India! I dare you to be rich

Category Archive: Public policy

The MS Swaminathan report (National Commission on Farmers) is no solution to farmers’ problems!

I did not have time earlier to review the key recommendations of the MS Swaminathan Report. I'm going to quickly comment on key recommendations and will seek input from Mr Sharad Joshi and Dr Manvendra Kachole. My final position on these issues will be informed by further discussion/ debate.

Preliminary view: THIS IS A VERY POOR REPORT. FROM THE SAME SOCIALIST STABLE FROM WHICH MOST OF INDIA'S ILLS ARISE.

Land Reforms

—Distribute ceiling-surplus and waste lands; [Sanjeev: The mess that is ceiling surplus should now come to an end. The ceilings should be abolished asap. In the meanwhile, any wasteland could be redistributed but this is a GHASTLY and ugly piece of work, which is a source of great immorality and corruption. This socialist intervention must end.]

—Prevent diversion of prime agricultural land and forest to corporate sector for non-agricultural purposes. [Sanjeev: Agreed, to the extent that the LOCAL COMMUNITY - i.e. local government - decides, subject to overall zoning made centrally - for the overall progress of the state/economy]

—Ensure grazing rights and seasonal access to forests to tribals and pastoralists, and access to common property resources. [Sanjeev: this is a property rights issue. The use of common land should be decided by the local government/ community]

—Establish a National Land Use Advisory Service, which would have the capacity to link land use decisions with ecological meteorological and marketing factors on a location and season specific basis. [Sanjeev: Sounds like a property-rights body. No in-principle objection]

—Set up a mechanism to regulate the sale of agricultural land, based on quantum of land, nature of proposed use and category of buyer. [Sanjeev: This is ridiculously complex and unsustainable. Why get involved in such details after a zoning decision has been recorded?]

Irrigation

—Increase water supply through rainwater harvesting and recharge of the aquifer should become mandatory. "Million Wells Recharge" programme, specifically targeted at private wells should be launched. [Sanjeev: Anything that is mandatory imposes a cost. Who is going to bear this cost? Are we saying government functionaries will get involved in building water harvesting features in each farmer's land?]

—Substantial increase in investment in irrigation sector under the 11th Five Year Plan apportioned between large surface water systems; minor irrigation and new schemes for groundwater recharge. [Sanjeev: No issue in principle, but this should be largely promoted through private cooperatives, facilitated by professional managers].

Productivity of Agriculture

—Substantial increase in public investment in agriculture related infrastructure particularly in irrigation, drainage, land development, water conservation, research development and road connectivity etc. [Sanjeev: No issue in principle, but STRONG objections to this being implemented through existing governance arrangements. Basic governance system reform is critical, else both inefficiency and corruption will dog us at every step.]

—A national network of advanced soil testing laboratories with facilities for detection of micronutrient deficiencies. [Sanjeev: Need to study how this is done in other parts of the world. Not sure why a government agency - totally unresponsive to the market, should dabble in this trivial task. Private sector can readily supply IF there is a genuine need]

—Promotion of conservation farming, which will help farm families to conserve and improve soil health, water quantity and quality and biodiversity. [Sanjeev: What is the meaning of "promotion"? Why won't farmers do this on their own if it is in their own interest?]

Credit and Insurance

—Expand the outreach of the formal credit system to reach the really poor and needy. [Sanjeev: This is a motherhood statement. Even as the government has choked ALL private enterprise and competition in this sector, we are now repeating the same thing. Why not let the credit market FREE!? - under stern regulatory control?]

—Reduce rate of interest for crop loans to 4 per cent simple, with government support. [Sanjeev: This is NOT a good idea at all. Yet one more government subsidy, one more scheme. Liberate the market and regulate it well]

—Moratorium on debt recovery, including loans from non-institutional sources, and waiver of interest on loans in distress hotspots and during calamities, till capability is restored. [Sanjeev: This kind of policy has created sufficient moral hazard for the past 65 years. When are we going to end it?]

—Establish an Agriculture Risk Fund to provide relief to farmers in the aftermath of successive natural calamities. [Sanjeev: NO. This is yet another unnecessary government scheme. Implement an NIT based scheme to directly fund the poorest of the poor]

—Issue Kisan Credit Cards to women farmers, with joint pattas as collateral. [Sanjeev. NO. No more useless government schemes]

—Develop an integrated credit-cum-crop-livestock-human health insurance package. [Sanjeev: Implement the BFN solution which will ensure that everyone gets health care. Why is Swaminathan talking about health?]

—Expand crop insurance cover to cover the entire country and all crops, with reduced premiums and create a Rural Insurance Development Fund to take up development work for spreading rural insurance. [Sanjeev: NO. No government scheme. Just liberalise the insurance market]

—Promote sustainable livelihoods for the poor by improving (i) Financial services (ii) Infrastructure (iii) Investments in human development, agriculture and business development services (including productivity enhancement, local value addition, and alternate market linkages) and (iv) Institutional development services (forming and strengthening producers' organisations such as self-help groups and water user associations). [Sanjeev:  This is something people can do on their own IF we let them free.]

Food Security

—Implement a universal public distribution system. The NCF pointed out that the total subsidy required for this would be one per cent of the Gross Domestic Product. [Sanjeev: This is a BAD idea. Let there be an NIT-type scheme which only funds the poorest. They can buy what they need, from the open market. No leakages to bureaucrats and politicians]

—Reorganise the delivery of nutrition support programmes on a life-cycle basis with the participation of Panchayats and local bodies. [Sanjeev: This, again, is NOT the business of governments. Direct elimination of poverty will enable people to buy the nutrition they need]

—Eliminate micronutrient deficiency induced hidden hunger through an integrated food cum fortification approach. [Sanjeev: This is a pretty strong regulatory intervention. Has been followed in some nations for some products. Worth considering based on proofs, and cost-benefit tests]

—Promote the establishment of Community Food and Water Banks operated by Women Self-help Groups (SHG), based on the principle ‘Store Grain and Water everywhere'. [Sanjeev: NO. This is  ridiculously interventionist]

—Help small and marginal farmers to improve the productivity, quality and profitability of farm enterprises and organize a Rural Non-Farm Livelihood Initiative. [Sanjeev: Motherhood stuff. How can this be done? What's the special advantage a bureaucrat brings in this regard?]

—Formulate a National Food Guarantee Act continuing the useful features of the Food for Work and Employment Guarantee programmes. By increasing demand for foodgrains as a result of increased consumption by the poor, the economic conditions essential for further agricultural progress can be created. [Sanjeev: NO. Only direct elimination of poverty. All other work, including infrastructure, should be professionally done, with proper governance reforms preceding it]

Prevention of Farmers' Suicides

—Provide affordable health insurance and revitalize primary healthcare centres. The National Rural Health Mission should be extended to suicide hotspot locations on priority basis. [Sanjeev: This is a good idea, in principle. The health reforms outlined in SKC agenda will take care of this]

—Set up State level Farmers' Commission with representation of farmers for ensuring dynamic government response to farmers' problems. [Sanjeev: There is no need for another bureaucratic body. Let the government widely consult as part of an Regulatory Impact Statement it prepares]

—Restructure microfinance policies to serve as Livelihood Finance, i.e. credit coupled with support services in the areas of technology, management and markets. [Sanjeev: NO role for government.]

—Cover all crops by crop insurance with the village and not block as the unit for assessment. [Sanjeev: Already discussed above]

—Provide for a Social Security net with provision for old age support and health insurance. [Sanjeev: NO. Only NIT based payments. That's a single payment that will eliminate all poverty at all ages.]

—Promote aquifer recharge and rain water conservation. Decentralise water use planning and every village should aim at Jal Swaraj with Gram Sabhas serving as Pani Panchayats. [Sanjeev:  Agreed, in principle]

—Ensure availability of quality seed and other inputs at affordable costs and at the right time and place. [Sanjeev: NO! This is not the job of government. Let the market supply the needs. Keep bureaucrats out of business.]

—Recommend low risk and low cost technologies which can help to provide maximum income to farmers because they cannot cope with the shock of crop failure, particularly those associated with high cost technologies like Bt cotton. [Sanjeev: Freeing the crop insurance and futures markets will readily resolve this issue]

—Need for focused Market Intervention Schemes (MIS) in the case of life-saving crops such as cumin in arid areas. Have a Price Stabilisation Fund in place to protect the farmers from price fluctuations. [Sanjeev:  MORE SUBSIDY AFTER SUBSIDY. I'm getting sick of the MS Swaminathan report, by now]

—Need swift action on import duties to protect farmers from international price. [Sanjeev: Ridiculous. A free market is the best protection. Sorry, this report is more of the usual socialist nonsense]

—Set up Village Knowledge Centres (VKCs) or Gyan Chaupals in the farmers' distress hotspots. These can provide dynamic and demand driven information on all aspects of agricultural and non-farm livelihoods and also serve as guidance centres. [Sanjeev: Why is government required to do this? Why not private internet cafes? Why does Swaminathan have a PASSION for more government?]

—Public awareness campaigns to make people identify early signs of suicidal behavior. [Sanjeev: That's fine. But in Australia, this is done by Beyond Blue, a not for profit organisation. http://www.beyondblue.org.au/. Surely the Indian social sector can do this on its own?]

Competitiveness of Farmers

—Promotion of commodity-based farmers' organisations such as Small Cotton Farmers' Estates to combine decentralised production with centralised services such as post-harvest management, value addition and marketing, for leveraging institutional support and facilitating direct farmer-consumer linkage. [Sanjeev: Swaminathan doesn't understand the BASICS of markest. All these things will originate on their own in the private sector once you liberate the farm sector]

—Improvement in implementation of Minimum Support Price (MSP). Arrangements for MSP need to be put in place for crops other than paddy and wheat. Also, millets and other nutritious cereals should be permanently included in the PDS. [Sanjeev: NO!]

—MSP should be at least 50% more than the weighted average cost of production. [Sanjeev: When the idea of MSP doesn't exist, why further details?]

—Availability of data about spot and future prices of commodities through the Multi Commodity Exchange (MCD) and the NCDEX and the APMC electronic networks covering 93 commodities through 6000 terminals and 430 towns and cities. [Sanjeev:  Why won't the market supply these systems on its own??]

—State Agriculture Produce Marketing Committee Acts [APMC Acts] relating to marketing, storage and processing of agriculture produce need to shift to one that promotes grading, branding, packaging and development of domestic and international markets for local produce, and move towards a Single Indian Market. [Sanjeev: APMC should go]

Employment

—Accelerating the rate of growth of the economy; [Sanjeev: I thought this was an agriculture report!]

—Emphasizing on relatively more labour intensive sectors and inducing a faster growth of these sectors; [Sanjeev: NO! Just let the people free, for God's sake.]

—Improving the functioning of the labour markets through such modification as may be necessary without eroding the core labour standards. [Sanjeev: I don't know what this means. Let there be a uniform labour law for all employees]

—Encourage non-farm employment opportunities by developing particular sectors and sub-sectors where demand for the product or services is growing namely: (i) trade, (ii) restaurants and hotels, (iii) transport, (iv) construction, (v) repairs and (vi) certain services. [Sanjeev: Why!!!! Let the market free, Mr Swaminathan! I'm happy to teach you the basics of the market.]

—The "net take home income" of farmers should be comparable to those of civil servants [Sanjeev: In fact, in Australia, civil servants get much LESS than farmers. But these farmers are super-educated and highly productive. Let the market decide who gets what]

Bioresources

—Preserving traditional rights of access to biodiversity, which include access to non-timber forest products including medicinal plants, gums and resins, oil yielding plants and beneficial micro-organisms; [Sanjeev: OK, but the ideal would to privatise under regulatory oversight]

—Conserving, enhancing and improving crops and farm animals as well as fish stocks through breeding; [Sanjeev: This is something that government COULD support, provided it is clear that the market will not  do so on its own. A rare third order function for the state.]

—Encouraging community-based breed conservation (i.e. conservation through use); [Sanjeev: Not clear what this means in practice]

—Allowing export of indigenous breeds and import of suitable breeds to increase productivity of nondescript animals. [Sanjeev: THIS IS MOST IMPORTANT. This should be a key focus of government intervention in agriculture]

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What am I ACTUALLY saying about disbanding the IAS? #1

In this post I'm providing the contents of an email sent out by my father a short while ago. In the next post I'll briefly deal with the issues.

Prem Sabhlok
Dear All,
As desired by Sh. Vinay Shankar IAS (retd) former Secretary government of India, I am sending his e-mail for an open discussion. The discussion was initiated by Col Dewan based on views of some learned person sh. Rajput. I do not have his e-mail I.D. Col Dewan may be knowing Sh. Rajput I.D
Kindly express your views freely.
 

Vinay Shankar

Date: Mon, 4 Aug 2014 15:40:32 +0530
Subject: Re: FW: Disband IAS and replace with the world best bureaucratic system

Dear Shri Sabhlok,

That a prominent and respectable writer holds one view does not necessarily make his view the right one for our circumstances. if that is held to be so, we should make a cabinet of all commentators with one of them as PM.

I do not agree that IAS should be abolished. I am not clear whether you endorse what Sanjeev says or Sanjeev echoes your views.
By simply wishing that an alternative system will be free of corruption, be epitome of efficiency and effectivenesss, it will not become so.

In a democrcy, it is the collective character of the people that is reflected in all institutions – political and bureaucratic. In dictatorship, it is possible for the administration to have a different cultural value system from that of the common man and society at large.

Even if you abolish IAS, other central services will remain. In terms of values, they would be much worse than what IAS exhibits. We have seen the Revenue, Customs etc or for that matter take any service. No corruption can thrive in defene purchases unless the Defence Accounts are actively involved. There are exceptions in Defence Accounts such as you, but you do not represent the collectivity of the officers of Defence Accounts.

It is ultimately the political executive that decides whether there will be wrong doing in government transactions. If they want efficiency, honesty, transparency, they will choose officers who would promote these values and if they think that the objective is different, they will choose officers of another type.

Bureaucracy is only a tool. It is the craftsman on whom the effectiveness of the tool depends. In a democracy, the craftsman is the political executive. If he is skillful, he will sharpen the tool and make it fit to do difficult job easily. If he is inefficient, he will blame the tool.

While it is easy to blame the IAS as it cannot defend itself, it cannot be forgotten that it has provided the framework on which despite such heavy odds of poverty, illiteracy and political system that seems bent on exploiting the system to stay in power, there has been relative social stability and peace and unity and integrity in the country.

My thesis is that our consitution was unsuited to the socio-economimc conditions of the country prevailing in 1950 and it continues to be so. It has thrown up in to power the scum of the society and the really talented, sincere, committed people in to resignation and helplessness. It needs to be rewritten by a new constitutent assembly. new Constitution will come up with a new scheme of bureaucracy.

I shall be grateful, if you could kindly circulate my mail to persons whom you had sent your earlier mail regarding the disbabding of IAS.

Prem Sabhok

     E-mail received from Col Dewan with comments from Rajput is forwarded  

    Date: Sun, 3 Aug 2014 18:50:25 +0530
    Subject: Disband IAS and Replace with the world best bureaucratic system
    From: coldewan@gmail.com  

Disband the IAS  Full book 297 pages [1 Attachment]

    It is suggested that all citizens of Bharat read the book, 'Breaking free of Nehru: Let us unleash India' by Sanjeev Sabhlok, Ex IAS , wherein the author recommends the disbanding of IAS;

      ================================

    COMMENT BY RAJPUT

    KILL THE USELESS, CORRUPT & BUREAUCRATIC  DEAD WEIGHT OF INDIAN ADMINISTRATION CALLED “I.A.S”

    A patriot has done a great service to his fellow countrymen/women by writing a book calling for the abolition of INDIAN ADMINISTRATIVE SERVICE (I.A.S.). But in the world of BABOOS and INERT ministers the wish is as futile as Bapu Gandhi’s call to abolish the All India Congress Party after it had shown their “patriotism” by surrendering five provinces to please the Indian Muslims in 1947.

    Still it is the best news of the decade.

    IAS has become a bunch of "BABOONS", totally subservient to the corrupt rulers and politicians, who have shown no initiative, no new ideas and no improvement to reform the crippling system of red tape and bureaucracy that waste years of a citizen's life making him a coolie or moron in the end. Like the ministers, they, too, are corrupt, dishonest and unreliable.

    RED TAPE of the Mogul Era, that had trapped the suffering Hindus under tons of Sharia Law of Koran, was wiped out by the British rulers on one day after they ousted the last senile Mohammedan Emperor in 1857 but since India was again slave colony and the natives had to be kept busy, filling in forms, getting them verified and attested, and re-attested, was necessary under the new complicated system of unending paper work. The citizens were all kept so busy in form filling and queuing up to buy essentials of daily use that they could never think of liberation from the foreign yoke. India had to wait for the end of World War 2 to hope for freedom from foreigners. But as ill luck would have it, NETAJI, Shyama Prasad Mookerjee (http://en.wikipedia.org/wiki/Syama_Prasad_Mookerjee#Death) and SardarPATEL were no more, leaving the field to another anglicised brown skin “coolie” of Empire, Jawaharlal Nehru. Instead of liberating the natives from the crushing load of red tape and bureaucracy he let the IAS create more and more ingenious ways to tie the natives down under pestering rules and regulations. Bribery and corruption flourished. Countless capable Indians (NRI’s) left the native shores, seeking freedoms abroad.

    India is most unfortunate where the natives are brainwashed and conditioned over centuries to willingly give a ride to any foreigner. How they have been charmed by a useless ITALIAN born Sonia Maino, No. 1 security risk, by putting patriotism and self esteem under her foot. Would she like to see a Hindu smiling? Would she wish to cut red tape? Would she speak up for eradication of corruption?

    Given the tolerant, timid and subservient Hindus, our Bharat cannot have a REVOLUTION when everything useless and cumbersome is set on fire, and new beginnings are made. Such is the case with the newly independent countries in Eastern Europe that went through the sudden collapse of the Soviet Union and had to write up totally new rules in the fresh air of freedom in 1991. Gone is the red tape there. To give an example, it takes SIX TO EIGHT WEEKS to buy a house in England with all those time consuming legal searches (where bureaucracy is frozen since the times of Magna Carta) but only three days to buy a house or apartment in Lithuania with all legal formalities completed! An NRI who bought his house in Vilnius in three days cried for the Indians back home who are trapped in the labyrinthian “baboodom”.

    India has no hope of any REVOLUTION by her majority community who are flat under the rulers' foot like a deflated balloon, but she will ultimately be overwhelmed by a foreign power once again. Then this BABOODOM will also die and many a citizen will kneel down to THANK GOD.

    We would like to congratulate the learned author of the book who pleads for the abolition of IAS. What a CONTRAST these "baboons" are to the original ICS (Indian Civil Service) of pre Partition days!

    India did not get freedom in 1947. She got “MUTILATED” (Partition) and her citizens lived under far worse bureaucracy thereafter. Only Pandit ("Bandit")  Jawaharlal Nehru got Independence.

    Rajput
   

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Swedish “school voucher” system is guaranteed to fail since it is badly designed

A commentator pointed out a recent Slate article showing that the Swedish voucher system is a failure. I had one quick look and dismissed the Swedish model outright. It simply is NOT well designed. If you don't implement fundamental principles into it, it just won't work.

This view is further confirmed by a quick extract from a 2011 article, below:

"a system where funding follows the student regardless of their parents’ income. If a school chooses to be part of the voucher system, it has to be all-inclusive, provide national standards and have its performance monitored. And it has no right to charge its students fees beyond the voucher." [Source]

Results are poor – as expected.

A proper design would include key elements outlined in BFN.

The Swedish system is a sham. Don't point to this sham and tell me that the voucher system doesn't work!

First design the system properly and then let's talk.

ADDENDUM

Haven't reviewed this document but will do so: School vouchers in Sweden by Jan Sjunnesson

Did vouchers cause the decline in Swedish schools? by Tyler Cowen

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Making the government redundant through technology

There are few things which, when property rights are properly allocated, private citizens can't manage themselves. But most of the 'easier wins' in this area have been achieved. The complex ones remain.

For instance, privatisation of roads is possible theoretically, but practically has been very challenging to implement. New land records technologies that permit tiny parcels of land to be registered and traded can allow privatisation of the kerb for bus stops (I've discussed this earlier) but also road lanes. 

Unfortunately, governments will remain reluctant to transfer property rights back to the people even though they can do so (under regulatory control), since governments are a monopoly and suffer an extreme form of inertia.

So what can be done to reduce the role of government? This would involve finding ways to short-circuit government itself. Many public goods/ collective choice problems are coordination and/or reputation management problems that could (with a lot of thinking) be broken down into component parts and resolved technologically. It is these coordination/reputation problems that led to the demand for government in the first place. We can get rid of such demand and help shrink government.

EXAMPLES

PUBLIC TRANSPORT

Government provided/managed public transport could become irrelevant as "super-uber" type applications that have mastered identity and reputation management, as well as pricing and auction models, allow thick markets in transport.

This could, for instance, involve algorithms that automatically calculate the best person to hitch a ride, with certified riders and drivers on both sides. I could type into the app that I want to go from A to B – and will pay $5 – and someone who meets the algorithm could get a signal (if he is open to that signal and driving that way), decide he wants an additional $5 and a SAFE rider, and pick me up in one minute, since he was nearby. It would involve linking with GPS and an identity and reputation management system – plus an auction model (so if I'm in a hurry I could offer $10).

[Someone has informed me that such a thing is already in operation: https://www.folksvagn.com/]

SCHOOL AND COLLEGE EDUCATION

This app would allow approved individual teachers to directly (and individually) teach students from across the world (each of whom could change each day, depending on what a person is doing). So if an app agrees to a syllabus and approves thousands of teachers then students could, based on their availability, tap into whichever teacher is teaching at that moment (each teacher being limited to 20 students at a time, say), thereby completing their course work with total flexibility. Payment would be by bitcoin etc. per lecture/tutorial, and approved teachers would also hold course exams on demand (i.e. as mutually convenient). This would eliminate the need for any government role in education, even if the government wants to have a role.

This is different from MOOCs etc. in the sense it is interactive and involves direct teaching by a human. Would be particularly useful for standardised school courses and bachelors degree courses, and would allow voluntary teachers from across the world to teach individual children.

JUSTICE

If people can cheaply agree to reliable private justice systems (assisted by technology such as robotics) they could resolve their justice issues (particularly civil matters) without access to the government justice system.

MONEY

Innovations like Bitcoin can eliminate both banking and central banking. [There are huge risks to Bitcoin at this stage, but I think it does illustrate the general principle].

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A tiny sliver of humanity contributes more than 50 per cent to our progress and wealth. #3

The human capital literature in economics does not have refined studies that distinguish top talent from ordinary talent. The paper I cited here was the first I had come across but it was not an empirical analysis.

Now, the Economist has written about a paper that proves this hypothesis empirically, that top talent matters most.

http://www.economist.com/blogs/freeexchange/2014/07/education-and-industrialisation?

"It is the skills held by top engineers and entrepreneurs that enables a society to innovate and foster the type of rapid technological progress that characterised the industrial revolution".

(Word version of the Economist article and PDF of the paper). 

All the more reason for India to focus on “upper-tail knowledge” – or ultra-talent.

BRAIN DRAIN MATTERS – BUT ONLY AT THE VERY TOP END.

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