RE: wisdom? Whose?

["Kulshreshta, Bhuwan" <Bhuwan.Kulshreshta@usa.xerox.com>]

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[Topics under debate]: GOOD GOVERNANCE
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Charu,

A few points to your response:

1) Technology is a great tool for converting what appear to be
unprofitable
situations into profitable ones. It is something like this, Once there
is
enough competition in the main and obvious markets it behoves most
organisations to look outside. The reasons why most of the MNC are eager
to
come to Emerging markets is somewhat similar. Now getting into new
markets
is always risky and often not very profitable in the short term ( e.g.
The
market in China) but the long term advantages of most of these markets
would
inevitably push organisations outwards. Wireless and satellite
technologies
can, for instance take away a large portion of the cost and effort that
was
earlier necessary for setting up a telecom network. Point is that
technological and other innovations are invariably found by
organisations
and entrepreneurs to find opportunity in seemingly tough markets once
there
is sufficient competition. Take for example T.V. Broadcasting or rural
sales
of Motorcycles. These are Phenomenon that did not even seem remotely
possible a few decades ago but today are central to the strategies of
companies in that marketplace. Once this trickle starts it very often
turns
quickly into a flood as advances in one area (say telecom) promotes
growth
in others. One may actually see relocation of urban population BACK to
rural
areas once the infrastructure becomes better, as in the case of suburban

living in the US or country estates in Europe.

2) Government intervention in the from subsidies etc. while necessary
(practically speaking) is a major evil as it soon becomes an end in
itself
and once offered is impossible to remove. Over a period of time there
develops a community of people with such deep vested interests in the
perpetuation of the subsidy that the target population never gets the
benefit and the vested interest groups would not let it be removed
either.
The monies spent on such direct intervention could well be spent on
education, healthcare and basic infrastructure like roads etc. that
would
ensure increase in earning levels which improves the overall quality of
life
rather than reduction in costs of living which ensures "survival" but
overall reduces the standard of life.

Government intervention is necessary in case of emergencies like
droughts
and depressions but I would say in balance it must be strictly
restricted to
these kind of situations only.

3) By the way the governments procurement of food grains is more driven
by
giving the farmers a 'better than market' price rather than giving the
urban
consumers cheap food. Most of the urban consumers are marginal users of
the
govt. PDS anyway. In reality, if the government did away with the
guaranteed
price and procurement it would BRING DOWN the price of food in all
likelihood. The government should buy only enough grains to keep
adequate
reserves.

Fact is, Charu most of the current systems and policies we see today in
India were created during the days of droughts and famine and these were

probably good for that time. Today these systems are unnecessary and
very
counter productive. However as I have said earlier there are today so
many
vested interests involved that it is a huge political gamble to change.

It is estimated that the PDS system LOST due to corruption,
inefficiencies
etc. around Rs.12000 crores last year! It wrote of over Rs.2000 crores
as
'wastage during transit' alone and this was the officially recorded
figure
in the books of FCI !!! How crazy can you get. It is further estimated
that
the benefits of the PDS system reached only slightly over 50% of its
intended beneficiaries! Where did the rest of the stuff GO??? Who paid
for
that??

In conclusion, if a decision has to be taken on subsidies it is better
to
say NO even though it might hurt a few needy people in the short term
(This
number will be certainly a lot lower than what people think) but it
would
certainly ensure better life for all in the medium to long term.


Regards,

Bhuwan





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