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This is a question that requires more than a HN post to answer. In broad outlines though 1) On the one hand this is our social safety net, and the floor to en

This is a question that requires more than a HN post to answer. In broad outlines though 1) On the one hand this is our social safety net, and the floor to ensure that farmers are guaranteed a floor price for their efforts 2) We HAVE boosted agricultural productivity, which is why we have stocks which are now rotting. 3) We are stuck (edit: Didn't finish this point) with the legacies of our past. Which include our own step backwards in the 1960s. 4) > We must avoid giving Freebies. Giving away things for free/subsidy is the root cause of the problem. The food isn't free. Its at a nominal subsidized rate. The poverty line is about 32 rs a day. This system acts as a social safety net, while also at the same time ensuring a floor price for agricultural produce. NREGA, a right to work act; may well be digging holes to fill holes. Yet it also is working to support a minimum wage across the country. Can they be scrapped? Yeah. Will it be good for India? No, it will likely be a disaster. The transition from an inefficient, old school system to a modern system will immediately close out entire generations from the economy. No amount of education and retraining will close that gap. Expect a gradual transition, as alternatives to western systems are dreamt up which work in an Indian context. Some of them are redundant, but are what people will swallow and accept. ----------------- Other fun stuff: Heck forget freebies, you should check out the reverse taxation mechanism that recently got introduced and is applicable from mid year. The larger firms now are responsible for collecting the taxes they pay for obtaining services! If you work for a large firm and rent a car, if the final bill contains service tax, you are now obligated to pay that service tax to the government separately. Why? Because the govt knows it can't go after the unorganized sector directly. So they make it inimical for the un-organized sector to remain disorganized. MNCs will transfer their work to companies like Hertz, or other rent-a-car companies and so on. Smaller firms will have to register and become compliant to survive. Widening the tax net, and increase compliance. At the expense of the more established firms. Bizarre? Yeah, its par for the course. ----------------------- Side note: 2 MBA students actually tried to live at 100 Rs/day and then Rs 32 a day. At the 32 mark, they said travel was out of the question because the calorific/time effort required to move that distance to get to a bus station would have curtailed other equally important activities. (http://rs100aday.com/about/ http://rs100aday.com/about/)

kamaal 14y ago
I agree with you in principle. But the point in discussion is why do people need to be provided food for free? Clearly if they are not able to buy for a real long time- This indicates they are not earning enough. So fixing that makes more sense than fixing problems in the free food program. Because if we fix the affordability issue we will not need the free food program at the first place. Yes the distribution system is broken. I think a step to fix that was tried- FDI in retail was good. Companies could buy directly from the farmers, eliminating middle men and the entire inefficient distribution cycle. But I and you know well the political opposition to those reforms.
- intended 14y ago
  Substitute free food for welfare and it might make more sense. Also your goal is good in the long term. In the short term we will be taking a lot of stop gap measures to reach that point. I don't think we have the option for mass production/industrialization to boot strap our unskilled labor. I know of some people who are building startups aimed at giving people in slums more usable skills - like carpentry, plumbing and so on. Those private sector moves will still bear fruit only to a moderate extent at best in generation N=0. Its only after we get that to reach N=2 and beyond that it should start making an impact. In short, for us, its going to be a hugely drawn out battle. I hope that changes, and I may easily be wrong, looking at things from this scale (mobile VAS could suddenly create tons of alpha for its users or who knows what). ------------ First hand horror stories again: (Do note I am pro FDI) A disturbing case that I received second hand was regards how Reliance handled their farmers. For other HNers, Reliance is a huge (gigantic) Indian conglomerate which does nearly everything. Reliance encouraged its producers to use a series of crop enhancing pesticides and chemicals which had long term negative impacts to the farmer's land. At the end of it, the land was fallow. At which juncture Reliance washed their hands of it.
- luser001 14y ago
  Just to be pedantic: I don't think it's literally free, it's subsidized. "Companies could buy directly from the farmers": this has nothing to do with FDI in retail. Indian companies are free to do so already. The reason it isn't happening has probably to do with small landholdings, bad public infrastructure like roads, electricity etc. Hence it probably makes sense for somebody to specialize in aggregating the output of multiple producers (aka middleman). Also transport of goods within India isn't friction-free (AFAIK agri. products can't be transported across states w/o a permit). Yet another opportunity for specialization aka middleman. These things won't just go away because FDI is allowed in retail. YMMV.

kamaal 14y ago

I agree with you in principle. But the point in discussion is why do people need to be provided food for free? Clearly if they are not able to buy for a real long time- This indicates they are not earning enough. So fixing that makes more sense than fixing problems in the free food program. Because if we fix the affordability issue we will not need the free food program at the first place. Yes the distribution system is broken. I think a step to fix that was tried- FDI in retail was good. Companies could buy directly from the farmers, eliminating middle men and the entire inefficient distribution cycle. But I and you know well the political opposition to those reforms.

intended 14y ago
Substitute free food for welfare and it might make more sense. Also your goal is good in the long term. In the short term we will be taking a lot of stop gap measures to reach that point. I don't think we have the option for mass production/industrialization to boot strap our unskilled labor. I know of some people who are building startups aimed at giving people in slums more usable skills - like carpentry, plumbing and so on. Those private sector moves will still bear fruit only to a moderate extent at best in generation N=0. Its only after we get that to reach N=2 and beyond that it should start making an impact. In short, for us, its going to be a hugely drawn out battle. I hope that changes, and I may easily be wrong, looking at things from this scale (mobile VAS could suddenly create tons of alpha for its users or who knows what). ------------ First hand horror stories again: (Do note I am pro FDI) A disturbing case that I received second hand was regards how Reliance handled their farmers. For other HNers, Reliance is a huge (gigantic) Indian conglomerate which does nearly everything. Reliance encouraged its producers to use a series of crop enhancing pesticides and chemicals which had long term negative impacts to the farmer's land. At the end of it, the land was fallow. At which juncture Reliance washed their hands of it.
luser001 14y ago
Just to be pedantic: I don't think it's literally free, it's subsidized. "Companies could buy directly from the farmers": this has nothing to do with FDI in retail. Indian companies are free to do so already. The reason it isn't happening has probably to do with small landholdings, bad public infrastructure like roads, electricity etc. Hence it probably makes sense for somebody to specialize in aggregating the output of multiple producers (aka middleman). Also transport of goods within India isn't friction-free (AFAIK agri. products can't be transported across states w/o a permit). Yet another opportunity for specialization aka middleman. These things won't just go away because FDI is allowed in retail. YMMV.