Saturday, March 29, 2014

Free the market in Indian agriculture sector

Very insightful thoughts from Ashok Gulati. Many interesting things he shares with BS. I did met him in one of the conference in Delhi recently. Inf act, he had shared most the following things in that talk he gave:

  • "export controls is one way of taxing the peasantry by suppressing prices"
  • “The problem is the government is trying to achieve equity through price policy and not using income policy, so you have massive misallocations. This is how Soviet Russia collapsed. We need to get out of this socialist mindset and allow markets to function,”
  • “This is the area where the second Green Revolution is supposed to happen. It was a bumper year, but you had export controls so you didn’t allow foodgrain to go out, you restrict the private sector domestically, plus you are not procuring. So the market collapsed for farmers in Bihar. Yet you are procuring from Punjab, which earns Rs 4,000 crore extra by charging a tax of 14.5%, what the heck!”
  • “He said, ‘Tumne saare desh ka theka le rakha hai? [are you responsible for the whole country?] The government has made you a chairman. Enjoy life’.”
  • He found Agriculture Minister Sharad Pawar “progressive, more market oriented than other ministers and with a broad vision.”
  • “Well, the food minister wanted to protect consumers, the agriculture minister the farmer. Each ministry works in a silo, so, really, it is for the prime minister to take a call. That’s when you need a leader.”
  • “Vajpayee didn’t say much but he listened. Once, there was a discussion on deficit financing and Montek talked about how we need to disinvest in Maruti, Ashoka Hotel and so on. Vajpayee’s response was, ‘Bawaal khada ho jayega’ [it will become a problematic issue]. Yet, 15 days later, that’s exactly what the government announced. That’s leadership.” 

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