The economics of Udta Punjab

udta punjab

The recent release Udta Punjab highlighted the problem of drug addiction in Punjab. While, drug addiction is a global problem, Punjab has nearly 3.3 times more drug addicts per lakh than the Indian national average.

And why is that the case? From the supply side, the state shares a border with Pakistan. Hence, drugs are easy to smuggle in. The demand side is a little more complicated to explain.

The state saw a Green revolution starting in the mid-1960s, with the agricultural yield exploding, thanks to C. Subramaniam, the food and agriculture minister back then.

Subramanian came to know of a form of wheat developed in Mexico which could rapidly raise output. As Gurcharan Das writes in India Unbound: “C. Subramaniam was a man in a hurry and he chartered several Boeing 707s and flew in 16,000 metric tons of seed of this miracle wheat…Punjabi farmers still speak lovingly of Mexico’s Lerma Rojo, one of the earliest varieties to take root in their soil.”

And thus started the green revolution in Punjab. In order to support this, the government also started to procure rice and wheat directly from the farmers through the Food Corporation of India and other state procurement agencies.

The higher yields along with assured procurement led to the farmers of Punjab progressing. While the procurement policy is supposed to be pan India, the procurement is limited largely to a few states. As the Economic Survey for 2015-2016 points out: In Punjab and Haryana, almost all paddy and wheat farmers are aware of the [procurement] policy.” In 2013-2014, Punjab produced 11.1 million tonnes of rice. Of this, 8.1 million tonnes was procured by the government. This is the highest in the country.

What also helped is that there is no tax on agricultural income. Also, free power is available for farming. All this, has helped the Punjabi farmer. The first generation worked hard to spread the green revolution. The second generation carried on the good work. And the third generation, born into money, is enjoying the spoils.

This is along the lines of what happens to a typical family owned business. As Das writes, taking the example of Buddenbrooks by Thomas Mann, which he feels is the finest book ever written about family business: “It describes the saga of three generations; in the first generation the scruffy and astute patriarch works hard and makes money. Born into money, the second generation does not want more money…The third generation dedicates itself to art. So the aesthetic but physical weak grandson plays music. There is no one to look after the business and it is the end of the Buddenbrook family.”

Something similar seems to have happened in Punjab, where some part of the third generation has moved away from farming and gotten into drugs, given the access to easy money they have, due to the hard work put in by their grandparents. Some evidence of this can easily be found in the kind of songs that Punjabi popstars sing these days. The word dope, weed etc., keep cropping up in these songs.

The other interesting thing is the number of super expensive brand names that these songs refer to and espouse. From Jaguar to Audi to Gucci to Armani, they seem to have it all. This seems to be a good indicator of the fact that some part of the third generation after the Green revolution started, has gone away from farming and gotten into other things.

No other state in India (except perhaps Haryana) has this kind of music. What has helped is the astonishing rise in the price of land in the state. Also, land acquisition in Punjab is easier compared to many other Indian states given that the average size of a landholding in Punjab is around 9.3 acres, which is much bigger than many Indian states. Hence, large parcels of land are easier to buy.

Land sale has also brought in a lot of easy money. And some of this seems to have leaked into drugs.

The column originally appeared in the Bangalore Mirror on June 29, 2016


Of Bhakts, Udta Punjab and Raghuram Rajan

udta punjab

The two news grabbing events last week were the release of the dark drugs drama Udta Punjab and the exit of Reserve Bank of India(RBI) governor Raghuram Rajan.

Udta Punjab finally made it to the theatres thanks to the Bombay High Court. And Rajan decided to go back to academics in the United States, perhaps because he wasn’t offered a second term by the Narendra Modi government.

It was interesting to see how the Bhakts (for the lack of a better term) reacted to both these issues. In case of Udta Punjab they were convinced that the movie was funded by the Aam Aadmi Party(AAP) and hence, showed Punjab in a bad light. And given that, the cuts that the censor board wanted the producers of the movie to carry out, were justified. Of course, none of the Bhakts had seen the movie.

Even some basic reasoning can tell us how stupid this sounds. The script for the movie would have been written in late 2013, early 2014. So, the Bhakts want us to believe that two writers of the movie, wrote the movie back then, planning three to four years ahead, to show Punjab in bad light, before the elections. In late 2013, and early 2014, nobody knew that AAP would be a force to reckon with in Punjab.

In case of Rajan, the Bhakts have been convinced that the man did not deserve a second term, because he was not mentally Indian and had a green card. Some Bhakts even thought he is not an Indian citizen, which is basically rubbish because you cannot be an RBI governor without being an Indian citizen. Still others totally believed in the accusations that maverick BJP leader Subramanian Swamy had labelled at Rajan.

The point being that the Bhakts were totally sure in both the cases and defended their positions vehemently. As Duncan J. Watts writes in Everything is Obvious—Once You Know the Answer: “Common sense is extremely good at making all sorts of potential causes seem plausible. The result is that we are tempted to infer a cause and effect relationship when all we have witnessed is a sequence of events. This is post-hoc fallacy.”

The point is that human beings like explanations and if none exist, they are likely to create them. Then there is also the issue of confirmation bias, which basically means that our initial position on any issue, decides what we think about it or other related issues. As Gary Belsky and Thomas Gilovich define confirmation bias in Why Smart People Make Big Money Mistakes as a “tendency to search for, treat kindly, and be over impressed by information that confirms your initial impressions or preferences.”

This bias plays out in many walks of life. As Leonard Mlodinow writes in The Drunkard’s Life: “When a teacher initially believes that one student is smarter than another, he selectively focusses on evidence that tends to confirm the hypothesis. When an employer interviews a prospective candidate, the employer typically forms a quick first impression and spends the rest of the interview seeking information that supports it.”

How does confirmation bias fit into the case of Udta Punjab and Raghuram Rajan? In case of Udta Punjab, sometime before the film’s release AAP started running an anti-drugs campaign in Punjab. Needless to say, it latched on to the movie. And AAP of course is against the Bhartiya Janata Party, the home ground of Bhakts. Hence, Udta Punjab was bad, and reasons to opposite it had to be found and were found.

As far as Rajan goes he is a man of ideas and an intellectual who is not afraid of speaking out his mind against whatever the government’s stated position on an issue is. This, of course, doesn’t go down well with Bhakts. In Bhakt land, you cannot question the Narendra Modi government. And hence, reasons justifying Rajan’s exit have quickly been found.

The most stupid reason being that India has enough good economists to replace Rajan. Yes, it surely does. But why fix what is already working?

The column originally appeared in the Bangalore Mirror on June 22, 2016