Sector wise economic model

Sector wise -economics-model

A model to predict the impact of various policy decisions on each sector at the state/national level.

Background

Today most of the data is available either on government websites(Census, department sites etc.) or other public domain datasets (World bank, FAO, US departments etc.)

It is possible to cross reference these various data sets and create a model of world economics. to study the cause and effect of various actions. E.g. if we take the case of sugar cane production, we know from online sources

• The MSP for sugarcane is Rs2300/ton
• The extraction efficiency is an average of 10% so we get 1 quintal sugar.
• The retail price of sugar is Rs 28/KG
• Trucking charges are approx Rs5/km/ton (assuming fuel and maintenance to be Rs4/km) So, a quintal of sugar fetches a gross of 2300 to the grower 2300 +x1 to the factory 2300 +x1+ x2 to the trucker 2300+x1+x2+x3 to the wholesaler in the city 2300+x1+x2+x3+x4 to the retailer x1+x2+x3+x4=500 x1+75+x3+x4=500 Assuming other components make the same amount then it comes to 141 Rs each So the gross earning of a retailer from selling 1 kg of sugar is Rs 1.4 of which 40p goes to packing and in the remaining Rs 1 he has to account for shop rent, salary to workers, expenses, interest on investment on commodities.

Using standard economic theory and assuming returns should be proportional to the labour involved.

• The shop keeper invests 12-14 hours of labour/day
• The wholesaler invests 8-10 hrs/day
• The Trucker invests 8-10hrs/day
• While in theory the farmer invests a year in growing the crop. the actual labor intensive activities are planting, weeding, applying fertilizer and pesticide, watering and harvesting. Which may come to a few months of labor.

A complete model of all farm sector, transportation, and retail sector will help in understanding the impact of agricultural, fuel, transportation policy decisions on all components of the game.

Components that need to be modeled

• Production
• Seeds, fertilizer, land, water, pesticide, labor.
• Environment
• Rainfall, Soil quality, heat, cold.
• Economics
• Local and global
• Policy
• Processing
• Factors for the given agricultural product
• Transportation
• Farm to APMC/Factory
• APMC/Factory to Wholesaler
• Wholesaler to Retailer
• Retailer to customer
• Warehousing
• @ Farm
• @ Factory
• @ Wholesaler
• @ Retailer

Modeling technique

A class based approach with a discrete event simulator to step the time and update the class parameters after each iteration can be used for the simulation.

Sample tools/languages/techniques are

• Verilog/Systemverilog/VHDL
• Omnet/SystemC
• matlab/octave (?)

A second approach could be a statistical simulator.