Monday, May 18, 2009

Really good news...

I think. The staggering ineffectiveness of Indian government is partially due to the standard curse of its parliamentary system and the lack of a single party majority to enable action.  As a result, the world's largest democracy makes single-party rule in China look like a brilliant idea in comparison. 

But the election recently concluded handed the Congress Party a sweeping victory and hopes India might begin to reach toward its potential are rising.  The election certainly was welcome news on Wall Street.  One reason is a glimmer of hope for freer trade.

Other good news out there: The communists were put to rout in the Indian elections. This suggests that India will take new steps to liberalize its economy, including foreign investment, free trade, privatization, and tax cuts. This is a big plus for global economic recovery. And the Indian elections may well have triggered the stock rally right from the opening bell this morning. [More]

But along with a more accommodating approach to trade, the bigger economic impact for farmers here will be efforts to encourage industrial development and emancipate some of the 600 million subsistence farmers.

In Singh’s first term, Communist resistance stalled a bill to raise the foreign investment ceiling for insurers to 49 percent from 26 percent. He also failed to pass a bill aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. His plan to permit global retailers into India also foundered.
Kamal Nath, a Congress lawmaker and India’s trade and industry minister, said in an interview last week that the government will continue its focus on “stimulating the rural economy” as a means to spur growth. More than three-fifths of Indians live in the countryside.
Congress has introduced a rural jobs program, written off farmers’ loans, and created economic zones, many of them located in the countryside, to create employment, boost consumer demand and win popularity. [More]
We often look at rural poor in other countries as cheap-labor competitors.  Too often our response is to prod the US government for protection or subsidies from low-priced commodities they produce, such as cotton and sugar.  What might be a better strategy is to encourage and even support efforts to raise per capita income to the point where the vast majority of citizens can add more protein to their diet.
Another qualitative aspect of food production has been India's efforts to identify, evolve, and propagate food-grain varieties with more-than-average nutrient content. Protein and lysine have received special attention. High protein/high lysine lines of cereals and millets have been identified, but have often been found not to breed true, for reasons not fully understood. Improving protein content and quality of staples was conceived as a method of improving the quality of diets, at a time when habitual Indian diets were considered to be protein-deficient. This concept has changed and the primary bottleneck is now believed to be energy. Cereal-pulse based diets have been found to be capable of meeting protein needs, when consumed in amounts that satisfy energy needs. The relevance of efforts to improve protein quality, therefore, needs re-evaluation.
At the national level, food production appears to be adequate to meet demands, provided there is equitable distribution. In actual practice many households do not get enough food because of poor purchasing power Among families whose daily per capita income is below Rs 3/-, over one half consumes an energy-deficient diet. A proportion of such households do not get enough protein either - a finding that explains the widespread childhood energy-protein ma/nutrition. The impressive buffer stocks of food grains held in recent years is a reflection of this low consumption. They would disappear should the purchasing capacity improve. Current levels of production under such circumstances would not be enough to build reserves.
Due to increased agricultural production, food-grain import has, normally, all but stopped. What has been achieved in the Indian agricultural situation has been the prevention of serious famines, which occurred in earlier years. But it does not appear to have made much impact on the widespread chronic malnutrition. To be able to reduce chronic malnutrition, increase in food production has to be of a magnitude larger than that seen at present. This alone will not suffice. Food grains have to be within the price range of the great majority. Also, national nutrition policy and national agricultural policy will have to be more compatible. [More]
Of course, this won't do us (grain farmers) much good if we allow our livestock industry to languish or even decay by focusing solely on ethanol. With opportunities like India on the horizon, rethinking our obsession with corn prices and the expense of demand might be in our best interests.

1 comment:

Anonymous said...

So what will happen to the 660 million subsistance farmers who farm maybe an acre, train them for call centers? While this type of arming is not good, eliminating them with cheaper ag imports creates the problem of what to do with them.