Indian economists want the Food Security Bill modified

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.


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