Inflation and economic Development  

19/01/2015

It is important to create demand for goods and services before the products are made in India and services sector is established. How do we create demand? By putting money into the hands of as many people as possible. If we take various sectors of the economy, agriculture sector is the one where more than 50% (nearly 65%) of the people are engaged. If those in the agricultural sector are to have surplus money to purchase additionally produced goods and services, the prices for the agricultural products should be increased for farmers and the wages of agricultural labourers should be increased. This will mean:

  1. When prices of onions, tomatoes, rice, wheat etc go up, there should be no agitations against the price rise
  2. There should be no ban on exports of these items
  • There should be no permission for imports of these items
  1. There should appropriate storage facilities  to store surplus production and there is no distress selling
  2. Farmers should be employed full time i.e. at least for 8 hours a day. This will require farmers to take up allied work like dairy farming, poultry farming, goat and sheep rearing, honey  making, rope  making etc. or intensive farming like multiple crops, good irrigation, etc.

People not engaged in agricultural sector will suffer with increased prices. To remove their sufferings their wages should also be increased. Their wages otherwise  also will go up with large scale demand from farmers and farm workers for the manufactured goods leading to higher profits for factories which in turn will lead to higher wages.


Onion- price should be around Rs.30/kg

08/11/2013

Onion is cultivated on an area of 43 million hectares in the world. The production is about 86 million tonnes with an yield of about 20 tonnes/ha. India has the largest area of 1.1 million ha or over 25% of world acreage under onion. However, India’s contribution to world’s production is only about 16 million MT or about 18%. The yield in India is only about 15MT/ha against about 25MT/ha in China. Countries like Australia, Austria, Germany, Ireland, Netherlands, South Korea, Spain and USA have yields of over 50 MT/ha.

The production in India is low as the farmers do not get remunerative price. The consumer price of RS.50 or Rs.60/kg is not at all high. But unfortunately there is hue and cry from political parties, trade unions and the consumers against this price. People should be allowed to be used to this price.

India exports onions at about US$400 per MT or Rs.24 per kg. If the farmers get price of Rs.30 per Kg, there will be incentive for farmers to grow more and supply to the local and foreign markets. There is a demand for onions in USA, Brazil etc.


Promoting consumption of milk in India and other countries

10/07/2013

India is the largest producers of milk in the world with production of about 120 million tons (2011). The per capita production comes to only about 100kg per year. USA, the second largest producer of milk with a production of around 90 million tonnes has a per capita production of about 300 kgs while countries like Germany and France produce about 400 kg per head per year.

Milk is one of the few items in which India has higher per capita production than China whose per capita production is only about 30kg. India with a very large vegetarian population should increase per capita consumption considerably. However, with low purchasing power of people, India may become surplus in milk within a few years if the present rate of increase in production is maintained.

India and Pakistan are the major producers of buffalo milk. Production of goat milk is negligible in the world.

India needs to take steps to increase consumption of milk because of its nutritional value. There should be increased use of milk and milk products not only in sweets but also in other dishes. Use of milk and milk products should be promoted in countries like China and Vietnam to whom India could export. Once the Chinese and Vietnamese get used to sweets, there will be huge demand for milk and milk products.


India- Export of Technology

13/08/2011

Excerpts from “Simple Alternate Development Strategy”1997

India

“Import of technology can be avoided,if in addition to the correction of the universiy admission system. the Indian companies allot about 15-25% of their work force, for research and development. Manpower is much cheaper in India than in advanced countries. If an advanced country like Japan or Germany or USA can deploy 100 people for research and development in a particular area, India can afford to earmark 500 people or 1000 people or more for the same purpose. Then India can improve technology much faser than developed countries and also develop much higher and sophisticated technology and within 4-5 years the country will be in a position to export technology to foreign coutries. While developed countries like Sweden, denmark, Finland etc. with populations of less than 10 million can concentrate and specialise only in a few fields, India with a population of over 900 million, can specialise in almost all fields. India has the third largest reservoir of scientific and technological manpower. But unfortunately all are not employed. Even of the employed, not all are doing scientific and tehnical work. Most of the scientists, doctors and technocrats occupying very high positions in their respective fields do very little of their work but more of administrative work, (their aptitude, more for administrative work than to technical and scientific work, can be traced to the faulty admission system in professional courses…) which can be done by non-technical persons….It is really regrettable that with the third largest reservoir of scientific and technical personnel, India has not been able to produce even a single Nobel prize winner in science….. while many small countries in Europe can boast of several Nobel prize winners.

Small countires like Singapore and even medium sized countries like Malaysia, South Korea and Taiwan cannot afford to employ large enough number of people in research and developmt and, therefore have to import technology …..Again while in many countries,the colonial powers did not leave much of infrastructure for scientific and technical development, in India,the British have left large and well equipped establishments. At the time of independence, India had several univesities, scientific institutes like Geological
Survey of India,Meteorology Department, Council of Scientific and Industrial Research etc.The British established railways and telecommunication system in India within a few years of esablishment of the same in Europe. But this is not the case with several other countries. They did not leave such establishments in Singapore, Malaysia,Sri Lanka etc. In fact, some of the counries under the foreign rule, did not even have universities when they became independent. The British had even established several modern factories in India. All that India needed to do, after independence, was to improve upon and expand the existing institutes. Even now the task is only to improve and expand the existing establishments and not to start from the scratch. If done, India could become major exporter of sophisticated technology in almost every field.”


Onion and Cotton Prices and Government’s response

23/12/2010

Two-three years ago there was bumper crop of onion. Onion prices crashed and in spite of very good crop, the farmers could not make more money than in the previous years. The consumers had very good time. The government did not take any action to give incentives to producers to export onions to ensure that the local prices did not crash. Government kept quiet.

This year, due to heavy rains and other reasons the production has done down steeply. The prices in the local market increased and the farmers who had very poor crop had some satisfaction that the prices are high. But the government would not allow them to be happy. On the basis of consumers’ complaints against high prices, the government disallowed export of onion and allowed import of onions free of any restrictions and without duty. The prices will come down and the farmers would suffer as usual.

While the consumers have good time through out their life, the producers of onions as also other agricultural produce will have bad or not so good time through out their life.

There is no rationale in the government’s action. The argument that due to high prices only merchants profit and not the farmers is not convincing.

The same is the case with cotton and cotton yarn. If producers of fabrics and ready made garments had good time- high profits- when cotton production was high and the prices were low, why not they have low profits or even small loss when cotton prices are high?


Globalization of Agriculture in Africa

06/02/2010

Africa is the country where the arable land utilized for cultivation is very low- less than 10%. This is much less than the land utilized in Asia and Europe. Similarly, the irrigation potential of all the rivers including Congo, Nile and Zambezi rivers are much less exploited compared to the rivers in other continents. Consequently, a large number of African countries are in severe food crisis not only now, but for a long time. Now out of a total of 31 countries n the world in severe shortage of food, 20 countries (Ethiopia, D.R.Congo, Uganda etc) are in Africa having a population of nearly 400 million. Theoretically it is definitely possible and also desirable for African countries to attain self-sufficiency/surplus in food grain production without involving foreigners. But after over 40-50 years of independence, most of the countries in Africa continue be deficit in food. The international community and the international organizations have been feeding a large number of people in these countries for a long period. During times of lower world production, international community would find it difficult to find food grains and buy at high rates. Therefore, urgent action has to be taken to increase food grain production in these countries. Like globalization of economy, the agriculture also may need globalization to realize food self-sufficiency. The following could perhaps be tried in most of the countries.

i. To Built, Own, Operate and Transfer(BOOT) Irrigation projects: The governments could allow the river and ground water available in the country to be tapped by the private sector, including the foreign companies. The private sector would set up projects at their cost and recover the same over a period by charging fee from farmers for the use of water. After the agreed period, the projects could be transferred to the local governments.

ii. The private sector may also be allowed to generate hydro-electric power and sell to the government or the consumers directly, after paying honorarium to the government.

iii. Unutilized arable land could leased for certain period- may be 20 or 30 years and if found necessary extended- to corporates, including foreign corporates with the condition that food grains should be produced and the same should be sold in the domestic market first and only surplus grain should be exported. The developed land when returned to the government after the lease period could be sold or freely distributed to the local farmers.