Keith said, Just as governments produce long and serious unemployment by interference in things which oughtn't to concern them (as western governments did during the 1930s),
Arthur suggests, Are you serious about this? Government should have backed off during the depresssion? Let banks fail? Let the market correct things? No matter how long it takes? -----Original Message----- From: Keith Hudson [mailto:[EMAIL PROTECTED]] Sent: Tuesday, December 17, 2002 9:06 AM To: [EMAIL PROTECTED] Subject: Producing starvation Just as governments produce long and serious unemployment by interference in things which oughtn't to concern them (as western governments did during the 1930s), the most serious starvation these days -- continuing from year to year -- is caused by governments, not droughts. The following article from today's FT shows how the Indian government succeeds at this: <<<< INDIANS STARVE AS POLITICIANS BATTLE TO REDUCE FOOD STOCKS Nation produces plenty of food but fails to distribute it to the poor Edward Luce In the 1880s, the European Economic Community gained notoriety as the producer of the world's largest food mountains. That distinction is now claimed by India -- much of its bumper stock is rotting in central government warehouses. "India has all the food it needs," says a western aid official, "but half of it is currently being eaten by rats." In the last three years, India's stockpile of rice and wheat has more than tripled to more than 60 million tonnes, or roughly a quarter of the world's food stocks. India's total grain production this year is about 220 million tonnes. The country, which, until less than a generation ago, had to rely on foreign aid to fed its people, is now a regular donor of food stocks to poorer countries. Last month, India gave 1 million tonnes of wheat flour to Afghanistan. And yet, with more than 50% of India's children classified as underweight, more people suffer from chronic malnutrition in India than in the whole of sub-Saharan Africa put together. Why does India have so much trouble getting its food stocks to the country's poor? NC Saxena, a rural development expert in New Delhi, says: "India has gone from being a major food importer to complete self-sufficiency in less than 30 years. But its system of food distribution to the poor has basically collapsed." India's farmers are suffering from the worst drought in 15 years. With food stocks at levels beyond the wildest dreams of ancient Engypt's pharaohs, India has been unable to prevent starvation and severe malnutrition. In Rajasthan and Orissa, two of India's poorest states, there are frequent reports of villagers eating bark and grass to stay alive. India's Public Distribution System, which allocates subsidised rice and wheat to those living below the poverty line, has singularly failed to find its targets. Roughly a third of the food stocks meant for the poor are sold on the black market by corrupt officials. Much of the remainder is rotting away in central government warehouses. "More than half of India's food subsidy budget is spent on maintaining the country's stockpile of 60 million tonnes," says Abhijit Sen, a leading agricultural economist. "You could not imagine a less efficient way of spending the subsidies." In the last twelve months, the Indian government has resorted to desperate measures to reduce its food mountain. The country has become the second biggest exporter of rice after Thailand, with 8 million tinnes solf off -- roughly a third of global rice exports. Foreign governments have purchased Indian rice at prices lower than or equivalent to the subsidised rate offered to the 260 million Indians living below the poverty line. Even then it is cheaper for India to sell the rice at a loss on the international markets than to keep it in stock. "One can think of better uses for scarce Indian taxpayer resources than to subsidise rise for foreign customers," says Nicholas Stern, chief economist at the World Bank. New Delhi's second remedy has been to sell the stockpiles of rice and wheat to the Indian private sector. But by flooding the market, the exercise has reduced market prices to the same levels as the minimum support price New Delhi offers to India's farmers for its central purchasing scheme. Sincve the government guarantees that it will buy any amount of grain at its minimum support price, farmers have been offloading millions of tonnes on to the Indian taxpayer. So the food mountain keeps getting higher. "It is a vicious circle in which the government's attempts to reduce the food stock only end up by increasing it," says Mr Sen. Meanwhile, India "Fair Price" shops -- the official outlets for distribution of subsidised food -- are rarely open and, when they are, offer little edible grain to customers. "Fair Price licences are distributed by politicians to their cronies," says Mr Saxena. "These are the wrong people to tackle malnutrition in India." So will the mountain just keep on getting higher? Economists say the problem is likely to remain, or get worse, unless New Delhi takes steps to simplify the country's complex system of price supports top farmers. But India's surprlus producer farmers, who are concentrated in states such as Pubjab adn Haryana, form a powerful lobby group that would react badly to any cut in the generous price support. For the same resons, most of India farmers receive water and electricity free of charge. The alternative would be to find more efficient -- and less corrupt -- ways of allocating the food mountain to the poor. As the effects of last summer's failed monsoon starts to bite, that task is beoming increasingly urgent. In the past few weeks the government has tried to tackle the problem by raising the minimum support price for rice and wheat to help tide farmers over the worst of the current frought. But the measure has mostly assisted farmers in those parts of the country that are least affected by the lack of rains. In the worst hit drought areas, such as Rajasthan, farmers have little or no crop to sell. "We need to raise the incomes of the poorest farmers and the landless so they can afford to buy food," says Mr Saxena. "Buying more rice from rich farmers is not helping very much." >>>> ---------------------------------------------------------------------------- -------------- Keith Hudson,6 Upper Camden Place, Bath BA1 5HX, England Tel:01225 312622/444881; Fax:01225 447727; E-mail: [EMAIL PROTECTED] ________________________________________________________________________
