Having a cake and eating it too

A lot of Goans are complaining about the real-estate boom in the state. According to them Goa is for Goans only and people from Mumbai or Delhi should not be allowed to buy property in Goa.

We want people form rest of the India and world come to our state, use our taxis, eat in our restaurants, stay in our resorts, play in our casinos and we want them to spend as much money as possible over these services. But if they want to spend money in settling down in the state we show them the middle finger. In short we want Goa to remain a place that offers great quality of life but to keep it cheap by killing the competition. This is the proverbial “I want my cake and eat it too” attitude. Day by day this attitude is increasing. We talk disrespectfully about people from other states and we want them out from our state but at the same time we want the tourism industry to flourish. The irony is lost on these people.

People flock to Goa because it offers a great quality of life. Goa can offer great quality of life because it get a large part of it’s revenue from service industry called tourism. Ultra rich people in the country want to buy property in Goa for the same reason. If I am a billionaire I will most certainly buys a manor in the Swiss or along the coast Miami or something like that. The moment Swiss close their doors on such billionaires the place loses it’s charm.

I think government and people of Goa should use this situation for their advantage. Both people and government must make a lot of money in the process. Sell your farmland to the builders at a premium price and government can ensure that the real owner of the land gets maximum money in the process.

Mr. Parrkar’s attempts to focus on agriculture is Goa are deluded. Common sense argument is this:

Per capita income in agriculture = worth of farm produce per unit area * land owned per capita.

Note that with high population growth per capita land holding is going down. How much you can produce in the given land is generally a constant. Goa is not in Ganga basin which is fertile.

So the only way Goans can make money through agriculture is buy owning larger and larger land. However land prices are a function of multiple variables. Given the tourism industry land prices remain very high. So it is impractical for the farmer to buy more land with the intention of farming. Let us do some basic arithmetic.

Areca nut or Supaari is one crop that gives highest income per unit area (if we ignore the non scalable, season dependent cash crops such as flowers). With Rs 100 per kg as the base price and around 2 KG per tree per year we get Rs 200 per tree. Each tree requires around 4 sq. m. of land. So we are making Rs 50 per sq. m. (This calculation is based on the farms that my family owns, pretty much back of the envelope calculations).

We have not considered the cost of irrigation, manual labor etc. etc. Neither the non-productive period when you plant the tree and wait for 5 years for it to grow. If the land has access to roads the on going land price is around Rs. 1400 per sq. m. If you sell this land and put it as a bank deposit for 9% rate of interest. You approximately make Rs 126 per year without moving any body part.

However as I said the land prices are a function of various parameters. For example the land price in some remote village in Cotigao, Cancona might be merely Rs 500 per sq. m. where the above approach is relatively worse off.

But unlike Karnataka or Maharashtra, Goa has the potential to urbanize the entire state. Also remember that with Areca nut plantation not even one man is getting a permanent employment. All of them are making much less money. But if the same land is sold off then the farmer who sold the land ends up making lot of money + a lot of free time. And the new project that might come in that land is likely to provide employment to the educated people in the nearby area.

But if all people sell their land who will produce the food we need ? The answer to that questions is “wherever it is profitable”. The exact regions will be the poorer parts of other states where land is cheap, labor is cheap and land is more productive.

Today Mr. Parrikar might come up with some fancy schemes but by next elections he will have shell out lot more dole to keep those deluded farmers alive.




Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s