Question

(Background) In the Indian state of West Bengal many farmers work as sharecroppers (bargadars in the Bengali language), renting land from landowners in exchange for a share of the crop. The traditional contractual arrangements throughout this state varied little from village to village, with virtually all bargadars giving half their crop to the landowner at harvest time. This had been the norm since at least the eighteenth century. However, because of the extreme levels of deprivation among the bargadars many thought this was unfair. In 1973, 73% of the rural population lived in poverty, one of the highest poverty rates in India. In 1978, the newly elected Left Front government of West Bengal adopted new laws, called Operation Barga. The new laws stated that: • Bargadars could keep up to three-quarters of their crop. • Bargadars were protected from eviction by landowners, provided they paid them the 25% quota. Both provisions of Operation Barga were advocated as a way of increasing overall output and the incomes of the farmers. Indeed, Operation Barga was subsequently cited by the World Bank as an example of good policy for economic development. One study suggested that Operation Barga was responsible for around 28% of the subsequent growth in agricultural productivity in the region. The empowerment of the bargadars also had positive spillover effects as local governments became more responsive to the needs of poor farmers. (Question: What can Pareto efficiency tell us about the fairness and equality of allocations? When discussing your answer be sure to reference the specific case of Operation Barga)

Answer 1

Pareto efficiency indicates that resources are allocated in the most efficient manner but it does not ensure equity or welfare. Pareto efficient outcome is one where no one can be made better off without making someone else worse off.

In the case of Operation Barga also for the betterment of the landlords were made worse off Bargadars. The increase in output cannot be seen as Pareto improvement but it is the result of the change in incentives of Bargadars Earlier the agricultural output has to be shared between them and landlords equally, they had very less incentive to put in more labor as they are not the one who was getting the fruits of their hard work. When the output has to be divided in the ratio of 3:1, they had an incentive to work more efficiently as they were going to get a higher share of the produce.