07/06/08

who pays for your food security?

murli deora says the country's oil companies will lose rs.2,25,000 crores in revenues if they continue to sell petrol & diesel at last week's prices. hence the hike. to save the oil companies. but there is a lot of merit in the argument of the left: the government doesn't need to raise the prices, it just needs to reduce the duties and taxes. one might think that the government and the left have different objectives: the government wishes to save the oil companies while the left is concerned about the consumer. one's wrong.

both of them wish to save those who work in the oil companies and those who buy their products: the brahminized classes. in real terms, neither is exploited because losses do not mean layoffs for the first category of the brahminized classes and higher costs do not mean lower subsidies for the consuming category. a majority of the motorized vehicle owners in the country work in the organized sector or are self-employed professionals or are businessmen selling goods and services to the other two classes of people or are those fortunate farmers whose efficiency is rewarded by the government through, for instance, loans and loan waivers. all those classes have the freedom to raise the prices of the goods and services they produce and sell: so, they can take the extra cost. so, who actually pays for their oil security? those who do not have the freedom to raise the prices of goods and services they sell, but still have to pay extra for the goods and services sold by the first classes of people (the brahminized classes). who pays for your oil security? the same folks who pay for your food security. like maize farmers, for instance.

the world's open only for iitians etc

the united states has diverted around 30 million tonnes of its maize/corn production this year to ethanol production. that's around 5% of the world maize output, and a much larger percentage of the tradeable maize surpluses in the world. the world needs those 30 million tonnes to feed millions of non-americans and also americans (each of whom would be paying $47 extra because of the increase in corn prices): who'll step in and produce and supply those 30 million tonnes?

indian farmers can fill a significant portion of that shortfall in the short term of 1-2 years and, perhaps, more than half of the gap in 4-5 years. but the indian government won't allow them to do it.

if prices go up, the government imposes a ban on exports thereby controlling the maize farmer's returns. this is what happened in april this year.

if the domestic market expands because of the entry of new, large users, the government threatens controls on sale of maize to these new users. this happened, again, in april this year. and again, the maize farmer paid the price for your food security.

who's the maize farmer?

you should recognize him from this recent post. maize is mostly grown in the arid, rainfed regions of india. which means large parts of central and peninsular india: the regions with the most inter-state and intra-state migrations. yes, places like mahbubnagar (check this page). though maize is the third most widely grown cereal in the country, it doesn't rate the same attention from the government as wheat and rice. the fci is not so interested in procuring the grain or storing it for distribution via the pds. less than 20% of maize farmers have access to regular irrigation- no state government is overly concerned about improving that situation. but the indian state does expect a heavy price from the mostly lower caste maize farmer for being a citizen of this country.

it expects him to pay a price that it has never asked any graduate from the iits or iims or the innumerable less well-known engineering and medical colleges and universities in the country to pay: to sell his labour and his future at a certain price and place, to certain parties. no questions asked.

i don't really know how to end this post: the ironies are too overwhelmingly large and i don't think they need to be pointed out again.

3 comments:

Random African said...

one might think that the government and the left have different objectives: the government wishes to save the oil companies while the left is concerned about the consumer.


You forgot one effect of reducing duties and taxes: a loss for the government itself.


both of them wish to save those who work in the oil companies and those who buy their products: the brahminized classes. a majority of the motorized vehicle owners in the country work in the organized sector or are self-employed professionals or are businessmen selling goods and services to the other two classes of people or are those fortunate farmers whose efficiency is rewarded by the government through, for instance, loans and loan waivers. all those classes have the freedom to raise the prices of the goods and services they produce and sell: so, they can take the extra cost.


The problem is that nobody will take the extra-cost instead that cost will be passed to final consumers. And while final consumers includes brahminized class private vahicules owners, I bet the range of people who will be affected through higher public transport prices or higher cost for transport of food and other products is a bit larger.

But then again, that may be a way to increase localized consumption (mostly of agricultural products).

kuffir said...

'You forgot one effect of reducing duties and taxes: a loss for the government itself.'

i remember your comment from my post on the size of socialist india's central cabinet- welcome, back. :)facts weren't on your side then.. they aren't now.

tax rates may have been reduced but the revenues would actually increase- this has happened earlier too. petrol/diesel consumption in india has been on a steady rise for the last ten years or so and the increase in volumes will more than compensate for the reduction in duties. all state govts have in the past/and shall now benefit from unexpected increase in revenues.

'And while final consumers includes brahminized class private vahicules owners, I bet the range of people who will be affected through higher public transport prices or higher cost for transport of food and other products is a bit larger.'

that's who i meant when i said 'those who do not have the freedom to raise the prices of goods and services they sell, but still have to pay extra for the goods and services sold by the first classes of people (the brahminized classes).'

Random African said...

I don't see which facts weren't on my side then. I simply pointed out that the number of ministries doesn't really prove that a country is more or less socialist or that its government is more or less big.
Other measures like % of public servants or public service payroll/GDP or government expendure/GDP have more relevance.

Which doesn't mean I had any objections to what you were saying either.

tax rates may have been reduced but the revenues would actually increase- this has happened earlier too. petrol/diesel consumption in india has been on a steady rise for the last ten years or so and the increase in volumes will more than compensate for the reduction in duties. all state govts have in the past/and shall now benefit from unexpected increase in revenues.

Well, since I don't know the current taxation levels, I can only take your word from it.
It's still a bit optimistic though and ignores the rising expendures associated with the rise in oil consumption (roads etc..).

that's who i meant when i said 'those who do not have the freedom to raise the prices of goods and services they sell, but still have to pay extra for the goods and services sold by the first classes of people (the brahminized classes).'


Oh. My apologies then.

 
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