the number of hungry people in india has increased by 65 million

7/30/2019 The Number of Hungry People in India Has Increased by 65 Million

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The number of hungry people in India hasincreased by 65 million more than thepopulation of France because economic

development excluded the rural poor, andwelfare programmes failed to reach them,according to charity organisation Oxfam.

In a report titled Growing a better future, it saidtoday that Indias economy doubled in size from1990 to 2005, but the number of hungry in the

country had risen by 65 million during theperiod.

Oxfam also warned that average prices of staplecrops will more than double in 20 years if urgentaction is not taken to change the internationalfood system, which is already failing to feed

nearly a billion people a day.

Oxfam research forecasts that averageinternational prices of key staples, such asmaize, will increase by between 120 and 180 percent by 2030, with up to half of this increase dueto climate change.

The worlds poorest people, who spend up to 80per cent of their income on food, will be hithardest.


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An Oxfam release says that decades of steadyprogress in the fight against hunger is now beingallegedly reversed as demand outpaces food

production.

Depleting natural resources, a scramble forfertile land and water, and the gathering pace ofclimate change is already making the situation

worse, it adds.

Oxfam warns that by 2050, demand for food willrise by 70 per cent yet our capacity to increaseproduction is declining.

The average growth rate in agricultural yieldshas almost halved since 1990 and is set todecline to a fraction of one per cent in the nextdecade.

Oxfam Chief Executive Barbara Stocking said,We are sleepwalking towards an avoidable ageof crisis. One in seven people on the planet gohungry every day despite the fact that the worldis capable of feeding everyone.

The food system must be overhauled if we areto overcome the increasingly pressing challengesof climate change, spiralling food prices and thescarcity of land, water and energy. We mustconsign hunger to history.


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Archbishop Desmond Tutu said, Manygovernments and companies will be resistant tochange through habit, ideology or the pursuit of

profit. It is up to us you and me to persuadethem by choosing food thats produced fairly andsustainably, by cutting our carbon footprints and

by joining with Oxfam and others to demandchange.

Former President Lula of Brazil said, We cant

wait anymore. Political leaders and globalcompanies must act now to ensure that allpeople can put food on their table.

There are no excuses. We have the capacity tofeed everyone on the planet now and in thefuture.

If the political will is there, no one will bedenied their fundamental human right to be freefrom hunger.

With 21% of its population undernourished,nearly 44% of under-5 children underweight and7% of them dying before they reach five years,India is firmly established among the world'smost hunger-ridden countries. The situation is

better than only Congo,


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Chad, Ethiopia or Burundi, but it is worsethan Sudan, North Korea, Pakistan or Nepal.

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This is according to the International FoodPolicy Research Institute (IFPRI) whichcombines the above three indicators to give us aGlobal Hunger Index (GHI) according to whichIndia is 67th among the worst 80 countries in

terms of malnourishment.That's not all. Data collected by GHI researchersshows that while there has been someimprovement in children's malnutrition andearly deaths since 1990, the proportion ofhungry in the population has actually gone up.

Today India has 213 million hungry andmalnourished people by GHI estimates althoughthe UN agencyFood and AgricultureOrganization (FAO) puts the figure at around230 million. The difference is because FAO uses
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only the standard calorie intake formula formeasuring sufficiency of food while the HungerIndex is based on broader criteria.

Nutrition schemes need to be expandedWhichever way you slice it and dice it, theshameful reality is inescapable - India is home tothe largest number of hungry people, about aquarter of the estimated 820 million in the

whole world.

The National Family and Health Survey (NFHS),last carried out in 2004-05, had shown that 23%of married men, 52% of married women and achilling 72% of infants were anemic - a sure signthat a shockingly large number of families werecaught in a downward spiral of slow starvation.

Global research has now firmly established thatdepriving the fetus of essential nutrients - as willhappen in an under-nourished pregnant woman- seals the fate of the baby once it is born. It islikely to suffer from susceptibility to diseasesand physical retardation, as also to mentalfaculties getting compromised.

So, continuing to allow people to go hungry andmalnourished, is not just more misery for them:it is the fate of future generations of Indians in

balance.


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What can be done to fix this unending tragedy?The government already runs two of world's

biggest nutrition programmes: the midday meal

scheme for students up to class 12 and theanganwadi programme under which infants andchildren up to 6 are given "hot cooked" meals.

These need to be spread further and moreresources pumped in to tackle weaknesses. Forinstance, a report by the anganwadi workers'

federation revealed that as many as 73,375 postsof anganwadi workers and 16,251 posts ofsupervisors are lying vacant. But the biggestcontribution to fighting hunger would beproviding universal coverage of the PDS withadequate amounts of grain, pulses and edibleoils included.

Subsidies in India

From Wikipedia, the free encyclopedia

The neutrality of this article

is disputed. Relevant discussion may

be found on the talk page. Please do

not remove this message untilthe dispute is resolved. (October 2011)

The Indian government,since Independence hasbeen subsidizing many industries and products,
http://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:NPOV_disputehttp://en.wikipedia.org/wiki/Talk:Subsidies_in_India#.23http://en.wikipedia.org/wiki/Wikipedia:NPOVD#What_is_an_NPOV_dispute.3Fhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:NPOV_disputehttp://en.wikipedia.org/wiki/Talk:Subsidies_in_India#.23http://en.wikipedia.org/wiki/Wikipedia:NPOVD#What_is_an_NPOV_dispute.3Fhttp://en.wikipedia.org/wiki/Government_of_India


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from petrol to food.[1] Loss-making state-ownedenterprises are supported by the government.Farmers are given electricity for free.[1] Overall, a

2005 article by International Herald Tribunestated that subsidies amounted to 14% of GDP.[1] As much as 39% of subsidized kerosene isstolen.[1]

On the other hand, India spends relatively littleon education, health, or infrastructure. Urgently

needed infrastructure investment has beenmuch lower than in China. According tothe UNESCO, India has the lowest publicexpenditure on higher education per student inthe world.[2]

India's vast subsidies have been severelycriticised by the World Bank as increasing

economic inefficiency.[3]

However, this argument against subsidies inIndia does not consider the fact that justagricultural and fisheries subsidies form over40% of the EU budget (seeAgricultural subsidy)although in Europe only fraction of the people

compared to India will be affected. This fact isalso true of United States and most otherWestern countries.

Contents
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[hide]

1 Introduction

2 Subsidy: Meaning and economic rationaleo 2.1 Definition

o 2.2 Objectives

o 2.3 Forms of subsidies

o 2.4 Transfers and Subsidies

o 2.5 Mode of administering a subsidy

o

2.6 Subsidy targetingo 2.7 Effects of subsidies

3 Subsidy issues in India

o 3.1 Sustainability Issues

4 Methodology for estimation of subsidies in

India

5 Central government subsidies

o 5.1 Trends in the subsidies given by CentralGovernment ( Year 1994-95)

o 5.2 Explicit subsidies of the Centre

o 5.3 Public Policy

o 5.4 Recent trends

6 Subsidies of state governments

7 Centre and states: aggregate budget-basedsubsidies

8 Benefits of subsidies

9 Agenda for reform
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10 References

[edit]Introduction

A subsidy, often viewed as the converse ofa tax, is an instrument of fiscal policy. Derivedfrom the Latin word subsidium, a subsidyliterally implies coming to assistance frombehind. However, their beneficial potential is atits best when they are transparent, well targeted,

and suitably designed for practicalimplementation.

Like indirect taxes, they can alter relative pricesand budget constraints and thereby affectdecisions concerning production, consumptionand allocation of resources. Subsidies in areassuch as education, health and environment attimes merit justification on grounds that theirbenefits are spread well beyond the immediaterecipients, and are shared by the population atlarge, present and future. For many othersubsidies, however the case is not so clear-cut.

Arising due to extensive governmental

participation in a variety of economic activities,there are many subsidies that shelterinefficiencies or are of doubtful distributionalcredentials. Subsidies that are ineffective ordistortionary need to be weaned out, for an
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undiscerning, uncontrolled and opaque growthof subsidies can be deleterious for a countryspublic finances.

In India, as also elsewhere, subsidies nowaccount for a significant part of governmentsexpenditures although, like that of an iceberg,only their tip may be visible. These implicitsubsidies not only cause a considerable draft onthe already strained fiscal resources, but may

also fail on the anvil of equity and efficiency ashas already been pointed out above.

In the context of their economic effects,subsidies have been subjected to an intensedebate in India in recent years. Issues like thedistortionary effects of agricultural subsidies onthe cropping pattern, their impact on inter-

regional disparities in development, the sub-optimal use of scarce inputs like water andpower induced by subsidies, and whethersubsidies lead to systemic inefficiencies havebeen examined at length. Inadequate targetingof subsidies has especially been picked up for

discussion.This paper based on the study conducted bySrivastava, Sen et al. under the aegis ofNational Institute of Public Finance and Policy,and the discussion paper brought out by
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Department of Economic Affairs( Ministry ofFinance) in 1997, aims to provide acomprehensive estimate of budget-based

subsidies in India. In addition, recent trendshave been included from the Economic Surveyfor the year 2004-05. Attention is focused onbringing out the magnitude of the implicitsubsidies, in addition to the explicit ones, to forman idea as to how heavy a draft do theyconstitute on the fiscal resources of theeconomy.

[edit]Subsidy: Meaning and economicrationale

[edit]Definition

The Oxford English

Dictionary defines subsidy as moneygranted by State, public body etc to keep upthe prices of stationaries etc

[edit]Objectives

Subsidies, by means of creating a wedgebetween consumer prices and producer costs,lead to changes in demand/ supply decisions.Subsidies are often aimed at :

1. inducing higher consumption/ production

2. offsetting market imperfections includinginternalisation of externalities;
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3. achievement of social policy objectivesincluding redistribution of income,population control, etc.

[edit]Forms of subsidies

A cash payment to producers/consumers is aneasily recognisable form of a subsidy. However,it also has many invisible forms. Thus, it may behidden in reduced tax-liability, low interestgovernment loans or government equity

participation. If the government procures goods,such as food grains, at higher than marketprices or if it sells as lower than market prices,subsidies are implied.

[edit]Transfers and Subsidies

Transfers which are straight income

supplements need to be distinguished fromsubsidies. An unconditional transfer to anindividual would augment his income and wouldbe distributed over the entire range of hisexpenditures. A subsidy however refers to aspecific good, the relative price of which hasbeen lowered because of the subsidy with aview to changing the consumption/ allocationdecisions in favour of the subsidised goods.Even when subsidy is hundred percent, i.e. thegood is supplied free of cost, it should be
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distinguished from an income-transfer (of anequivalent amount) which need not be spentexclusively on the subsidised good.

Transfers may be preferred to subsidies on theground that i) any given expenditure of Statefunds will increase welfare more if it is given asan income-transfer rather than via subsidisingthe price of some commodities, and ii) transferpayments can be better targeted at a specific

income groups as compared to free orsubsidised goods.

[edit]Mode of administering a subsidy

The various alternative modes of administering asubsidy are:

1. Subsidy to producers

2. Subsidy to consumers3. Subsidy to producers of inputs

4. Production/sales through publicenterprises

5. Cross subsidization

[edit]Subsidy targeting

Subsidies can be distributed among individualsaccording to a set of selected criteria, e.g. 1)merit, 2) income-level, 3)social group etc. twotypes of errors arise if proper targeting is not
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done, i.e. exclusion errors and inclusion errors.In the former case, some of those who deserveto receive a subsidy are excluded, and in the

latter case, some of those who do not deserve toreceive subsidy get included in the subsidyprogramme.

[edit]Effects of subsidies

Economic effects of subsidies can be broadlygrouped into

1. Allocative effects: these relate to thesectoral allocation of resources. Subsidieshelp draw more resources towards thesubsidised sector

2. Redistributive effects: these generallydepend upon the elasticities of demands of

the relevant groups for the subsidised goodas well as the elasticity of supply of thesame good and the mode of administeringthe subsidy.

3. Fiscal effects: subsidies have obviousfiscal effects since a large part of subsidiesemanate from the budget. They directly

increase fiscal deficits. Subsidies may alsoindirectly affect the budget adversely bydrawing resources away from tax-yielding
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sectors towards sectors that may have a lowtax-revenue potential.

4. Trade effects: a regulated price, which is

substantially lower than the market clearingprice, may reduce domestic supply and leadto an increase in imports. On the otherhand, subsidies to domestic producers mayenable them to offer internationallycompetitive prices, reducing imports orraising exports.

Subsidies may also lead to perverse orunintended economic effects. They would resultin inefficient resource allocation if imposed on acompetitive market or where marketimperfections do not justify a subsidy, bydiverting economic resources away from areaswhere their marginal productivity would behigher. Generalised subsidies waste resources;further, they may have perverse distributionaleffects endowing greater benefits on the betteroff people. For example, a price control maylead to lower production and shortages and thus

generate black markets resulting in profits tooperators in such markets and economicrents to privileged people who have access tothe distribution of the good concerned at thecontrolled price.
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Subsidies have a tendency to self-perpetuate.They create vested interests and acquirepolitical hues. In addition, it is difficult to control

the incidence of a subsidy since their effects aretransmitted through the mechanism of themarket, which often has imperfections other thanthose addressed by the subsidy. On 29 June2012, C Rangarajan, Chairman of the PrimeMinister's Advisory Council in view of presentdifficult economic position, advocated cuttingdown of fuel and fertiliser subsidies to keep thefiscal deficit within the budgetted level of 5.1 percent.[4]

[edit]Subsidy issues in India

Subsidies have proliferated in India for severalreasons. In particular this proliferation can betraced to 1)the expanse of governmentalactivities 2) relatively weak determination ofgovernments to recover costs from therespective users of the subsidies, even whenthis may be desirable on economic grounds, and3) generally low efficiency levels of

governmental activities.In the context of their economic effects,subsidies have been subjected to an intensedebate in India in recent years. Some of the
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major issues that have emerged in the literatureare indicated below:

Whether the magnitude and incidence ofsubsidies, explicit and implicit, have spun outof control; their burden on governmentfinances being unbearable, and their costbeing felt in terms of a decline of real publicinvestment in agriculture.

Whether agricultural subsidies distort the

cropping pattern and lead to inter-regionaldisparities in development

Whether general subsidies on scarce inputslike waterand power have distorted theiroptimal allocation

Whether subsidies basically cover onlyinefficiencies in the provision of governmentalservices

Whether subsidies like (food subsidies) havea predominant urban bias

Whether subsidies are mistargeted

Whether subsidies have a deleterious effecton general economic growth of sectors not

covered by the subsidies Whether agricultural subsidies are biasedagainst small and marginal farmers

How should government services be pricedor recovery rates determined
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What is the impact of subsidies on thequality of environment and ecology

[edit]Sustainability IssuesAn example of potential environmental orsustainability issues arising from the currentsubsidy structure can be seen interrelatedproblems of water and energy consumption inthe agricultural sector.

During the Green Revolution in the 1960s and70s, Indias agricultural productivity grew greatly,in part due to a dramatic increase in agriculturalirrigation, particularly from groundwater sources.[5][6]

While that increase in irrigation has helped thenation feed itself, it has also created a

groundwater crisis, the dimensions of whichhave become increasingly clear in recent years.[7]Groundwater tables are falling in many areasof the country, from around 20 cm per year inPunjab to 3 to 5 meters per year in parts ofGujarat. The medium to long-term risks toagriculture in such a scenario range from aneventual decline in water resources, to theintrusion of salt-water in coastal areas.[8]

As groundwater tables drop, the pumping ofgroundwater from deeper and deeper wells
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requires an ever-increasing amount of electricity.Because electricity for agriculture is subsidized,there is little incentive for farmers to adopt

water-saving techniques, creating a viciouscircle of water and energy consumption.[8]

Recently, the government of Gujarat hasengaged in a pilot program to experiment withways to shift incentives for farmers toward morewater- and energy-efficient technologies and

practices.

[9][10]

[edit]Methodology for estimation ofsubsidies in India

Alternative approaches and conventions haveevolved regarding measurement of themagnitude of subsidies. Two major conventions

relate to measurement through (i) budgets, and(ii) National Accounts. The latter estimatescomprise explicit subsidies, and certain directpayments to producers in the private or publicsectors (including compensation for operatinglosses for public undertakings) that are treatedas subsidies. This, however, does not

encompass all the implicit subsidies.The estimates of budgetary subsidies arecomputed as the excess of the costs ofproviding a service over the recoveries from that
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service. The costs have been taken as the sumof:

1. revenue expenditure on the concernedservice

2. annual depreciation on cumulativecapital expenditure for the creation ofphysical assets in the service;

3. Interest-cost (computed at the averagerate ofinterest actually paid by the

respective governments) of cumulativecapital expenditure, equity investments inpublic enterprises, and loans given for theservice concerned including those to thepublic enterprises. The recoveries are thecurrent receipts from a service, which areusually in the form of user charges, fees,interest receipts and dividends.

Mathematically, the subsidy (S) in a service isobtained by:

S = RX + (d + i) K + i ( Z + L ) - ( RR + I + D )

Where:

RX = revenue expenditure on the serviceL = sum of loans advanced for the service at thebeginning of the periodK = sum of capital expenditure on the serviceexcluding equity investment at the beginning of
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the period.Z = sum of equity and loans advanced to publicenterprises classified within the service category

at the beginning of the period.RR = revenue receipts from the serviceI + D = interest, dividend and other revenuereceipts from public enterprises falling within theservice category.d = depreciation ratei = interest rate

Services provided by the govt are groupedunder the broad categories of general, socialand economic services.

General services consist of i) organs of state ii)fiscal services iii) administrative services iv)defence services, and v) miscellaneous

services. These services can be taken as publicgoods because they satisfy, in general, thecriteria of non-rival consumption and non-excludability. The entitlement to these servicesis common to all citizens. Since they are to betreated as public goods, they are assumed to be

financed through taxes.Important service categories in social servicesare i) education consisting of general education,technical education, sports and youth services,and art and culture, ii) health and family welfare,


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iii) water supply, sanitation, housing and urbandevelopment, iv)information and broadcasting,v) labour and employment and vi) social welfare

and nutrition.Under the heading of economics services, thefollowing are included i) agriculture and alliedactivities, ii) rural development, iii) special areaprogrammes, iv)irrigation and flood control,v)energy, vi)industry and minerals, vii) transport,

viii) communications, ix) science technology andenvironment and x)general economic services.

In the estimation of subsidies thesegovernmental services are divided into threegroups:

Group1: all general services, secretariatexpenses in social and economics services, andexpenditure on natural calamities are included inthis subgroup. Being public goods, these arefinanced out of taxation and are therefore notincluded in the estimation of subsidies.

Group 2: it consists of services with strongexternalities associated with them. In the case of

these services, it is arguable that even thoughthe exclusion may be possible, these ought tobe treated as merit goods or near-public goods.The provision of subsidies is most justified in thiscase. Near zero recovery rates in these cases
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only indicate the societal judgement that thesemay be financed out of tax-revenues.

Merit social services: elementary education,

public health, sewerage and sanitation,information and publicity, welfare of SC, STsand OBCs, labour, social welfare and nutritionetc.

Merit economic services: soil and waterconservation, environmental forestry and

wildlife, agricultural research and education,flood control and drainage, roads and bridges,space research, oceanographic research, otherscientific research, ecology and environmentand meteorology.

Group 3: all the remaining services are clubbedunder this head. In these cases consumption isrival and exclusion is possible, therefore cost-recovery is possible through user charges.These services are regarded as non-meritservices in the estimation of subsidies.

The distinction between merit and non meritservices is based on the perceived strong

externalities associated with the merit services.However, it does not imply that the subsidisationin their case needs to be hundred percent. Inaddition, even if small recoveries are advocatedfor merit services, the issues relating to the


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costs of their provision, leakages to non-targetbeneficiaries, and their effectiveness in attainingthe objectives for which they are provided, need

to be examined. It also does not mean that thereare no externalities associated with non-meritservices, or that the subsidies associated withthem should be completely eliminated.

[edit]Central government subsidies

[edit]Trends in the subsidies given by

Central Government ( Year 1994-95)

The bulk of the Central Govts subsidiesarise on the provision of economic services,which account for 88% of the total subsidies(10% on merit services and 78% on non-merit).

The recovery rates in the social endeconomic services are very low (around 10%).

Subsidies on non-merit goods are more thanfive times those on merit goods, which reflectson an unduly large and ill-directed subsidyregime.

The bulk of subsidies on merit goods go forthe construction of roads and bridges,followed by elementary education andscientific research.
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Amongst non-merit services, the biggestrecipients are industries and agriculture andallied services.

78% of subsidies which go for non-meriteconomic services are amenable to economicpricing. Even if one allows for a part of thesesubsidies being given in the interest ofredistribution or provision of human needs, asubstantial part must be due to inefficiencycosts of public provision of these servicesand/or inessential input or output subsidies.

Subsidies to Central Public Enterprises areestimated separately as the excess of imputedreturn on the equity held and loans given bythe central government to these enterprises,over actual receipts in the form of dividends

and interests. Subsidy in this manner iscalculated for each enterprise. They areaggregated according to cognate groups.

Each cognate group has some enterprises thatreceive a subsidy and some surplus units.However, there are four groups where no unit is

able to show a surplus viz: coal andlignite,power, agro-based goods and tourist services.

[edit]Explicit subsidies of the Centre
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The most important explicit subsidiesadministered through the Central Governmentbudget are food and fertilizer subsidies, and until

recently, export subsidies. These subsidiesaccount for about 30% of the total centralsubsidies in a year and have grown at a rate ofapprox 10% per annum over the period 1971-72to 1996-97.

The relative importance of different explicit

subsidies has changed over the years. E.g.,food subsidies accounted for about 70% of totalCentral explicit subsidies in 1974-75. Since then,its relative share fell steadily reaching its lowestof 20.15% in 1990-91. Thence onwards, it hasrisen steadily reaching a figure of 40% in 1995-96.Export subsidies have been on the decline

except for the spurt in the late 1980s, whereasthe relative share of the food subsidies has beenrising although in a cyclical pattern.

As a proportion of GDP, explicit Central govtsubsidies were just about 0.305 in 1971-72. theycontinued to increase steadily reaching a peak

of 2.38% in 1989-90. after this during the reformyears, the explicit subsidies as a proportion ofGDP have continued to decline.

[edit]Public Policy


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In the last quarter of 20th century, Indiangovernments began procuring condoms on largescale to facilitate national population control

schemes by reselling them at subsidised prices.[11]

[edit]Recent trends

Expenditure on major subsidies has increased innominal terms from Rs. 9,581 crore in 1990-91to Rs.40, 416 crore in 2002-03. It was budgeted

to increase by 20.3 percent to Rs.48, 636 crorein 2003-04. Expenditure on major subsidies asper cent of revenue expenditure after decliningfrom 13.0 per cent in 1990-91 to 8.7 per centin1995-96 started rising to reach a level of 9.6per cent in 1998-99. In 2002-03, expenditure onmajor subsidises increased to 11.9 per cent from

10.0 per cent in 2001-02. With the dismantling ofthe administered price mechanism for petroleumproducts from 1 April 2002, subsidies in respectof LPG and kerosene distributed throughthe public distribution system are now explicitlyreflected in the budget. This partially explains

the spurt of 35.3 per cent in the expenditure onmajor subsidies in 2002-03. The spurt in majorsubsidies in 2002-03 was also because of anincrease in food subsidy by Rs. 6,677 crorenecessitated by the widespread drought in the
http://en.wikipedia.org/wiki/Subsidies_in_India#cite_note-10http://en.wikipedia.org/w/index.php?title=Subsidies_in_India&action=edit&section=17http://en.wikipedia.org/wiki/Public_Distribution_Systemhttp://en.wikipedia.org/wiki/Subsidies_in_India#cite_note-10http://en.wikipedia.org/w/index.php?title=Subsidies_in_India&action=edit&section=17http://en.wikipedia.org/wiki/Public_Distribution_System


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country. Some of the major initiatives taken sofar to rationalise the budgetary subsidies includetargeted approach to food subsidy (BPL

families) under Public Distribution System,allowing Food Corporation of India (FCI) toaccess market loans carrying lower interestrates, encouraging private trade in food grains,liquidating excess food grain stocks, replacingunit based retention price scheme with a groupbased scheme in the case of fertiliser subsidiesand proposed phasing out of subsidies on PDSkerosene and LPG. (Economic Survey for theyear 2004-05

[edit]Subsidies of state governments

Subsidies given by 15 non-special categoryStates were estimated for 1993-94, the latestyear for which reasonably detailed data wereavailable for all these States. The trends thrownup by the study are:

Subsidies in social services and economicservices both constitute half each of the totalsubsidies given by the States.

The proportion of merit subsidies is muchhigher in social services vis--vis economicservices.
http://en.wikipedia.org/wiki/Food_Corporation_of_Indiahttp://en.wikipedia.org/w/index.php?title=Subsidies_in_India&action=edit&section=18http://en.wikipedia.org/wiki/Food_Corporation_of_Indiahttp://en.wikipedia.org/w/index.php?title=Subsidies_in_India&action=edit&section=18


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The overall recovery rate is 5.81% of thetotal cost (less than 2% in social services andapprox. 9% in economic services).

There is a distinct tendency for the percapita subsidies to rise as the percapita incomes rise.

None of the 15 States spends more than 30-35% of total subsidies on merit goods.

The recovery rates for merit services showvariation in a narrow band whereas the largestvariations are recorded for recovery rates fornon-merit economic services.

The near zero surpluses for all servicesshow that subsidies are mainly financed bytax-revenues and borrowing in the States.

More than one-fifth of non-merit social

subsidies accrue to education, sports and art& culture.

In economic services, irrigation accounts fornearly a quarter of services whereas poweraccounts for around 12%.

Lastly, subsidies to States publicenterprises are large but recovery in the formof interests and dividends is extremely low.

[edit]Centre and states: aggregate budget-based subsidies
http://en.wikipedia.org/wiki/Per_capitahttp://en.wikipedia.org/wiki/Per_capitahttp://en.wikipedia.org/wiki/Irrigationhttp://en.wikipedia.org/w/index.php?title=Subsidies_in_India&action=edit&section=19http://en.wikipedia.org/wiki/Per_capitahttp://en.wikipedia.org/wiki/Per_capitahttp://en.wikipedia.org/wiki/Irrigationhttp://en.wikipedia.org/w/index.php?title=Subsidies_in_India&action=edit&section=19


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Total non-merit subsidy for the Central and Stategovernments taken together amount to Rs.102145.24 crore in 1994-95, which is 10.71%

ofGDP at market prices. The share of Centralgovernment in this is 35.37%, i.e. roughly half ofcorresponding State government subsidies. Therecovery-rate for the Centre, in the case of non-merit subsidies, is 12.13%, which is somewhathigher than the corresponding figure of 9.28%for the States. The difference in recovery rates isstriking for non-merit social services, being18.14% for the centre and 3.97% for the States.It is only marginally different for non-meriteconomic services (11.65% for Centre and12.87% for States) where, in fact, States dobetter.

The total non-merit subsidies for the year 1994-95 amounted to 10.71% of GDP at marketprices, resulting in a combined fiscal deficit of7.3% for the Centre, States and UnionTerritories. Therefore, if these subsidies werephased out, the same would have a discernibleimpact on the fiscal deficit. It can be done byincreasing the relevant user charges, whichwould also lead to a reduction in their demand.

Apart from these first round effects, there wouldalso be positive secondary effects on fiscal
http://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/GDP


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deficit, as the overall efficiency in the economyrises with an improved utilisation of scarceresources like water, power and petroleum. With

an increase in efficiency, the consequentexpansion of tax-bases and rise in tax-revenueswould further reduce the fiscal deficit.

[edit]Benefits of subsidies

The relative distribution of the benefits of asubsidy may be studied with respect to different

classes or groups of beneficiaries such asconsumers and producers, as also betweendifferent classes of consumers and producers.

In case of food subsidy, PDS suffers fromconsiderable leakage and apart from a lowcoverage of poor; the magnitude of benefit

derived by the poor is very small. In case of electricity, the subsidy rates havebeen rising for both agriculture and domesticsectors because the unit cost has been risingfaster than the relevant tariff-rate. Also, thereis considerable variation in the level of percapita electricity subsidy indicates that, in thericher States, the per capita subsidy issubstantially higher as compared to that in thepoorer States.
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In case of public irrigation, water has a veryhigh marginal productivity when used inconjunction with HYV of seeds, chemical

fertilisers, power and other related inputs. It isthe richer farmers who may derive relativelylarger benefits because of their capacity touse these allied inputs.

Subsidies to elementary education formabout half of the total subsidies on generaleducation. However, this is not true for allindividual States: the share of elementaryeducation is lowest in the high income Statesand the highest in the low income States(Goa, Punjab and West Bengal actually givehigher subsidies to secondary education thanprimary education).A negative correlation

between the level ofper capita income andthe share of subsidies to elementaryeducation is thus discernible. Most subsidiesto higher education accrue predominantly tothe better-off sections of society as they havean overwhelming advantage in competing outprospective candidates from the poorer

sections in getting admission to courses thatare characterised by scarcity of seats.

For subsidies of health, the greateremphasis on curative health care expenditureoften reflects a bias towards the better-off
http://en.wikipedia.org/wiki/Per_capita_incomehttp://en.wikipedia.org/wiki/Per_capita_income


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people whereas preventive health careexpenditure with much larger externalitieswould clearly be of greater help to the

economically weaker sections of the society.

[edit]Agenda for reform

The study brings to the fore the massivemagnitude of subsidies in the provision ofeconomic and social services by thegovernment. Even if merit subsidies are setaside, the remaining subsidies alone amount to10.7% of GDP, comprising 3.8% and 6.9% ofGDP, pertaining to Centre and State subsidiesrespectively. The average all-India recovery ratefor these non-merit goods/services is just 10.3%,implying a subsidy rate of almost 90%.

The macroeconomic costs of unjustifiedsubsidies are mirrored in persistent large fiscaldeficits and consequently higher interest rates.In addition, unduly high levels of subsidisationreflected in corresponding low user chargesproduce serious micro-economic distortions aswell. Its prime manifestations include excessivedemand for subsidised services, distortions inrelative prices and misallocation of resources.These are discernible in the case of certain inputbased subsidies. These problems are further


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compounded where the subsidy regime isplagued by leakages which ensure neitherequity nor efficiency.

The agenda for reform should therefore focuson:

Reducing the overall scale of subsidies

Making subsidies as transparent as possible

Using subsidies for well defined economicobjectives

Focusing subsidies to final goods andservices with a view to maximising theirimpact on the target population at minimumcost

Instituting systems for periodic review ofsubsidies

Setting clear limits on duration of any newsubsidy schemes

The explosion of opinion on the issue of ForeignDirect Investment in the retail sector in Indiahas confounded most of us with dubiousdata, incorrect analysis and obfuscatory

lobbying. Time to set the record straight. 10good reasons why it is a bad idea.1. FDI in retail is a non-critical areaof intervention. Nobody in urban India issuffering for lack of access to food or


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grocery items. If at all it is the publicdistribution system that is diseased withcorruption and needs to be replaced or

removed. Access to food is an issue in theremote and rural impoverished areas of thecountry, where as the fine print tells you, FDIin retail will not be implemented.Comparative examples that try and portrayan opposition to FDI in retail as regressiveare not only misplaced, they are patently

suspect. [Montek Singh Ahluwalia of thePlanning Commission included, whosuggested that arguing against FDI in retail

was like complaining that the taxis woulddislodge theTonga]. To imagine that FDI inretail exemplifies a progressive mindset

shames us into thinking that an ability to buyin the comfort of a twenty thousand squarefeet air conditioned space is more indicativeof progress than providing similar qualityhousing for its citizen or schools for ourchildren. The taxi took over theTonga forreasons of speed and protection from the

elements. FDI in retail projects no suchbenefit. We already get what we need for ourdaily needs through local general stores andlocal big format stores. The gloss of a shiny


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international brand name atop a store is notenough of a differential.2. Middlemen are key to

distribution. The myth about farm-to-store supply chain should end with thesimple fact that middlemen will not beremoved from the operation but that existingmiddle men will be replaced by bigger, moreorganized, more prosperous middlemen.

Anyone who knows the business of

distribution knows that there is nothingcalled a direct sale from farmer to retail,unless it is self-owned farm by the retailer.The process requires a minimum of threetransactions. From the farmer to thetransporter, to the distributor and to the end

supplier. There are middlemen even if youmake a direct purchase and underwrite thefarmers produce and each point of contactcosts something to keep his or her servicesgoing. The middleman is not an enemy of thestate. The middleman is being paid forservices rendered, his is not a free lunch. He

is the conduit that makes delivery possible.Removing middle men, as is being claimed

by votaries of FDI in Retail does nothing forthe families of those who will be obliterated

by the new model that will take over: the


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retailer will have his own middle men in thesystem, and that is all the difference there

will be. The argument advanced by many

including some farmer lobby groups thatthere are 4 to 10 layers of middle men

between producer and retail are not onlyhumbugging they are undermining freemarket movements where nobody can get inline unless he performs a function. The othercharge, that a policy failure produced such

layers of middlemen can be countered with asimple answer FDI in Retail cannot remedya policy failure. It is the governments job tofix that, not Walmarts.3. Farmers will not get betterprices. The idea that the farmer will get a

better price for his produce if FDI in Retail isallowed is a baseless suggestion. The openmarket does not work on altruism and socialservice. It negotiates the best for itself so itcan corner the most for itself. Farmersuicides are not because they cannot sell, asis being written about by irresponsible

columnists and business leaders but becausethey are unable to get remunerative prices fortheir produce qwing to poor quality producedue to lack of proper crop management orcrop failure, an inability to pay back their


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loans or make ends meet and lose their land.To suggest that foreign retailers would be soteary eyed at the plight of farmers that they

would offer a premium on produce which isavailable at less is plain childish. Fact is thatthe markets, if allowed to function withoutcontrols, will take their own route to pricediscovery. And remember, the more clout a

buyer has, the lesser the seller gets percapita. That is a law of the free market. FDI

in retail cannot do any more than local bigformat retailers are already doing. Those thatargue that FDI in retail will bring succor tofarmers and reduce prices for consumersneed to explain why, when there are homegrown large format retailers, that is not

already the case. How can you expand on atheme when you admit that it is not working?The farmer is only an emotional hook in thepro FDI lobbyists scheme. The truth is thatmore than 70% of revenues of large formatstores come from non-food items where thefarmer does not even figure. All the stories in

media about farmer unions supporting themove are motivated through two straightfacts: lobbying with a generous dose of cashinfusion into these unions by food majorsand retail chains and the other more


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important fact they are rightabout some farmers in their areas, speciallyPunjab getting a better deal. But the cost of

that is this: big retail and food processorsalter crop selection to have farmers produceto order. So, because Pepsi needs potatoesfor their chips, farmers skip the Dal seasonand other such produce in favour of extensivecultivation and specialization towards potatocultivation. Now they are right that

particular farmer is doing well contractfarming is profitable, but in effect an entirerange of products are now in short supply.Precisely why Dal and cereals and vegetablesare becoming costlier by the day. This isapart from the other real problem

corporates do not like dealing with a dozensmall producers. So they focus on one or twolarge producers and create conditions for therest to either submit to a larger contractor or

just sell the land and move out of business.4. Brands compete to secure marketshare. Market share can only be

secured at the cost of another existingcompetitor. It is equally naive to imaginethat the anomalies of predatory pricing will

be taken care of once the sector is open tocompetition. Let us understand the idea of


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competition. All competition starts from abaseline price point. The base line pricealready exists with the current prices the

farmer gets. All competition is normally overand above that base line. Nobody sells belowhis purchase price. But what is being debatedhere is the ability of the big retailer to sustainlosses for a long period of time by sellingunder cost to dismantle competition owing todeep pockets. Brands will go on a losing

spree to corner market share. That is an oldprinciple. Walmart will sustain losses tocounter Carrefour and a Carrefour will do thesame to contain another competitor. In afight of such giants, the small retailer andthe kirana shop owner of today stand no

chance. As a caveat, one should be wonderingwhat the local large format stores would faceand why they are supporting a policy shiftthat could hurt them. After all, Spencer and anumber of smaller retailers hardly stand achance in the face of a Walmart. Well thereason is simple: The only reason you hear

some of them support the idea is because [a]some want to raise money from marketsabroad to run their unprofitable enterprisesfor a little longer until they hope to breakeven [b] access cheaper funds which the


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Government and its fiscal laws have madealmost non remunerative or [c] hope to betaken over and bought out. Note that the

retail business is cut throat and many large-format or branded stores have alreadyfolded. Subhiksha inSouth India and Vishaland Sabka Bazaar in the North come to mindimmediately. Most of the existing local largeformat retailers who support the idea arefolks who are looking for a bail out or hoping

to sell their operations on the back of decentvaluations.5. Big Retail cannot co-exist withsmall retail. That big retail can coexist

with kirana is a flat impossibility. It cantbecause big retail alters the playing field

permanently. The instruments of small retailare redundant in the schema of big retail.The grammar of big format selling influencesthe buying habits of people. The kirana sellson the basis of daily consumables of a middleclass. The big-format pushes for bulk sales,

weekly big purchases where you buy four

when you need one simply because it ispriced in an attractive deal for the day.The kirana and the small retailer cannot

bundle promo packs because it cant dealdirectly with producers. Big retail is habit


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altering. It is not an alternate, not anexpansion of choice but a modification of themanner of consumption and sale. Big retail

does not encourage balanced consumptionbut exists on the principle of overuse, andexcess. Big retail altered the psyche of anentire generation of Americans consumers,producers and manufacturers alike. The ideathat shopping can be a weekend activity,

where you load up on supplies for a week

comes from a country where joint familiesare not known, buying fresh vegetables dailyis unknown, where women dont cook and

burgers are staple diet. Weekend buyingleads to storage. Which leads to oversizedfreezers; which leads to more frozen food,

and to more heat-and-eat dishes, and thespiral of the other problems of plenty.Indians dont consume like that and there ismuch to be said about buying fresh and local,as the world is now discovering.6. Big Retail is one big cause of foodinflation. That food inflation will be

curtailed with FDI in Retail is a plain lie.Food inflation has to do with supply sideshortages and distribution bottlenecks thathave mostly to do with government policy ineach case. The advent of big retail will not


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induce any farmer to grow more food ormake any dent in the fossilized mechanismsof food procurement and distribution policies

of Government. The truth remains thatagriculture has suffered for long, thatfarmers do not get remunerative prices andthat they are unable to pay back whet theyhave borrowed. Food inflation is a derivativeof the paralysis of government and states andnothing to do with FDI in retail. Were

talking about FDI in retail for Gods sake, notFDI in agriculture. The other startling aspectof FDI in retail is that it is being sold as theanswer toIndias farming woes. Congress MPJyoti Mirdha has pointed out that the FDIintroduced in the agriculture sector in 2006

is yet to show any progress, so where is thebasis for moving on to FDI in retail. WhatFDI could not do for agriculture directly, it

will do through FDI in retail is a bit of a bigjoke.7. Consumers do not get betterprices. Consumers will get lower prices is

another figment of the lobbyists fertileimagination. Prices never come down. Big

bazaar or Walmart, prices never come down.The argument is a facetious assault on theprinciple of growth and inflation. Big retail


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can at best sell you cheaper potatoes or fivesuch items carefully selected on seasonal

variations or bulk deals with producers cheap

for only a week and no more. For everythingelse you buy from them, you will pay more.That is how big retail works. To qualify this,read this comment from a KPMG expert who

was arguing for FDI in retail: To drawconsumers, [big] retailers squeeze suppliersand ensure efficiencies in categories that

drive foot falls. They balance it out byenjoying higher margins in categorieswhere impulse buying is high [AnandRamanathan quoted in EconomicTimes,1st Dec 2011] The reason there is nodata on this is because it is not in the interest

of big retail or big media to support the idea.Think about infrastructure and overheads. Alarge format retailer, if it is not within anexisting mall and aims to be the size of

Walmart stores will have to put up its ownair-conditioning plant, parking, galleys, staff,

vans, transport, machinery and processes

that simply cannot offset any purchasingbulk deals to support the idea of cheaperprices. That prices of food items are cheaperat big retail outlets is also not without aserious caveat. Comparing prices is not the


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only criterion: you have to compare qualityas well. Has anyone ever bought fresh

vegetable produce from a big retailer

nobody will accept that quality from a localvendor. The jargon about cereals andselected stuff being cheaper is sketchy at bestand the reason there is no data on this is

because nobody wants to reveal the modusoperandiof selective discounting by bigretailers as a marketing tool rather than any

real principle of lower pricing. The surveypublished in a newspaper is an in-houseattempt which does not answer to the mostfundamental discrepancy why does everysurvey attempt at comparing prices of chosencommodities at kirana stores with big retail

outlets: how about comparing one big retailoutlet with another and explain why they donot conform to the same price principleacross the board?8. Big Retail kills small jobs. More jobs

will be created when big retail comes in is afallacy and a purposeful falsehood. For an

economy where 80% of the populationengaged in trade and local retailing is selfemployed, how do the numbers stack up if

you dislodge even 20% of that population.Does any math support the theory that any


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number of big retailers in a city likeDelhi willbe able to support 5 lakh people who willprogressively be thrown out of business due

to their advent? For a government that isunable to provide employment in big cities

with reasonable opportunities, the impact insmaller ones will be unmanageable. The 30%caveat that is being bandied about as a

bulwark against large scale displacement oflocal producers is also a charade because it

does not concern itself with produce butinfrastructure investments that big retailersmust make, [as a safeguard, in theGovernments weak words] withoutexplaining that these could be the plywoodand the roofing they use to set up their retail

stores or the marble tiling and the bathroomfixtures or even the trucks they buy. So whatprotection is this worth? Then again, even ifthis were to be reworded to ensure that the30% limit pertained to produce and notinfrastructure, which gigantic micromanagement agency would pore over their

account books to determine this on a daily ormonthly basis?9. Big Retail is relative to RealEstate. Retail is a first cousin of the realestate industry. Already the calculators are


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out fantasizing about the acreage these newbig format retail marts will need and thenewer malls that will be coming by design

around such anchor stores. Big Retail lovesBig Development and vice versa. The upshotis that the already skewed real estate market

will only get more out of control and housingfor middle classes and the ordinary folks thatmuch farther. Big retail creates the groundsfor large scale property price hike throwing

up a new spiral of inflation in real estatespace a totally unregulated, unbridled,

black money haven. Another reason why thesmaller retailer will have to pack up andmove cant afford the real estate.10. FDI in Retail is a political hot-

potato and a non-issue. The politicalexpediency attributed to the opposition onthe issue of FDI in Retail is actuallymisdirected and it is the government of theday which should be under a cloud ofsuspicion for the timing of this move. If thisis about proving that there is no paralysis in

governance, it is plainly a bravura act whichshould be set aside for the moment. On theother hand, if this passes for reform, howabout we discuss instead FDI in education, asector that holds the key to prosperity for this


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country and its future generations. If this is asop for theUS and the rest of the west, let uslearn from their mistakes profligacy in

consumer spend and consolidation ofbusiness are dangerous instruments in theeconomic life of a country. Let us not bail outthose who would take us down the preciseroute that landed them in hell. India mustdecide if it wishes to trade its cultural, dietaryand social habits for the old western

paradigm of conspicuous consumption andwhether it can stave off the easy charm ofeasy money and draw a new plan where thefarmers are attended to immediately,incentives woven into their crop cultivationhabits, offer remunerative prices which keep

him engaged and allows him to prosper. Thispandering to the urban consumer with theidea that he will have more choice and betterpricing is a charade and its bluff must becalled. The urban consumer they are talkingabout probably earns Rs 5 Lacs annually onaverage and is already spoiled for choice. If it

is all about saving a few rupees per kilo on apacket of Ariel detergent, is it worth sendinga man out of work for that? Can aGovernment which cannot provide jobsafford to argue with that? All the media


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support for FDI in retail is connected to theiradvertising potential and business crossholdings. Media houses are naturally not

saddled with the responsibility of findingemployment for the burgeoning populationof the country and they must be excused theirfit of greed. The best way to test theirintegrity is to ask if they are okay with FDI inmedia.

7 reasons why FDI in retail is good for

IndiaByLekhni

Published: September 23, 2012Postedin: Economy, India, OpinionNow that the government has approvedFDI in multi-brand retail, it has paved theway for the likes of Walmart and Amazonto set up shop in India. Predictably, there

have been protests from shopkeepers andBharat Bandhs from political parties.Street vendors are saying thegovernment is ignoring the working class,while others are worried that local
http://elekhni.com/2012/09/7-reasons-why-fdi-in-retail-is-good-for-india/http://elekhni.com/2012/09/7-reasons-why-fdi-in-retail-is-good-for-india/http://elekhni.com/category/allminusaside/economy/http://elekhni.com/category/allminusaside/india/http://elekhni.com/category/allminusaside/opinion/http://www.thehindu.com/business/Economy/article3918932.ecehttp://www.thehindu.com/business/Economy/article3918932.ecehttp://www.thehindu.com/news/cities/Delhi/article3917053.ece?homepage=truehttp://elekhni.com/2012/09/7-reasons-why-fdi-in-retail-is-good-for-india/http://elekhni.com/2012/09/7-reasons-why-fdi-in-retail-is-good-for-india/http://elekhni.com/category/allminusaside/economy/http://elekhni.com/category/allminusaside/india/http://elekhni.com/category/allminusaside/opinion/http://www.thehindu.com/business/Economy/article3918932.ecehttp://www.thehindu.com/business/Economy/article3918932.ecehttp://www.thehindu.com/news/cities/Delhi/article3917053.ece?homepage=true


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industries will collapse.Meanwhile,Walmart is saying it will openstores in India within 18 months.

Im not so sure, though, that allowing FDIin retail is such a bad thing. I can think ofseveral ways it will actually help the Indianconsumer :

1. Small shops, street vendors andmalls can all co-exist (as they are

doing now) : They all serve differentneeds, and sometimes different incomesegments. Not everyone is going to beable to drive to a Walmart, or shop atmalls. The neighborhood shop sellingeverything from toothpaste to SIM cards is

not going to go away anytime soon,whatever giant retailer comes in. To saythat Walmart will harm small vendors islike saying McDonalds will harm theroadside chaat / tea shop.

2. Premium pricing has not meant

better quality : I have found this to betrue of almost every product and servicein India. Just because you go to a big storeand pay a premium for a product, youcannot expect either that the product will
http://online.wsj.com/article/SB10000872396390444165804578009520703223306.htmlhttp://online.wsj.com/article/SB10000872396390444165804578009520703223306.html


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be better quality, or that the service willbe better. Prices for a whole lot ofproducts are the same as in the US,

though the quality is just not the same.

When I visit India, I buy kurtis and bagsfrom street vendors for Rs 100 or so. Ialso buy kurtis from big-name stores inmalls, and from Fabindia for anywherefrom Rs 400 to Rs 1000. At the end of the

day, I dont find much difference betweenthe Rs 100 kurti and the Rs 500 one. Bothare cotton, both run during the initial fewwashes, and both last equally long.

3. Customer service is non-existent : Most stores in India will not

allow a customer to return a product evenif he/she has the purchase receipt and theproduct is unused. Salesmen are moreinclined to hardsell a product thanunderstand the customers needs andsteer her to what will fit her needs. And if

you get a lemon, getting the store or themanufacturer to fix anything is extremelytime-consuming. I have been surprisedthat the same big name brands whoprovide excellent customer service in the


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US do not do so in India, not even in theircompany-owned stores. If the advent ofFDI means stores with US standards of

customer service, it would be a bigimprovement.

A Bharti Walmart store in Amritsar. (Piccourtesy : PTI/ The Hindu)

4. Local industry doesnt have to

suffer : A lot of stuff will still be made inIndia. If people want to use Hamam soapand Bambino vermicelli, that is whatWalmart will have to stock. Even wherethere is no brand preference, it makes
http://www.gophoto.it/view.php?i=http://elekhni.com/wp-content/uploads/2012/09/Bharti_Wal-Mart_Amritsar.jpg


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complete sense to source items locallyinstead of importing them from say,Mexico. Its not as if products made in

China are not already sold in Indianstores, small and large. That is thegreater threat to Indian industry, notWalmart. Granted, Walmart has a longhistory of squeezing its suppliers (and willdo the same to any Indian suppliers), butthe suppliers who stick with Walmart do sobecause what they lose in margins perunit, they make up with the huge volumes.

Finally, the FDI approval does state that 30 per cent of the products must be

procured from small scale industries

which have a total investment in plant andmachinery not exceeding $1 million. 5. Hypermarkets arent new to India,right ? We already have the Big Bazaarsand Spencers and so on. So what arethese international chains going to dothats so dangerous for local industry? If

anything, the consumer will have greaterchoice.

6. Some categories currently have nobig players : There are some categories


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of stores that are just not present in India.For instance, we have the friendly

neighborhood hardware stores, but

something like Home Depot could reallychange peoples attitudes towards DIY.(At first, though, people will just buy tools

so their handyman/carpenter has what isneeded. A bit like how washing machinesmainly make the maids work easier.)

Similarly, craft shops like Joann couldpotentially do well in India given howmany people still sew/ embroider/ knitetc. Knowing India, it could well also be ago-to store for tailors and owners ofclothing boutiques.

7. The Prime Ministers perishablesargument is very true : We do haveenormous wastage in foods andvegetables because small stores andvegetable vendors cannot affordrefrigerated trucks, or actually any

refrigeration. The stores lose money, andso does the consumer (because a lot ofthe fruits/ vegetables spoil too quicklyafter purchase).


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Having said all this, a Walmart , Target orHome Depot will only do well in India if itadapts quickly to the Indian market,

otherwise it could very well failspectacularly. So it should be veryinteresting to see how this all plays outover the next few months.

India doesn't need FDI in retail to growTNN Oct 21, 2012, 01.21AM IST

Tags: Wal-Mart|

united states|

Joseph Stiglitz|

INTERNATIONAL MONETARY FUND|

Columbia University

One of the few economists who predicted thefinancial crisis of 2008, Nobel LaureateJosephStiglitzis also credited with starting the "1%versus 99%" debate. The ColumbiaUniversityprofessor talks toShobhanSaxena about his latest book, "The Price ofInequality", in which he argues that economic

inequality leads to instability.

In your book, you argue that an equalsociety is more efficient and productive.
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the number of hungry people in india has increased by 65 million

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