Indian economists want the Food Security Bill modified

by on November 18, 2012 at 1:52 am in Economics, Law, Uncategorized | Permalink

You will find their petition here, signed by many notables including from MIT and Princeton.  They want to “abolish the distinction between general and priority households, and give the same PDS entitlements to all households outside the excluded category.”  Furthermore cash transfers are raised as an alternative possibility, a good idea in my view.

Vipin Veetil and Atanu Dey raise some issues which these economists neglected, for instance:

On the production side, laws restricting for-profit corporate investments in agriculture (like those forbidding corporate ownership of agricultural land) starve the rural economy of capital investment and technology transfers. Such laws have two effects. First, they impoverish farmers by reducing demand for their primary asset – agricultural land. Second, corporations bring efficiency gains through large-scale knowledge-intensive farming. This is equally damaging but more difficult to detect. In addition they furnish a steady wage income to workers; this is desirable for low-income households. In the absence of corporations (and markets for insurance) farmers have no way of transferring the risk of production, i.e. they borrow money on fixed rates but face an uncertain return on investment. A crop failure then has the potential to begin a debt-cycle.

All those smart economists on the first petition, and not nearly enough talk of markets.

M.R. Orlowski November 18, 2012 at 12:09 pm

“All those smart economists on the first petition, and not nearly enough talk of markets.”

Maybe they’re not so smart? Or perhaps they’re succumbing to a cognitive bias?

Rahul November 18, 2012 at 5:30 pm

No True Scotsmen?

whatsthat November 18, 2012 at 1:01 pm

It is difficult to believe that any privately owned company would want to invest in many rural areas.

Chuck Currie November 18, 2012 at 4:16 pm

I think they all need to read Joel Salatin. Or at least watch his recent presentation at Cal Berkley’s Edible Education 103.

Cheers

mulp November 18, 2012 at 9:04 pm

How does driving up land prices by having corporations buy the land from farmers help farmers?

Is a landless farmer actually a farmer?

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