Strike by professors of IIT and IIM

The Professors of IIT and IIM are planning a hunger strike in a few days to protest the fresh pay structure awarded to them in the pay commission. One grouse is that the teachers at these "premier institutes" are now to be paid at par with those of the other UGC supported institutes (actually the differential is being reduced). The consulting income that these professors make (in part because they are professors at these institutes instead of any run-of-the-mill university) is ofcourse not part of the debate.

The irony is that the IIM chaps think that they deserve more than even the IIT profs. Given that the debate is based on the grounds that these institutes are "premier" I thought it would be worthwhile to check the kind of academic work they do. IIMA's website is quite informative when it comes to the kind of programs they offer. However, click here - on the research and publications weblink - and you will be greeted by a blank page. The research page ofcourse claims that IIM A produces a third of all the management research done in India. I wonder if they mean that they are responsible for a third of nothing !

As Ram Tzu says (refer previous post)

You stand at the edge
Ready to throw yourself in.

What a shock to discover

There is nowhere to go
And no one to throw

Go figure

"No Way" by Ram Tzu

Landmark's book sale always throws up a few surprises. This time it was on a subject I would not normally go near - but I happened to pick up the book (mentioned in the title) and then could not put it down.

A quick internet search revealed that Ram Tzu was the pen-name of Wayne Liquorman - a teacher of Advaita. His writing is, however, deliciously irreligious and iconoclastic. At the risk of infringing some copyright, I quote

Ram Tzu hears it all the time...

You had a profound, revealing,
Deeply moving spiritual experience.
Now you're hooked.
Now you want more.
Now you're a seeker.

No junkie has ever
Been more dedicated
Or more continually disappointed
Or more miserable.

Once you might
Have been satisfied
With a new car
Or a loving mate

Now you will settle
For nothing less
Than union with God

Ram Tzu knows this...

You're fucked.

For those whose interest is piqued some more poems are available at here or here . Have fun

Rising oil price - differing reasons - but no peak

Oil prices are rising again - up 65% in the current year. Reasons differ - Opec oil production cuts, data indicating economic recovery, political tension in Nigeria - take your pick. However, two recent newspaper articles written in different continents have rubbished the existence of Hubbert's Peak. This one in New York Times exhorts readers to rally against government attempt to conserve oil:

we can’t let the false threat of disappearing oil lead the government to throw money away on harebrained renewable energy schemes or impose unnecessary and expensive conservation measures on a public already struggling through tough economic times.

The other just blames OPEC. Don't forget to read the comments on this one - highly entertaining and informative.

So should one worry about oil and oil prices or not? Go figure

Forgettable few weeks

The past few weeks have been rather sad for the country. Increasingly, it is being realised that we cannot safely let our Prime Minister speak on foreign policy. Apologists will continue to cover up for India's inability to influence our neighbours and protect ourselves. Any serious defense analyst would realise how we are perilously weakening our position in the world and viewing ourselves from the US worldview. As Chellaney mentions in his column for Singh:

to say India cannot emerge as a great power without making peace with Pakistan. “It is in our vital interest, therefore, to try again to make peace with Pakistan.” By linking India’s global rise to the placation of Pakistan, Singh has hyphenated India with that country even more strikingly than any international actor

Chellaney's columm on China is another case in point.

The BJP too has lost its ability to appeal to the "liberal" right-of-centre. The removal of Jaswant Singh from the membership of the party and the banning of his book in Gujarat has to rank among the most intolerant and graceless acts that the party has committed in recent years. As an admirer of Atal Bihari Vajpayee and his vision of India, I had assumed that his ideals were also those of the party. Clearly that is far from the truth. I look, with just a tinge of anxiety, for a new alternative to the Congress that more closely seeks to build a strong, self-reliant and liberal India. That such an alternative offers itself quickly, has to be my prayer for this year as we celebrate the 62nd year of independent India.

Smart Managers for Smart Cards

Swaminathan Aiyar's article in the Times of India today on Nandan Nilekani's appointment in the government is worth a read. One can only wish Nandan Nilekani good luck and hope, for all our sakes, that his term is successful.

Correcting our Education system

Kapil Sibal, the new Education Minister recently unveiled his 100 day plan for "reforming" the education system in India. A proposal that seems, surprisingly, to have met with almost universal enthusiasm, has been that of abolishing examinations at the 10th grade. Speaking of education, he said

"We need to de-traumatise it and reduce the burden on parents and children. We could, for instance, think of abolishing the class 10 board exam. Why does a child need to appear for a board exam in class 10 if he/she is continuing in the same school?"

There a many things wrong in our education system - but eliminating competition in the name of "de-traumatising" is a huge mistake. In recent years, the world has woken up to the fact that India produces one of the largest numbers of technologists - scientists, engineers et al. In a U.S. Senate Committee Hearing on "Strengthening American Competitiveness", Bill Gates reportedly said:

"Unless we transform the American high school, we'll limit the economic opportunities for millions of Americans...we need to adopt more rigorous standards and set clear expectations. We must collect data that will enable students, parents and teachers to improve performance.And if we are going to demand more from our students, we'll need to expect more from teachers."

Those in India who hold the US education system as epitomizing the best should keep in mind the statement by Senator Enzi made at the same hearing :

"A year ago I was in India. We were trying to find out why they graduate so many scientists and engineers. I did have one person that I thought had some great insight. They said that they didn't have any professional sports teams. (Laughter.) So the highest pay and the most prestige that they could get was being a scientist or an engineer or a doctor, something in that kind of field."

Though almost farcical, there is a glimmer of truth in the statment that the votaries of "no stress" need to bear in mind.

The world does not seem to think there is much wrong with the Indian system. Japan has, seemingly, a cult following for "Indian" Maths.
A special reporter accompanying a business delegation from Japan in 2008 remarked

"After making a deep assessment of educational systems all over the world, particularly the developed countries, a majority of our educators have concluded that the teaching system in the Indian subcontinent can do wonders for Japan."

A story erroneously attributed to Bill Gates is none the less correct in the extreme. Charles Sykes when writing an op-ed on dumbing down of school education commented:

Your school may have done away with winners and losers. Life hasn't. In some schools, they'll give you as many times as you want to get the right answer. Failing grades have been abolished and class valedictorians scrapped, lest anyone's feelings be hurt. Effort is as important as results. This, of course, bears not the slightest resemblance to anything in real life.

Is anyone listening?

The Budget Agenda – making India competitive

As the first budget of the new government, the market is looking for the government to set the agenda for the next few years. High fiscal deficit will restrict maneuverability with regard to tax reduction. The popular mandate, as interpreted by the ruling party, is one of continuity of fiscal policy with a bend to offering direct assistance to farmers and the fiscally weak. This limits the ability to reduce expenditure.

The agenda therefore has to focus on improvement in efficiency of expenditure and better tax collection. Besides, steps are needed to reduce of size of government, and bureaucracy to speed growth. Some steps I would look for are:

1. Financial Reporting – remove the obfuscation. The Fiscal Responsibility and Budget Management (FRBM) Act was expected to form the blue print for India to the path of fiscal prudence. Instead, it has led to the government resorting to a policy of smoke and mirrors to hide its inability to manage the budget. Obvious ones include the non-inclusion of fuel subsidy in the budget deficit. The more pernicious ones are reduction of state transfers – with states being asked to approach the market. While this reduces the apparent expenditure of the Central government, it does not actually reflect better fiscal management. What is needed is to:
a) Move to a system of accrual accounting instead of cash accounting. This will help focus policy debate on not only the immediate term issues, but the longer term ones of ballooning pension liabilities, and debt servicing.
b) Reflect all governmental revenues and liabilities through the budget – all non-budgetary items to be avoided – to prepare a true and fair picture of the state of government finances
c) Prepare accounts that are consolidated – which represent the accounts of the state governments as well as the centre
d) A key area of reform has to be to measure all salaries paid by the government and its agencies and by public sector companies on a cost-to-company basis. This will likely throw up interesting information especially when measured against productive output!

2. Establishment of efficiency parameters – for the most part, the budgetary focus is on revenue and expenditure and not on measuring the efficiency of use of the money spent. Most government departments do have review mechanisms. However, these are not transparent – a case in point is the inability of the Ministry of Human Resources to explain where the money collected (as a cess) for secondary education actually goes. Besides, rarely is the measurement of delivery of efficient service a goal. As part of smaller government, the government needs to move out of providing services itself and instead set up monitoring agencies that set out goals and monitor results while using private enterprise to deliver.

3. Privatization – not disinvestment – This debate seems to have been set-back by the present government. While it continues to desire selling off bits of public owned companies, the approach is essentially episodic in nature. Efficiency of operations can only increase if there is a change of ownership that leads to a change of management style. Arguing that 51% stake would allow better performance is not demonstrable. On the contrary, the use of oil marketing company balance sheets to offer fuel subsidy, that of banks to write off loans and the “donation” by Gujarat state owned companies (where the government is in a minority) suggest that government ownership in any amount detracts from the commercial nature of business.

4. Economic friction in the form of ill conceived taxes (FBT, dividend tax, cash withdrawal) and the discretionary nature of multiple tax rates have crept in the taxation system over the past few years. While the nineties had established a clear road map of tax reforms, the previous UPA tenure marked the reversal of the trend towards simplification and instead returned ad hocism in tax matters. This needs immediate rectification. Another key area remains the implementation of GST – where the time frame of implementation does not seem feasible given the lack of preparedness of the government. Another key area of friction is the restriction on capital flows. The present FII registration requirements serve little purpose. In fact, with limited control over foreign institutions, government has less knowledge of who is the final investor than if it were to allow the normal “know your client” requirements of brokers to work in the case of foreign clients. We need to now drop “I” from “FII”

5. Land and labour reform remain glaring unfinished agenda for faster economic growth. While labour reforms are contentious, land reforms need not be so. Clarity in land titles, and land use planning are two areas that, if sorted out, can reduce corruption significantly.

The Judicial sector needs serious attention. The pile up of unresolved legal cases renders the system incapable of being used. While this is not an agenda for the budget, this has to be one of the key areas of focus for the government if they are serious about increasing the economic growth of India on a sustainable basis.