Should India Celebrate?

The wealth of Indian billionaires is more than 3.5 times the wealth of Chinese billionaires. With 19 newcomers, India has 53 billionaires with a combined wealth of $340.9 billion, according to the Forbes list of world’s billionaires. India also holds the honour of having the largest number of four billionaires in top ten – NRI steel baron Lakshmi Mittal (4th), Mukesh Ambani (5th), Anil Ambani (6th) and KP Singh (8th).

Here is what Barkha Dutt, Managing Editor, NDTV 24×7 opines, “Let’s celebrate because all four men on the global list of the super-rich are men who for the most part, built or expanded their own empires, crawling and climbing their way up. None of them were born to money (not even the Ambanis in the strictest sense). And if they can get here, so can the rest of us. It’s this can-do spirit that the New India is so excited about.” But the best part is that Ambani brothers taken together become the richest in the world today. In absence of icons from other areas of activities except cricket, perhaps it is good that these wealthiest ones are becoming the icons for the middle class youth and the urge of entrepreneurship is getting contagious.

·Foreign exchange reserves moved above the $300-billion mark to touch $301.235 billion for the week ended February 29, according to data released by RBI. Gold reserves increased to $9.558 billion. Indians use 20% of gold in the world and nine out of 10 diamonds used in the world are made in India. And surprisingly, it is not only the richest that are getting benefited. Diamond industry provides so much of employment. However, many of these industries are still not run by professionals, but owned and run by traders who become real misers when it comes to pay their workers. How can India bridge the gap between the rich and the poor?

·According to AICTE, India produced 4.01 lakh engineers in 2003-04, of which 35% were computer engineers. The number of graduates swelled to 5.2 lakh in 2005-06 and by 2006-07, the number of colleges had increased to 1,503, which admitted 5.83 lakh students in all. Surprisingly, five Indian states – Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka and Kerala – account for almost 69% of the country’s engineers. Uttar Pradesh, Bihar, Gujarat, Rajasthan and Orissa account for only 14%. Why are the laggard states behind? Do the states not allow the setting up of the colleges or no entrepreneur is interested in going there because of the unique local culture? Why can’t the central government create an equitable condition by providing more of central universities in these states? Surprisingly, at least Bihar feeds most of the colleges in Karnataka and Maharashtra with students in large number. But with all the number that may soon be the highest in the world even exceeding Chinese output, the industry rates only 25% of the graduates as employable. Should the affiliation of the college that has poor record of the employable graduates be withdrawn?

·As many as 12% scientists and 38% doctors in the US are Indians, and in NASA, 36% or almost 4 out of 10 scientists in US are Indians. 34% employees at Microsoft, 28% at IBM, 17% at Intel and 13% at Xerox are Indians. And the source of information is a minister who announces it as achievement of its department in parliament. Should he or she do that to be proved as hoax? Will it not create a bad-feeling for those in USA in the election year? How are these so called NRIs of help to India? Why should we celebrate?

·India is the sixth most popular country in the US, with 69 per cent of the Americans having a positive image about it, while Pakistan finds itself among the 10 most unpopular nations, according to a new poll. Will it help India in any major way?

·The Railways would have a total surplus of about Rs 1,00,000 crore by the next year. It has already generated a surplus of Rs 69,000 crore in the past four years. And when can we have a better timely running railways and a clean safe railway station?

Should we celebrate the wonderful performance of Team India in cricket or shed tears for the shameful loss in hockey?

India wins where there is good governance, where there is good leadership, where there is least interference from the politicians. Look around and see the amount of dirt and dust created by our own people that trips even the national grid. Should we celebrate that?

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India’s Best Managed Companies and Manufacturing

It is not that it happens. Do they follow some set principles and policies, or use some set tools and techniques? Many look into the evolution of the company and deduce some mantras of management success. Business Today’s list of the best managed companies in India that has appeared in its March 23, issue includes Larsen & Toubro (industrial products), ICICI Bank, Reliance Industries (energy, chemicals & utilities), Grasim Industries (materials), Tata Steels (metals and mining), ITC (retail and consumer products), Great Eastern Shipping Co. (transport and logistics), Bharati Airtel (technology, media and telecom), and Tata Motors (Automotive).

I keep on looking for the manufacturing companies, as that has been my area of engagement. Interestingly, the list includes L&T and Tata Motors that are from manufacturing sector with L&T right at the top. And both are moving ahead fast enough to become global soon with organic as well as inorganic growth. L&T is moving into ship building as well as power equipment manufacturing. L&T can help building a leadership for India in the sophisticated engineering products and large project implementation. I wish it developed world-class vendors using the untapped and unutilized manufacturing facilities of the country that can provide sustainable employment of large number of people.

Tata Motors has grown beyond its traditional mainstay commercial vehicles manufacturing to cover the wide range from ‘Sumo’ to ‘Nano’ and that will get further widened very soon with high end ‘Jaguar’ and ‘Rover’. Sumo, Indica and Indigo, Ace, and then Nano can cater to the domestic market and build a profitable scale. Both Ace and Nano has all the potentials than can increase its scale to make it globally competitive. Tata Motors can also be the prime mover to take India’s auto component sector to a greater height and the sector can become world leader.

But it was not always like that. I was in Tata Motors, Jamshedpur (it was called TELCO) for a vocational training in 1959 with some of my friends from IIT, Kharagpur. It was huge even in those days but with manufacturing only at Jamshedpur. It was a truck company and was also manufacturing locomotive engines. In 1961 I joined Hindustan Motors, as most of my friends from IIT had also joined it. HM paid Rs 400 per month as salary, while TELCO paid only Rs 200 per month as stipend. Over the years, I kept in touch with TELCO, as some of my friends from HM joined TELCO in later years. It may surprise many that I undertook some very successful courses on general machining management and gear technology in TELCO, Jamshedpur in 1993. TELCO even in those days concentrated in building its technical capability and was flexible enough to do anything to excel. It went with Cummins for technology-wise better engines and developed its machine building capability that cut down its investment for new projects. At one time I used to tell my friends in industry that TELCO machine building division can produce better machine tools than even HMT. TELCO had huge technical training facilities to man its manufacturing shops. However, on R&D it didn’t concentrate much in those days.

Fortunately, the strong and successful line of products today provides all evidences for it shifted priority for R&D and innovation. And today it is one of the best managed companies of the country. But will it be one of the top 5 automobile manufacturers of the world very soon? Perhaps one day it may happen. It will depend on the leadership of the person who takes over from Ratan Tata. However, Ratan can live a long active life for Tata Motors to make it a Toyota from India.

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India on the coverpage of ‘Economist’

India has again appeared on the cover page of the ‘Economist‘ this week.

” In many ways India counts as one of liberalisation’s greatest success stories. Over the past 15 years it has been transformed into a far more powerful beast. Its companies have become world-beaters. Without India’s strength, the world economy would have had far less to boast about.”

It is happening India. The stock might have crashed. In one corner, some insane young and old selfish politicians might be content with creating mental agony and physical skirmishes for few persons for media attention and ego-satisfaction. The pink papers may be forecasting slowdown, but the employment is booming, the cars are selling, and the entertainment industry is getting more and more stable providing the growing middle class what it wants. “Many things restrain India’s economy, from a government that depends on Communist support to the caste system, power cuts and rigid labour laws. An enduring constraint is even more awkward: a state that makes a big claim on a poor country’s resources but then uses them badly.”
Many a times it may appear confusing and annoying, but no doubt India is moving ahead, otherwise Economist can’t keep on writing about India.

The main story deals with ‘the babu raj’.

” On coming to power in 2004, Manmohan Singh, the prime minister, said that administrative reform-“at every level”-was his priority. Some economists see India’s malfunctioning public sector as its biggest obstacle to growth. Lant Pritchett, of the Kennedy School of Government at Harvard, calls it “one of the world’s top ten biggest problems-of the order of AIDS and climate change”. Yet it is hard to find progress on Mr Singh’s watch.

But in a mostly unreformed system, rent-seekers have a habit of clawing back. The title of a draft paper by researchers at the Massachusetts Institute of Technology is apt: “Putting Band-Aid on a corpse: incentives for nurses in the Indian public health-care system”. To encourage a batch of Rajasthani nurses to show up for work-which, on any day, over 60% did not-its authors began monitoring their attendance at village health centres by computer and sending the results to the state health ministry. Threatened with fines, half of the absentees returned to work. Six months later, they began breaking the computers and reporting “machine problems”. After 16 months, the health centres featured in the study were no more likely to contain a nurse than any other.”

It is unfortunate that in his second inning at a higher chair that could have propelled Singh to a permanent prominent position in India’s history, he has not been able to make any great impact but for his integrity. With his personality and knowledge, he could have at least continued and pressed with one single mission of the administrative reforms. Nothing could have stopped India to reach the highest ever growth rate ever achieved by any country, if babus had taken that as their mission. As a management student all along, I think Indian administration needs distruptive innovations. Unfortunatelly, with politics of the lowest order, it is not going to happen. And India will keep on living in various ages of its history from the primitive stone era to the twenty second century simultaneously for decades and perhaps centuries.

It is unfortunate that Manmohan Singh has to resort to blaming the previuos government in the fifth year for the farmers’ debt on the dictate or direction from his master.

And India will have to wait for another prime minister to bring in the disruptive innovations in its administration.

I wonder why can’t the IAS system be done away with. Why can’t the great achievers of IIMs or from the industry fill all the vacancies?

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CM Bihar Sir!

I know you had and have a tough job in hand. Some of the actions are certainly changing the perception of the outsiders about Bihar. However, Bihar requires some fast track action plans that can make as quick an impact in development as you claim to have achieved in law and order situation in the state. Media have less news about kidnappings. Many of the political parties backed dons are behind the bars and have been convicted too.

Bihar must do something drastic about educating and skilling its younger people, who are to join the workforce. Every village has some retired teachers and persons from the defence forces in Bihar. I suggest using the services of these people who already get paid pensions from the government.

Can’t you request and push all the retired teachers from the villages to attach themselves with the schools of their locality to get their pensions? Let them help in covering up the absenteeism of regular teachers, coaching the students that are weaker than the average particularly those from deprived classes, or initiating adult education in evening shift. Let them be actively associated with ‘sarva sikhsha abhiyan’ in real sense of the term. I am sure your appeal will matter.

As I have observed most of the rural schools are away from the habitation. Will it not be better if at least it is provided with at least residential facility for some teachers and students? Can’t other buildings in government plan of action such as ‘panchayat’ house or knowledge center be constructed in proximity? I am sure you must be planning to provide the facility of computer with Internet also in these schools. Let one teacher from the school get trained in computer on his own and once qualified be paid extra. Let him get a website for the school and help in online teaching that will be the solution to have equity in quality of teaching and education.

Please get one creativity center attached to each of these schools. It will not require very high investment.

Let the teachers of the rural schools be motivated to involve the students in yoga, sports and games seriously. If properly executed it will reduce the drop out problem almost in similar manner as the mid-day meal. The retired defence persons will be able to take up this assignment happily. (They can also be of help in manning he creativity center. Don’t you agree that even with the material available around the school from the fields, the students can learn about horticulture and floriculture or even making terracotta figurines? Will some paint and brushes be so costly that the school or the students can’t afford?)

Please appeal in all your ‘durbaar’ to the people from the rural Bihar to send their children to school and see that they continue education. Today, it has become very easy to make oneself employable. Just a good communication skill gets a pretty respectable job. And it is easy to master it with the digital equipment and readily available course materials even without teachers. Many Dalits have proven that. Some crooks are still exploiting people in rural area. It is necessary to communicate all the government offerings to them through various means.

I wish again if you can use the services of ‘Pratham’ to the best and outsource the inspection of the schools to it and thereby eliminate the department of school inspection.

Please make some fast track changes in education sector of the state. That can be the strength of the state and so its differential factor.

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Powering India

As confessed in Economic Survey as well as Budget 2008, the growth of power generation has always been lower than the targeted growth rate. Lack of availability of quality electric power has been one of the major reasons for poor industrial growth. The target for 2007-08 was fixed at 12,039 MW, of which 7,263 MW has been commissioned up to January 31, 2007. The total capacity addition during the current financial year would be 10,821.8 MW. A capacity addition of 78,577 MW has been proposed for the Eleventh Five Year Plan. It translates into a growth rate of 9.5 per cent per annum. Will it happen?

The deficit in power supply in terms of peak availability and of total energy availability during the current year was still 14.8 per cent and 8.4 per cent, respectively. However, the PLF (power load factor), a measure of efficiency has improved over time in the sector as well as in all regions. To improve PLF further, new thermal power plants are changing to super-critical technology from sub-critical ones. The Government is also going for coal-based Ultra Mega Power Projects (UMPPs), each with a capacity of 4,000 MW or above either at pithead sites or at coastal sites envisaged with imported coal. Tata Power and Reliance Power have bagged Sasan, Mundra and Krishnapatnam UMPPs.

India has an estimated hydro power potential of more than 1,50,000 MW. However, only 21.14 per cent of the potential has been developed till date and 9.53 per cent is being developed. Private sector participation that was negligible till recently has been increasing in the recent past. 10 Schemes with an installed capacity of 3991 MW are under construction while States have allotted 67 Schemes with an installed capacity of 18,030 MW to private developers.

A new initiative of Merchant Power Plants (MPPs) is also under consideration. Merchant Power Plants fill different niches in the market; some provide steady supplies to the power grid, while others fire up to meet peak loads when the demand is at its highest.

And what is happening on power generation front all over the country? Some news reports provide hope, because of its breadths:

Tata Power, India’s third-biggest utility by value, will spend Rs 17,000 crore ($4.2 billion) on a plant at Mundra in Gujarat to generate 4,000 mw of electricity. Tata Power has tied up Rs3,115 crore debt to develop a 1,050 Mw coal- based power project in Jharkhand.

Reliance Power is expecting necessary clearances from the governments within 90 days for its 4,000 Mw Sasan ultra mega power project (UMPP) in Madhya Pradesh and plans to make it fully operational in 50-60 months.

NTPC Ltd would invest $1.84 billion in setting up a 1,320 MW power plant and is to set up and maintain a 1,980 Mw coal-based thermal power project at Nabinagar, Bihar.

Godawari Power and Ispat (GPIL), an integrated steel manufacturer based in Chhattisgarh, is mulling foray into commercial power generation with projects in Chhattisgarh or Jharkhand with capacities ranging between 300 to 1,000 Mw with coal and coal rejects as fuel.

Vidoecon proposes a thermal power plant with a capacity of 1,000 Mw and investment of about Rs 4,000 crores in eastern UP. Venugopal N Dhoot may set up a photovoltaic (PV) factory somewhere in Varanasi for an estimated Rs. 1000 crore investment.

Kolkata-based Jain Energy plans for setting up a 1,000 Mw coal-based thermal power plant at Balpur of Janjgir-Champa district in Chattisgarh and expects to commission it in 2011 at an estimated investment of Rs 5,000 crore.

Jindal India Thermal Power Ltd plans to invest over Rs 20,000 crore to implement three pit-head, coal-based power projects totaling 4,300 Mw in Orissa, Madhya Pradesh and Chhattisgarh. The firm also proposes to venture into hydel power production with plans to establish a 1,000 Mw project in North India at a cost of Rs 6,000 crore.

Hyderabad-based GVK Power & Infrastructure Ltd (GVKPIL) is setting up a 660 Mw thermal power project Amritsar at a project cost of about Rs 3,000 crore, and has also plans for a thermal power plant at Talwandi Sabo (1,800 Mw) and another coal-based thermal power plant near Rajpura (1,200 Mw) for an investment of Rs 12,000-14,000 crore.

Adani is targetting a power generation capacity of 10,000 Mw that will be operational in a phased manner.

Steel-maker Prakash Industries will set up a 600 Mw thermal power station in Chhattisgarh with an investment of about Rs 2,400 crore.

And similar initiatives are going on for hydel power too.

NHPC, the country’s largest hydel power company will double the power generation to become a 10,000 Mw-plus corporation by 2011-12 envisaging an investment of Rs 28,000 crore.

The Himachal Pradesh government has signed deals with private companies for building eight hydel projects, including two mega projects and six micro-sized projects.

Initiatives to remove the darkness do also cover alternative sources of energy.

More and more entrepreneurs are trying in different ways to tap solar energy to light up homes in rural hamlets

Moser Baer India is investing about $1.5 billion in increasing its thin-film photovoltaic capacity to 600 Mw over the next two years from the existing project capacity of 40 Mw.

After successfully starting its pilot wind energy project in Gujarat, Oil and Natural Gas Corporation (ONGC) is now planning to invite bids for its second pilot project in Karnataka. ONGC will invest nearly Rs 600 crore in the first phase of its wind energy foray for generating nearly 15000 Mw of power. The total installed capacity for wind energy in India was about 7114 Mw.

And naturally the entrepreneurs are moving into equipment manufacturing too. BHEL can’t remain the sole supplier and the excuse for not meeting the target.

L&T is seriously getting into power equipment manufacturing. L&T is being officially promoted as the BHEL-II for manufacturing power equipment required for large super critical thermal power plants.

Lanco Infratech Ltd is planning to set up one of the country’s largest wind turbines manufacturing facilities, to take advantage of shortage of wind turbines in the global and domestic markets.

The interesting development is the increase in the number of power projects based on imported coal, which will be shipped in from countries such as Indonesia and Australia. “Of the 78,577Mw (of power generation capacity) that is to be added by 2012, around 4,000Mw will be from imported coal-based projects on the coasts.”

Delays in timely forest and environmental clearances for 30 thermal power projects, with a combined generation capacity of around 22,000Mw, may make it difficult for India to meet its already ambitious power generation targets. India must learn to complete its power projects within a timeframe that must match the best international standard, and move to cut down the electricity losses on war footing. Electricity losses in India are about 30% of output; in Bangladesh, it is below 10%. Will the initiatives make India power sufficient and efficient, if not power surplus?

I wish the government could design some robustness in administrative system that can build clear accountability to ensure timely executions. Simultaneously, a time bound programme for power conservation through disciplined use and technologies (preference and incentives for energy-efficient equipment and CFLs) must also be in place.

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IITs and IIMs: Demand to Dilute

During my school days in Birlapur, I had heard of how Dr. BC Roy, the then chief minister, who was also a very reputed physician wrested the first IIT to get established at Kharagpur in West Bengal that was going to Bihar. People in those days could have hardly imagined that IIT, Kharagpur and then IITs as brand would go so famous. During our time even Shibpur Engineering College, Engineering college of Jadavpur was equally famous. My friend Ashoke had preferred Shibpur for his civil engineering. Indian School of Mines was also a very highly preferred institute in eastern India.

Today every state craves for getting an IIT and IIM. Political parties are making the demand of setting up an IIT and IIM in the state as part of its manifesto. Assam got one on political ground.

And appreciating its importance, the FM in his every budget speech includes the plan or progress on setting up of IITs or IIMs. “An IIM at Shillong; three IISERs at Mohali, Pune and Kolkata; and an IIIT at Kanchipuram have started functioning. In the process of establishing one Central University in each of the hitherto uncovered States, the FM proposed ‘to make a beginning in 2008-09 by establishing 16 Central Universities’. Besides, we propose to set up three IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs at Bhopal and Tiruvananthapuram; and two Schools of Planning and Architecture at Bhopal and Vijayawada.”

While Andhra has cleared the location of IITs, the selection of the sites for IITs in Rajasthan and Bihar is still not zeroed. Beside the state, the choice of sites in the state is causing political chaos.

In his Independence Day speech last August, Prime Minister Manmohan Singh had promised of eight IITs in the pipeline. As reported, the government has also given the go-ahead to set up Indian Institutes of Technology in Kerala and Himachal Pradesh. 15 states are also vying for them.

Even Shashi Tharoor thinks that India by now would have established more number of IITs by now. “When I left India for post-graduate studies in 1975, there were perhaps 600 million people in India, and we had five IITs (Indian Institutes of Technology). Today, we are nearly double that population, and we have seven IITs. To keep up with demand – and the needs of the marketplace – shouldn’t we have had 20 IITs by now of the same standard as the original five? Or even 30?”
As it appears, crave for IITs will not stop till every state will have one IIT and IIM. But perhaps before that IIT and IIM will get its brand image diluted down where the demand will be meaningless.

I agree that more of engineering colleges providing technical education of the quality standard of IITs are essential for the country, but that doesn’t require setting up of IITs. Two other avenues can help meeting the demand of industry for good technical manpower. However, IITs are not the only answer.

Each of the IITs can become a hub for imparting education and get into a network of affiliation of six other state or private colleges of the region and with help of e-teaching and virtual laboratory already created by IITs for different branches of engineering and improve the quality of education to IIT level. An effective interchange of teachers and students can further the quality of education of the affiliated colleges.

More of the corporate houses must get into the business of engineering education, as in good old days Birlas did with BITS, Pilani and Ranchi that are no way inferior to IITs. Indian School of Business, Hyderabad, and Great Lake Institute of Management, Chennai have already set examples of world-class institutes of management education outside the government control. Vedanta, Jindal, Ambanis are already going ahead. Thrust must also be on upgrading the facilities and quality of education at the existing facilities at both, the state and private colleges. Industry must play an active role in getting them affiliated more effectively with the reputed foreign universities of developed countries.

Instead IITs must further get into specialized and contemporary branches of technologies for its M.Tech levels to cater to various requirements of different sectors of the industry. Why can’t one IIT set up a School of Automotive Design or School of Tooling Design with help of experts in the sector? It is unfortunate that many of the sector-related knowledge remains with some pioneer companies and gets lost once the companies get into red and close its door. Some such areas for instance are gear design, machine tool design, and bearing design out of many in the industry.

It may sound a little trivial. However, whenever I visited mechanical or production engineering departments of IIT, Kharagpur; Jadavpur University; Pantnagar University, Institute of Technology of BHU, Varanasi or NIT, Kurukshetra, I got shock of my life about the gap between what were being taught and what are or going to be the need of the industry. Lack of knowledge and information about the industry even among the best of the teachers is dismal.

Can’t the academician sit with some knowledgeable people of the industry to narrow the gap? Unfortunately, there are psychological barriers among the people on both the sides that don’t allow them to interact freely for mutual benefits.

Further, the politicians with inferiority complex are damaging the great institutes by interference in the name of democracy and inclusive growth. Is it not the case with Presidency College, Bengal Engineering College, and Jadavpur University?

—
PS: Read
!. ‘Instant IITs no growth recipe‘ by P. V. INDIRESAN former Director, IIT Madras
2. Online Education Takes Off in India in Business Week by Nandini Lakshman<

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Budget 2008: Some Exhilarating Proposals for Intellectual India

Many like me must be excited about FM’s proposals about the education sector significant increase in allocation for education- Sarva Shiksha Aviyan, extension of Mid-day Meal for 13.9 crore children and up to upper primary schools, setting up of 6,000 high quality model schools, some more Jawahar Yuva Kendras, Navodaya Vidyalayas in additional 20 districts, and 410 new Kasturba Gandhi Balika Vidyalayas, instituting a large number of scholarships, taking major steps to create knowledge society, establishing new IITs and other institutes of national importance, and awarding three institutes of excellence. Some more ambitious ones may find it inadequate, but the priority has got now the governmental attention.

The total allocation for the education sector (including NER) will be increased by 20 per cent from Rs.28, 674 crore in 2007-08 to Rs.34, 400 crore in 2008-09. What percentage of GDP is allocated to education? Is it now 6% as promised?
Will the extension of Mid-day meal to 13.9 crore children to all upper primary classes stop dropping out? Is it incentive enough to go to schools? Will the teachers be going for refresher courses to update themselves, or be showing more compassion and paying more attention to their students? Will the teaching become interesting enough for the children to enjoy the hours in the schools? The Finance Minister’s intentions are clear, but the roadmap is missing. “The focus of SSA will shift from access and infrastructure at the primary level to enhancing retention; improving quality of learning; and ensuring access to upper primary classes.” FM has mentioned of some of the work done and the new interesting proposals:

Institutes of national importance: An IIM at Shillong; three IISERs at Mohali, Pune and Kolkata; and an IIIT at Kanchipuram have started functioning. Government will establish one Central University in each of the hitherto uncovered States. We propose to make a beginning in 2008-09 by establishing 16 Central Universities. Besides, we propose to set up three IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs at Bhopal and Tiruvananthapuram; and two Schools of Planning and Architecture at Bhopal and Vijayawada. Eleventh Five Year Plan appears to be giving education its due importance.

Deccan College Post-Graduate and Research Institute, Pune one of the oldest institutions of modern learning in India gets a grant of Rs.5 crore. Three institutions of excellence- Mahatma Phule Krishi Vidyapeeth, Rahuri, Maharashtra; University of Mysore, Mysore; and Delhi University, Delhi will get a special grant of Rs 100 crore each. I dream of the day when 150- year old Presidency College, Kolkata gets a recognition as a heritage educational institute.

Science and Technology: To encourage the students to take to careers in science and research and development, Ministry of Science and Technology will introduce a scheme called Innovation in Science Pursuit for Inspired Research (INSPIRE) that will include scholarships for young learners (10-17 years), scholarships for continuing science education (17-22 years) and opportunities for research careers (22-32 years). FM has provided Rs.85 crore in 2008-09 for this inspired contribution to building a knowledge society.

Government has accepted an important recommendation of the National Knowledge Commission to inter-connect all knowledge institutions through an electronic digital broadband network that will encourage sharing of resources and collaborative research. FM provided the Ministry of Information and Technology Rs. 100 crore for establishing the National Knowledge Network.

Information Technology: FM has enhanced the allocation to the Department of Information Technology from Rs.1,500 crore in 2007-08 to Rs.1,680 crore in 2008-09 for driving the growth of Information Technology and Information Technology Enabled Services. A scheme for establishing 100,000 broadband internet-enabled Common Service Centres in rural areas and a scheme for establishing State Wide Area Networks (SWAN) with Central assistance are under implementation. A new scheme for State Data Centres has also been approved. FM has provided Rs.75 crore for the common service centres, Rs.450 crore for SWAN and Rs.275 crore for the State Data Centres.

One day in an integrated public-private initiative, all the 6.5 lakh schools of the country, including those in rural India must be part of the knowledge network and get benefit of online education.

Let the country get status of knowledge-predominate country. ‘Tamso Maa Jyotir Gamay’.

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Budget 2008: Terrible, Historic, Sweeping, Election, or Election-oriented

I thought I must also write about my views on the budget 2008 presented yesterday. For senior citizens, the exemption limit has been raised to Rs 2.25 lakh. I don’t bother about enhancement of exemption limit at my age when I don’t have that high an earning. I don’t know how many of senior citizens who are retired are earning good enough money for paying taxes. It must be a miniscule percentage. Even after working for almost 39 years, though in private sector, many like me hardly get any significant pension earning. As such the prices of all the commodities of daily use have gone so expensive that many a times we are forced to think before buying some essential things too. Even many, and I am also one among them, do take the risk of major illness. The premium of medical insurance for persons above 60 years of age is either pretty high or the insurance companies don’t have anything for them. And the cost of hospitalization and treatment as well as medicines has skyrocketed. It may be cheap with respect to the cost in UK, or US but for a retiree like me it is exorbitant.

All the time I wish some finance minister will introduce a scheme in which the persons paying significant income taxes for 20 years or more will be covered by some respectable medical insurance scheme, at least for major hospitalization. However, I don’t think it to happen ever.

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Budget 2008: Failed Promises of water Bodies and Industrial Training Institutes

I listened to the budget speech as religiously as I used to do earlier when it was necessary for adding to my professional excellence at work.

Mr. Chidambaram had proposed two missions in his first budget as UPA’s Finance Minister in 2004 that I got interested in. Both were of immense importance. First was his missionary zeal to get all the old water bodies in the country that were getting silted and vanished, renovated. It would have helped in irrigation, fishery, and tourism too. The FM never tells how many of the water bodies have been repaired and put back to their old glories. However, the FM has not dropped it from his agenda and has smartly put in to the sates’ responsibility with a statement: “Agreements have been signed with the World Bank by the Governments of Tamil Nadu, Andhra Pradesh and Karnataka under the project to repair, renovate and restore water bodies. The three agreements are for a total sum of US$738 million that will benefit a command area of 900,000 hectare. I am confident that similar agreements will be signed soon between the World Bank and the Governments of Orissa, West Bengal and some other States.” Why couldn’t the FM give a figure of the water bodies repaired in different states? Perhaps, the states didn’t take up the project seriously and carry out the work. Why can’t the creation of water bodies be a prime task of NREGS in rural areas where water scarcity causes poor farming yield? It can also be good prevention for the flood too, if carried out in a planned manner.

The second of his proposal right in 2004 budget was to upgrade the large number of Industrial training Institutes that was getting ineffective in providing the skilled manpower for the industrial development. Unfortunately, though the Finance Minister as well as CIIs and FICCI have been taking steps, but the progress is dismal. It hardly shows the tremendous need of the industry that look for double-digit growth. Let us look at what the FM has talked about it in the budget speech. “Under the World Bank assisted scheme, 238 ITIs are undergoing upgradation. Under the PPP scheme, 309 ITIs in 29 States have been identified with corresponding industry partners and agreements have been signed in 244 cases. 300 more ITIs will be upgraded in 2008-09.”

I think all the institutes would have undergone up-gradation by now. CII also has failed to keep the promises. Basically, India requires these institutes in thousands in both types Industrial Training Institutes that provides diploma courses as well as trade schools or vocational training institutes that train for trades of all types. And all these institutes would have been attached with some or the other private companies that would have been made responsible for the upgradation at least as its contribution to inclusive growth. The announcement of setting of a non-profit corporation with Rs 15,000 crore as capital from government, the private and public sector and bilateral and multilateral sources to address the major concern of skill shortage and skill development in the Budget 2008. Only time will tell if it succeeds to meet the challenges of manpower requirements of the country.

Today, India is really sort of skilled manpower. As many from the industry, particularly the booming realty sector point out the serious scarcity of masons, plumbers, electricians, carpenters, fitters, and persons of many other skills. As reported, in some state of south, people from Sri Lanka are joining the labour force. Where are the trade schools for filling this vacuum? Can the formal training institutes meet the demand? I feel the education at secondary and higher secondary level must make the training in one employable skill as compulsory for every student. Another institution that can be called on to help in building the skills among the willing young men and women of the country is the defence facilities, if the facilities in the industrial enterprises of various sectors are not sufficient.

The country has 9.5 lakh schools and 220 million schools students. How can there be a shortage of manpower of all the skill levels required from this big a mass? Why do the children drop out from the school? Mid-day meal can keep it only to a very little extent. Scholarship also can make only a little contribution. Education at school level must be made interesting and attractive enough for the kids who come there. Parents as well as the children themselves not start feeling the education as difficult to understand or useless I their perception. Schools from the primary to all levels must have more thrust on exploiting and nourishing their latent talent and creativity with more labs and laboratories to create or experiment with their ideas. Formal traditional knowledge from books is essential but not sufficient enough to keep them attached to the education process.

Why the FM and his government can’t keep the promises made? Why should a person like me who keep on following some specific promises believe in what he promises in the present budget such as IITs in Bihar, Andhra, and Rajasthan? And further will the next government or the FM if not UPA or Chidambaram comes back again have any commitment for the projects? For instance, what happened to five AIIMS promised or interlinking of rivers?

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Economic Survey 2007-08: Some Observations and Views

The survey tabled by the Finance Minister has some interesting data about the country’s economy and obviously for its people to look at future with hope. It also says that with some constraints on the road to growth removed, the country can easily attain a rate of growth that can alleviate the curse of poverty among a significant section of the population faster.And so all sacrifices, if any, are justified for getting into a growth rate of double digits. Mainly, some political parties must change its mindsets.

The full year gross domestic product (GDP) at factor cost at constant 1999-2000 prices is to grow at 8.7%.

GDP at current market prices is projected at Rs 46,93,602 crore in 2007-08 – making it the first time that the size of the economy at market exchange rate will cross $1 trillion. At the nominal exchange rate (average of April-December 2007), GDP is projected at $1.16 trillion during the year while the per capita income is pegged at $1,021. GDP growth at market prices has exceeded 8% in every year since 2003-04. The rate of growth of per capita income has sharply climbed to 7.2% per annum – implying that average income of the Aam Aadmi can virtually double in a decade. Private final consumption expenditure at per person level is up and so are the saving rates. The growth rate of consumption has almost doubled to 5.1 per cent per year during the subsequent five years from 2003-04 to 2007-08, with the current year’s growth expected to be 5.3 per cent, marginally higher than the five-year average.

The rate of investment (gross capital formation) rose to an unprecedented 35.9% of GDP in 2006-07, and is projected to increase in 2007-08. Similarly, the savings rate scaled new highs in 2006-07 reaching 34.8% of GDP in the year.

The total number of IPOs issued in 2007 was 100 when compared with 75 in the previous year. Rs 33,912 crore was mobilised by initial public offerings (IPOs).

Assets under management (AUMs) of domestic mutual funds grew 1.7 times from Rs 3.23 lakh crore during 2006 to Rs 5.50 lakh crore in 2007. Valuation of Indian stocks, as reflected in the price-to-earning multiples, of around 27 times at end December 2007 was the highest among emerging market economies. At present, the market capitalisation as a percentage of GDP is 150 – higher than economies such as China, Japan, South Korea and America.

Interestingly, as reported, the tax collection both the direct and indirect has been rising significantly.

Direct tax collection till February 15, 2008 had registered 41% rise, while the budget had assumed about 17% growth over the revised estimates for 2006-07. The total receipts rose by 22.4% (with net tax revenues rising by 29.3%), according to provisional figures released by the Controller General of Accounts (CGA).

Corporate tax receipts, which now account for about three-fifths of direct taxes, rose to Rs 1,27,683 crore, a growth of 39.84% compared to the previous April-December period. Personal income tax, which accounts for the rest of direct taxes, rose to Rs 77,380 crore, a growth of more than 50% from the last comparable period. Exceeding indirect tax receipts for the first time, direct tax collection now looks set to cross Rs 3 lakh crore or (Rs 3 trillion) this fiscal. The budget estimate of a tax (both direct and indirect) to GDP ratio of 11.8% is likely to be exceeded.


But 41% rise of tax collection raises certain queries. It must be because of the significant rise in the revenue earning and so the output of the taxpayers, both individuals and corporate. It means the individuals and corporate are working hard and efficiently, producing more, perhaps with better productivity, and growing richer. Why does it not reflect in GDP growth rate too that has gone down actually compared to last year?

The rise of tax collection certainly indicates the efficiency of the tax administration and its officers and better compliance of the taxpayers. Should not the tax rates be reduced to reduce the unbearable load on the existing taxpayers and to encourage those who must pay but don’t pay in the net willingly?

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