Do it yourself

Thursday, August 28, 2014

No free rides

Thought for the day

” When you have got an elephant by the hind legs and he is trying to run away, it's best to let him run. "

- Abraham Lincoln (American, 1809-1865)

Word for the day

Rusticate (v)

To go to the country

(Source: Dictionary.com)

Teaser for the day

Is Modi relying too much on Japan? or Vice versa is also true?

No free rides

Yesterday I called 50people randomly selected from my phone book to ask "what if Google, Facebook, Wikipedia, WhatsApp, and Yahoo are not available from tomorrow morning?". The reactions were unusually but expectedly uniform. I could imagine that all of them had expression "are you mad?" and "Do ya even realize what're you talkin' 'bout?"

Not surprised, I followed this up with a supplementary "what is all these service providers start charging for their services?" Now the silence was deafening. The unease was palpable.

No one could deny the critical role these services play in our day to day life. The utility is unquestionable. But we are accustomed to enjoy these services for free. We have never planned paying for these.

I am sure that if I have to directly pay for these services, I will cut down the usage by at least 75%. The sense I got from the people I called, most of them will be very discrete in using these services.

I believe that this "for free" attitude of ours has introduced serious problems in Indian economy. Not only consumers, but investors and industrialist are also often seen on the lookout for freebies.

We all appreciate that serious economic inefficiencies have crept in the system due to schemes like tax Free zones, free food, free electricity, free water, free air, free mines, free tickets/passes, interest free, etc. These schemes invariably lead to misallocation of capital, regional imbalances, lower productivity, misuse, wastage, leakages and various forms of corruption.

The classic example is sudden rise in markets value of a company which announces a bonus issue of shares. Theoretically, a bonus issue causes no change in the intrinsic value of a company. In fact post bonus issue the company has enlarged equity base to service, which in some cases could be disadvantageous to shareholders.

The PPP model of infrastructure development in India also appears to be an outcome of this "For Free" seeking mindset. The projects are often undertaken under the model with 5:95 equity to debt ratio. It is popularly believed that some promoters even avoid putting 5% equity using scrupulous methods. In case project is successful, they make lot of money. However, if the project fails, the loss is absorbed by the lenders (mostly public sector banks) and tax payers.

I understand the Prime Minister call for reform of this "For Free" mindset, has disrupted peace in many corporate board rooms.

The independence day exhort of PM to shed "what's for me in this?", "cleanup the filth around you", "focus on quality and sustainability of your business", "make positive contribution to society" clearly shows the intent.

But "Good Days" will come only when and if we are ready for that.

Wednesday, August 27, 2014

"Vote" over "voter" - III

Thought for the day

”Stand with anybody that stands right, stand with him while he is right and part with him when he goes wrong."

- Abraham Lincoln (American, 1809-1865)

Word for the day

Gregarious (adj)

Seeking and enjoying the company of others.

(Source: Dictionary.com)

Teaser for the day

Will the SC ruling on coal block allocation in past two decades mark end of the reign of the Gangs of Wasseypur and Khadi clad Gundey on Indian natural resources?

"Vote" over "voter" - III

The draft report of the Expert Committee on Integrated Energy Policy set up by the Planning Commission submitted in December 2005 explicitly stated that “India faces formidable challenges in meeting its energy needs and providing adequate energy of desired quality in various forms to users in a sustainable manner and at reasonable costs.

India needs to sustain a 8% to 10% economic growth to eradicate poverty and meet its economic & human development goals. Such economic growth would call for increased demand for energy and ensuring access to clean, convenient and reliable energy for all to address human development. To deliver a sustained growth of 8% through 2031, India would, in the very least, need to grow its primary energy supply by 3 to 4 times and electricity supply by 5 to 7 times of today’s consumption. The energy challenge is of fundamental importance to India’s economic growth imperatives (emphasis supplied).

The Expert Committee made suggestions based on the following approach:

(a) Markets that promote competition.

(b) Pricing and resource allocation to take place under market forces under an effective and credible regulatory oversight, as far as possible.

(d) Improved efficiencies across the energy chain.

(e) Policies that reflect externalities of energy consumption.

(f) Policies that rely on incentives and which are implementable

Despite having such a vivid idea about the problems and well documented approach to the solution, the government not only took a divergent route but also did all possible things to scuttle the growth of energy sector.

The NDA government had for once effectively dismantled the administrative pricing mechanism for transportation fuel; de-regulated the oil and gas exploration and production under New Exploration Licensing Policy (NELP); allowed private players in retailing of transportation fuel; privatized power production and related coal mining.

The successive governments however undid most of these steps in the interest of short term political gains. It dithered for many years on revision of market price of transportation fuel and LPG. Failed to implement the coal mining policy; national solar mission remained mostly on papers; nuclear energy program has seen very little progress despite all the political hoopla in 2009; subsidies have been misdirected and mostly remained uncontrolled till tye hot summer of 2013.

A two day trip to rural Bihar, Jharkhand, Eastern UP will prima facie explain how by making people dependent on subsidized kerosene for lighting and cooking purposes, successive governments have successfully broken the spines of millions of households. They walk miles, stand in queue for hours to get a couple of litters of this health hazard fuel. This time and energy could have been spent much more productively, if the government subsidy was well planned, e.g., for roof top solar panel, solar lanterns, solar charging stations closer to their home...to continue tomorrow

Tuesday, August 26, 2014

"Vote" over "voter" - II

Thought for the day

” Some single mind must be master, else there will be no agreement in anything."

- Abraham Lincoln (American, 1809-1865)

Word for the day

Qualm (n)

An uneasy feeling or pang of conscience as to conduct; compunction

(Source: Dictionary.com)

Teaser for the day

What is more important (a) Planning Commission or (b) Commissioning the plans?

"Vote" over "voter" - II

“Although poverty and inequality play a powerful role in shaping our children’s educational opportunities, inequality is not inevitable, and poverty is not destiny,” said Sean Reardon, a professor of education who helped to establish the workshop on Poverty, Inequality and Education at Stanford University to examine the challenges to closing the growing opportunity gap in USA.

While it is popular to examine the state of economy on usual macro parameters like price conditions, growth rate, employment level, trade balance, business confidence, consumer confidence, savings, investments, and productivity etc., in my view the true scale and primary lead indicator of the economic conditions is the level of human development. Especially in a people centric (against resource centric) economy like India, the importance of human stock can hardly be overstated.

I therefore believe that complete failure in developing a strong education, skilling and training system aimed at equalizing the society is a one of the weakest link.

It is widely acknowledged that the extant education system is grossly inadequate. The poor standard of education and educators in a large majority of public educational institutes is not only perpetuating the socio-economic inequalities in the country, it is also proving to be a serious challenge to (a) economic growth in terms of shortage of skilled workforce; (b) fiscal consolidation by increasing the dependency ratio of people on the government; and (c) internal security by forcing youth to undertake unlawful and disruptive activities.

A large majority of Indian workers, artisans and laborers acquire their occupation skills and training on the job. Their exploitation aside, the skills they acquire are mostly of poor quality. By the time they realize or try to become independent of their masters, they are already casted in a rigid mold. They are usually their past prime learning age and have no option to chose a different occupation.

With this state of populace, the dream of upgrading 700mn Indians from poverty to middle class will remain only that a dream. The fabled India story that is quintessentially built on the premise of a strong middle class who will earn, consume, save, invest.

The government and the industry needs to understand that a uniform, good quality education system and skilling and training program should be much higher priority than building airports and smart cities. Appointing almost uneducated graduates as teachers to win their votes is sufficient.

CAG also needs to examine whether the government has optimally used the 3% education surcharge collected from all taxpayers, or an alternative mechanism is needed to administer this huge corpus.

Those who are regular visitors to Mata Vaishno Devi Shrine (J&K) from pre Shrine Board days would understand better what I am suggesting here....to continue tomorrow

Sunday, August 24, 2014

"Vote" over "voter" - I

Thought for the day

”The philosophy of the school room in one generation will be the philosophy of government in the next."

- Abraham Lincoln (American, 1809-1865)

Word for the day

Waif (n)

A person, especially a child, who has no home or friends.

(Source: Dictionary.com)

Teaser for the day

Many companies have responded favorably to PM's appeal for contribution to toilet in school project.

Should PM also appeal to all trusts managing places of worship to join the moment?

"Vote" over "voter" - I

One elementary problem afflicting the Indian economy is misdirected political priorities. Successive governments have pursued policies that would fetch them enough "votes" rather than benefit more "voters".

Many would argue this as a quintessential shortcoming of the Westminster "first past the post" electoral system. I would beg to differ. I believe it is incompetence and short sightedness of political leadership in most cases.

Our politicians have sought to control markets for various products and services in the name of national security and social justice. Six decades later there is little substantive evidence to suggest that strategy has been effective in meeting any of the objectives.

I find that mishandling of markets through mostly unwarranted and often misdirected interventions by successive governments has caused serious damage to the economic structure of the country at many places.

In my view, the problem like inflation, adverse balance of payment and infrastructure (especially energy) deficit have their roots in the political follies committed by successive governments.

For example consider the following -

(a) Edible oil industry has mostly been destroyed and sugar industry has not seen any material investment in past 15years and is on the verge of bankruptcy.

(b) Despite having one of the largest reserves globally our imports of coal and iron ore are rising fast.

(c) Over half the population is forced to live without electricity or with inadequate electricity and almost one third of the installed capacity is lying idle.

(d) The PPP model of infrastructure building has mostly been conceived to benefit private partners rather than the public at large. The projects have been undertaken with minimal equity and mostly public debt. Failure of projects have therefore strained the public sector banks and public finances.

(e) The public education system of the country has been distorted beyond repair largely to the benefit of private commercial institution, many of which are dominantly controlled by politicians or connected people.

(f) Most metros including Delhi, Bangalore, Lucknow, Bhopal, Ahmadabad, etc. have no rolling taxi service like Mumbai and Kolkata, forcing people to drive their own cars for short distances.

Telecommunication, information technology, and civil aviation industries have clearly demonstrated that government monopoly over many businesses, in the falsehood of national security, has caused more harm to the economy and people than it has benefitted them.

The incumbent NDA has suggested little precious to alter these conditions. Most of the steps announced so far are incremental and do not propose any substantive departure from the extant line of thinking....to continue tomorrow

Friday, August 22, 2014

Problem of plenty - II

Thought for the day

”Half of the harm that is done in this world is due to people who want to feel important. They don't mean to do harm. But the harm does not interest them. "

- T. S. Elliot (American 1888-1965)

Word for the day

Plaudit (n)

Enthusiastic approval; an expression of praise.

(Source: Dictionary.com)

Teaser for the day

Congress J&K leaders seeks Hindu CM for the state.

Congress CM declare PM untouchable by refusing to share dais with him.

Is this the Antony formula for resurrection of Congress Party?

Problem of plenty - II

As per NSSO report^{^[1]} on the status of employment in India, "he population in the age group 15-59 years, which is considered to be economically active, comprised about 60 per cent of males and 61 per cent of females in rural areas and about 66 per cent each of males and females in urban areas."

However, only about 40 per cent of population participated in the labor force, meaning offered themselves for work. Participation was significantly lower for females than for males in both rural and urban areas.

A large majority (52%) of the workers are engaged in self-employment. Moreover, about one third of workers were under casual labour category. Only 18% were found to be regular salary/wage earners. The share of casual labour in the total workforce of rural areas was about 35 per cent as against the corresponding share of 15 per cent in the urban areas.

This in my view is an alarming situation. Most of the self employed people are either underemployed or employed in disguise, both in urban and rural area. A stroll across the street or any market area would show you a large number of youth pretending to engage in petty jobs as laborer and hawker etc., who work and earn much lower than potential.

All those who vehemently opposed the FDI in multibrand retail trade in the Parliament, need to go an ask a person who runs a 24*7 daily neighborhood Khomcha, how much he earns after working 17-18hrs a day.

My enquiries suggests it is much lower than what a counter boy at Big Bazaar earns, in a 10hr shift, in a dignified, secure, and air conditioned environment with no investment risk and without any botheration about the municipal raids.

I have met many fruit and vegetable hawkers in past couple of years in connection with my NGO work. More than one quarter of them cannot afford to send their kids to even government schools who do not charge any fee.

Moreover, overall 49% of all participating workers were engaged in agriculture activities. For female workers the ratio was substantially higher at 63%. A large majority of these workers are self employed with no financial or social security. These are also unemployed or underemployed for a large part of the year.

To harness the potential of Indian youth demographics, it is therefore essential that an integrated approach is adopted to increase employability, employment and productivity level.

Political bickering or prejudices notwithstanding, a serious relook is needed on issues like land reforms, labor mobility, labor laws, skill development, gender equality, integrated rural development, cottage industry, MSME sector, technology innovation and business facilitation.

The new government has made many positive statements in this regard. I hope to implementation of these ideas in next few years.

[1] 68th Round Survey (June 2011-June 2012) published in June 2013.

Wednesday, August 20, 2014

Problem of plenty - I

Thought for the day

”Business today consists in persuading crowds."

- T. S. Elliot (American 1888-1965)

Word for the day

Execrable (adj)

Deserving to be execrated; detestable; abominable; extremely bad; of very poor quality; very inferior.

(Source: Dictionary.com)

Teaser for the day

UP, Uttrakhand, Bihar, Assam, Odisha and Himachal Pradesh suffering from serious floods.

All 6 are non-BJP rules states.

Wonder why no one has sensed a conspiracy in this!

Problem of plenty - I

The India story is largely about ‘demographics’ and ‘sociopolitical transformation’. Economic growth is a by-product and hence more predictable.

The young demography is one of the major strengths of Indian economy. This is such a consensus view that it almost sounds cliché to mention it in an argument.

Nevertheless, young demography is a huge "potential" advantage for Indian economy, but currently this potential has so far not been exploited adequately. This failure in exploiting the youth energy to its full potential is primary problem ailing Indian economy at this point in time, in my view.

I see it as failure of planning process inasmuch as lower priority has been accorded to (a) enhancing employability of young population; (b) creation of adequate number of employment opportunities and (c) developing an integrated approach to plan and monitor mobility of workforce to balance regional skew in population.

Consequently, it is common to find shortage of skilled, semi skilled and even unskilled labor in high demand industrially developed regions of the country. Whereas a large number of people remain unemployed, underemployed or disguisedly employed in less developed areas.

Even in skilled and semi-skilled labor category serious imbalances have been observed. I have observed that a few disciplines have witnessed oversupply of labor, whereas many other disciplines face perennial shortages. This might have also caused discrepancies in the remuneration structure over a period of time.

...to continue tomorrow

Tuesday, August 19, 2014

Let the patient be cured first

Thought for the day

”We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time."

- T. S. Elliot (American 1888-1965)

Word for the day

Fink (v)

To inform to the police; squeal.;

(Source: Dictionary.com)

Teaser for the day

You cannot take away my right to preach morality, even if I am stuck in 300BC.

You are free to disagree, ignore, ridicule, or contradict me.

But for God sake do not gag me or paint me a criminal.

Let the patient be cured first

Once a patient was admitted to an upscale private hospital with a serious heart condition.

The cardiology team at the hospital was headed by an experienced old surgeon, who was lately rendered incapable of performing complicated surgeries due to his blurred vision and trembling hands.

The team he headed was not harmonious. Many doctors were either incompetent or had allegiance to their vested pecuniary interests. They would often indulge in unethical practices and conduct unbecoming of a reputable medical practitioner.

The management of the hospital was fully aware of the state of affairs at the hospital, but did little to put the house in order. The popular belief is that the management itself encouraged the disharmony amongst the team members and incongruence of the objectives to stay in control of the institution and maximize the profitability.

The head of the team diagnosed the patient's condition accurately and proposed a line of treatment, which would treat the patient promptly with minimum pain and cost. The team members however disagreed. They wanted the patient to spend more time in hospital and undertake a variety of experimental tests and procedures. This would cost the patient much more and cause more pain. The management concurred with the unethical lot of doctors.

After spending some time in the hospital, paying huge costs, and suffering tremendous pain, when the relatives of the patient saw condition of the patient worsening, they moved him to another hospital.

The doctors there studied the case history and discovered that the patient's condition was accurately diagnosed by the previous hospital and correct line of treatment was proposed by the head of the department. The doctors there decided that once the condition of the patient is stabilized they would follow the same line of treatment as suggested by the old surgeon at first hospital.

The doctors and management of the first hospital accused the second hospital of unethical practice and incompetence, charging them with appropriating their diagnosis and following the same line of treatment as they had suggested.

Somewhat similar is the situation of UPA (the first hospital), NDA (the second hospital) and the Indian economy (the patient).

In the meanwhile some vital signs of the patient have shown improvement, since moving to the NDA hospital. I'm not sure whether it is effect of the treatment afforded at the UPA hospital or at the latest hospital. Nevertheless, as one close relative of the patient, I hope NDA doctors and management would take care of the patient well and follow the correct line of treatment that would cause least pain and cost us minimum.

In next few days, I shall discuss what's ailing the economy and what should be the ideal line of treatment in my view.