Elections to Tamilnadu Legislative Assembly

The manifestos of the political parties of Tamilnadu show that the political parties are not interested in finding solutions to the problems, but are interested only in temporary  relief to the affected people.For example, the solution to the problems of farmers is to increase the procurement prices of wheat, rice, sugarcane etc and to procure vegetables from farmers at a fixed price, of say Rs.10/kg for tomato, Rs.15/kg for brinjal etc.Similarly. the solution to the corruption is not appointing new authorities or enacting new laws but to undertake simple administrative reforms like changing the office procedures. No manifesto talks about this.Giving subsidies and freebies is no solution to poverty. The real solution is to provide jobs to all able bodied and willing persons. Considering the very large number of works to be undertaken, creating jobs is definitely very easy. What is to be done is to undertake large projects like linking rivers in the state, laying /widening roads, maintaining these roads, deepening lakes, dredging dams, building hospitals etc. The government  should also offer all possible assistance to private sector to set up factories. Thus it is easy to provide jobs to all. In fact in Tamilnadu, there is  shortage of labour, and that is why workers from far off states like Assam, West Bengal, Bihar, Orissa, Jharkand etc have come to Tamilnadu. What is to be done is is  to establish an agency  in each village,which will regulate the employment. This will lead to migration from cities/towns to villages.

Dividing the society is not good

While trying to promote the interests of a particular section of the society, governments, non-governmental organisations and international organisations like UN, are unknowingly creating a divide between
i.men and women
ii.young and old
iii.employers and employees,
iv.farmers and businessmen
v.producers and traders
vi.small land owners and large land owners
vii. rich and the poor
viii.forward communities and backward communities
ix. small industry and large industry
x.consumers and suppliers

The promotions which the governments etc. organisations tried, have mostly robbed the unity and happiness of the society to some extent. The unit of the society is family and not individuals. A family has men, women, old people and young people. So the family should not be divided along the lines of gender or age. A society needs farmers, businessmen, rich people, small industry, large industry, consumers, suppliers etc. and the interests of all the people should be promoted. It may be argued that poor people need protection and support whereas the rich do not need. Hence one has to divide the society into rich and poor people. But the rich people also need to become richer to provide jobs to larger number of people, to provide higher wages and benefits to existing employees etc.Producers need traders to distribute their products. Traders need producers to produce goods for them to distribute. Thus the people are inter dependent. They need each other. It is therefore necessary not to talk in terms of men, women, young, old, rich, poor etc.

Inflation and economic Development

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

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.

India -Taxing the super rich more

Recently there is a talk about taxing the super-rich more. At present there are In India only 3 rates i.e 10%, 20% and 30% of taxable income, for taxing the income of people in India. These slabs can be increased to 5 or 6. In several countries there are 5 slabs. In several developed countries, the maximum rate of income tax exceeds 50%. India can introduce tax rates of 40% and 50% for higher income groups. In countries like Italy and Netherlands, everyone has to pay income tax irrespective of the income. It is only fair that those who enjoy more benefits from government viz low income people should also be made to take some responsibility to pay at least a token contribution for the benefits. The lowest tax rate could be nominal –may be 1% or 2%. Cost of collection of income tax in the lowest slab would be high but ways can be found to minimise the cost of collection. Alternately indirect taxes like excise duty and sales tax rates should be increased.

Income from agriculture should also be taxed. However farmers should have the freedom to fix prices for their produce in the same way as industrialists fix prices for their products. Government should not interfere by regulations like procurement prices, ban on exports, export duty etc. Of course, governments can do away with the grants and subsidies.

The minimum wages should be so much that it is sufficient to meet all the basic needs and tax payments.

Declining position of India in Cashew production and exports.

Till late 1990s, India was the largest producer of raw cashew nuts(cashew nuts with shell) and largest exporter of processed cashew nuts in the world. Roasted Cashew nuts also used to be an important item of export from India.However India is now not so prominent in the world as an exporter.While India’s production of raw cashew went up only by about 50% from 420,000 MT in 1996 to 675,000 MT in 2011,Vietnam’s production increased by about 500% from 237000 MT to 12,72,000 MT during this period making Vietnam the largest producer in the world. Nigeria’s production went up by about 700% from 110,000 MT to 813000 MT, making Nigeria, the second largest producer behind Vietnam and ahead of India.India thus is only the third largest producer in the world.

The low increase in production in India is due to low yield. During the 15 year period from 1996 to 2011, in India the yield increased only marginally from 0.66MT per hectare, while in Nigeria it went up by about 400% from 0.63MT to 2.46 MT.The yield in Vietnam increased from 2.23MT to 3.84MT.

In India as much as 0.95 million hectare of land is under cashew while Vietnam and Nigeria each have only about 0.33 million ha under cashew.

In 2001, India was the largest exporter of roasted cashew nuts with exporters of about 90,000 MT when Vietnam’s exports were only 44000 MT. But in 2011, India’s exports were almost at the same level at 93,000 MT while Vietnam’s exports went up by 4 times to 195,000 MT.

Cashew tree starts yielding from about 3rd year and its life is about 35-40 years.
India should consider measures to increase yield by encouraging farmers to grow high yielding dwarf varieties, consider giving grants and subsidies and/or procuring raw cashew nuts at a much higher price which would offset effect of increased wages of workers as also services like transport etc.

India should also coordinate with other large producing/exporting countries like Vietnam and Nigeria to promote consumption of cashew nuts in the world particularly in developed importing countries, to evolve high-yielding varieties,exchange of information, exchange of agricultural and industrial experts etc.

Food security requires higher foodgrain prices

There was a time when India had acute shortage of sugar. Then the government increased the procurement price of sugarcane and continues to increase the procurement price periodically. This has led to India becoming not only self sufficiet but also surplus in sugar.Not only this, sugarcane is one of the only 2 or 3 crops in which India’s yield is higher than world and Asian average yield.

If countries which are deficit in cereals increase procurement prices substantially,the farmers will find ways to increase the yield and production. These countries should also impose import duties on cereals to such an extent that the local produce becomes cheaper. The deficit in food grains can easily be wiped out in most of the deficit countries.

The question will arise as to how poor people who are malnourished for want of money to buy food gains shall buy at higher prices. The people do not have buying power because they do not have enough work. The govenments there should undertake massive works like digging lakes, canals, wells,laying roads, railway lines, power transmitters and lines solar power stations, hydro-electric power stations etc. Most of the west and east African countries receive over 1000 mm rainfall every year and hence increasing food grain production may not be a big problem at all.

Tamilnadu population 2011-natural growth and immigration

According to provisional 2011 census data, the population of Tamilnadu state, India increased during 2001-2011 by 97 lakh(9.7million) from 6.24 crores(62.4 million) to 7.21 crores. The birth rate was 15.3 per 1000, death rate was 7.6/1000 and the natural increase was 8.6/1000. The natural increase works out to 53 lakhs, the balance of 44 lakhs being net immigaration(incoming migration-outgoing migration) from neighbouring states and mostely from high population growth states like Bihar, Jharkhand etc. But for the immigrants, the economy of Tamilnadu would have been in very bad shape. There would have been no growth at all. Does this mean that there is shortage of labour?

Actually, the economy has not expanded so much as to lead to labour shortage.(In fact even with immigrants,the economy has not grown as much as it could have been) What has happened is that a large number of people of Tamilnadu have been taken away from the labour force because of the so called welfare measure of the government of Tamilnadu, like free food items, free clothig, free shelter, free schooling etc(Free medical treatment however is necessary). Because of the freebies, a person needs to work only fo 4-5days in a month to earn for his requirements For the rest of the days, people are made to lie idle. Hence, there has been need for people from other states to migrate to Tamilnadu.

The migrants who drive the growth engine of the state need to be looked after better. They have to be provided with all the welfare measures as are the local people. The goverment should allot house sites to them on a priority basis. In other words, government should encourage these migrants to settle in Tamilnadu permanently so that the farmers will intensify agriculture, industriliast will think of expanding their busiesses,service providers will enlarge their activities. Simultaneously, the government should minimise the welfare measures, so that the local labour is also fully available for agricultural, industrial and other activities.
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Onion and Cotton Prices and Government’s response

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?

India – Land Acquisition by the Government

The Land Acquisition Act provides for acquisition of privately owned land by the Central and State Governments for public purposes. However, Governments acquire land for private companies, calling it public purpose. They acquire more than required area of land for current use and also for future use. The compensation being paid is much less than current market value. In order to induce landowners to come forward to sell land the price has to be what it would be 5 or 10 years later in the market. In Malaysia, the government used to pay large compensation and people used to compete to sell their land and become “instant millionaires”. In fact, the Malaysian government asks companies to procure land themselves.

Government has recently acquired/ is acquiring land for widening national highways. They are acquiring land not only for the present use for 4 lanes but for future use of  6-8 lanes which may be after 20 or 25 years later. Till then surplus land will remain fallow.

Even for welfare measures like free or subsidized housing for low income people, some governments are using as much as 10 acres of land for 100 small houses whereas 3-4 acres will be sufficient. Government can do with about 2 acres if double storey houses are built in stead of single story houses

The land acquisition has shrunk agricultural land considerably and the country would have to depend on imports for consumption. Not only this. The farmers are agitating against land acquisitions even for genuine purposes for government’s direct use. In order to avoid problems for acquisition in future, it would be better, if governments acquire land only for government’s current use at an estimated value 10 years later.