they agree with me in mexico..and at the nyt..and the world bank

'In 1995, the Mexican peso crashed and the economy contracted by 6 percent. At the time, Santiago Levy, the deputy finance minister, realized that the country’s antipoverty programs were going to fail its poor. The programs were a hodgepodge of food subsidies, adopted in response to powerful food producers. They were inefficient because they targeted foods everyone ate, rich and poor. Some even targeted foods the poor don’t eat, such as bread – poor Mexicans eat tortillas.
Mr. Levy saw a looming disaster – but also an opportunity to build political support for an antipoverty program that worked. Stealthily, he organized a pilot project to test a new idea in Campeche, far away from the capital so it would draw little notice. He began a program to pay poor mothers to keep their children in school and take their kids to the health clinic. He compared the results to poverty figures in a group of similar villages without the program. It was a great success. Data in hand, he persuaded President Ernesto Zedillo to phase in the new program and phase out the food subsidies.
Oportunidades, formerly called Progresa, is now embraced by all parties in Mexico and, with financing from the World Bank, is helping virtually every poor family. It not only focuses antipoverty spending on those who really need it, it does so in a way that encourages families to break the cycle of poverty for their children.' (from this blog).

looks familiar? doesn't it look similar to what i had suggested a few months ago in this post ?

'why do they pay so little attention to the non-voting children in mahbubnagar as compared with the voters in mumbai? a simple dole of ,say, rupees five hundred a month (which is what, almost, the current bill assures) to rural parents who send their children to school would not only cost much less than what the current project would but also a. stop the migration and b. protect the rights of the children.would you call that charity? most of the subsidies and other giveaways intended for the poor are today cornered by the more privileged classes. why shouldn't the poor have their share? but that would not be elaborate enough for the wise men.'

that was actually a part of a long comment i had originally made here on a dilip d'souza article on the employment guarantee act (which i had reposted on this blog as an independent post). this idea had taken a hazy kind of shape in my mind around two years ago when i had started looking at poverty alleviation programmes in india a little closely. i had nursed serious doubts about their efficacy for more than a decade but..ordinary, well-meaning citizens in india don't usually question these programmes hard enough...and they usually let their hearts rule over their heads in these matters. but the nrega was a kind of last straw for me..because i knew, whatever the intentions behind it, it was going to miserably fail. but that wasn't why i primarily objected to it, there were other reasons...and chief among them was that it was a shortsighted program - it didn't address the problem of future poverty, because it ignores the causes of present poverty. worse - it takes money away from programs which would actually help the most in fighting future poverty - schools. funds for the nrega would mean that the much needed increase in the woefully inadequate funding schooling, and education in general in india receives..can be ruled out for a long time.the upa govt had promised to increase budgets for education upto 6% of gdp, as first prescribed by the kothari commission way back in the sixties. now, how can that happen? the twin objectives of my idea were to address both the problems of a.illiteracy b. poverty, in that order, because poverty can't be solved without solving the problem of illiteracy, in my view.

the idea, in a nutshell, was that the govt pays rural parents a certain allowance/dole/sum every month to encourage them to send their children to school. the design of the plan was simple: direct transfer of funds every month from delhi to every villager's doorstep. please read the post and the comments to get a better idea. my contention is that the idea has better chances of fighting leakage and corruption that plague most such schemes in india (because it is based on direct transfer of money from delhi to the beneficiaries...and does not, as annie of known turf and otherindia presumes in the comments, involve any other agency in this transaction).

now, i am pleasantly surprised to find that there are other people in the world, much more important people, endorsing a program that so closely resembles an idea that i'd thought up! the mexico program is now being touted as one of the most successful anti-poverty programs, alongside eight other great endeavours such as universal vaccination, de soto's ownership titles for the poor idea and microcredit etc., Read more about those eight programs on the Poverty & Growth Blog of the World Bank Institute here.


test tube village

the new indian village, created after independence, had no place for anyone except the farmer. nothing for the artisans, for the workers, for the outcastes, for the wandering tradesmen, performers...for anyone except the farmer. what palagummi sainath and others like him mourn now is the death of this re-created village, this refashioned universe...this new ayodhya.

in this new indian village, the farmer became the focus of all policy : he was anointed the carpenter's patron, the blacksmith's, the farm worker's and the touring theatrical troupe's. even in a village that was earlier more known for the skills of its weavers, or silver filigree workers, or brass workers or bone-setters or pickle-makers. he was appointed as the 'backbone' of the village..and of the country itself. i will cut short my view about this process of re-creating the indian village here, now that i've introduced the idea (to continue at a later stage, in follow-up posts)...i'll let it fester for a while, untended.

so, then along came reforms in 1991 (some might argue they started much earlier, but it's the policies since 1991 that are much disputed). and the furor over suicides..and the concerted campaign by some to paint liberalisation as the cause. i will attempt to explore, in instalments, whether reforms were really the only cause of distress..or were there other villains. in this post, i'd like to refer to a study conducted on the impact of liberalisation on the lives of small and marginal (with specific reference to the 'resource-poor' among them, as defined by the researcher) farmers in telangana, especially those who migrated from jowar, maize and other cereals to the cultivation of cotton in the nineties.

let me quote a few sections from this abstract from the study that i found interesting -

'from the time india became an independent nation in 1947 its policy regime has been characterized by extensive controls on production, pricing, trade and a managed overvalued exchange rate. In the specific case of agriculture the main thrust of policy since the mid-1960s had been on achieving food self-sufficiency. domestic policy instruments used to attain this goal included input subsidies on fertilizers, power and irrigation, minimum support prices for major crops (such as wheat and rice), and quantitative restrictions on agricultural exports and imports.while the industrial sector was heavily protected under the import substitution regime, agricultural production was in the aggregate actually dis-protected (taxed) by as much as 20 per cent from the 1970s to the mid-1990s.. this is because although expenditures on price supports and input subsidies were large, these were more than offset by the relatively low domestic farm-gate prices that were sustained behind the border measures.'
in other words, the indian farmer didn't actually need the subsidies and the support prices..if only the quantitative restrictions had been lifted... if there hadn't been any 'border' restrictions (as the researcher calls them), and the subsidies and price support had been withdrawn.. it's even possible that the indian farmers would not just have been not harmed at all, in the aggregate (to borrow a phrase from the researcher)..but actually have improved his position (as compared with his position after twenty years of subsidies and price support)..and if competition had been allowed in pesticides/fertilizers and other input supplying industries there is every possibility that farmers would have incurred less costs, gradually. maybe. these are my own conclusions.

so why didn't the indian farmer benefit from the gradual lifting of trade restrictions through the nineties and later? let us return to the researcher-

'in 1991, faced with a balance of payments crisis, india embarked on an economic reform programme in line with structural adjustment and stabilization policies initiated by the imf and the world bank. the reforms focussed largely on trade liberalization, encouraging foreign direct investment, reforming capital markets, and deregulating domestic business. [...] it is important to bear in mind that domestic and border policies directly affecting agriculture were not included in these early reform efforts. [...] in 1994, import restrictions on oilseeds, sugar and cotton were liberalized but most agricultural products remained subject to import controls. as the reforms progressed and the foreign exchange situation became more comfortable, quantitative import restrictions on a whole range of agricultural commodities were phased out starting in 2001.'

it's pertinent here to remind myself and those suckered into reading this.. that india's journey towards globalisation (or unrestricted trade), though it was formally flagged off in 1994, did not actually start until 2001. but trade in cotton was de-controlled to an extent in 1994, and this research study was primarily conducted on cotton famers in telangana...to get back to the original question: why didn't indian farmers, like the cotton growers of telangana, benefit from the lifting of trade restrictions?

'it is interesting to note that while the government pushed heavily for border policies, input subsidies on fertilizer, power and irrigation remained largely unaffected by the reforms. minimum support policy for major crops (such as wheat and rice) also remained virtually untouched because of the fear of political retaliation.'

the input subsidies remained untouched, the minimum support policy wasn't abandoned and trade controls were not relaxed until 2001 - so what drove the farmers to suicide? and what was liberalized?


milton friedman and the nrega

'While traveling in India, Milton Friedman came upon a large crew of ditch-diggers. When he asked why they were all using shovels to dig the ditch instead of getting a backhoe, the foreman replied that it was part of a government project to create jobs. “I see,” said Friedman, “I was confused because I thought you were trying to dig a ditch. If what you’re really trying to do is create jobs, you should all use spoons!”'

i found that here.


s.varadarajan on the sachar report

s.varadarajan writing in the hindu, says :

'WHEN THE Justice Rajinder Sachar committee submits its report on the socio-economic status of Muslims, the full extent of the community's exclusion will be obvious to all. Especially those who have made political careers out of the canard that Muslims in India enjoy special privileges and have been "appeased."
Based on the data leaked so far, it is evident there are entry barriers Muslims — who account for 17 per cent of India's population — are unable to cross in virtually all walks of life. From the administration and the police to the judiciary and the private sector, the invisible hands of prejudice, economic and educational inequality seem to have frozen the `quota' for Muslims at three to five per cent. Thanks to a hysterical campaign run by the Bharatiya Janata Party and some media houses, the Sachar committee was denied data on the presence of Muslims in the armed forces. But even there it is apparent that the three per cent formula applies.'

i haven't been a regular reader of varadarajan's writing but this article made me dig into the archives of his blog . i found very little material there - just a few articles and nothing directly related to poitive discrimination programmes.could anyone help me in this regard?
i wish some muslim journalists too come out with their own views on the issue soon.
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