Events & Issues

New Delhi, 30 May 2011

Jairam’s IIT Remarks

 (IN) SUFFICIENT RESEARCH WORK?

By Col. (Dr.) P. K. Vasudeva (Retd)

Environment Minister Jairam Ramesh has kicked up a controversy by claiming that the faculty of Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) are “not world-class”. Is that a fact? He also maintained that these premier institutions were “excellent” because of the quality of students. Further, he said there was hardly any worthwhile research from the country's IITs and IIMs, which are ranked among the prestigious universities in the world.

The statement of Ramesh does not seem to be true as the Indian School of Business (ISB), is ranked 12th among business schools globally by the Financial Times. It also has high brand value in the world of corporate placements.  Similarly, IIM Ahmedabad has also been ranked 20^th among the best global management institutes. However, other IIMs and IITs do not figure anywhere near the global rankings.

In an assessment of research capabilities in business schools in India, a study has found that these schools have poor representation in the 40 peer-reviewed journals that the Financial Times uses to rank research in MBA schools worldwide.

Covering two decades to 2009, the study shows just a handful of faculty of a few IIMs and IITs having contributed papers to such journals. In addition, the study suggests that while case papers are valuable as pedagogic tools these do not provide the “cutting edge knowledge”

This knowledge comes from academic research that is “double-blind peer reviewed (i.e. the authors and reviewers do not know each other's identities)” with “high standards of proof”. The emphasis is on “rigour” as against practitioner-oriented research with immediate ‘relevance' and lower standards of proof.

Importantly, academic management research is more important than theoretical teachings in the classrooms of management schools because it gives applicability to “real life” solutions in the industry. There are three main reasons why such research constitutes the “backbone” that “supports the pedagogical mission”. One, is the introduction into the real world of concepts such as ‘core competence' that strategists and financiers cannot do without today. Two, the value it contributes to teaching, consulting and “writing for practitioners”. And three, the value it adds to the institution's efforts at attracting the best faculty.

All this sounds perfectly reasonable on first consideration. The advantages of research target three groups: the corporate world itself, the faculty that broadens its knowledge frontiers (and, of course, fattens its purse through consultations) and the student as the beneficiaries of enhanced pedagogy.

If Ramesh’s statement is to be believed then how Ramalinga Raju's Satyam's board of directors had leading management professors from Ivy League business schools: Mangala Srinivasan from University of California, Berkeley, Krishna Palepu from Harvard Business School, not to forget R. Ramamohan Rao, dean of Indian School of Business; who could not prevent the promoter from hijacking the blue-chip IT company. 

Given the interface between management school research and corporate practice “in real life”, the best that business schools can do is to get jobs for students who pay through their nose for these courses.

Viewed against the primary aim of imparting a value-loaded degree, research and publications by faculty members has merit. Double peer-reviewed publications on issues relating to management theory and practice would improve the quality of the pedagogy and its recipients.

The big question is: What is the explanation for this poor representation of Indian B-schools and technical institutes in the corpus of global management theoretical practice? The more obvious answer is that these institutes are driven by one agenda only — placements.

Indian firms do not tire of complaining about the shortage of managerial talent. As if in answer to this oft-stated gap between demand and supply, a rash of management schools have spread, some in the most unlikely places, including regions with few industries such as the North-Eastern States that want their own IIMs. To date, there are some 1,600 management schools and while there is no way of finding out if all their graduates get jobs, the lure of a business school binds both the promoter and the student. Landowners and business luminaries turned politicians turn again into founders of business schools, and technical institutes all with one aim: Increasing student enrolment to amass wealth.

As of now, employability of engineering graduates for technology services is only 26 per cent. But things seem to be changing on the ground now. For the first time, large companies such as Cognizant and Infosys are acknowledging an improvement in the quality of engineering graduates. Much of this is because of interventions in educational institutions by the industry.

Over the past few years, the industry has collaborated with technical institutes not just for the curriculum, but has also been involved in train-the-trainer initiatives for universities, engaged in workshops and training modules and lent subject experts as guest lecturers to colleges. Also, where volumes are concerned, the industry can derive comfort from the spurt in the engineering enrolment at colleges — over a million at the last count. That will mean more hands on the production floors a few years from now.

There could be no doubt that more needs to be done. Even today, IT sector invests $1.4 billion to convert ‘trainable talent' into ‘industry ready' professionals. And, because the education system does not make them “first day-first hour job ready'', freshers joining companies have to undergo months of training. Even then some do not make the cut in the end. Second, the growing chasm between the quality of output from leading IITs and those from smaller technical institutes needs to be bridged. The latter still suffer from old curriculum and unavailability of good faculty.

B-schools in India are meant to be degree shops; in most rankings and in the popular imagination, “placements” determine quality. As degree shops, they are no different from the general university that has, over the decades, shed its research faculties to become an assembly-line producer of degrees.

The poor quality of academic research in B-schools and technical institutes is the outcome of a general and systemic decline of research within the university system. – INFA

(Copyright, India News and Feature Alliance)

Economic Highlights

New Delhi, 28 May 2011

RBI Monetary Policy Fails

BLACK MONEY CALLS SHOTS!

By Shivaji Sarkar

Black money is increasing in the economy and the market is showing contradictions. Wherein currency notes in circulation have increased by over 21 per cent over the last one year but the stock market turnover has come down to single digit at 9.6 per cent. According to Reserve Bank (RBI) date, in absolute terms currency notes circulation has risen from Rs 786,266 crore as on 30 April 2010 to Rs 952,604 crore on 30 April 2011. An increase of Rs 165,438 crore.

Significantly, this is against the tight banking and monetary systems introduced by the RBI during the last over 18 months. In theory, tight banking is anti-inflationary, which should have helped RBI contain inflation and money circulation. But inflation is rising, both at the wholesale and retail levels and has brought the economy to a critical point.

Clearly, the increase in black money in the economy has led to money circulation going up. Perhaps, the reason for the real estate maintaining high speculative prices despite not having a happy sales turnover.

This, however, has hit the stock markets. Whereby, tightening of regulations has led to legal money supply being on leash. But this is not to state that stock markets are propelled by white money alone. The post-2-G scenario has definitely put a brake on black money flow to a market that is on a continuous scanner.

The excess notes in circulation could be defined as money gone out of the banking system which is now circulating as cash. This is the characteristic of the Indian economy. A lot of cash is used in the country for transactions instead of debit-credit cards or other modes of banking transactions.

This is in contrast to Western economies where debit and credit card usage is high and money stays within the banking system. It is untrue to state that it does not have a skewed monetary system. Indeed, the 2007-08 Lehman Brothers-led crises was due to that, leading to collapse of a chain of monetary institutions.

India too has witnessed such scenes repeatedly since the 1992 Harshad Mehta scam, UTI bust and Ketan Parekh scandal, to name a few. Still a major corporate house is facing a SEBI ban on stock market transactions. The SEBI itself is under scanner.

So despite a large money supply, the market is gripped by fear. Investors with large cash are shying away from investing in scrips. As a percentage of total volumes, the average daily turnover in the cash segment of the stock market has dropped. The average in the last quarter, before further RBI tightening in April was 14 per February 2009, when it plunged to Rs 10743 crore.

Importantly, there has been a steady decline over the last few months. In October-December 2010, the average daily volumes were Rs 21,000 crore, which plunged to Rs 16,000 crore during January-March. With foreign institutional investors (FII) selling continuously throughout May, in the wake of the crisis in the European region and partial recovery of the US market, retail investors’ participation is not there and those engaged in intra-day trading have also not made money.

A shift has also been noticed. Many of the short-term traders have started engaging in commodity markets. This is a significant development and indicates that black money is playing a role in commodity transaction. It helps keep prices remain at a high, commodities are easier to hoard and prices easy to manipulate. This is evident as prices of food grains, butter, milk, fruits and vegetable are breaking all records.

Hoarders are known to use black money for commodity trading in a large scale. Thus, monetary tightening has little impact on the inflationary trend. But it is impacting other sectors as well.  Be it industry or manufacturing are squeezed between inflation and monetary tightening.

Not only that. The high food prices are leading to higher operational costs as wages and transportation costs go up. The squeeze on money supply makes investments expensive and impacts pricing and leads to a fall in demand. Bluntly, growth is being seen in those sections of the economy that are seeing inflow of black money or where money has gone out of the banking system and is circulating as cash.

Undoubtedly, real estate is a major beneficiary of black money. Given that most of the real estate transactions involve a huge component of cash. Leading to not only property prices increasing by over 25 to 30 per cent over the last three years but the value of cash element has also gone up. This is one factor behind the increase of currency in circulation.

Moreover, the RBI’s tight monetary policy is failing also for the “gold for loan” scheme it introduced. With gold prices rising many are pledging gold and taking loans to buy consumer durables or invest in real estate. Since gold loans are usually given in cash, this virtually facilitates cash to be used for many operations that may not be considered strictly legal.

Needless to say, the contradictions need to be studied closely as it is affecting growth of all sectors. If the trend is not checked, it might lead to a dismal economic scenario. Whereby, the Government’s fiscal deficit is bound to rise. It might lead to a cut in developmental expenditure, which may further affect the growth prospects.

Already in the last quarter, the 2010-11 GDP growth is estimated to have fallen. With the situation in the US, Europe and northern Africa being in turmoil coupled with India’s investment climate subdued, the 2011-12 growth prospects is likely to be shaky.

Plainly, it calls for a change in lowering of interest rates and tightening of the commodity market system to give a boost to the economy and check prices. The first, deciding policy rates, is in the RBI’s domain but tightening the commodity market system needs brain-racking as it is out of the legal framework purview.

Additionally, many individuals and corporates are basking in the system that favours them. Specially, as both have black money for operations. Thus, till such time that all money is scanned financial manipulations would be the norm. Whereby, banks would be at the mercy of the unscrupulous and the economy despite Government promises might remain off the hook. ---- INFA

(Copyright, India News and Feature Alliance)

Open Forum

New Delhi, 25 May 2011

W Bengal & Tamil Nadu Poll

TWO DAMSELS STORM TO POWER

By Dhurjati Mukherjee

The resounding victories of Trinamool Congress’s Mamata Banerjee  in West Bengal and AIADMK’s Jayalalithaa in Tamil Nadu in the recent elections has demonstrated that the people have voted for change.

The victory of Mamata is significant not only because it brought to an ignominious end 34 years of Left rule in West Bengal but also the people were fed up of the lack of governance, appalling conditions in the health and education sectors, large-scale corruption of the CPI (M) cadres, indifferent attitude towards farmers and threat of land acquisition at below market rates for industrial development by private parties. Shockingly, the CPM was more powerful than the Government wherein most orders were dictated from the Party headquarters.

True, the outgoing Chief Minister Buddhadeb Bhattacharya admitted his Government’s mistakes, vowed to rectify them and control the Party cadres, if voted to power but the people were in no mood to listen and give another term to the Stalinist method of functioning of the Left Front.

Importantly, the Singur and Nandigram movements against land acquisition, spearheaded by Mamata with support from intellectuals, civil society activists and Maoists was the turning point in the Left Front’s fortunes.  Reinforced by the TMC winning 19 seats in the 2009 Lok Sabha elections followed by gaining control in key municipalities. Whereby, Mamata was seen as the harbinger of a new Bengal. Clearly, her uncanny ability to connect with the people and understand their problems worked wonders.  

Undoubtedly, the State needed a new approach to infrastructural development, both physical and social, as also a clean and transparent Administration geared to serve the interests of the poor, economically weaker sections, OBCs and tribals.  The State needed to attract investments which were not forthcoming compared to Gujarat, Maharashtra, Punjab, Karnataka, Rajasthan and Orissa.  

In Tamil Nadu, Karunanidhi’s DMK lost credibility after Raja’s involvement in the 2G spectrum scandal. It was widely believed that the State’s First Family was a beneficiary of the scam and Raja was only acting on behalf of Karunanidhi’s daughter, Kanimozhi, both now in jail. Obviously, the Congress was left with no option but to swallow the bitter graft pill against its ally and keep its ties afloat as the support of the DMK MPs was vital to keep the Central Government in tact. 

Significantly, Jayalalithaa demolished the theory that public resentment against the DMK “family rule” and its corrupt misdeeds was restricted to urban areas instead it transcended to rural areas as well. Even freebies like rice at Rs 1 per kg, free medical insurance for the poor and a housing scheme for the under-privileged failed to blunt the ruling Party’s misdeeds. It was thus quite obvious that the electorate refused to allow the DMK another term thanks to the Jayalalithaa promise and her capability for good governance.

Undeniably, both Mamata and Jayalalithaa have been rewarded for their determination and courage in fighting their political adversaries. In the case of the former, she relentlessly carried out the movement for change against the powerful CPM and the people joined en masse. Even intellectuals, who were with the Left in the previous Assembly elections, started working for her. Creditable for a leader from humble background to have emerged victorious solely through her efforts against an organized and cadre-based parties of the Left Front.    

What are the people’s expectations in these two States? Political analysts feel that the Government should be above the Party. In Bengal, the Leninist model needs to make way for infrastructural development, better hospitals and health care centres, more resources for tribal areas and non interference of Party cadres in administrative matters, right down to the panchayats. Impetus is needed for employment-oriented education and increasing agricultural productivity, which has plummeted to 7.8 per cent in recent months from 17 per cent during 1965-.

In Tamil Nadu, physical infrastructure development is a key issue along-with corruption-free Administration, improvement of slums and squatter settlements and financial and fiscal reconstruction.

Needless to say, the challenge before Mamata is indeed quite severe as the State’s economy is in shambles. West Bengal has the highest debts as a percentage of the GDP at 40.8 per cent and the total outstanding liabilities are around Rs 1.98 lakh crores. Add to this, a poor tax collection compared to Maharashtra. Andhra, Tamil Nadu, UP etc. Meanwhile around 90 per cent of the revenue is eaten up by interest payments. According to economist, Prof. Abhirup Sarkar, the first priority would be to shore up revenue mobilization though better tax administration and crackdown on corrupt practices.

Though many industrialists have promised large-scale investments in the State, only time will tell what actually happens in Bengal’s rejuvenation. This is not all. Mamata needs to spell out a separate action plan for rural and urban sectors as also for tribals and minorities. Development projects in the rural hinterland are vital along-with rapid industrialization. The State’s shabby towns need a makeover to attract investment and tourism. 

In sum, the two women Chief Ministers have there task cut-out. An uphill task to say the least which can only be achieved with generous support from the Union Finance Ministry, RBI and Planning Commission. For Trinamool’s stormy petrel this should not be a problem because the Congress would like to keep Mamata happy. As far as Tamil Nadu’s Purtha Thalaivi Jayalalithaa is concerned, the State does not face any major financial problem though people have high expectations for a clean and efficient Administration as also faster growth and development. ----- INFA

(Copyright, India News and Feature Alliance)

Political Diary

New Delhi, 28 May 2011

Ghar-Ghar Ki Kahani

FAMILY, NOT PARTY IS NUMERO UNO

By Poonam I Kaushish

Till yesterday, politics was all about pedigree, today, its all about parties becoming ghar-ghar ki kahani read family firms. Its shining torch bearer is none other than the Congress’s Gandhis’, spanning four generations of the Nehru-Gandhi First Dynasty. Adroitly imitated by regional satraps, Tamil Nadu’s DMK clan, Maharashtra’s NCP father-daughter duo and Shiv Sena’s father-son roar, UP’s Samajwadi, Bihar’s RJD and Punjab’s Akali’s father-son duet. Never mind, that it debases the party itself. It’s all about keeping everything in the Family, yaar!

Why not? Arguably, if a carpenter’s son could become a carpenter, an actor’s daughter an actress then what was wrong if a neta’s progeny reaps political dividends. After all, it is in his DNA. Thus, post Independence, over the decades, India’s polity transgressed from its lofty pedestal of serving the people, fighting for their respective States, caste and class down to banal, politics-is-my-birthright charade.

Worse, so obsessed and caught-up in this technicolour family album promotion, have the leaders become that their politics, ideology, programmes and policies revolve around only their aankhon ka tara. Groomed to don the mantle of power, a precious family heirloom. Wherein, all have to bow and hail the rising son.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Let better and meritorious leaders be waylaid. All is fair in love and war, bhaiya.

The muted call by old Congress jee huzoors for induction of Priyanka Gandhi has to be seen in this light. Raising a moot point: Is the over 110 year-old Grand Dame suffering from a leadership deficit?  Is it bereft of party-men who make the leadership cut? That only its First Family --- mother-son-daughter --- can lead it to political nirvana?

Sadly, yes. It is immaterial that Sonia-Rahul’s Congress seems to have lost the plot since it was voted back to power. Post the spate of scandals and the deafening silence emitting from 10 Jan path has many worried Congressmen confused and adrift. Privately, not a few admit that the Party is facing a crisis of leadership. Yet, like the Emperor with no clothes, the leader-progeny can do no wrong, merit or no merit.

Witness the way, the Congress formed a protective ring around its Yuvaraj Rahul Gandhi post the Party’s poor showing in the recent Assembly polls. In Tamil Nadu, the resounding defeat was all thanks to an ungrateful aam janata that took the colour TVs, sarees and monies but didn’t vote the DMK-Congress back. In West Bengal, the Trinamool-Congress victory was a Didi Mamata show all the way.

In Kerala, Amul Baby Rahul’s Congress won by a whisker of three voted over ‘old man’ CPM Achuthanandan. Yet its victory was pyrrhic. The prize went to the old war horse who symbolized selfless dedication to morality and probity. In Assam, Congress Gogoi’s was seen as a homespun leader who single-handedly fought a hard-won third term. In Puducherry Rangaswamy came in from the cold and dislodged an over-confident Grand Dame.

Just as the aam aadmi had done with Lalu’s RJD in last year’s Bihar poll, Sonia’s Congress and Mulayam’s Samajwadi in UP’s election in 2006.  While the people hooted for Nitish Kumar-Sushil Modi in the former and BSP’s Mayawati in the latter.  Along-with BJD’s Naveen Patnaik in Orissa and BJP’s Narender Modi in Gujarat who performed a hatrick.

Why? Primarily because they carried no baggage of family khandaan. Each leader was singular per se who was on the top because of his projection as devoted to his people, merit, hard work, likeability, coupled with shrewd politics and a dose of good governance. Also, while the Family Parties had no place for merit and were increasingly myopic in outlook, the iconoclast firms offered upward mobility if one had the stomach for grass root politics. Bringing things to such a pass, that over eight States are now run by individuals, Mamata, Mayawati, Modi, Nitish, Patnaik, Rangaswamy and Jayalalithaa.

Does that mean the days of the Dynasty are over? Not as yet, but the climb to the top has become harder. Be it Rahul and his baba log brood. No longer will being born-with-a political-spoon suffice. Post the Anna Hazare campaign against corruption which resonated in a rising middle class aspiration and youth eager to embrace change things are beginning to change slowly but surely.    

Indeed, the recent Assembly elections cannot be dismissed as straws in the winds. It holds out important lessons for neta’s who-have-yet to arrive and aspiring politicians. Importantly, do they have the grit, guts and ability to gamble? Like Andhra’s erstwhile ‘problem child’ Jagan Mohan Reddy who left the Congress only to make it bite dust in the Lok Sabha by-poll.  Or Puducherry’s Rangaswamy who ditched the Congress and formed his own Party.

The stomach to do an Indira Gandhi Belchi elephant jaunt through Bihar’s flooded waters in 1977and ride to victory? Be an inexorable unwavering one-man army like Mamata with a one-point agenda: Defeat the Marxists. Towards that end she unflinchingly bore the brunt of many CPM’s lathi-charges and arrests.

Her Nandigram and Singur land acquisition battles were a far cry from Rahul’s one-off Bhatta-Parsaul arrest-release drama. Yet, Mamata stood her ground through defeats, blood, sweat and tears. Notwithstanding, the trappings of power that were her’s to grab. She did but on her own terms, crumpled janata sarees, hawai chappals and jhola her trademark. 

Questionably, does this have any bearing on those whose political future and fortunes are destined by the Dynastic Gods to lead the nation? Yes, specially, Rahul Gandhi, already there are great expectations that he will resurrect the Congress and lead it to victory in 2014. As a test case, the Congress General Secretary seems to be pulling out all the stops to make his Party matter in next year's UP Assembly polls after 23 years.

But this is easier said than done. Leading an one-time farmers agitation against land acquisition in Bhatta-Parsaul, spending a night in a Dalit hut and stepping into the dusty hungry bowl of Bundelkhand might make for  Kodak media moments but he's far from bringing about a 'Congress revival' in the State. True, he played a big role in netting the Congress 21 of the 80 Lok Sabha seats in 2009. But the Party came a cropper in the 2007 Assembly poll, winning 22 in a 403-seat Vidhan Sabha — three less than in the previous polls. 

Clearly, Rahul his baba log and India’s Gen X need to learn from Anna Hazare, Rangaswamy , Mamata, Patnaik, Modi et al, a voter hoots for a fearless leader who will  risk his where-with-all on an ideological conviction and beliefs that this is best for his people. Also, the aam aadmi still cherishes certain old-fashioned moral sobriety in their netas,

All in all, family “jenaioos” do not guarantee success beyond a certain point. In an era of 24/7 TV the aam janata wants a leader it can identify, connect and communicate with, one of its own, in good times and bad. He must be part of a deeper commitment to people-centric issues. Given that the people are saying goodbye to the shameless feudal trappings of a divine right to rule. Time to get rid of this gharelu nautankis! What gives? ---- INFA

(Copyright, India News and Feature Alliance)