Team-BHP - Understanding Economics
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Quote:

Originally Posted by digitalnirvana (Post 5504018)

Proven wrong as indicated where exactly? Show me one iota of evidence apart from those in your opinions.

Looks like haven’t you read my posts. Quoting below:

“So how come this does not apply to Ladakh (lowest population growth, low GDP growth and where agriculture is the main component of GDP), Manipur, Odisha, A&N islands & Meghalaya - states with low GDP growth and low down on the list?”

Quote:

Originally Posted by digitalnirvana (Post 5504018)

Also we started with population and then you went off on a tangent which has nothing to do with the topic I am debating.

Again, looks like you don’t read my posts. All my posts talk not only of population but also the larger issues affecting us.

Quote:

Originally Posted by digitalnirvana (Post 5504018)

China and her policy was introduced BEFORE they uplifted, on an average a million people out of poverty every year.

Of course, you have to introduce a policy BEFORE the result you set out to achieve - in this case economic growth. The policy was in force from 1980 to 2015. China became the worlds second largest economic power in 2010. So the one child policy was in force even AFTER it became an economic superpower.

Given a choice between uncontrolled population growth vs lack of economic growth, China’s choice was clear. They may or may not face the consequences in future but they have at least reached their target.

Quote:

Originally Posted by digitalnirvana (Post 5504018)

They tackled the symptom, not the problem.

There are many areas they did right and some wrong. Case in point their emphasis on the uplifting of women and increasing their role in contributing to the economy has been far more successful than in India. The percentage of women in employment in India has actually declined.

Quote:

Originally Posted by digitalnirvana (Post 5504018)

It is a tool that can be used wisely

True. The operational word is wisely.

Population is only one of the areas affecting us where we have so far been a failure. There are far larger issues involved as indicated in all my earlier posts.

Quote:

Originally Posted by PGA (Post 5504460)
I wonder many a times as to why farming has to be such a low paying activity. All economic models talk of getting farmers out of their profession. Why can't farming be as renumerative as any other economic activity.

We all know that -

(1) Running a Business is risky: Your retail business has rental costs, employee costs, competitors opening another shop infront of yours and so on.

(2) Investment in Stocks is risky: Your Rs. 1L investment can become Rs. 70,000 after a year.

Now farming involves both the above risks (1) and (2). You have both investment risk and business risk. Over a short term, there can be periods of good returns. But unless one is well capitalized and has a good grasp of demand/supply, there will be lots of failures over the long run.

Farming is actually a business, and that is easy enough to understand -

- Your capital investment is farm equipment like tractor/tiller etc
- Your operational cost is seeds, labour, fertilizer, pesticides etc
- You need financing because cash flows come in only after a gestation period of 3 to 12 months.

Farming also carries 'investment risk' -

- You invest Rs. 10L over 6 months growing wheat/rice etc.
- But the price of agricultural goods (wheat/rice/sugarcane/fruits/vegetables) is as volatile like price of a stock.
- Your returns at the end can either be Rs. 20L or Rs. 4L.

Quote:

Is there an economic model which can give farmer his due, where educated could be employed as well and can hope for a future.
For farming to be a stable and profitable business, it needs to solve all the above risk factors. Corporatization of farming (not just sourcing) and/or Govt support might work:

- Easy financing at low interest rates
- Technology to understand global supply and demand for various agricultural products
- Price hedging tools like commodity futures and options, that can protect against crash in prices
- Investment in agriculture infrastructure (storage, logistics, exports)

Quote:

Originally Posted by SmartCat (Post 5504552)
For farming to be a stable and profitable business, it needs to solve all the above risk factors. Corporatization of farming and/or Govt support can work:

- Easy financing at reasonable interest rates
- Technology to understand global supply and demand for various agricultural products
- Price hedging tools like commodity futures and options, that can protect against crash in prices
- Investment in agriculture infrastructure (storage, logistics, exports)

In addition to this, what is required is a guaranteed income (purchase) or price by the Govt.

Farming is a very profitable business in US and that is mainly because all the above 4 points along with Govt price support are applicable there.

Re the point about population, the global population is expected to peak around 2050 and then enter an irreversible decline. I would say India will follow the same trajectory, this is due to both fertility rates decreasing and also the cost of raising a child being prohibitive (which is already happening in the west). Our population can be a great strength considering there's already a global labour shortage depending on the skill set.

Immigration is a taboo subject in the west now now but over the next few decades countries will be vying with each other to attract immigrants as you always need more people to pay into the social security net than you have people taking out of it.

Quote:

Originally Posted by SmartCat (Post 5504552)
We all know that -

(1) Running a Business is risky: Your retail business has rental costs, employee costs, competitors opening another shop infront of yours and so on.

(2) Investment in Stocks is risky: Your Rs. 1L investment can become Rs. 70,000 after a year.

Now farming involves both the above risks (1) and (2).

(3) additional regulatory risk associated with essential materials. If you sell mobile phones or cars and international prices rise up you can make a profit. but in case of stuff like wheat govt can impose export controls and stop you from finding the best market as food security is important to any nation. Now MSP etc., can offset this risk to an extent, but its a hit or miss.

Seems like this thread is highjacked with some folks predicting India's doom and others predicting India's meteoric rise. Neither side seems to be focusing on economics anymore.

Quote:

Originally Posted by EV NXT (Post 5504545)
Looks like haven’t you read my posts. Quoting below:

Difficult to determine whether this post can claim to be better at trolling or just being rude. Probably a bit of both? :)

I'm not trolling and haven't ever done in this forum. If you feel I am, please use the report button.
I have read your posts, and I am responding to the parts I am engaging you on.

The cases of Ladakh, A&N and the NE states are easily explained. They are outliers on account of their tiny size. Their actual population in terms of absolute numbers is so less that their relative population growth or de-growth will never match the rest of India. India is not homogeneous, that's why we have varying levels of fertility and replacement.

If I as A&N say have a million people and add twenty thousand babies, it's still very different from say a Uttar Pradesh adding a million on top of a hundred million. Can't compare them.

Using these outliers in your example actually proves the argument that I am trying to make. Because ALL the mainland states have had their population growth slowed. Even BIMARU (though there is a lot of work to be done there).

China's economic growth is based on manufacturing. And a sizeable and cheap young working population. To say that their positive economic growth has any corelation with their one child policy is frankly disingenuous. China has done a hundred things right, and that's why it's an economic powerhouse. I'm not debating any of that. But their one child policy has been universally panned, because the effects will be long lasting.

And I made it very clear at the beginning, the ambit of my responses to you is purely around population control. Using facts and figures. Not using opinions.

Hence the other aspects of your post about your opinions on India aren't relevant for my response. So I will continue to ignore them.

This is my last post to you. Peace.

Note from Support:

Folks, play nice. Opinions are fair play for attack, fellow BHPians are not.

Thanks!

India has been and is being betrayed by its politicians. Nobody enters politics (anywhere in the world) to serve people. It is ALWAYS self serving. To that end,

Population reduction : why would politicians do this when it means lesser votes?
Education : why, when educated people are more likely to be aware of their rights and question?
End to corruption : why, when it means a direct decrease in their earnings?

Our politicians have created a fantastic system for themselves where they lead even more fabulous lives than the Maharajahs of yesteryears. They can't be questioned, criticised, arrested or even taken to court except by special dispensation. Why would anyone want to change this (if one is a politician)?

A very good explainer on economic concepts like Gini Coefficient, Inequality (Income and Wealth), real world data and examples, and a surprising conclusion at the end. Do watch if you really want to understand economics. I would also recommend you to subscribe to the channel.

https://youtu.be/Zwn6fqbNRLo

Quote:

Originally Posted by PGA (Post 5504460)
Why does a farmer has to be illiterate, poor slogger always cursing middleman and nature.

Almost 10 years back, we had a guy in our team who came from a family of farmers. He was the only educated guy in the family. His siblings chose not to go to school as they didn't want to learn, and stayed illiterate taking up the family profession. This makes them a victim of middleman exploitation. Illiteracy shuts down the ability to venture to online selling and get better pricing. Its something that they chose, not forced by someone else.

Quote:

Originally Posted by PGA (Post 5504460)
Is there an economic model which can give farmer his due, where educated could be employed as well and can hope for a future.

There are some Facebook group groups of farmers where they sell products directly and are able to fetch better prices. My wife is into some of the groups and we now get most of our stuff from them except grains/pulses. I came across a young chap in his 20s selling top quality agricultural products. He is very proud to tell that he is farmer and is helping other farmers sell their products too. He runs his business through WhatsApp/Facebook and has an army of repeat customers including me. He is also very transparent in his dealings and only charges fair price. I've recommended his products to family and friends too. An example of how education and exposure to social media can help a farmer gain better market and fair price for his products.

Quote:

Originally Posted by d.w.w. (Post 5504900)
I came across a young chap in his 20s selling top quality agricultural products. He is very proud to tell that he is farmer and is helping other farmers sell their products too. He runs his business through WhatsApp/Facebook and has an army of repeat customers including me. He is also very transparent in his dealings and only charges fair price. I've recommended his products to family and friends too.

Mind sharing the details? Assuming this is for Chennai, I'd be happy to share it with my family there. And if you put it out here - I'm sure he wouldn't mind the word-of-mouth publicity.

Quote:

Originally Posted by ninjatalli (Post 5504929)
Mind sharing the details? Assuming this is for Chennai, I'd be happy to share it with my family there. And if you put it out here - I'm sure he wouldn't mind the word-of-mouth publicity.

Attached his brochure containing his contact information and rates. This guy is from Palakkad, Kerala and ships his products pan India. I think he charges 90rs/Kg for shipping via DTDC. He occasionally runs some promotional offers too. I don't use Facebook these days, so I contact him over WhatsApp.

I highly recommend his cold pressed coconut oil and palm jaggery. A special mention to his Kerala banana chips and jaggery chips (both seasonal products during Vishu{April} and Onam {Aug/Sep})

Quote:

HealthNest.pdf
The price list was shared a few months ago and could be outdated.

Note: I am sharing the detail on request and personal experience with his products and I am in no way related to this business.

With regards low income levels from farming, Ashwin (@smartcat) has put it across very well from the economic point of view. Few other very important aspects are
1. Low land holdings -
The average land holding in India is very low and as such very difficult to achieve advantages of scale and also diversification. A farmer with 20 or 30 acres can diversify his crop and thereby reduce the price risk from a single commodity. In western nations, we speak of hundreds of hectares of farms. Here it is not even in tens.

2. Low yields
Probably a direct consequence of the point above. Yields in India are very low. For example the average yield of cotton for 1 acre is between 400 - 500 kg. In Australia it is almost 1400 to 1500. USA is around 900.

3. Excess use of inputs
In order to compensate low holdings and to ensure the already minimum income isn't hit due to pests etc, we seem to use lot of pesticides and insecticides along with fertilizer. This increases the overall cost. Combine this with lower yields and that's a recipe for disaster

4. Storage
India still lacks extensive cold storage facilities to cater to the amount of crop we produce. Without proper storage farmers are forced to sell off their produce as they are perishable with different timelines of course.

5. Risk management
Lack of education, smaller holdings and quality together with absence of a very liquid derivative segment means that there is no proper transparent platform for farmers to hedge their price risk. The lack of participation from farmers itself is resulting in lack of liquidity in the few commodities for which derivatives are there.

I don't have solid data but I believe because of the presence of MSP together with all the above, many farmers tend to go with crops where there is support even if the location it is being grown isn't apt for it. For example Ahmednagar, Solapur, Satara and Sangli areas in Maharashtra are in the lower rainfall zone but produce sugarcane in a big way because of irrigation. Having irrigation is good but growing sugarcane which is a water intensive crop in area with less rainfall is simply bad economic as well as farming policy. The excess water that is used to produce sugarcane could have been used more effectively elsewhere. And we have seen how these areas suffer in summer.

Guys, please read 'Imagining India' book from Nandan Nilekani. He has beautifully explained about population and our achievements. What we have achieved in 75 years is just phenomenal. Green revolution, white revolution, literacy from 10% to more than 70% , 100% stock market in demat, digital voting, digital civic vaccine certificate, UPI.

Our films reflect our society, the angry young man who revolted against rich, powerful people is no longer ruling on the market.... Heroes are now powerful business men...

Population explosion was overhyped.

History, right from the Indus valley civilisation, the subcontinent is the most populous part of the world because of our climate which is best suited for Human beings....


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