Thoughts???
India Shining – Really?
“India Shining” - the infamous slogan used by the right wing in the last election unsuccessfully. India is progressing, there is a new level of confidence in it steps, and most of the people who have made well after India opened its economy in the early 90’s feel the upside. But India has always been a land of contradictions, one end there is 300 million people who live in abject poverty for whom having one meal a day is a monumental struggle and at the same time we have close to 300 million rich and middle class whose purchasing power is attracting every industrial conglomerate in the world to obtain part of their disposable incomes.
The proclamation of India shining depends on what segment of demographics you speak to, is it the IT or service worker who has increased his/her wealth or is it the farmers family whose sole earner recently took his own life. Number of farmers committing suicide in India is 48 per day now and this has increased significantly in the recent years. The lack of vital capital to have a sustainable livelihood is pushing a farmer to the brink. Overall India still has 70% of the population struggling to make ends meet and a considerable portion of them are also stuck in un-productive labor. On the positive side finally India is averaging over 6% GDP (http://en.wikipedia.org/wiki/Gross_domestic_product) growth consistently, recently it hit as high as 9%, which is phenomenal by any standards. India today is the 12th largest economy in the world and the official poverty level is at 27% of population compared to 51% in 1977-78.
The key for India to be shining would be the nation’s ability to provide upward mobility to its society based on productive work. Sixty percent of Indian employment is agriculture based and this sector contributes to 28% of total GDP of the country. This is too high a percentage of working population dependent on one occupation. The country need to raise its productivity levels dramatically to improves it GDP which in turn will create new capital to further invest in its infrastructure and human development. Comparatively only 2% of United States population is dependent on agriculture and their agriculture-output is more than India. Machinery usage can easily raise agriculture productivity, the question to be asked is why is still such high level of labor stuck here. This entrapment in non productive labor and capital unavailability makes it difficult for India to improve its standard of living. One is acknowledging this level of labor pool available but on the other hand India needs to have the right opportunity for the skill set available. India’s agriculture labor needs to be weaned away to manufacturing or service or technology jobs, and it needs to make this happen to successfully compete among developed nations.
India has still few decades to go before it can shine, as of now unquestionably it is rising. The rise is crucial and needs to be sustained for few more decades, the battle over poverty, infrastructure, healthcare, child labor can never be won in any country in absolute terms, it can only be contained. India currently is on the right track and at this rate will be able to significantly improve standard of living and quality of life for majority of its citizens in 15-25 years. India has finally embarked in a direction which though not perfect has achieved notable success, West & South India seems to have a head start over North East and Central parts of the country. Finally the per capita income (http://en.wikipedia.org/wiki/Per_capita_income) is rising too and was up by 8% in 2007, the poorer states like Orissa and Jharkhand actually hit 17% for last year. And though many may argue wealth is rising more unfairly, still annually close to 40 million people are making the transition to middle class in India. Basically India has doubled its per capita since 2000/2001, this rise is very critical and as the savings of its people rise, they will form the key capital for future growth of the country and can be used individually or collectively to improve infrastructure and education.
The recent wealth distribution has favored the educated and they in turn have shown significant innovation in their areas of work. The innovation and the skill set available will influence larger investment from corporations resulting in job creation. But note that in any society 50% of the jobs are always created by thousands of common folks whose entrepreneur spirit to innovate and create wealth forms the largest employer than any one organization. Disproportionate money is trapped in private land or assets and this is available to few millions today on top of the economic chain and they are the folks who are benefiting the most. India needs to un-tap its credit to the other 700-800 million of the population who are locked into either a debt trap from local moneylenders or they make an inherent choice to suppress their entrepreneurial skills for lack of credit availability. Today Grameena Banks and micro financing organizations are making inroads into communities and are making credit available to the poorer society. But the amount available through such channels is too still too small and has not reached the tipping point (http://en.wikipedia.org/wiki/Tipping_point) to positively impact overall progress.
India is on the right path and is rising and to sustain this rise and make the transition to a true developed country or “Shining Status” would be determined by it ability make credit accessible and provide relevant education to its people. For the next generation of entrepreneurs to take risk, innovate and create employment, credit access will be the essential factor. In addition, relevant educated pool of people will make the nation employable and help the entrepreneurs succeed. India needs its people to succeed and achieve their potential, a third of the billion people in India are under 15 and over 55% of the population is younger than 35, it is a young nation with the hunger to dream big. The path will not be easy as half of the young population lies in the poorest regions of India, i.e. UP, Bihar, MP and Rajasthan. It will be interesting to see how the new generation of leaders make policies and decisions to make their society better educated and have access to easier credit happen in the next few decades.
Poverty, crumbling infrastructure issues, child labor, infant mortality, etc, statistics of any such issues are highest in India compared to the rest of the world and can make people feel that India may never overcome its shortfalls or force attention on symptoms than the underlying issues. And Indians needs to accept that government of the country cannot directly make any of these problems go away lastingly. In the end the democratically elected policymakers can only make laws and protect its people by enforcing the law. The choice to succeed and do better lies in individual capability of people, elected governments need to make all efforts to help improve its human resources. India has done well in small scale in both credit access and education, a small portion of 60’s-80’s generation commitment to educate their children has helped a significant portion of the current generation to take advantage of the opening of the market. As for credit access, some of the pioneers of grameena bank come from India, organizations like SEWA (http://www.unesco.org/most/asia1.htm) have successfully made thousand of women and children climb out of poverty and establish their own businesses with no federal or foreign investment. India needs to look at the big picture and focus on scaling such success story and help its whole population get access to credit and better education. Only time will say when INDIA will SHINE, and this will depend on the current generation to take responsibility of their society, believing in hard work and adhering to its laws. However idealistic the last statement may sound, never in history has forced labor or disciplining of majority of its society to follow a way of life has worked. Like any country if the majority of Indians do the right thing per law and have access to credit and education, it can truly shine as people will be able to choose their futures and achieve their potential.
Labels: credit access, education, generation, India, poverty, rising, shining, society, wealth creation
US Farm bill & poverty
Last one year US congress is debating the new US farm bill, which expired last September 2007. The bill will impact the rural communities of United states and the larger world and will have far reaching consequence in some of the poorest regions in the world.
Size of this bill is $300 billion over 5 years and its scope is everything related to US agriculture to farmer payouts to subsidies to food stamps, etc. Traditionally subsidies made up to 15 billion per year but recently has come down as low as 10 billion due to higher commodity pricing. Most of the subsidies end up with just 8% of the total US farmers who are in some part of large conglomerates, this stifles other US farmers and all developing countries by keeping the prices artificially low in those regions. Within the United States, in regions like the Mississippi delta poor farmers are finding it impossible to climb out of poverty. As poor farmers tend to have lesser land they get lesser subsidy than the rich farmers with more land which helps the latter to buy more land or better machinery resulting in the poorer farmer not being able to compete with the richer farmer.
Less than 2% of US population works on farms unlike half of the population in developing world. Farming is the largest occupation in the world and the income generated is key for climbing up the economic ladder and increase the standard of living in poorer regions. Oxfam studies points to the fact that the cotton farmer subsidy in US has dramatic effects on income generation of millions of cotton farmers in West Africa. Even a modest increase in cotton prices for West African farmers would mean more income towards education of their children, better diet and healthcare, etc. But due to subsidies the margin of profits for farmers is so low, they are forced into subsistence living. The only way to break this cycle of poverty for these farmers is fair market competition which is impossible as the harvest capacity of United States floods most of the world commodities market resulting in price dictated by them too. The abolishing of the US subsidy program would make the prices much more competitive for the West African farmers to better their lives.
Poverty alleviation is hard hit by such practices and in poorer countries with 70% of population dependent on farming, this “farm bill” makes it impossible for such countries to better their standard of living. Mostly all the subsidies go to commodity farmers, basically staples like corn, wheat, etc which is labor intensive and employs the largest segment of the societies in the poor regions. For example, the unfair competition in corn prices has devastated the farmers in Mexico which has also contributed to large scale migration of low skilled labor into the United States. Even the US aid programs are being affected, most of the food aid is bought by US government at lower prices produced by US farmers and then sent to poor regions of the world. In the poor regions the US food results in fundamentally altering the prices of local produces and it makes it no longer viable to locally produce similar food. CARE, one of the large charities recently has stopped accepting funds from US federal programs due to the negative impact (http://www.nytimes.com/2007/08/16/world/africa/16food.html?em&ex=1187409600&en=f24fcdc9bda66c75&ei=5087%0A).
In 2004, World Trade Organization (WTO) declared cotton subsidies in US illegal, the last WTO talks failed on the topic of rich countries farming policy as developing countries consider the reduction of subsidies of paramount importance (http://www.bloomberg.com/apps/news?pid=20601087&sid=ardyFvYPoEzY&refer=home). Unites States needs to take bold steps to help alleviate poverty, it is understandable that the practice cannot be stopped overnight, it at least needs to start slowly cutting back on the subsidy program which will help everyone including United States as countries with better standard of living will import higher value items from them resulting better sales for US industries. US farm bill was supposed to be a temporary depression era bill, but over the decades has become permanent and is approved every 5 years, it is time to get back to the original intent of the bill for long term prosperity of United States and the world.
Labels: africa, aid, farm bill, food, poverty, USA
Significance of food shortage
Instability in the developing world is mounting as food shortage intensifies as a result of increase in basic commodity prices. After 20 years of relative stability in food prices, world is seeing substantial price increase. The global food prices gained 57% year over year, this is the highest gain in decades. Cost of staples like rice, wheat and corn has doubled in the last year. When everyone speaks of Oil spike hurting global growth, etc it pales in comparison to the risk of food inflation which would by far guarantee a global slowdown.
As per capita’s have risen household in most countries have relatively reduced spending on food over the last century. An average family household in United States spent 11.7% (http://www.ers.usda.gov/briefing/CPIFoodAndExpenditures/Data/table8.htm) of income on food in 2006, recent price rise has today increased this modestly to 13%. Similarly developed countries have come a long way, though they still average close to 50% of expenditure on food and it varies significantly from region to region also within a nation too. India for example spends less than 40% on food compared to 75% in the 1970’s. However still close to third (2+ billion) of the world population lives on less than $2 a day, this segment of population spend 80-90% of their income entirely on food, imagine the effects on this large portion of mankind.
As the rich – poor divide widens in the world, there remains a significant poor population in every country which is being priced out. Even in countries like United States, folks receiving food stamps will hit all time high of 28 million this year, 2008. So far 40 states in USA have reported increase in recipients, economically depressed states like Michigan have one in eight receiving food stamps, highest in decades. Based on percentage of population in USA, it is still low compared to the 90’s recession wherein close to 10.3% (1993) received food stamps compared to 9.2% today. The worrying part is that the increase has happened much before US has officially hit a recession. Normally the worst years are 1-2 years post official recession as that is when companies increase layoff’s resulting in greater unemployment which is still holding currently at 5.1% compared to 7.3 in 1993 (http://www.data360.org/dsg.aspx?Data_Set_Group_Id=44).
In developing world the impact is graver as there are no structures like food stamps to cushion the effects, social unrest and political instability is unavoidable. Haiti recently has seen large scale rioting and deaths over food and also has resulted in ouster of the government, riots have also hit Egypt, Yemen, Burkina Faso, Indonesia, Mexico, Bangladesh, Senegal and many more countries. African and Asian countries are the hardest hit as most of the subsistence living population lie in this region. United Nations projects all regions which spend 50-60 percent of wages on food will be hit by unrest. In the short term hardest hit regions have to be cushioned by aid programs, else unrest will escalate resulting in anarchy and unnecessary deaths. Many countries like Philippines, Pakistan have sent in the army to guard government food stock from banditry and rioters. Countries like Thailand, India have curbed exports of staples like rice to stabilize the prices.
The causes of food price increase are attributed to many factors, from rising food consumption to biofuels, etc. As countries like India, Vietnam, China are seeing their high growth economies create larger middle class societies, they are naturally moving to much better and higher nutrient diet. For example China alone consumes three times more food today than in 1995, similarly all fast growing economies are seeing a significant jump in consumption. Biofuels boom is making countries like USA put 20% of their harvest to energy use today which is further fueling the price rise. Prolonged droughts for last 6 years in Australia have decimated its rice production by 98% which has also contributed to the rise in prices. Factors like global warming, water resources shortage, etc all are valid arguments hurting food production too.
Overall many of the factors for higher consumption of food for eating or energy is hear to stay, the last time world faced such a situation in the years 1955-75, the world economies reacted by increasing yield. Example, when India was facing another famine in early 1960’s, Norman Borlaug (father of Green Revolution) was invited as an adviser to increase food production. Soon India adapted to new seed varieties, resulting in increased per hectare yield to 6 hectare from 2 hectares earlier. The rise in production resulted in rice costs dropping from $550 in 1970 to $200 per ton in 2001. Similarly most countries (exception was few African countries) in the world adapted to the green revolution thus increasing yields radically, thereby driving the prices of food down significantly.
The current challenge to increase food production is definitely more formidable. However solutions are there, from increasing yield using GM foods to curbing biofuels in exchange to natural energy sources like solar, wind to conservation to more efficient use of energy like hybrid automobiles, etc. Based on technological advances, today the world can exchange information and share innovations at a global level easily. What it lacks is a global coordination of efforts to reduce pressure on food prices. Currently there exists no worldwide framework to combat price rise, different regions need unique tactics and strategies as problems range from consumption to hoarding to speculative pricing to shifting priority in food use. Currently each country is taking local short term actions which are further causing unnecessary shortages and worsening situations in other geographical regions. It is time for UN or a major country or G-7 or a foundation similar to the size of Gates foundation to coordinate a global effort to fight price rise on a big picture basis? Time is of the essence as more countries take inefficient steps it will only result in a painful correction and will hurt both local and world economies for a longer period. Else famines are a real consequence of inaction, which will be dreadful and will result in millions of death and worldwide depression; it can and should be avoided at any cost.
Labels: biofuels, commodity, food, instability, poverty, price rise, shortage
Will daylight savings help save energy?
Daylight saving times (DST) starts 3 weeks early this year, in hope of decreasing national energy consumption, signed into law in summer 05, was one of the measures of “the great energy bill”. Most of you must have wondered how much does daylight savings saves “us” in the end. Well, studies show that the saving is close to 100,000 barrels a day, which by itself looks like a large number. US alone consumes over 20 million barrels day, the 100,000 barrels accounts for just 0.5% oil savings.
US being the largest contributor (25%) to greenhouse gases should do more than this, after walking away from the Kyoto protocol we have in fact increased CO2 emissions significantly (http://news.bbc.co.uk/2/hi/science/nature/3143798.stm). Reason, protect the broader economy as higher energy prices will hurt consumer spending, etc, etc. But did it really matter, when the current administration took power, oil was less than $30 and today it is close to $60 and the economy is still expanding. The cost paid in other terms was many folds, one example Katrina, off course we have a whole coterie which would disagree that there is a relationship between Katrina and climate change.
Politically drafting this bill was more of economy, anti-terror and security bills and reducing dependency on foreign oil, the goals were too near-sighted and make no effort to look into the bigger picture. The bill has few good things, in terms of investment into renewable energy, also encourages investment into new energy finds and gives tax credits for hybrid buyers, etc.
However the simple big energy savings were missed, like failing to increase gas mileage for all new auto’s manufactured, 40% of oil is consumed by automobiles in US. Even one additional mile increase in auto mileage translates to close to 1.5% reduction in oil consumption. In the 70’s US had less than 20% of total auto’s as trucks/suv’s, today this makes up 50% of the auto market. This has reduced average mileage considerably and increased oil consumption in US, simply increasing taxation on SUV/trucks (thereby making users buy cars) will reduce oil consumption. Both the technology (Asia and Europe have much higher mileage efficiencies) and the means are already available to make a difference.
The bill was supposed to be a long term comprehensive energy policy which would help push innovation and bring in new way of producing energy with “renewable” and “conservation” being the key. Are we kidding ourselves on conservation, congress/government have smart people and they know what they are doing and may surprise us all by achieving these goals. As for the simple people, they have decided to kill the gas guzzlers of GM, Ford and Chrysler and moving to the more efficient imported cars. Even the scientist and evangelical movement (which put the current establishment to power) are talking the same language (http://www.enn.com/today.html?id=12054). Hopefully the “smart people” must know something the rest do not know and we can all sit back, relax and enjoy an extra hour of light in the evening :).Labels: change, climate, daylight, dst, energy, katrina, oil, reduction, savings, time
New leadership/thinking needed
Everyday as people tune in to the current affairs on television, it gets worst, things never change, except our reaction to it. As the Israeli-Lebanon conflict continues with further intensity, we see our minds accepting the killings and look at it, as old news. Are we finally numb to the violence? Why? It is the hopelessness of not being able to do anything about it.
It is unbearable to watch the pictures from the conflict, makes most of us wonder how this can be happening in the modern era. The minority extremists have managed to bring the devil out of the majority. We feel sorry for the Israelis and Lebanese alike, was war the only option. Hezbollah’s deceit, killing and kidnapping is unacceptable so is the collective punishment of the Lebanese society by the Israelis. Both Hezbollah and Israel will come out weaker out of this conflict, the biggest casualty will be peace itself. Extremism will rise in the middle east and this will have far reaching effects, the biggest achievement will be the pushing back of the peace, ironically this is what people want the most, but none in the political establishment has the nerve, long vision or the guts to deliver
When will the killings end, is peace ever achievable in the middle east or is it just a dream. No, it is not a dream, currently all we lack are the right people and political will to achieve it. The current leaders are so short sighted; they are immersed in their own egos and lack the sense of direction of where they want to lead their country too. Politicians need to understand, they cannot blame the opposing side always, barriers will always be there, in the end it takes a lot of courage to make peace with the enemy. Very few leaders have the courage to make peace with the enemy and convince their own compatriots to believe in the compromises they will be making for the greater goal.
It is time for the new generation of leaders to arise, he/she will need to be a person who can understand the big picture, the goal is simple, it needs to be “sustainable peace”. We need new thinking, new leaders to arise, it is time the right people took responsibility and deliver what millions of people in middle east crave for, i.e. “Peace”.
