Archive for March 13th, 2008

Dr Radhakrishnan report on agricultural indebtedness

March 13, 2008

The 60,000 crore debt waiver has been the most discussed topic after this Union Budget (after the issue over contingent liabilities).

There have been comments from all sections of the public (Shankar Acharya does a summary of the views).

The Finance Minister mentions in his speech of the Dr. R. Radhakrishnan report:

Sir, while I am confident that the schemes and measures that I have listed above will give a boost to the agriculture sector, the question that still looms large is what we should do about the indebtedness of farmers. Honourable members will recall that Government had appointed a Committee under Dr. R. Radhakrishna to examine all aspects of agricultural indebtedness. The Committee has since submitted its report and it is in the public domain. The Committee had made a number of recommendations but stopped short of recommending waiver of agricultural loans. However, Government is conscious of the dimensions of the problem and is sensitive to the difficulties of the farming community, especially the small and marginal farmers. Having carefully weighed the pros and cons of debt waiver and having taken into account the resource position, I place before this House a scheme of debt waiver and debt relief for farmers….

And then he suggests the proposal for debt waiver.

I am going through this report and on reading it I just ask one question- Have we progressed at all as a nation?

The same problems which must have been there at the time of independence (or even before) continue to exist. I have mentioned earlier over the crisis in the agri sector. I have even written a research paper on the subject which captures bulk of the reasons for indebtedness mentioned in the report.

However, I was not aware of several other issues like undernourishment has increased in farmers over the years (the ones who provide nourishment are undernourished) etc.

Most would criticise the political system in the country and say how the political parties have wasted resources in the country. I don’t really agree. The country as a whole has to share the blame. I had said this earlier as well.

Only in a country like India we see management graduates breaking records in salaries every year and have so many people die because of indebtedness.

Update:

1. I have done a research paper on the same.

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Give Indian Cricket League its due

March 13, 2008

I had written a while back on Economics of Indian Premier league. I have also argued in a Mint articlehow BCCI has ensured maximum revenues without a ball being played. However, I have not written on one of the main reason why IPL was started.

It was basically because Indian Cricket League was started by Subhash Chandra, Essel (Zee TV) group chief.  Subhash Chandra created a revolution in Indian cable TV industry and tried to do the same for Cricket as well.

ICL was criticised from day one for being a rebel league and chided for being interested only in making money from Cricket. IPL is not a rebel league (as it has got endorsements from other boards) but we can argue about it being a big money spinner (read this Shahrukh Khan interview)

BCCI naturally didn’t like the fact that without consulting it, Zee launched ICL.  It led to a huge controversy with respective country boards banning their players from playing for their country. The Indian state-level players were banned from playing for their respective teams. Various cricket grounds which are run by respective state cricket associations were not allowed to give their grounds for exhibiting ICL matches. Further, BCCI barred a senior cricketer like Kapil Dev from getting pensions.

I missed the first edition of ICL (in 2007) but have been watching the second edition. I find nothing they are doing which can be called rebellion etc. They are playing pure cricket and some matches have been really very good.

  • It has also got players from all countries and some great ones as well (Brian Lara (who is injured this time), Damien Martyn, Inzamam ul Haq, Chris Cairns etc). With such super players around, it helps build the Indian team in future as youngsters get to to learn a lot.
  • It is also based on the Twenty-20 format and is pretty exciting. The teams are also similar.

    ICL IPL
    Chandigarh Lions Mohali
    Chennai Superstars Chennai Superkings
    Delhi Giants Delhi Daredevils
    Hyderabad Heroes Hyderabad
    Kolkata Tigers Kolkata Knight Riders
    Mumbai Champs Mumbai Indians
    Lahore Badshahs Bangalore Royal Challengers
    Ahmedabad Rockets Jaipur Royals
  • What it is also doing (which IPL is also doing but is at best limited) is it has given chance to some young Indian talent. These players have been playing Ranji Trophy and other domestic matches in the hope of playing for India someday. But, being a large country and inadequate coverage (it is improving now) of India’s domestic cricket season they more often than not miss out.
  • Plus, ICL gives all these players a chance to earn a decent living. We often get the news that the cricket boards of Pakistan, Sri Lanka, New Zealand, West Indies etc are not doing well and need financial support. And they often ask BCCi for help. So, how do you expect them to pay the players? So, ICL helps them get a decent iving which isn’t a bad thing at all. As incentives are too high so players have not minded defecting to ICL instead. This has led to a concern for a few teams like New Zealand not having enough players!

I don’t know why despite so many benefits the ICL has been banned. How can you stop a youngster from playing for the country if his performance is good?

Like we say in economics competition is good, so is the case here. It is a win-win situation for all.

The ICC has also so far not allowed IPL to become an official international tournament. ICC says it is a domestic tournament. Then why do the players agree to play as most complaint of overdose of cricket. It is easy to say it is the huge incentives at stake, nothing else.

All ICC, BCCI and other boards have to do is plan a schedule and let players decide which league they want to play for – ICL or IPL? And then like we see in Europe, let top teams from each league compete against each other to become the best team.

Indian cricket also missed a great opportunity to make India a cricket superpower (it already is one, could have made it stronger). By letting both the leagues work, India’s already powerful stature in the game would have grown further. Just like various football leagues shifted the the football power to Europe, similarly it could be the case for India. It is not very often that we see people from developed economies coming to a developing economy to earn a living. It changes the dynamics completely.

It is time authorities do a rethink on this issue and remove the ban on ICL. Let cricket thrive!!

Addendum (31/3/08):

The matches have been simply amazing, nail-biting stuff. All matches are beiung played in great spirit as well. There is one request from ICL authorities though- please do not repeat one advertisment time and time again between the breaks. They always repeat the Airtel ad which makes it very boring and irritating.

Assorted Links

March 13, 2008

1. MR points to a new journal on public choice theory. It also points to an example of financial inclusion.

2. WSJ Blog says Fed may run out of ammunition. Meanwhile it has an excellent joke:

Journalist: I keep expecting to get hit by a kitchen sink flying out of the Fed.

Fed watcher: Hold onto that sink. You’ll be able to repo it at the discount window.

3. This postfrom  WSJ Blog tells me we would have some more data which will help us understand economic history of numerous countries. (The purpose of the post is actually completely different)

4. Rodrik says why foreign investors are given preferential treatment over domestic investors.

5. PSD Blog points to a new conference on partial credit guarantees

6. Ajay Shah on watching markets work.


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