Saturday, July 31, 2021

Who needs to be blamed for the Food Wastage during the end of UPA II

During the end of the UPA II, there was lot of food wastage in the godowns of the Indian Government. Who needs to be blamed for that? 

I don't blame Manmohan Singh's Government.

Manmohan Singh's Government regularly increased Minimum Support Price (MSP) for the food items. Many times, it was more than the Market Price. So, the farmers sold everything to the Government rather than the private entities. 

Towards the end of the tenure of UPA II, Government had more food stock and almost no space to put it in its godowns. What should the Government have done at that time?

Any good businessman would sell the excess stock at the market rate irrespective of the price at which the stock was bought. i.e., Even if they had bought the stock at very high price, they would sell it for very less price in that situation.

One can see the same situation, whenever anyone goes to a wholesale market, and finds a person who has very less stock and wants to move to his hometown soon, or on the last day of any exhibition where the vendors come from different states. In that situation, for the vendor taking the stock back to his hometown is going to cost him a lot. Instead, selling it for any price (even if it is far less than the purchase price) may be beneficial for them. 

If the Government does the same thing, where it sells the food stock at market price (less than the purchase price), what would happen? 

CAG comes up with a report of XXX crores of Loss to the exchequer due to that.

Opposition stalls the Parliament from functioning.

Media abuses the Government left and right for the huge loss.

There would be many cases in the courts against many people in the Government for the loss, and those people would have to face the cases for many years.

What is the best course of action for the person who is in the power?

Not selling the food stock is the best option. 

If the rats eat food in some godown, it is highly difficult to put a case against a Minister or a Secretary in the Ministry. But, if the Minister or the Secretary signs on a bill to sell at market price, it is very easy to put a case against them.

So, the Government chose the best option for them.

Chidambaram said, he wanted to sell the food stock at the market price. But, he did not get any support from the bureaucrats. And, finally, lot of food got wasted. 

Unless People, Media, Opposition and other Government agencies are ready to realize that, sometimes, realizing a loss is good for the country, these things are bound to happen. 

Saturday, July 24, 2021

Who Should Get Credit for Economic Reforms? Manmohan Singh or P.V.Narasimha Rao

Who Should Get Credit for the Economic Reforms? Is it Manmohan Singh or P.V.Narasimha Rao?

When Chandrasekhar became P.M., he realized the economic situation, and tried to get a good economist. He asked I.G.Patel to take up the post of the Finance Minister. But, he rejected.

Later he got, Yashwant Sinha, who wrote a great reforming budget (almost on the lines of Manmohan Singh). But, few days before the budget, Rajiv Gandhi asked Chandrasekar to present only Vote on Account Budget, and not full fledged budget. And, that budget never saw the light of the day.

Even if it was not Yashwant Sinha, there was Subramanian Swamy in Chandrasekhar's Cabinet, who was for the economic Reforms.

Eventhough, Chandrasekhar, Yashwant Sinha and Subramanian Swamy were ready to reform, the supporter Rajiv Gandhi was not ready.

After P.V.Narasimha Rao became Prime Minister, it is widely believed that, he offered the post of the Finance Minister first to I.G.Patel, who rejected it.

Later it was offered to Manmohan Singh and everyone calls that as the Masterstroke, and Manmohan Singh alone changed the course of the country.

The dismantling of elimination of the license raj was not part of the Ministry of Finance. But, it was part of the Ministry of Industry. Who was the Cabinet Minister of Industry? It was P.V.Narasimha Rao himself.

Another famous economist P.Chidambaram was a commerce minister during the first year of P.V., who had done significant contribution in the economic reforms.

On the other hand, Manmohan Singh has been working for a long long time in the Government of India. He worked under Indira Gandhi, Rajiv Gandhi and even with Chandrasekhar. Why there was no reform during that much long period? How come the significant reform happened within the first two months of P.V.Narasimha Rao's tenure as the Prime Minister?

P.V.Narasimha Rao had many options open at every level. If Manmohan Singh had rejected the post of the Finance Minister, he could have brought somebody else to reform the economy.

But, if there were no P.V.Narasimha Rao, there would not have been any economic reforms at that time.

Saturday, July 17, 2021

Khaidi No. 150 - Who are Corporate People?

Who are corporate people?

The people who take our wealth for little money and sell it back to us in dollars. Once, it was Britishers and now these corporate people.

This is told by Chiranjeevi in the movie Khaidi No.150.

I never expected such a stupid definition by Chiranjeevi. If he is expecting some Corporate Responsibility, he should have some Social Responsibility to not mislead people. 

Saturday, July 10, 2021

Montek Singh Ahluwalia on Punjab's Policies on Agriculture

Some policies had become too 'baked in' to change. I recall pointing out to CM Badal that Punjab's policy of giving free power for agriculture (which he had introduced many years earlier) was having a very damaging effect, leading to excessive extraction of groundwater. This meant a steady decline in the water table and deterioration in water quality because of chemical and heavy metal content, endangering both soil fertility and human health. He agreed with the logic of my argument but said the policy had persisted for so long that it was now impossible to change! In my concluding remarks to the Punjab delegation, I read out a quote from Machiavelli:

At the beginning, a disease is easy to cure but difficult to diagnose: but as time passes, not having been treated or recognized at the outset, it becomes easy to diagnose but difficult to cure. The same thing occurs in affairs of state. By recognizing from afar the diseases that are spreading in the state (which is a gift given only to a prudent ruler) they can be cured quickly. But when they are not recognized and left to grow to the extent that everyone recognizes them, there is no longer any cure.

Courtesy: Backstage: The Story Behind India's High Growth Years by Montek Singh Ahluwalia

Saturday, July 03, 2021

Montek Singh Ahluwalia on Agriculture

 Agriculture was a sector where states could take several initiatives. They could amend the state APMC Act to allow private markets to emerge to compete with government-run 'mandis'. Corporate buyers could be allowed to pick up the produce directly from the farmers, thus giving farmers better prices, especially for perishable crops. They could liberalize tenancy laws that made leasing illegal in many states. Holders of small parcels of land, which were unviable to cultivate as separate farms, could then lease them out to others. The agriculture extension system could be revived to provide a powerful means of bringing the latest technology to farmers to improve yields and increase farm income.

Courtesy: Backstage: The Story Behind India's High Growth Years by Montek Singh Ahulwalia