One of the problems as stated by Mr Venkatesh is that of Farm Credit.
Well co-operative banks & societies are said to be of the common people including farmers and run by the people. But what we see is that most co-operative banks are headed and run by politicians & businessmen. While these banks give a marginally higher interest(0.5-1%) on deposits, the interest rates on loans are much higher(3%) than those charged by public sector banks. Shouldnt these loans be available at a lesser rate or the same rate. Secondly the point that loans are more easily available with co-op banks & socs is a fallacy. The politician/business nexus issue loans to their cronies and more often then not these turn into NPA's. They encourage the poor to take gold loans ( loan is calculated at Rs.500/gm) > when the loanee is unable to pay the interest (10-12%) to prevent it from turning into NPA then issue them another loan and use it the new loan to close the old loan. Thus trapping the poor man into a vicious cycle and finally auction the gold amonst themselves. This is all done with the full support and co-operation from the Government. The solution is to ban politicians & businessmen from such co-op banks & socs.
RE:Well stated Mr Venkatesh
by dean jones on Mar 27, 2007 10:22 PM
Why do ministers own the maximum number of medical colleges in India? Each postgraduate seat is being 'sold' in excess of 40 Lakh.
In 1990-91 the per capita food availability was almost 520 gms-this was due to the green revolution. Subsequent to our so called reforms in 90-91 the availability has reduced continously on YoY basis and today stands at the mid 70s level-i.e about 370 gms. This happened due to two reasons:
1. Post 90-91 after our "economic liberization" grain exports were alllowed so private middlemen bought out the grains exported and made money. In effect for the poor food security reduced by a factor of almost 10-15%
2. The govt's idea of food security is rice and wheat based. Whereas, traditionally many regions had millets and pulses in their diet. Thats gone now and consequently our pulse production has also reduced YoY. So not only reduction in quantity now the quality of nutrition has also gone down as no pulse( high protein diet), millets are available to poor people. Cow belt politics where wheat and rice are grown is responsible for this.
3. Add to this the inherent flaw of a per capita calculation in a society where the rich poor divide is large. If today the percapita is about 370 gms then the poor reallly have a per capita of about 200 gms and the rich definitely in excess of 650 gms!
In effect the poor in india are eating less in quantity and quality than they did in 1970. Forget progress we are regressed actually.
Always be aware of politicians who say they are for poor. Their business model survives only if there are poor!
I would agree to most of the facts that shri venkatesh has pointed out. And the truth is what he says is now new either. He has only published a compilation of facts. And like most people who do 'research' or NGOs who point out the problems, he too has failed to give us any solution. And the crux of the problem lies not in identifying the factors that cause the problems (once again what he says are mostly well known, and any individual with some interest on the matter will know them) but in mitigating the problems. Of course what he says about the burucracy is "paranoia'; yes there ate a few rotten scoundrels here and there in the administration, and where not do they exist; but most do a sincere job. Administering in India is very complex. And with all the hurdles, the civil servants mostly do a decent job. Yes delivery is a problem. And what shri vinketesh calls ' orthodox finance' it%u2019s true that governments do have a very severe financial crunch, and although intended, often fails to deliver because of fund crunch. Yes cost of administering its policies in high. But as a CA he ought to be aware of fixed costs. Well most of the costs of administering are fixed. There are little variable costs. But if one add up both the FC and the VC and then compare it with the actual benefit (in money terms) it will be a very high percent. Yet one cannot do away with the fixed costs. In some states and in some offices of central govt. there is experimentation to reduce costs, specially the fixed ones. But it will take some time to see if at all such an approach is sustainable. And once again, please don%u2019t make beurucracy the punching bag. How about the pvt sector showing us some initiative. Why don%u2019t we have any pvt sector banks catering to agriculture? Because it%u2019s a very unsure business (risky wouldn%u2019t be an appropriate term here). So now come to the paradox: Pvt Sector will not invest, or invest for a very high return (cause of high risk) which we will label as exploitation. govt can invest because we expect it to deliver welfare, but since there is no generation of revenue, and because govt uses its set up to deliver, one complains of very high costs so much so that to deliver Re 1 worth there is a cost of Re 7. In fact, may I call upon the pvt sector and specially the CAs to stop providing ideas to lessen govt revenues especially by unethical means; and help govt raise its revenue? I believe that with higher revenue, there will be higher delivery. On must observe that the countries that Sri Venkatesh draws comparision with almost all have higher tax incidence. And a very stringent tax administration. so am I justifying wastages, no. am I justifying govt's failure to deliver, no. do I say that starvation deaths or suicide by farmers could not have been avoided, no. surely much need to be done. But for people who don%u2019t do it, it is important to show some support to those who toil. Together, surely we will have a motherland worth living.
RE:the problem has been rightly pointed out.......now how about giving us a solution
by dean jones on Mar 27, 2007 10:16 PM
Dear friend, why are you defending the Govt and bureaucracy? May be you are right, but do you have any examples? I dont have any first hand knowledge of bureaucratic misappropriation and hence am actually on the fence regarding this. But would like to ask you since you are on one side, which is quite to the opposite of common perception. This is just intended as an attempt to a healthy debate. Please do not take offense. Thanks.
RE:the problem has been rightly pointed out.......now how about giving us a solution
by ajit verma on Mar 27, 2007 07:15 PM
Well nice suggestion friend.
What i have concluded after few days of thought is, Involve Government and end user directly. Give directly money equivalent to subsidy altogether avoiding middle man.A clear transparency.The beneficiary will purchase goods at market rate.
the government machinery is ineffective and corrupt. Just to quote from article " It is estimated that for every Re 1 of subsidy to reach the ultimate beneficiary, the government has to spend approximately Rs 7 on the administrative mechanism. " So to give 1Rs benefit u spend 7Rs still PDS is failure, as also accepted by government.
Solution for PDS. 1. Open bank a/c for poor people and deposit Food equivalent money for a month. Benefit : End target directly in control of Money for food. Only problem which might come is Awareness of Managing bank a/c, but that also can be taught.
Last and most important, No system can be perfect. " Country men have to be active and in control of how the country is governed "
RE:the problem has been rightly pointed out.......now how about giving us a solution
by Rohit on Mar 28, 2007 09:12 AM
Pie-in-the-sky schemes are very nice for Children but how EXACTLY do you propose to pay for this scheme of yours?
Do you want MORE debt? OR Do you want HIGHER taxes? OR Do you want to CUT one of the following expenses? Rs 160,000 Crores goes to interest on the debt Rs. 96,000 Crores goes to defense Rs 80,000 Crores goes to energy sector Rs 40,000 Crores goes to the food subsidy Rs 32,000 Crores on Education
ANSWER FOR THIS QUESTION IS VERY SIMPLE , GOVERNMENT KEEPS INDIANS PORR TO MAKE MINISTERS RICH & RICH & RICH & MORE RICH , THEY WANT THAT MINISTERS DO SCAMS & REMOVE HIS POVERTY.
This is truly an amazing article which opens our eyes to the harsh reality. Mr.Venkatesh has presented his thoughts in an articulate manner and each point talks about the structural damage in the system. But i would say, things will not remain the same. One simple example - inefficiency in harvesting and food storage causes 40% loss of produce, be it in the farmer's storage or in FCI godowns. with the entry of private players, there is a drastic change in the supply chain efficiency and the storage loss has come down. another example, this year our beloved FCI is struggling to buy wheat for its food security, while private players are paying exorbitant price to the farmer! regards Levine L
Government should distribute 20 kg rice or wheat at Rs 2 per kg per ration card through Public Distribution System
1. Will have a CASCADING effect on remaining food items and will help in reducing the prices and inflation. 2. Will create demand for agricultural products and will PREVENT farmers suicide. 3. Will prevent 350 million people STARVING every day for a meal. 4. A nationwide credible "minimum" income guaranteed system for every one whether they work or not will bring in "dignity" instead of desperation for the working poor and "inheritance taxes" will stimulate "compassion" instead of collusion.
Such system will prevent all socioeconomic issues in India viz farmer suicides, dowry deaths, child labor, fear, frustration, corruption, bribery, prostitution, terrorism etc.
In USA,UK,Germany,Portugal, Brazil, Belgium etc this system is implemented. http://en.wikipedia.org/wiki/Guaranteed_minimum_income#Examples_of_implementation http://en.wikipedia.org/ wiki/Inheritance_taxes
RE:Will and Wisdom
by ajit verma on Mar 27, 2007 07:11 PM
Well nice suggestion friend.
What i have concluded after few days of thought is, Involve Government and end user directly. Give directly money equivalent to subsidy altogether avoiding middle man.A clear transparency.The beneficiary will purchase goods at market rate.
the government machinery is ineffective and corrupt. Just to quote from article " It is estimated that for every Re 1 of subsidy to reach the ultimate beneficiary, the government has to spend approximately Rs 7 on the administrative mechanism. " So to give 1Rs benefit u spend 7Rs still PDS is failure, as also accepted by government.
Solution for PDS. 1. Open bank a/c for poor people and deposit Food equivalent money for a month. Benefit : End target directly in control of Money for food. Only problem which might come is Awareness of Managing bank a/c, but that also can be taught.
Last and most important, No system can be perfect. " Country men have to active and in control of how the country is governed "
