I believe you have read my previous article in this blog. But I got only four comments yaar. If at all you don’t like that, do write my mistakes. Or If you don’t like my name or face….I can’t help. Hahahaa…Jokes apart, here is a summary of a very old but very nice article of Mr Swaminathan (Swaminomics). But I want to warn you that, this article of Mr Swaminathan is a mixture of Gandhigiri and his economics brain.
Bihar is by far the best place in India to grow cane, a water-intensive crop. Bihar has fertile land, heavy rainfall and a high water table that can provide cheap, assured irrigation. Bihar should become the sugar-cane capital of India, producing millions of tones of ethanol. Also Cane is a very profitable crop for farmers, requiring little care and yielding high returns. After cutting, cane grows again, and can be harvested four times before requiring replanting. Cane has made western U.P. prosperous, and could make Bihar rich too.
Bihar, a state which was India’s industrial heartland in the 1950s, boasting the giant Tata complex at Jamshedpur and Dalmia-Jain complex at Rohtas. Bihar enjoyed massive public sector investment (Bokaro steel, Barauni refinery, Sindri and Barauni fertilizer plants, Heavy Engineering Corporation, Mining and Allied Machinery Corporation, coal mines). But Now Bihar is among the poorest, most misgoverned states. More Plan funds or public sector projects are not remedies. No business man wants to invest in Bihar because of the mafia extortion and kidnapping threats. Nothing can be done in against of that. Reason…. Everyone knows, Deplorable governance, Weak institutions and Criminal galore in state legislature & cabinet.
Mr. Swami Nathan suggests…”To make a legitimate business more politically and financially rewarding for the mafia than extortion.”
With oil at $ 70/barrel, ethanol is a cheap substitute for petrol and diesel. Up to 15% ethanol can be mixed with these fuels. Brazil has pioneered vehicles running on pure ethanol, which today costs half as much as petrol. Ethanol is produced in India from molasses, a by-product of sugar. In Brazil, ethanol is also produced directly from sugar cane juice: that, at today’s prices, is more profitable than the sugar-molasses-ethanol route.
But most sugar mills in Bihar are closed. Business conditions have long always been abysmal. Bihari farmers have stopped growing cane because mills lack the money to pay. No business tycoon is ready to fund on mills in a crime-ridden state even though it is a profitable business.
So, who will run ethanol mills successfully in Bihar? Only the mafia can. But first, they must be convinced that they can get more money and votes from ethanol than extortion. The mafia alone can enforce rules, so let them enforce rules for growing cane and converting it to ethanol. Let the robber barons become sugar barons, or ethanol barons. They will do so only if ethanol yields sinful profits. That, happily, seems to be the case with oil at $ 70/barrel. The political dividends look good too. Sugar cane benefits farmers and wins votes.
Isn’t it fantastic idea? How different he thinks. Isn’t it guys? After all he is Mr. Swaminathan, the great ecnomist.