DesiPundit

Karthik writes that India is not shining for him. He tells us not to forget the agricultural sector.

Many of us (including me) work in the IT sector. Like other private sectors we enjoy medical claim, health insurance and many other such benefits. And yet, we crib when we fail to make it to that particular grade during our appraisal period which would have given us a 20% salary hike instead of that 15%.

What is your opinion on the rising food prices,the declining dollar, and the shooting oil prices?
Sramana Mitra comments on the outlook for the global economy.

My sense is, all the major economies - US, Europe, India, China - would be looking at Free Trade with a question mark at this point. US, particularly Obama, wants to keep jobs in the country. That desire translates into an anti-globalization, anti-free-trade rhetoric that is off-putting, but it is what it is. The declining dollar is causing food prices to rise, oil prices are sending shocks all over the world, also a function of supply-demand inequilibrium. India and China, on the other hand, will need to restrict exports to be able to feed their internal growth, whether in terms of grains or steel.

In a recent verdict the Supreme Court upheld the 93rd amendment and Reservation act which enables the Government to have reservations for OBCs in educational institutions. Thus the limited number of higher education seats are now being divided among various groups with the Government acting as the pizza cutter. Atanu takes a look at this issue from the demand and supply perspective and says:

The shortage arises from the limited supply of seats in educational institutions. That shortage of seats is mandated by the government. The government mandates the shortage and then assigns itself the power to dictate how the rationing of seats will be done. That rationing is motivated primarily by vote-bank politics.

Now artificially created shortages are good for those who control the supply – whether it is about controlling the supply of diamonds or the supply of educational seats. In India’s case, government mandated shortage for the private profit of the politicians and bureaucrats is nothing short of criminal. It is responsible for much of the existing poverty in India and unless this situation is urgently changed will perpetuate poverty for the foreseeable future.

The RBI is mulling the creation of a Sovereign Wealth Fund to invest its stash of excess reserves. Kiran launches into an interesting history narrative to explain why this is not a bad idea. Whether you agree with the conclusion or not, you will love the History lesson!

While Bartholomeo Diaz and Vasco Da Gama were finding the Eastward trade route to India, Spain dispatched one Christopher Columbus on a misguided Westward journey to India. Now the “India” or “Indies” that Columbus found quickly became the exclusive domain of Spain, where they found that they could simply dig up precious metals like gold and silver. They decided that it was good to keep your gold and silver in the country than to use it. And trade with India virtually meant that gold would leave your country and end up in India.

The first Africa-India forum was held in New Delhi. The trend among analysts is to see this as a reaction from India to balance the Chinese influence in the continent, but Pragmatic says the Indian initiatives on Africa go beyond the traditional factors.

The recent improvement in India’s economic relations with Africa, however, cannot be attributed solely to the new focused approach of the Indian government. Another factor is the ‘outward-looking’ attitude of India’s private sector. Tempted by the easy availability of capital and driven by the search for new markets, Indian companies have been eagerly targeting those regions in Africa, in which they had shown little interest until recently. The economic boom in India and the success of both home-grown and NRI/PIO (Non-Resident Indian/Person of Indian Origin) companies in Europe and parts of South America have given Indian businesses the confidence to venture into Africa.

The world indeed has changed in the last couple of centuries. One word encapsulates the differing experiences of development among nations: Freedom. The human spirit’s ability to thrive in an atmosphere of freedom is enduring. Those nations that have granted themselves that freedom have developed. Lack of freedom explains the differences in development.

Atanu Dey has a fantastic conversation with the spirit of Adam Smith that covers topics like freedom, innovation, education, and energy policy and yup, he has some insights for India as well.

The Sixth Central Pay Commission (CPC) was released recently leading to much analysis and talk among the bureaucracy. Having a tough time sifting through the highlights?

Glowfriend is writing a series of detailed posts of the CPC’s implications. Part 1, 2, 3, and 4 are already out. Keep an eye out for more.

Greatbong argues that waiving off loans of farmers would only establish a bad precedent with minimal benefits to distressed farmers,

 However what the government has done, instead of concentrating on those regions that need special attention, is that it has written off loans universally for all small farmers all across the nation. By doing so it has kept out of the ambit of its munificence all those who have repaid their loans, not because all of them could afford to but because they felt they had to. By rewarding loan defaulters, irrespective of their financial conditions, the government has sent an unmistakable “Tough luck suckers” message to those who made their payments. Such a gesture can only have detrimental effects on recovery for future loans—those who have been penalized for obeying the terms of the loan will not, and should not, make the same mistake again.

DhiOnlyOne blogs about an interesting lecture by Prof. Preston McAfee:

There were several examples quoted to show how airlines price their tickets (Prof. McAfee seemed to be as confused as the rest of us – but he had more data to justify his confusion!), how hotels almost always have better fares if only you ask (sometimes many better fares depending on what segment you fall in), and how several internet retailers randomize their prices to cash in on various customer types. The lesson learnt – it always pays to probe.

Aniruddha quotes from a few articles to make the case that sugar co-operatives in Maharashtra are actually not in taxpayers interest because they are subsidizing the losses of these co-operatives while getting none of the benefits.

Sugar cooperatives have a complicated structure, which makes it possible for them to incur losses but not profits. This is because profits are fully distributed among the members of the cooperative, whereas losses are not; losses accrue to the cooperative. It is bad enough when a cooperative makes losses but when it is shown to be making a loss when it has actually made profits, then the members of the cooperative are being cheated of their share of the profits. In addition, the burden on the government rises because the government bears the losses of the sugar cooperatives and also provides subsidies.

The other issue is - shouldn’t any entity that receives subsidies not open its books to the general public and show exactly how the funds are being used?