Farm Subsidies

[ratananmol]

It is impossible to make claims for perfect or total solutions for the problems we shall discuss.I will try to discuss how policymakers think and only reflect as much as i know.(My current interests are Information Economics,Corruption etc rather than Indian economy, but let me give my shot).
Q.whether i continue subsidies or not,isgoing to settled by my information related to its performance? To whom it was targetted;how it was expected to improve welfare and who ended up enjoying it?
Ans.The subsidy policy was the old nehruvain scheme of things designed to prevent more poverty, improve farm incomes and strengthen farm output because in 60s india was on the verge of big food shortage disasters.It works in the following way-by reducing input costs it improves the usage of those inputs which were a critical component of the green revolution experiment to raise output
While all objectives were not fulfilled it made modest gains on other counts.
The rural urban migration turned out to be more of a time driven phenomenon and i would say a major section of peasantry has graduated from being poor to earn rental incomes,especially around delhi,is visibly well off.So now the "farmer is poor paradigm"is not as true as before.
But the subsidy story became an impeccable tool of neo rich "farmers" and farm leaders to strengthen their political interests.
Rural india is in need of major infrastructural improvements and the subsidy money could be used to do just that provided there are minimal leakages from corruption and proper allocation.The farm leaders should focus their attention on the decisions related to these funds that will be saved from withdrawal of subsidies rather than singing old tunes.(unfortunately our farm leaders do not htink like this coz most of them are not experts)
It is interesting how the subsidy has been siphoned by an industrialist-manufacturer of "Anchor"electrical appliances.Fertiliser inputs are used in making switches and other stuff which he rolls out at below cost prices because of the fertilizer subsidy he gets.So it is not the farmer who is benefitting out of this.
Instead of subsidies,this govt believes,we need more education,electricity and roads in rural india and hence the decision,i think.
(By the way the so called farm leaders we have now indelhi i know have never seem farms; having sold their land and secured rental incomes their kith and kin are a growing law and order problem; they are ones who howl the most on farm issues.No matter what are our characters we need to be vigilant and gather useful knowledge rather than follow rhetoric).
Read the current economic survey where the planners may have laid out their rationale of their plans...

[devdahiya]

YOU ARE LOOKING SENSIBLE AND A BETTER HUMAN BEING BY ADOPTING A POSITIVE ATTITUDE TOWARDS LIFE, EVEN IF IT IS ON THE ADVISE OF A WORTHY MEMBER. DERR AAYE DURUST AAYE.


IT IS A VALUABLE THREAD AND ON FURTHER DELIBERATION WILL BECOME MORE USEFUL TO THE COMMUNITY. ALL THE BEST!


Regards

[ratananmol]

Save the praise for a later day.Your strike rate is already very high.In case our batting order falls in one dayers i would like to recommend you to national selectors but instead of a bat you will need a mouse,computer and net access and your intro will read 9 posts per day in bold letters.
Luv
AR.

[devdahiya]

Save the praise for a later day.Your strike rate is already very high.In case our batting order falls in one dayers i would like to recommend you to national selectors but instead of a bat you will need a mouse,computer and net access and your intro will read 9 posts per day in bold letters.
Luv
AR.

thanx anyway

[rkumar]

Dear Anmol,

Thanks for starting this most informative thread. As you would appreciate, farmers in developed countries get much higher subsidies than those in India. When most of the income and expenditure of a farmer in India can be controlled by Government, it is not the case with industrial products. In case of farmers, the government controls the prices of inputs and outputs and often intervenes through imports of food grains whenever prices start going up. At the end of the day the poor farmer does not get even two square meals. Ever reducing land holdings are making it impossible for any farmers to invest the type of money required these days into agriculture. Water levels are going down rapidly and most farmers are unable to cop up with the investments. Canals have almost gone dry.
In my view of the need of hour is the integrated land development at national level. Land development must include all aspects of land usage like roads, canals, industries, airports, cantonments, railway lines, schools and colleges. Mother of all problems and disputes is becoming the water. There is only one source of water God has created and that’s the rainwater which charges the ground water and then flows through the rivers. In toady’s economics water is turning out to be as costly as petrol. It would the stupidity of highest order for any government to spend billions on oil exploration on one hand and letting this precious water flow into the ocean during rainy seasons.

I agree with you on infrastructure development. However, it should be taken up in its entirety at national level and not in piecemeal. I would name it ''Integrated Infrastructure Development" which encompasses every possible type of infrastructure and the land required for it.

[ramksehrawat]

Ostensibly the subsidies are given to the poor, but in reality the maximum benefit is derived by the rich. Subsidised electricity to big factories, like Escort, Atlas, Bharat steel, and urban households is beyond my comprehension. I am of the view that all subsidies should be done away with except on diesel, fertilizers, seeds etc. to help farmers. Here too, some mechanism (say ID cards) should be introduced to identify that the subsidy reaches the deserving people. For example, kerosene is highly subsidised for the sake of poor but in practice 75% of it is used by rich in running their generators. Hence, the subsidy on this item should be ended and only people with BPL cards be given kerosene at subsidised rates.

[ratananmol]

Let us wait for a few more responses before i try to bring in some numbers or respond.

[stokas]

Ostensibly the subsidies are given to the poor, but in reality the maximum benefit is derived by the rich. Subsidised electricity to big factories, like Escort, Atlas, Bharat steel, and urban households is beyond my comprehension. I am of the view that all subsidies should be done away with except on diesel, fertilizers, seeds etc. to help farmers. Here too, some mechanism (say ID cards) should be introduced to identify that the subsidy reaches the deserving people. For example, kerosene is highly subsidised for the sake of poor but in practice 75% of it is used by rich in running their generators. Hence, the subsidy on this item should be ended and only people with BPL cards be given kerosene at subsidised rates.

RK, you are putting it right. Only the bigger players make full use of 'these' subsidies. In India, plans are being made, but not rightly implemented/promoted.
If 'these' subsidies reach at root levels, then I am assured that, within a short period of time, there would be no word like 'BPL'.
Politicians and Sarkari Babu's have nothing to do with this, as they are busy in securing their 'Raj Gaddis', they just 'announce' and 'advertise' these schemes, but don't even take a small look after it is announced.

Thanks to Anmol and all for discussing this 'serious' point.

Shailendra Tokas

____________________
-Where everything is bad, it must be good to know the worst.