Free markets and Indian farmers

Sakal Gharelu Ustad

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If India wants to get into the top league of nations, it will need a leap of faith where it forms its policies towards rapid industrialization and moving as many people out of agriculture as possible. A flavour of this argument is presented here in an article I wrote long time ago: http://defenceforumindia.com/urbanization-the-only-solution-for-a-modern-india-1536

So, now coming to the question pertinent to this thread. I support free markets like a lot of other people on this forum. The question that is really important and challenging is how to smoothly transition from an agricultural based economy (by # of people employed) to a manufacturing/service based economy.

This means we need to take care of poor farmers on the way while we move significant numbers of our people out of agriculture. The important questions to ask:

1) Should govt. policies hand out benefits to farmers?
2) What kind of support should govt. provide?
3) Can govt. provide some insurance scheme to cover crop losses?
4) How to deal with APMCs?
5) Direct cash transfers instead of MSPs.
 

pmaitra

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My responses:
  1. Should govt. policies hand out benefits to farmers? Handing out benefits will create a crutch. Those that are moving out of the agricultural sector can be given temporary transitional assistance. It is unclear how to identify these people, because this sector is not well organized.
  2. What kind of support should govt. provide? APMC and MPSS are already in place. We can brainstorm on alternatives.
  3. Can govt. provide some insurance scheme to cover crop losses? The government can provide insurance. The farmers can also be compelled to buy insurance by law. This is government intervention. This is an antithesis to free market.
  4. How to deal with APMCs? What is there to deal with APMC?
  5. Direct cash transfers instead of MSPs. Direct cash transfer in exchange for what? MPSS is a trading arrangement. What is the idea behind direct cash transfer?
 

amoy

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Based on the above I think on the supply-n-demand scale the priority for GoI shall be to encourage manufacturing that results in massive job creation. Otherwise where shall those who move out of agriculture go?States that perform well in India must be successful at attracting investors on the demand end Gujarat, TN...

If u truly follow “free market” u shall let demand take the lead. Then the invisible hand will guide supply of workforce to the greener pasture.

Also GoI shall open up yr market as much as possible in exchange for access to foreign markets. Take the good pupil Vietnam for example, it has signed FTA with EEU, EU , US, Japan… almost every major economy, in addition to VN being a member of a dynamic ASEAN.

On DFI I observe many Indians are obsessed with "ideology" ~ right wing, leftist, socialism, ~ism… In fact what's more imperative is basic things like a "uniform tax code" nationwide, which nurture a free market in its very sense.

~Tapa talks: Orange is the new black.~
 

Sakal Gharelu Ustad

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My responses:
  1. Should govt. policies hand out benefits to farmers? Handing out benefits will create a crutch. Those that are moving out of the agricultural sector can be given temporary transitional assistance. It is unclear how to identify these people, because this sector is not well organized.
  2. What kind of support should govt. provide? APMC and MPSS are already in place. We can brainstorm on alternatives.
  3. Can govt. provide some insurance scheme to cover crop losses? The government can provide insurance. The farmers can also be compelled to buy insurance by law. This is government intervention. This is an antithesis to free market.
  4. How to deal with APMCs? What is there to deal with APMC?
  5. Direct cash transfers instead of MSPs. Direct cash transfer in exchange for what? MPSS is a trading arrangement. What is the idea behind direct cash transfer?
These were some points that I thought were important and not essentially mutually exclusive. I will think more about it and then post. In the mean-time you can post what you think is relevant.
 

amoy

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Besides a vibrant capital market is necessary to finance start-up businesses and serve as an incubator for SME enterprises.

Unlike China India may not have as many robust state-owned enterprises, which may be less profit driven but very effective in undertaking long term (infra) projects that accomodate lots of workforce.

All in all the role of govmt is to do the groundwork proactively for business to perform and absorb those who transform from the 1st industry (farming). Govmt itself shall become more service oriented than governance ~ as u see premier of China is taking every occassion to promote export of China's railway.

And timing is very important esp. now in another wave of shift of low end manufacturing to cheaper places, VN BD… Last time it was from Japan to Asian Tigers then China. There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries.

~Tapa talks: Orange is the new black.~
 

amoy

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Even though India has the biggest arable land in the world it doesnt need ever-increasing farmers due to progress in tech n productivity. Moreover yr uncurbed population growth exerts extra pressure on sustainability year by year.

It's kinda naive or passive to expect farmers to stay in "green villages". Already millions perhaps are flooding to urban areas for opportunities, adding to overcrowded slums. Meantime inadequate industrialization prevents yr "demographic dividends" from materializing ~agriculture is unable to cope with it all. Most villagers obviously are not well-to-do consumers who'd put up a strong purchasing power to stimulate yr industries . That doesn't sound a positive cycle.

~Tapa talks: Orange is the new black.~
 

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