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The guy who bores you here is Sreekanth, Indian, ex-Software Engineer, management student(IIM Ahmedabad)
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Scary Movie Part 1
Post 2004 election India
Return of the RobinHoods

And just wait and watch for the rest of the parts of this movie for which we paid money and have bought the tickets.

Saturday, June 05, 2004
(6) comments  
From BS editorial:
Food and Agriculture Minister Sharad Pawar has ruled out the resumption of foodgrain exports this year.

At the same time, he has indicated that grain procurement operations would be extended to all those states where such arrangements do not exist, and that the public distribution system (PDS) would be expanded substantially.....

...Banning exports will merely mean shutting out the market for India's surplus grain, and will add to the discomfiture of exporters who have undelivered contracts in hand....

...In recent years India has emerged as a major exporter of rice and wheat and has been formally recognised as such by the International Grain Council. All this will now be history.

This is not the only worrying aspect of the new policy. The proposal to extend grain procurement operations from 15 per cent of the country to all of it, will render private wholesale trade virtually irrelevant in this sector.

It could even take the clock back to the days when people had to queue up at ration shops for buying grain...

...India has built up unsustainable grain inventories in the past, and these were pruned by exporting over 33 million tonne, conducting open market sales of nearly 20 million tonne and by liberally using food for welfare and drought relief schemes...

Going by Mr Pawar's reckoning, the central grain pool inventory is, in any case, likely to touch 33 million tonne on July 1, against a buffer stock requirement of only 24 million tonnes. With the monsoon projected to be normal, another bumper kharif crop seems round the corner — which means the government's stocks will climb further.

Under the circumstances, there is absolutely no need for Mr Pawar to ban exports or revert to tried-and-discarded models of food management, when the objective should be to reduce the subsidy bill and let markets function with greater efficiency, while providing farmers a price cushion.

Instead, Mr Pawar seems to be moving in exactly the opposite direction. Any modification in the grain procurement and distribution system that eliminates or reduces the role of private trade would be inappropriate, inadvisable and perhaps even financially unsustainable. And to shut out exports is of course to be completely anti-farmer.

Saturday, June 05, 2004
(2) comments  
TN Ninan in Business Standard:
...Most of all, there is the bald truth that rapid growth by itself achieves quite a lot on the employment front. All of this could perhaps be short-handed to argue that there is precious little that is wrong with the reform programme, except that there hasn’t been enough of it.

This is certainly not to argue that there is no unemployment in India, but to suggest that the UPA’s understanding of this very important problem is defective and probably born out of the syndrome that makes people dislike good news.

The result is that it is barking up the wrong tree with its preferred solutions, when the old arguments of reformers probably hold more water: create a flexible labour market instead of trying to protect the high-wage islands, get rid of small-scale reservations so as to allow the growth of labour-intensive industries, reform agriculture and create the infrastructure to support rapid economic growth.

The reformers in the UPA government may have exactly these policies and objectives in mind, but they will be hamstrung by the assertions of the Common Minimum Programme. More’s the pity.


After 6 years (or atleast last 2-3 years) of good rule by the NDA where reform was better thought out, we are now going to see the UPA take a short term view and take us back by years. Thanks to all those who voted. You guys did a great job.

Saturday, June 05, 2004
(0) comments  
Communist anyone?
More from Sunil Jain's article:
As in India, in China too, there has been a decline in employment in state-owned enterprises, from 103 million in 1990 to 68 million now.

But in China this was made up by the increase in urban private industrial employment, from 6 million to 42 million in the same period.


I would love to hear the comments of Communists on this? Not that I dislike them or anything but if they argue rationally they have to answer to this piece of stat.

And take this:
While the Left parties in India are fundamentally averse to foreign investment, and to making life easier for the organised manufacturing sector (where wages are at least double those in the unorganised sector), the states of West Bengal and Kerala, where there have been Left-run governments, have the highest unemployment in the country; indeed even the highest growth in unemployment has been seen in these states.

Saturday, June 05, 2004
(3) comments  
Public Policy: Is it really well thought out?
From Sunil Jain's analysis on Job vs growth in Business Standard:
In the textiles sector where India has a very low export share, for instance, years of tax-breaks for small units discouraged larger units from coming up and stunted the country’s ability to service large orders.

The share of big players is 93 per cent in the spinning sector, to cite one instance of the importance of large manufacturers, and India’s share of global exports is 26 per cent.

In the weaving sector, larger players have only a 4 per cent share in local production, and their global share is a mere 3 per cent.

Read this article: Part 1 Part 2 Part 3


This I believe is a classic case of a public policy thought out from the narrow angle of helping small scale units alone rather than about the textile sector at large. Why do we want to have only small scale textile units grow? Or why do we want people to get jobs by only incentivising small scale. Shouldn't we do things to achieve the final objective that is more job and higher growth for textile industry as a whole rather than assume one solution i.e. the small scale is THE solution and then incentivise that?

If we incentivise small scale and it achieves 3 percent global export share and 10,000 people work in it, is it better than getting 25% share and 70,000 people getting jobs?

Saturday, June 05, 2004
(1) comments
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