's right? no one, actually. because no one seems to know the actual figure. do you know the actual number of people who work for the central government? i've seen estimates ranging from 31 lakhs to 40 lakhs. the ministry of statistics and programme implementation, which does most of these kind of surveys and censuses, offers a figure of around 37 lakhs. do you get the picture? no one, not even the top most elected government officials like the prime minister at the central level or the chief minister of any given state at any point of time can give you, forget the precise, even a rough estimate (within a 5% margin of acceptable error) of how many people actually work for his/her government!

so we can safely assume the actual figures are around 25% higher. let's settle for a total figure of, say, 8 lakhs. even this figure won't give you the complete story. because it does not account for employment in the public sector banks, financial institutions etc., and also because the number of defence, para-military and other kinds of security personnel stationed in delhi are also not included. and we need to account for the practice of inadequate disclosure that most government and quasi-government organizations often indulge in to avoid problems like providing for reservations etc., the final figure could be close to a million?

it's more than a million

this is not a number that expanded over the years- in fact the number of regular job-holders, paid for by the government (centre or the state), has actually decreased a little over the last fifteen years or so.the delhi government website says 2.17 lakh people were employed in the private organized sector in 2001- so the total size, the number i was working with, of the market has grown to around 1.3 million families. this also means that the formal or organized sector employs more people in delhi than in mumbai. or kolkata. this is not a number fuelled by the expansion of the city- it is the number that has fuelled the expansion of the city. here, i'd like to quote from an india today article that describes the dizzy pace at which delhi's economy is growing and explains, much more succinctly, why delhi has grown so fast over the last three decades:

There is something more basic behind business magnetic charm for Delhi. It's the nation's most affluent market.An average family in the capital earns Rs 21,830 a year against the national average of Rs 9,321. This has much to do with the presence of 6.5 lakh government employees who were granted generous salary revisions.

well, the magazine has got the numbers slightly wrong (6.5 lakhs) but its analysis is right. it's the government that drove/drives the growth in delhi. a community of more than a million families with regular incomes within a small, defined area- that's a fantasy come true for most marketers. especially in a country marked by vast stretches of poverty and low purchasing power like india. measured in terms of government supported regular employment, delhi, is far luckier than hyderabad, bangalore and chennai put together.

the per capita income in delhi is 2.5 times the national average. it scores higher than the national average on all human development indicators. it has the best infrastructure among all cities in the country- an ernst & young report concluded delhi is the 'best place to reside in the country' after evaluating 48 cities in india on 57 parameters. delhi is different from india. the usual explanation for a city's growth anywhere would be- its citizens worked hard, saved a lot and invested a lot more and wisely, and the governance was extraordinarily good, so it grew. does this explain delhi?

does it explain how a city mostly peopled by wage-earning babus has managed to father the largest (or the second largest) brood of rich people in the country?

[more on this later.]

india and the camel

you've heard of the arab and the camel. let's look at india and delhi now. let me quote a short paragraph from this paper to illustrate the point i'm going to make:

...for example, one of our findings is that while the central government spends (in 2005-06) rs.4.07 on hrd-nh per person in orissa, it spends rs.177.12 in delhi, rs.105.42 in uttaranchal, rs.105 in arunachal pradesh, rs.77.7 in assam, rs.33.78 in himachal pradesh, rs.28.10 in west bengal, rs.25.12 in karnataka, rs.17.29 in tamil nadu, rs.17.09 in maharashtra, rs.17.08 in u.p., rs.16.2 in jharkhand, rs.16.05 in andhra, rs.14.5 in j & k....

i haven't quoted the full paragraph because i think you've already got the point. that was the spending on national highways- only one indicator of many barely hidden signs that delhi is steadily pushing india out of the tent. from a capital of a union of states and a municipality it's been fast growing again into an imperial capital and a state-nation on its own. people, and more acutely, politicians, businessmen, mediapersons and the smartest sections of the middle classes in the states in the immediate neighbourhood understand that. who from the neighbouring states doesn't want to be in delhi? from charan singh to bahuguna to v.p.singh to n.d.tiwari to mulayam singh to mayawati- which chief minister from uttar pradesh hasn't expressed his/her desire to be the prime minister (sometimes, even before he/she became the chief minister)? bihar isn't any different and if the chief ministers and other ambitious politicians from the other states around delhi aren't so candid about expressing their 'right' (because that's what it ultimately seems to be: none of them seem to have any doubts about whether they deserve the post) it doesn't mean they don't nurse any such aspirations. and if the rulers do not wish to stay in their respective states a moment longer than necessary why should the ruled want to be in those states? especially, if they're smart?

a large portion of those employed by the central government, through its various ministries, the psus, the banks, the railways and the armed forces have planted themselves in delhi and even the threat of an imminent nuclear attack wouldn't convince them to leave, i think. that wouldn't be less than a million people (i'd agree if you say- two million, but i'll come to these figures later) hanging onto a million of the most prized jobs in the country. a million people who'd get the first chance to help themselves to the billions that the central government supposedly spends on the upkeep (after first paying for its own upkeep) of the country and to 'develop' it and to 'alleviate' poverty. if you were one among those lucky million, would you let the gravy train just roll by, onward to the boondocks- even after you've been paid enough for your needs? without stealing from it, or directing its course or in some way attempting to change its destination? you'd be stupid if you didn't do any of those things.

[this was growing into a very long post so i'm going to stop here and continue later].