Wednesday, June 06, 2007

new-age farmers

Amitabh Bachchan and Aamir Khan.


Neeraj said...

I wanted to comment on the nature of such laws, and try to understand why there are incentives to do this, and tie it into the rent-seeking system we have created.

Apart from the two cases you mention, there was also the case of the Government of Punjab giving Reliance Industries low cost agricultural land for a rural farming center. Which might well be good for agriculture and the consumer, but why should the tax payer help Reliance?

Agricultural land in Maharashtra (and in other states) is subsidized. This means that a civil servant, rather than the market decides what the price of the land should be. Once you have artificially lowered the cost of land you have created more demand for it than you can meet. You then have an arbitrary way to select those to whom you will give the land away - perhaps those who can profit you personally? What this also means is all of us, the tax payers, pay a large part of the cost of the land when its sold.

More generally in agriculture, we subsidize fertilizers, establish minimum support prices, subsidize power and water, and distort the market in other ways. How about eliminating tariffs across state borders, removing export controls, building modern roads so agricultural produce can be transported faster. But I digress.

If you set up the wrong kind of incentives, you invite that the laws be violated. And then you have to either spend a great deal of tax-payer money to enforce it, or allow enforcers the opportunity to be corrupt profiteers.

Maruti said...

He earned his money fair and square...but as the above comment says,the wrong incentives and laws completely against the rich force him to do illegal things...again notice the amount of media coverage a 'not-so-atrocious' thing is getting.