Indian Economy - News & Discussion Oct 12 2013

Theo_Fidel · Post by **Theo_Fidel** » 12 Aug 2015 21:14

If rupay is zero transaction who will pay the cost of running it.

AFAIK there are plenty of debit cards in India. Literally every bank account now comes with one. Must be many 100 million+ such cards out there. If Indian companies want people to use credit cards they will have to provide better incentives. The ICICI credit card has an incentive of 1 point per Rs 150 with a ratio of .30 WTF. This works out to an incentive of 0.20%! Even the shabbiest card in USA offers 1%. And my AMEX offers 6% on some items.

Suraj · Post by **Suraj** » 12 Aug 2015 21:23

According to the PMJDY site, 152 million RuPay cards are currently in circulation. All were issued within the last year, during rampup of the PMJDY program. The total number of PMJDY accounts opened in the past year was 173 million. The debit card user base is on top of that.

Suraj · Post by **Suraj** » 12 Aug 2015 21:53

Retail inflation hits multi-year low of 3.78 pct in July

Retail inflation fell to multi-year low of 3.78 per cent in July on account of cheaper food prices, including of vegetables, fruits and cereals.

The retail inflation based on Consumer Price Index (CPI) was at 5.40 per cent in June 2015. In July 2014, CPI based retail inflation was as high as 7.39 per cent.

Food inflation measured on Consumer Food Price Index during the month of July 2015 fell to 2.15 per cent as against 5.48 per cent recorded in June 2015, the official data released today showed.

Prices of vegetables fell sharply during the month from a year ago, with inflation printing a negative 7.93 per cent. Fruits also turned cheaper by 1.45 per cent during the month compared to the same month last year.

However, prices of protein-rich items such as pulses remained higher as inflation rose to 22.88 per cent. Also, meat and fish prices turned costly by 7.02 per cent.

Inflation in cereals and products was at 1.06 per cent, eggs at 2.8 per cent, milk and products at 6.12 per cent and that for oils and fats was at 2.78 per cent in July 2015.

Among others, sugar and confectionery prices contracted by 12.30 per cent.

Spices prices rose by 9.09 per cent, non-alcoholic beverages by 4.44 per cent, prepared meals, snacks and sweets by 7.7 per cent while that for food and beverages category by 2.89 per cent.

ShauryaT · Post by **ShauryaT** » 13 Aug 2015 05:17

Bad policy led to rural distress: Bibek Debroy

And for more than 40% of them MGNREGA is their first opportunity to earn independent cash income. Not surprisingly, this increases their power within the household and improves their conditions including access to health care,” says the report.

This in turn led to better education of children and lesser incidence of child labour, it says.

MGNREGA was also instrumental in reducing poverty by upto 32 % and prevented 14 million people from falling into poverty.

However, “the positive effect of MGNREGA is limited by a very low access to work in some of the poorest states such as Bihar and Odisha,” the report says.

“Only 24.4% of rural households participate in MGNREGA nationwide, and nearly 70% of the interested households cannot participate due to lack of work. Most important, about 70% of households below of the poverty line do not participate,” it says.

Underscores the massive need to get the rural workforce into more gainful and productive employment.

Prem · Post by **Prem** » 13 Aug 2015 06:44

Factory output, retail inflation spring a surprise
http://www.thehindubusinessline.com/eco ... 531238.ece

Manufacturing – with weightage of 75 per cent in the IIP – grew a robust 4.6 per cent, much higher than the 2.2 per cent growth seen in May 2015. The latest IIP print was, however, lower than 4.3 per cent growth recorded in June last year. Consumer Price Index (CPI)-based inflation for July fell sharply to 3.78 per cent, helped by a sharp fall in food prices, which account for nearly half the index, and some base effect. Food price inflation fell sharply to 2.15 per cent (5.48 per cent). Vegetable prices contracted 7.93 per cent for the month under review. However, the worrying news is inflation in pulses continues to remain over 20 per cent but could head down in the coming months responding to imports. Core inflation fell to 4 per cent from 4.6 per cent. The sharp fall in CPI in July has opened up the possibility of interest rate cut by the Reserve Bank of India in September, say economists. Devendra Kumar Pant, Chief Economist, India Ratings & Research, said that the July CPI of 3.78 per cent was much below the expectation and mainly due to sharp fall in food inflation. “It is contradictory to daily price data released by the government. July vegetable prices have declined by nearly 8 per cent. This (fall in retail inflation) will have a favourable impact on bond pricing and increase in probability of monetary easing”, he said. Rishi Shah, an economist with Deloitte, said the key takeaway from the current print was that the inflation could likely undershoot RBI’s target of 6 per cent by January next year. Chances of a further 25 basis points cut has clearly increased given the latest inflation print, Shah said.

disha · Post by **disha** » 13 Aug 2015 08:12

Jhujar wrote:Factory output, retail inflation spring a surprise
http://www.thehindubusinessline.com/eco ... 531238.ece

{ITEM-1} However, the worrying news is inflation in pulses continues to remain over 20 per cent but could head down in the coming months responding to imports.

Core inflation fell to 4 per cent from 4.6 per cent. The sharp fall in CPI in July has opened up the possibility of interest rate cut by the Reserve Bank of India in September, say economists. Devendra Kumar Pant, Chief Economist, India Ratings & Research, said that the July CPI of 3.78 per cent was much below the expectation and mainly due to sharp fall in food inflation. “It is contradictory to daily price data released by the government. July vegetable prices have declined by nearly 8 per cent.

This (fall in retail inflation) will have a favourable impact on bond pricing and increase in probability of monetary easing”, he said. Rishi Shah, an economist with Deloitte, said the key takeaway from the current print was that the inflation could likely undershoot RBI’s target of 6 per cent by January next year. Chances of a further 25 basis points cut has clearly increased given the latest inflation print, Shah said.

Item-1 was predicted here. Due to uneven monsoon, it was going to suffer. The other was Onion/Garlic., but that has been mitigated this time by timely rains in the Mah region and more importantly states like Jharkhand and Chattisgarh are trying to break into that market.

#mediapimps will focus on Onions - but I am not too worried about that bulb. Short term anomalies on Onion can be corrected. It is actually a simple structural problem.

My main and verily concerned about pulses (and overall legumes - the term pulses/legumes will be used interchangeably) -

Both #mediapimps and CONgoons at the center have destroyed the traditional backbone of Indian agriculture. Pulses (routinely the "Dal" component from the Dal-Chaval-Roti combination) is suffering from a host of factors., here are some of the factors that has contributed to the shoddy state of pulses in India (and interestingly India was the first to domesticate this very important food crop some 5000/6000 years back).

Here are some of the problems which will require a decadal turn around to be fixed:

1. Subsidized urea has led farmers big and small to destroy their farmlands. In effect, by overuse of urea - they have acidified their natural alkaline soils. This has net resulted in land shrinkage (or loss of acreage) for growing legumes/pulses.

In effect, government should de-subsidize urea. We end up paying a huge energy import bill on Urea and on top of it destroy our farmlands using Urea. Problem is the entire society, from the farmer to #mediapimps to their political masters are addicted to Urea. Let us say there is 10% cut in subsidy to urea - all the #mediapimps will go to town screaming #Anti-Farmer-Sarkar and we will have major whines in BRF with #Blow2Modi.

2. More attention is being paid to MSP for rice and wheat while ignoring the "Dal" component. For example., the MSP for Rice was increased by 4.1% in 2014 followed by 3.6% - in effect in two years FCI/GOI is paying 7.8% more for Rice. If one looks from 2011 base., it is even more egregious - GOI is paying 35% more in MSP!

Now look at the dals (toor, urad, moong, masur) - compared to 2011, the amount that is being paid to this now for MSP has grown only by 2.9% (avg).

Basically MSP needs some tuning. FCI can easily reverse the MSP percentage growth to encourage more dal cultivation and actually save money. On top of it, an education campaign by GOI to plant legumes - in areas which traditionally planted legumes will help.

3. All the populist schemes went out like Rs. 2 per kilo of rice etc. This is ridiculous. All such populism should be curtailed (and can be curtailed - for example - stop offering Rs. 2 per kilo rice and at say community kitchens or Amma's kitchens wich offer Rs. 2 per 50 gm organic "dal" laddu - made with a. Asli Ghee b. Any of the locally grown pulse and c. *only* jaggery or molasses to be used to sweeten it (no sugar!). And to get subsidized meal at say Amma's kitchen - one has to order laddu. Kids have to eat two laddus. If there are no community kitchens - one can buy such laddus. Call it Modi laddu in Bihar/UP.)

The import of pulses (mainly from Africa) will tide over the short term shortage., but GOI should look at the complete pulses/legume family - not just as a food crop, but as a cash crop as well (guar gum is used in food additives, fracking and explosives).

Currently by my estimates the intake ratio of cereal to lentils is 9:1 (that is for every 9 unit of cereal, we are taking in only 1 unit of various lentils)., this needs to be changed to at least 3:1 (if not 2:1).

Singha · Post by **Singha** » 13 Aug 2015 09:33

add to that the prices of masur, toor, chana, moong dal have put it out of reach of poor.

we need a dal revolution as you said.

gakakkad · Post by **gakakkad** » 13 Aug 2015 09:53

few people know , that India is a massive importer of pulses ...A big shame ,considering the fact that we have the highest proportion of fertile cultivable land in the world...50% Indian land is cultivable in contrast to a mere 5-10% chinese land...in fact we have as much cultivable land as US ,even though US is 3 times bigger...

disha · Post by **disha** » 13 Aug 2015 09:58

^^ Singha saar - +1. If all kinds of Dal are brought back to the poor's kitchen - we would have a very healthy and economically progressive population!

What we need is a Dal revolution - not a green revolution for the next gen!

Vayutuvan · Post by **Vayutuvan** » 13 Aug 2015 10:15

What about amaranth?

somnath · Post by **somnath** » 13 Aug 2015 15:11

The structural issue with Indian agriculture is one of framentation. Too many people cultivating too small patches of land. In the process they are taking the kind of entrepreneurial risks that only large enterprises can take.

Reform in agri should start with abolition of land ceilings. We need to allow large corporates to aggregate land, as lease or outright purchase and grow crops at industrial scale. Subsidies then can be better directed than the current architecture of input-level subsidies (on fertilizer, power etc). Large enterprises will be able to bring scale, technology and be able to be flexible basis market demand.

A_Gupta · Post by **A_Gupta** » 13 Aug 2015 16:20

^^^ On the contrary, Arun Jaitley quotes the result of irrigation schemes in Madhya Pradesh:

QUESTION: Thank you very much for being here. I'm Jamie Metzel (ph). What more—what can be done to make Indian agriculture more efficient?

JAITLEY: I'll give you a two-point response.

We have examples of three regions in India, Madhya Pradesh, Andra Pradesh and Gujarat. These are three states which have made a significant investment into irrigation.

The pattern was different. Gujarat did it by minor irrigation projects like check dams to collect the rain water and then use it for agriculture the whole year.

Madhya Pradesh created a river grid. And both of them, Gujarat, which was a dry state with less rainfall, for almost a decade as a result of this campaign has a double-digit growth in agriculture.

Madhya Pradesh is the most fascinating experience, because it's considered one of the sick states in India, one of the least-performing states. And suddenly, it's turned around, on the backbone of agriculture. I've been repeating their figures. The last three years it was 18 percent, 20 percent and 22 percent growth.

And, therefore, if you grow at this kind of a pace by the river grids that they are creating, you can actually change the whole economy of the state.......

(from http://www.cfr.org/india/arun-jaitley-r ... ise/p36625 )

This idea of letting Adam Smith's invisible hand work is exactly the same thinking that the British used in the huge famines and death tolls in the tens of millions that devastated India, and Ireland and so on.

Pushing people off the land via market forces is a very bad idea. You have to draw them away from the land by alternative and better-paying employment.

somnath · Post by **somnath** » 13 Aug 2015 17:43

^^^Arun Jaitley doesnt say anything to contradict the point I am making. Irrigation is of course important to agriculture - its ad oculos. The issue is that agriculture has been suffering from negative terms of trade for decades now, its an irreversible process. The way govt has been trying to address that is by increasing MSPs, that act as a support mechanism to artificially boost terms of trade. Similar to the West, that also subsidises farm income.

Issue is that resources arent infinite, and most importantly continuous increases in MSP is inflationary in a country like India (we saw that in the UPA years), besides impacting 70% of the farmers the most (as they dont manage to sell to FCI, but are net buyers of grain themselves).

The way to tackle the situation is to make agriculture competitive through a basket of measures, one of them being indsutrialise it to trasnfer risks of the business from the most vulnerable sections to enterprises. Protecting the marginal farmers is best done through direct interventions like investment in education, health, cash transfers (including NREGA).

We need to decouple ownership of land from the profession of farming in order to start the process of weaning large numebrs of people away from the currently unremunerative vocation.

Abhay_S · Post by **Abhay_S** » 13 Aug 2015 19:10

disha wrote:^^ Singha saar - +1. If all kinds of Dal are brought back to the poor's kitchen - we would have a very healthy and economically progressive population!

What we need is a Dal revolution - not a green revolution for the next gen!

http://indianexpress.com/article/opinio ... ess-bhaat/

Abhay_S · Post by **Abhay_S** » 13 Aug 2015 19:21

Madhya Pradesh created a river grid. And both of them, Gujarat, which was a dry state with less rainfall, for almost a decade as a result of this campaign has a double-digit growth in agriculture.

Madhya Pradesh is the most fascinating experience, because it's considered one of the sick states in India, one of the least-performing states. And suddenly, it's turned around, on the backbone of agriculture. I've been repeating their figures. The last three years it was 18 percent, 20 percent and 22 percent growth

can someone point me to any detailed articles regarding the MP agriculture? most of what i have read is not to detailed.

Kakkaji · Post by **Kakkaji** » 13 Aug 2015 21:10

States sidestep stalled reform, go it alone to woo investment

Theo_Fidel · Post by **Theo_Fidel** » 13 Aug 2015 21:21

I’m with Somnath on this one. While there might be some momentary blips the long term trend for agriculture is very clear. It is a declining factor in our economy meaning the bargaining power of farmers is declining. Even if there are a few years of cash flow due to this or that project, the long term projection is still very bleak, and if people don’t move to another sector of the economy on economic bankruptcy will arrive sooner or later. If there is a period of cash flow people should be told to use it to prepare for the long term decline that is coming, else their earning will continue to decline relative to everyone else. And I say this as a person who still farms his land.

In the even longer term it must be recognized the much of agriculture in India is being done in marginal agricultural areas. The prime agricultural areas in India are the enormous deltas of the East coast, the Gangetic plains and the Punjab plains. All other areas will have a tough time competing with these regions. Once the high productive areas are freed up and start approaching world level productivity, they alone can more than feed the nation. Not dissimilar to how California put the rest of USA out of business other than the low margin crops of Corn/Wheat and Soybeans. Depending on agriculture for prosperity is a recipe for disaster. Any state that overly favors it today will pay a terrible price in the longer run.

The ultimate situation is agriculture will be less than 5% of the economy and so only 5% of people can be employed in it. On a good day...

Vayutuvan · Post by **Vayutuvan** » 13 Aug 2015 21:40

somnath wrote: Large enterprises will be able to bring scale, technology and be able to be flexible basis market demand.

Probably the small farmers who go out of business would not be employed by the large corporations. The solution is worse than the problem. It has to be organic (no pun but can be that too) movement to consolidation. Remove land ceiling and let the market discover prices of farming land - lease or otherwise. But there should be enough employment available for 30+ year olds in agri., as their farming knowledge of old methods is not enough to become management employees in the new agri corporations. Workforce in this age group are not only not suitable for working the machinery, maintenance and repair of the equipment, take instructions but also greater mechanization and consequent reduction in the workforce, most of them would not be absorbed in the new scheme of things.

In the U.S. Farming workforce is 3% of the national workforce. Even if one adds illegal farm workers into the mix, it will not be more than 10% which is a very lose upper bound. Assuming that in India we cannot go to that level of mechanization, we will end up having say 20% workforce in the agri. What will be done with the rest - iirc- ~32%?

Sri Pitroda a decade back has said in a lecture that the govt. - at that time it was fag end of NDA1 - was very keen to bring in reforms in agriculture sector. They formed a committee of experts of which he was a part. Probably all those things fell by the way side after the first MMS UPA.

I would not speculate on who the culprit(s) could have been. Current govt. is certainly focused on agri. As much as on industrial sectors and they are business friendly, but do not expect a revolution overnight.

Vayutuvan · Post by **Vayutuvan** » 13 Aug 2015 21:45

Adding to A_Gupta's point of alternate employment, that cannot happen in vacuum. If infra development is dependent on LAB and it is getting delayed, how exactly India would be able to shift some of these farm workers to other employment? India is different from both the U.S. and China. May be a little closer to Japan in that respect.

Theo_Fidel · Post by **Theo_Fidel** » 13 Aug 2015 22:41

Vayu saar,

I agree.
For some reason every 6 months we go through this exact same argument. Among Indians there is no consensus that farming has to be given up for education and industrial/service jobs.

disha · Post by **disha** » 13 Aug 2015 23:14

I am horribly astounded by the idea of farm consolidation and large farms.

The canard that only large mechanized farms are productive is easy to spread. It is precisely due to large farms that we have less food items in our food basket.

Further due to large farms, there is less innovation.

Just like any nation grows on its small business and small entrepreneurs., so is the case with small farms. A 2-bigha jamin (a quarter-acre plot) in most of the places in India if one can manage the farmland properly., can earn a revenue of @120k rupees per year (note a family of four lives off the farm in a 400 sq. ft. home). All the revenue that is generated is ploughed back into the economy and not stored on to a CEOs balance sheet.

A small farm can also be appropriately mechanized. Anyway., just because the farm productivity in India was let to go to seed in last 60 years does not mean that small farmers should be moved off the land and stuffed into factories and government sponsored take overs of their farms be enabled. That is plain wrong.

If the farmer decides to migrate to more remunerative vocations., that should be a personal choice.

disha · Post by **disha** » 13 Aug 2015 23:32

Theo_Fidel wrote:
The ultimate situation is agriculture will be less than 5% of the economy and so only 5% of people can be employed in it. On a good day...

Again I shake my head at the baki math! Half of Indian population *do not* contribute to GDP directly at all! For example, all babies till 6 months - they are just parasites attached to their mothers - all they do is drink milk and poop and *do not* contribute a single paisa to GDP directly!! Same can be said for all kids till they join workforce and all retirees out of the work force.

Have a great day discussing economics and gdp growth when baki math and logic is used.

Anyway., thanks for the chart theo.

It is easier to increase India's GDP growth. First arrest the GDP contribution of agriculture to India's GDP growth and second start increasing it.

Take example of Guar - the guar gum is used in fracking (and other food processing industries). Is also used as plasticizer in explosives. Can it be used in solid motor rockets? If it can be used in large rockets - can it be used in say small rockets or diwali? Again that is a single point example. Did a systemic study of using food and cash crops for industrial use has been undertaken? Has it been propagated to small farms? For example - take karanjia oil. Do we have nurseries which guarantee a minimum output of oil given certain parameters for growth and maintenance?

Has any effort on improving the farm productivity outside of Modi's mantra of "more crop per drop" has been made? Has people seen the date/oil seed revolution in Kutch? Even this forum was in stupendous disbelief when it was pointed out that MP has achieved 10% growth YoY over 10 years. If marginal states like Guj/MP can do it - what is stopping UP and Bihar from achieving the same?

All I find is a lazy and very dishonest evaluation of "follow the US model and apply it to India". That is, kick off the small farmers from their land and create large land for chorporate farming! If Chorporates were farming that efficiently, they will be owning large tracts of land in Raj/Guj and running without support from Government for primary inputs.

Bottomline - the way out for higher economic growth is to *not* see farmlands and small/marginal farmers as problems but potential opportunities. Improve their productivity and improve their standard of living and net focus on improving the GDP contribution from agriculture.

[PS: I am with Vayu Tuvan'ji on this respect]

ShauryaT · Post by **ShauryaT** » 13 Aug 2015 23:59

vayu tuvan wrote:Adding to A_Gupta's point of alternate employment, that cannot happen in vacuum. If infra development is dependent on LAB and it is getting delayed, how exactly India would be able to shift some of these farm workers to other employment? India is different from both the U.S. and China. May be a little closer to Japan in that respect.

The issue of Land is a vexed one. Think of this from the perspective of the person holding the do bigha zameen. All his livelihood, his entire identity is tied to that piece of land. Put this in the context of the "experience" so far, with money lenders, banks, local politicians, bureaucrats and even the local community mired in caste groups in most of the country. The following video is a dramatization of the lack of justice and the trust deficit that has been built up but these are the real issues a lack of trust, broken promises, indebtedness, a breakdown of governance, emotions and justice. Is it any wonder, the LAB has landed in trouble?

ShauryaT · Post by **ShauryaT** » 14 Aug 2015 00:09

Theo_Fidel wrote:Vayu saar,

I agree.
For some reason every 6 months we go through this exact same argument. Among Indians there is no consensus that farming has to be given up for education and industrial/service jobs.

Again from a relatively well off farmer's perspective in some regions, where a 3 crop per year land is being sought to be taken over by the state and where in these local communities a lot of young boys are sitting around with various so called degrees and no commensurate job to do, there is a question on the "value" of education for some of these well of farmers. Couple this with all the misgovernance, lack of trust and justice over decades, the question of consensus will remain a question till the point, where the education can be decidedly matched to productive skills that can be utilized by the rural youth.

I do not think the big bang central government led chinese style approach can work in India.

Vayutuvan · Post by **Vayutuvan** » 14 Aug 2015 01:59

Disha: Actually we (our company) are looking at leasing about 40 acre land. Surprisingly for two year lease money we can actually buy the land a little away from the place where we have identified the lease farm. Now there is a difference in perspective between me and somnath/suraj/amit and other economists on BRF. when I talk big money it is in single digit crores if that. But thy talk big money it is 3-5 digit crores at least.

By the way 2 bigha zamin is about 2/3 of an acre. At home here in the US, our lot is about 1/2 acre and we have a small veggie patch - 16x24 where we grow veggies for 4 months of summer. Once harvested, cleaned, cut, and stored in a freezer or two, they are half of our yearly veggie needs. We are completely vegetarian. quarter acre may be a litle too small but 2/3 acre can certainly feed four people comfortably except for rice/pulses/corn/sorghum. Of course, people also need sugar, fruits, milk (a water buffalo or two will do it) but what about education?

disha · Post by **disha** » 14 Aug 2015 02:31

vayu tuvan wrote:We are completely vegetarian. quarter acre may be a litle too small but 2/3 acre can certainly feed four people comfortably except for rice/pulses/corn/sorghum. Of course, people also need sugar, fruits, milk (a water buffalo or two will do it) but what about education?

You mean literacy.

Ask a simple question., if the fertility replacement rate is stable - that is the overall population is stable - then what is the need for advanced literacy in that society? This is more of a thought provoking statement.

I do agree that a 2/3rd acre of plot will lead to marginal livelihood. A full (or complete) livelihood may require more than that. Maybe 5 acres of land (some 7x more). A 5 acre of land is puny in US terms. Average farm size in US at @400 acres is 80x more!

My whole thrust is to break the logic that for India grow GDP via improved farm productivity - large farms are required. This is a canard and needs to be thrown in dustbin.

For India to grow GDP in farming., they just need improved farm productivity. That means proper irrigation, soil management and scientific inputs. Put it this way, Indian farmer is not a burden but an under-utilized and over-abused resource. Give them proper and modern techniques and make them productive and agriculture will become both a foundation and central pillar for nation's economy.

Now coming to education., I take it how will you obtain land for creating educational institutes/hospitals and industrial centers? I will give you another statistic - take all the worlds' population - each and every human - including the babies and old who contribute zero to the GDP and put them in Texas. Yes round them up and put them in Texas. The average density will be still less than the average density of New York. Further - farmland the size of California will provide enough resources for food and textile for this dense New Texas.

A_Gupta · Post by **A_Gupta** » 14 Aug 2015 02:54

somnath wrote:
We need to decouple ownership of land from the profession of farming in order to start the process of weaning large numebrs of people away from the currently unremunerative vocation.

The ownership of land from the profession of farming is already decoupled. I assert that landless laborers are in the profession of farming, and they don't own land, being landless. How many of them are there? Per this article it is 56% of rural households that are landless.
http://indianexpress.com/article/india/ ... d-reforms/

The reason so many are in this "currently unremunerative vocation" of farming is

a. we aren't providing the necessary infrastructure (such as irrigation, post-harvest storage) to make it more remunerative.
b. we aren't providing alternative means of earning a livelihood.
c. the historical reason is that as the British destroyed Indian industries (e.g., textiles), the people had no alternative but to work the land.

You take away the land ceiling now, and all that will happen is that big bosses will make offers that the poor person with his 2 bighas of zameen cannot refuse; or will get them into debt and snatch away the land, and you'll create a whole additional class of landless laborers, over and above the current 56% of households.

The time to lift the land ceiling will be when you have large numbers of people finding and moving to other jobs, in services or manufacturing, and then consolidation of small land holdings into larger ones will be natural.

FYI - in the West the most food wastage happens at the final consumer, the harvest -> market (wholesale --> retailer) --> consumer is very efficient. In India, the most food wastage occurs between harvest --> market, the rest of the chain is pretty good. But all this wastage represents lost income for the farmers.

One of the things farmers have to be able to do is losslessly store their harvest to be able to sell at an advantageous price point, not during the price drop because of the temporary glut that is created at harvest.

PS: " to start the process of weaning large numebrs of people away from the currently unremunerative vocation" -- people aren't into being landless agricultural labor because they love it and they need weaning away from it like breast-fed babies need to be weaned; they would abandon it in an instant if there was some realistic choice for them. Take away even what they have now would be bad, inhumane policy, it would make the British Raj look like a great advocate of Indian welfare in comparison. It would be a disaster of magnitude unparalleled in Indian history. You get them to move by providing better choices, which is something they are too destitute to do for themselves, by the way.

PPS: the proposed policy to remedy "why so many people are in a unremunerative vocation" is kind of like spending 2% of GDP on primary education where every other nation spends 5% and then asking "why is the literacy rate so low?" Very Pakistani attitude, if you ask me.

Theo_Fidel · Post by **Theo_Fidel** » 14 Aug 2015 03:26

ShauryaT wrote:Couple this with all the misgovernance, lack of trust and justice over decades, the question of consensus will remain a question till the point, where the education can be decidedly matched to productive skills that can be utilized by the rural youth.

I can attest to this. No farmer wants to give up his tiny land holding because in that tiny plot he is the boss. Again and again I have heard the story of how badly workers are treated when they do go to work. Many run away ASAP and return to their plot of land. No doubt about it people are sentimentally attached to their land. Never mind that only by getting and education and moving to where the jobs are have people prospered. Even on BRF I doubt there is a single person living off his land, all have given up their land and moved far far away in some cases. Being attached to your land very much causes poverty, I have seen it with my own eyes. Even in that movie saar, being so attached to his land devastated the farmer and completely reduced his opportunities. In 3 months in the city he could earn more than his entire land was worth, what does that tell you. But the unfortunate thing is workers are treated quite badly in todays India, there is little justice or trust or respect.

Also make no mistake, even what look like prosperous farmers today will go broke as the economy expands and general per capita income increases. There is no way one can get even $5,000 per capita income, meaning $20,000 for family of 4, even from 20 acres of land. The numbers are against you, even in 2-3 crop a year land. Without raising the income to that level, there is no money for infrastructure, or roads, or education, or administration, or housing, or electricity etc. which is why our rural areas look so devastated and folks can't afford to hire skilled people to do the things that need to be done, and the educated sit around waiting for work.

One little data point, in order to keep its small plot farmers solvent Japan pays it farmers 7 times the world price for rice.
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A_Gupta wrote:FYI - in the West the most food wastage happens at the final consumer, the harvest -> market (wholesale --> retailer) --> consumer is very efficient. In India, the most food wastage occurs between harvest --> market, the rest of the chain is pretty good. But all this wastage represents lost income for the farmers.

Do you have any data on this. I would be interested in seeing it. Personally think it is a bit more nuanced than that.

Hitesh · Post by **Hitesh** » 14 Aug 2015 03:30

Disha, I disagree with your posts wrt small scale farming.

In today's world, small scale farming has no place. At the very best, it is subsistence farming. There is no way in hell you can grow your income with a small plot of land. You would maximize your earning ability because a plot of land can only grow much. You cannot increase productivity beyond a certain point or you will destroy any long term viability of the land itself. So in order to grow your income you either need to acquire more lands or go vertical, i.e., building more farmland on top of existing farmland which is a very expensive proposition. Moreoever, with small scale farming, enchroachments and loss of lands due to easement rights and division, you end up wasting a lot of land. In fact you are way better off in renting a land to a corporation that can farm your land and share a portion of the profits with you while you use your time to build a skilled profession (can be related to agriculture) and live in the town or village center because you get two sources of income, one from the farmland and one from your profession (You even can work for the corporation that requires manpower such as skilled operators of machinery, accounting, food processing, trading/bartering, etc). That is the best approach.

Your approach leaves no ability to effectively grow your income.

Vayutuvan · Post by **Vayutuvan** » 14 Aug 2015 03:36

Hitesh: There are no jobs in India. What you are saying is how it works in the US. That is where you are, I presume?

ShauryaT · Post by **ShauryaT** » 14 Aug 2015 03:41

Theo_Fidel wrote:
Also make no mistake, even what look like prosperous farmers today will go broke as the economy expands and general per capita income increases. There is no way one can get even $5,000 per capita income, meaning $20,000 for family of 4, even from 20 acres of land. The numbers are against you, even in 2-3 crop a year land. Without raising the income to that level, there is no money for infrastructure, or roads, or education, or administration, or housing, or electricity etc. which is why our rural areas look so devastated and folks can't afford to hire skilled people to do the things that need to be done, and the educated sit around waiting for work.

One little data point, in order to keep its small plot farmers solvent Japan pays it farmers 7 times the world price for rice.

Have some experience with the numbers. My family holds some farming land in that acerage range, purely recreational and not dependent on that income in any manner. We started this project about 7 years ago and after a lot of trial and errors, automation, irrigation, consultants and what not, the yields are up, the variety grown is more cash rich, however no way the project cuts over $20K per capita income, after all said and done and this is after not even doing strict accounting of capital assets or sweat time.

The truth of the matter is, there is no way to depend on farm income and thrive. Survival is the only thing that can be attained.

Vayutuvan · Post by **Vayutuvan** » 14 Aug 2015 03:44

Theo saab: Same answer to you as for Hitesh ji. Where are the jobs in India? Lots of graduates are jobless. All of them cannot go to cities which are over-crowded, accommodation and schooling for children, transportation (by necessity city people have to travel longer distances for everything from vegetables, groceries to shopping for clothes however occasional and entertainment if it is the budget of the low earning workers are un-affordable. As it is most cities are already bursting at the seams - there is just no place for new people especially if they do not have the money to pay for the services. For example, it is impossible to travel in mumbai locals even if you are willing to first class fares. Unless you are boarding at the terminals, it would be a struggle to board. The kicker is that Mumbai is supposed to have (and probably it is true that it has) the best mass transit in India.

Hitesh · Post by **Hitesh** » 14 Aug 2015 03:50

vayu tuvan wrote:Hitesh: There are no jobs in India. What you are saying is how it works in the US. That is where you are, I presume?

If there are no jobs in India, then where is the growth centered? India is growing at 7%, faster than the population growth, so there IS a demand for labor. There is a reason why tens of millions leave the rural areas and migrate to the cities, looking for work. What I am proposing is that they do not need to leave their villages or farmland for a faraway land such as the cities and give up their farmland. They learn the skills related to agriculture such as how to maintain long term storage, transporting goods, maintaining equipment and machinery and band together with other like-minded people and form a corporation or partnership where they pool the lands together and grow the crops together and sell the crops together. That way, they achieve better bargaining position with respect to prices of their crops since middlemen wont try to undercut each farmer by taking the next lowest bid. Thus, when they get the income, they can decide to split the profit or use it together to build better basic infrastructure that benefit their whole group immensely such as water treatment plants, irrigation systems, power systems, etc. That way, they can jumpstart their local economy at home and with the jumpstart comes with more demands for a wide diverse array of skilled and unskilled jobs.

Vayutuvan · Post by **Vayutuvan** » 14 Aug 2015 04:00

Hitesh: Yes, that's what had been tried many times in India has succeeded too in most instances. But all these are limited small geographical areas. One is Maharashtra and the sugar cooperatives. The other is White Revolution started in Anand which was a great success. If my guess is right we have some people here on BRF who are graduates of IRMA. But each state has different conditions - and even with states different regions with different conditions - skills wise, infrastructure, access to water, power, and sometimes yes even the work ethic. In India one solution which worked in one part cannot be transplanted into another part leave alone what worked in another country. The complexity overwhelming. Any kind of mathematical modeling is riven with special cases which i not the case in the US. There is certain uniformity across the country here in that certain base assumptions can be made without any fear of them being grossly wrong. That is not the case in India.

But still what you say is true and can work. Work ethics has to improve so does the contractual commitments.

Theo_Fidel · Post by **Theo_Fidel** » 14 Aug 2015 04:12

vayu tuvan wrote:Theo saab: Same answer to you as for Hitesh ji. Where are the jobs in India? Lots of graduates are jobless. All of them cannot go to cities which are over-crowded, accommodation and schooling for children, transportation (by necessity city people have to travel longer distances for everything from vegetables, groceries to shopping for clothes however occasional and entertainment if it is the budget of the low earning workers are un-affordable. As it is most cities are already bursting at the seams - there is just no place for new people especially if they do not have the money to pay for the services. For example, it is impossible to travel in mumbai locals even if you are willing to first class fares. Unless you are boarding at the terminals, it would be a struggle to board. The kicker is that Mumbai is supposed to have (and probably it is true that it has) the best mass transit in India.

I don't have a good easy answer. There are jobs in cities but as you said they are quite crummy at present.

Unfortunately administration in India never thought it would come to this despite many many warnings and so our cities are not ready. But they are coming, one way or another they are coming. Bengluru has doubled in population in 15 years. It will double again. I have predicted that Chennai will be 25 million strong in our lifetime. Bengluru and Hyderabad too will be 25 million strong. Look around India, every commercial capital in a state will be 15 million strong in our lifetimes. The young have no appetite for farming though they may hold onto the land.

A_Gupta · Post by **A_Gupta** » 14 Aug 2015 04:18

Theo_Fidel wrote: Do you have any data on this. I would be interested in seeing it. Personally think it is a bit more nuanced than that.

Look up FAO, for instance. This is not the one I remember, and is not India-specific.
http://www.fao.org/docrep/014/mb060e/mb060e.pdf (PDF file)

And yes, it is much more nuanced than my blunt post, which frankly, was posted in a fit of exasperation.

We have to distinguish between "food loss" and "food waste" which I did not do in my post. It divides up the universe into several categories, such as cereals, oil seeds, fruits&vegetables, dairy, meat, etc.

From the above:

Food losses in industrialized countries are as high as in developing countries, but in developing countries more than 40% of the food losses occur at post-harvest and processing levels, while in industrialized countries, more than 40% of the food losses occur at retail and consumer levels.

In developing countries and, sometimes, developed countries, food may be lost due to premature harvesting.

Poor farmers sometimes harvest crops too early due to food deficiency or the desperate need for cash
during the second half of the agricultural season. In this way, the food incurs a loss in nutritional and
economic value, and may get wasted if it is not suitable for consumption

Poor storage facilities and lack of infrastructure cause post-harvest food losses in developing countries. Fresh products like fruits, vegetables, meat and fish straight from the farm or after the catch can be spoilt in hot climates due to lack of infrastructure for transportation, storage, cooling and markets (Rolle, 2006; Stuart, 2009).

Prevention: investment in infrastructure and transportation. Governments should improve the infrastructure for roads, energy and markets. Subsequently, private sector investments can improve
storage and cold chain facilities as well as transportation (Choudhury, 2006).

Lack of processing facilities causes high food losses in developing countries.
In many situations the food processing industry doesn’t have the capacity to process and preserve fresh farm produce to be able to meet the demand. Part of the problem stems from the seasonality of production and the cost of investing in processing facilities that will not be used year-round.

Prevention: develop contract farming linkages between processors and farmer. Governments should create a better ‘enabling environment’ and investment climate, to stimulate the private sector to invest in the food industry and to work more closely with farmers to address supply issues

Inadequate market systems cause high food losses in developing countries.
To minimize losses, the commodities produced by farmers need to reach the consumers in an efficient way. There are too few wholesale, supermarket and retail facilities providing suitable storage and sales conditions for food products. Wholesale and retail markets in developing countries are often small, overcrowded, unsanitary and lacking cooling equipment

The non-availability and unreliability of electricity supply in India certainly contributes to the problem of reliable food storage.

A_Gupta · Post by **A_Gupta** » 14 Aug 2015 04:21

Here is a recent news-item:
http://www.ft.com/cms/s/2/c1f2856e-a518 ... z3ik3hzi9A

According to estimates by the UN’s Food and Agriculture Organization (FAO), about 40 per cent of India’s fresh fruit and vegetables – worth an annual $8.3bn or so – perishes before reaching consumers. Each year, some 21m metric tonnes of wheat, especially grain – an amount almost equal to Australia’s total annual production – rots in India because of improper storage in the custody of the government-controlled Food Corporation of India.

India is not unique in the level of its losses. According to the FAO, 42 per cent of fruit and vegetables grown in the Asia-Pacific region, and up to 20 per cent of the grain, never reaches consumers because of poor post-harvest handling.

But the magnitude of food losses in India dwarfs those in other countries, given the country’s size and the scale of its farm output, while the context in which this food goes to waste is also far more serious.

A_Gupta · Post by **A_Gupta** » 14 Aug 2015 04:29

Here is another paper (PDF), which for the first several pages, quotes the previous paper that I provided, and only at page 11 gets to India.
http://www.fao.org/fileadmin/templates/ ... -13-13.pdf

PHL=post-harvest loss

Basavaraja, Mahajanashetti, and Udagatti (2007) conducted a study to estimate PHLs on
cereals in the state of Karnataka (India). The study covered rice and wheat and was designed to
identify which stage of the post- harvest is responsible for the greatest loss (Appendix I, Basavaraja, Mahajanashettiand Udagatti, 2007). Survey data was collected from 100 farmers, 20 wholesalers, 20 processors and 20 retailers for the year 2003-04 (Appendix I I). Linear regression was used to examine the role of different factors affecting post-harvest losses in the rice supply chain from the field to processors and sellers.The storage stage was identified as contributing to the highest percentage weight losses along the entire supply chain. Losses at the farm level were estimated at 3.82% for rice and 3.28% for wheat. Education level of farmers and weather conditions also had significant impact on post-harvest losses.

Another study conducted in Punjab (India) provides an example of postharvest loss estimation for a perishable product. The study was conducted for kinnow (citrus fruit) using random sampling technique in the largest production region of the state in 2004-05 (Gangwar, Singh and Singh, 2007). After selection of the region, four villages were randomly chosen and the kinnow growers were grouped into three categories depending upon the size of their orchards: (1) less than 2 ha; (ii) 2-5 ha; and (iii) above 5 ha. Data were gathered during the fruit harvesting and marketing seasons through pre-tested questionnaire by personal interview method. Simple averages and percentages were used to calculate the post-harvest losses at different stages identified in the kinnow supply chain.

In the kinnow study, two methods of harvesting were adopted. The first method involves just dropping them on the ground and the second one uses clippers, followed by the collection of fruits in crates or bags. In the first method PHLs at the harvesting level were recorded to be 10.63 % compared to only 2.51 % in the second method. PHLs also varied depending upon the distance to the market. When they are marketed to medium-distance markets, PHLs were 5.15% whereas for long-distance markets they were 8.17 %. Overall losses were 14.47 % for the Delhi market and 21.91% for the Bangalore market.

In the Punjab citrus case, two stages appear to be critical, harvesting and transportation. Significant losses could be prevented by using harvesting techniques which prevent damage to the fruit. Similarly, losses could also be minimized by either reducing the distance to markets, or likely by using climate-controlled transportation with proper packaging of fruit. On the other hand, the Karnataka study indicated that for cereals such as rice and wheat, 75% of the total PHLs occur at
farm level and 25 % at market level. Storage (33-35%) was the biggest contributor of these losses along the entire supply chain.

A_Gupta · Post by **A_Gupta** » 14 Aug 2015 04:33

There is another report about food waste and loss, from the Institution of Mechanical Engineers, available on a link on this page:
http://www.imeche.org/knowledge/themes/ ... lobal-food

disha · Post by **disha** » 14 Aug 2015 04:37

ShauryaT wrote:Have some experience with the numbers. My family holds some farming land in that acerage range, purely recreational and not dependent on that income in any manner. We started this project about 7 years ago and after a lot of trial and errors, automation, irrigation, consultants and what not, the yields are up, the variety grown is more cash rich, however no way the project cuts over $20K per capita income, after all said and done and this is after not even doing strict accounting of capital assets or sweat time.

The truth of the matter is, there is no way to depend on farm income and thrive. Survival is the only thing that can be attained.

ShauryaT'ji - you need to be more specific. Is the land in US or in India?

20 acres to get $20,000 *total income* (not per capita., since per capita for a family of four will by 80k - so I take the lower $20k) will be $1000 per acre *income* (not revenue - this is income after taking out the costs). I think anywhere a $1k (or Rs. 60000) per acre *income* per year is an excellent thing!!!

If it is in India., I am ready to leave my day job right away and do an R2I.