Wednesday, March 31, 2010

Informed judgment on capitalism

Ten key governance lessons learnt from financial crisis

Really, terrified Shri P Chidambaram!!

This is what he said in a Lunch with BS:

“Those were the best years. In the UF, nobody asked any questions. We all knew the government would fall, but till it did, you could do what you wanted. I slashed tax rates in the 1997 Budget, opened up FDI and carried out disinvestment. H D Deve Gowda was the prime minister. He was very fond of sleeping. I still remember, when I was reading the Budget, his Principal Secretary Satish Chandra was standing in for him and he was sleeping. All he was concerned about was if there was any mention of farmers,” he recalls, his eyes lighting up at the memory. “Nobody has tampered with those tax rates in 14 years.”

“Jaswant Singh was forgettable. Yashwant Sinha had a mixed record. He put in place some things. But he didn’t have a holistic perspective, a philosophy. His prime minister had no interest in finance. The deputy finance minister was a self-confessed ignoramus on finance. And who was his Planning Commission deputy chairman? Jaswant Singh.” Chidambaram says.

Tuesday, March 30, 2010

Liberty can't be had on the cheap

Gary Becker on health,

Capitalism has produced the highest standard of living in history, and yet markets are hard to appreciate? Mr. Becker explains: "People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."

"But when Milton was starting out," he continues, "people really believed a state-run economy was the most efficient way of promoting growth. Today nobody believes that, except maybe in North Korea. You go to China, India, Brazil, Argentina, Mexico, even Western Europe. Most of the economists under 50 have a free-market orientation. Now, there are differences of emphasis and opinion among them. But they're oriented toward the markets. That's a very, very important intellectual victory. Will this victory have an effect on policy? Yes. It already has. And in years to come, I believe it will have an even greater impact."

Mind the logics

“The latest report from World Intellectual Property Organisation shows that the US has filed for over 45,000 patents, Japan about 30,000, Germany about 16,000 and China about 8,000. Guess how many from India? A princely 761! We produce the most number of engineering and science graduates–and our share of innovation is one of the lowest. This goes on to prove one simple thing. For Indians, logic is not a stepping stone to anything bigger. Logic is possibly an end in itself. Logical? Isn’t it?

Monday, March 29, 2010

Planned chaos of schemes and programmes

What India’s PM has said on last two years of economic development?

  • “Our concern for inclusiveness in the 11th Plan period is reflected in the fact that, in addition to the 9 per cent growth target, the Plan lists 26 other monitorable targets highlighting inclusiveness concerns. These include targets for agricultural growth, poverty reduction, employment generation, school enrolment, reduction in the gender gap and access to clean drinking water.
  • We do not have all the data we need to measure progress in these dimensions during the first three years of the 11th Plan, but the document before us presents a reasonable assessment of the overall position in these areas.
  • Rates of enrolment in primary schools have increased. Gender gaps in schooling are narrowing. Life expectancy rates after immunisation of children have increased. The percentage of population with access to safe drinking water has also gone up and so has village connectivity and electrification. But, I must add that, while there is progress, we have achieved less than what we need to.
  • Our target for reducing poverty is to cut the percentage of the population below the poverty line by ten percentage points during the Plan period. This implies a pace of poverty reduction more than twice that experienced in the past. Our success in ensuring inclusive growth depends critically on how well we do in this dimension of performance.”

In a way these are the standard statement even before the economic reform that was initiated in the 1990s.

Read what other economists have said:

Bimal Jalan on

  • “….the prevailing practice of passing several Bills at the end of the day at the discretion of the executive branch, without discussion or actual voting, has to be simply abolished — except in an emergency — to enable Parliament to perform its assigned role under the Constitution.
  • I believe that if the above measures are taken, or at least considered by Parliament, the working of Indian democracy by the people would become less oligarchic and more accountable.”

Rajiv Gandhi Index and dud NREGA

Saturday, March 27, 2010

Missing teachers in schools

Teachers in AP, MP, UP miss school for 28 days a year: Study

Economics is a “moral science” or Art?

If one thing is true in Economics after the 2007-2008 financial crisis it is this that John Leonard own words “It takes a long time to grow an old friend.”

Yes, David Brooks explains what went with Economics in the past.

Some excerpts:

“Russ Roberts of George Mason University wondered why economics is even considered a science. Real sciences make progress. But in economics, old thinkers cycle in and out of fashion. In real sciences, evidence solves problems. Roberts asked his colleagues if they could think of any econometric study so well done that it had definitively settled a dispute. Nobody could think of one. “The bottom line is that we should expect less of economists,” Roberts wrote.

One gets the sense, at least from the outside, that the intellectual energy is no longer with the economists who construct abstract and elaborate models. Instead, the field seems to be moving in a humanist direction. Many economists are now trying to absorb lessons learned by psychologists, neuroscientists and sociologists. They’re producing books with titles like Animal Spirits, The Irrational Economist, and Identity Economics, about subjects such as how social identities shape economic choices.

This amounts to rediscovering the humility of an earlier time. After all, Adam Smith was a moral philosopher, Friedrich von Hayek built his philosophy on an awareness of our own ignorance, and John Maynard Keynes “was not prepared to sacrifice realism to mathematics,” as the biographer Robert Skidelsky put it. Economics is a “moral science,” Keynes wrote. It deals with “motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogenous.”

Economics achieved coherence as a science by amputating most of human nature. Now economists are starting with those parts of emotional life that they can count and model (the activities that make them economists). But once they’re in this terrain, they’ll surely find that the processes that make up the inner life are not amenable to the methodologies of social science. The moral and social yearnings of fully realised human beings are not reducible to universal laws and cannot be studied like physics.

Once this is accepted, economics would again become a subsection of history and moral philosophy. Economists will be able to describe how some people acted in some specific contexts. They will be able to draw out some suggestive lessons to keep in mind while thinking about other people and other contexts — just as historians, psychologists and novelists do.

At the end of Act V, economics will be realistic, but it will be an art, not a science.”

Friday, March 26, 2010

Socialist Ramraja and Liberal Express

There is an interesting development is taking place in Indian newspaper business companies. What is more interesting is the reporting of one news and suing of that news because of that reported news has no ground to believe.

Almost everyday there are thousands of such news being printed. How many are really sued for lack of authentic sources?

Infact it is laughable that a 132 year old Newspaper company did not have any “stipulated a retirement age for board members and also, the editor-in-chief”

For long the Hindu newspaper has been said as Socialist/Statist newspaper in India. The present case is an example for such polices adopted in pre 90s in India!

Read the full stories from below links:

Thursday, March 25, 2010

Same House, learned later

Ramachandra Guha brings out several valid points to debate in larger perspective for better India:

Some excerpts:

"When the politician-social worker Nanaji Deshmukh died last month, none of the obituaries mentioned what may have been his finest moment. This occurred during a debate in the Rajya Sabha in the first week of May 2002. The subject being discussed was the recent Gujarat riots. As members of the BJP and the Congress traded accusations, Deshmukh intervened to suggest that the Prime Minister, Atal Bihari Vajpayee, and the Leader of the Opposition, Sonia Gandhi, together visit the camps of Gujarat in a bid to restore communal harmony.

The most remarkable appointment to that first Cabinet, however, was that of B.R. Ambedkar. Through the 1930s and 1940s, Ambedkar had been a bitter opponent of the Congress, and had attacked Mahatma Gandhi in particular in very sharp language. Yet, as Rajmohan Gandhi tells us, when India became independent, the Mahatma advised Jawaharlal Nehru and Vallabhbhai Patel to include Ambedkar in the Cabinet, on the grounds that ‘freedom has come to India, not to the Congress party’. The old adversary of the Congress was made Law Minister, as well as Chairman of the Drafting Committee of the Indian Constitution. Good deeds led to noble ends, for Ambedkar did an excellent job in piloting the Constitution through an often fractious Assembly.

In January 1977, the Emergency was lifted and fresh elections called. On the eve of the polls, the Opposition politician Morarji Desai, told an interviewer that if his Janata Party came to power, it would ‘work for the removal of fear which has enveloped the people’. One of its first tasks would be ‘to rectify the Constitution’ to rid it of the Emergency-era amendments which had reduced the powers of the Supreme Court and the legislature, while greatly magnifying the powers of the Prime Minister. ‘We will have to ensure’, said Morarji Desai, ‘that [an] Emergency like this can never be imposed [again]. No Government should be able to do so’.

When the Janata Party came to power and Morarji became Prime Minister, he kept his word. His outstanding Law Minister, Shanti Bhushan, supervised the drafting of amendments to the Constitution which would restore the position of the courts, make the functioning of legislatures more transparent, reduce the arbitrary powers of the Centre, and so on. These amendments required a two-thirds majority in Parliament. By now, however, even the Congress Party was embarrassed by the Emergency and its excesses. Thus, when these amendments were discussed in Parliament on December 7, 1978, both Morarji Desai and Indira Gandhi voted in favour, along with their respective party members.

These need not necessarily be in constitutional matters alone. In the wake of the Gujarat riots, had the Prime Minister and the Leader of the Opposition the courage to follow Nanaji Deshmukh’s advice, it would have sent an extraordinarily powerful — and wholly positive — message to the citizenry at large. Now, in the wake of the crisis caused by the rising Maoist insurgency, there needs to be a cross-party (if not all-party) consensus on how not to yield to violence and terror while simultaneously making amends for the shocking exploitation of tribal people by the Indian State and corporate interests down the decades. The corruption of our political class, and of our judiciary, police, and civil service, is another problem that can only be tackled by an abandonment of partisan and self-interested positions.

In the history of democratic India, examples of constructive cross-party collaboration are rare indeed. Those who are pleased with the recent denouement in the Rajya Sabha should now work towards making such happenings a more regular feature of our political life."

Universal values

Prof Donald Boudreaux on universal liberal values:

“Classical-liberal (or, if you prefer, libertarian) political values are no more than the application to society at large, and to government, of some of the most fundamental and indispensable rules that every decent person learns early in life and adheres to until death.

In this light it is interesting to read a recent observation about libertarianism by University of Virginia government professor Colin Bird. He tries his hand at explaining the increased acceptance, over the past 30 years, of libertarian ideas. In his opinion, this success results from the fact that libertarianism was able to represent itself as the true heir to the liberal mainstream rather than as a revolutionary departure from Western political values. That is not to deny that libertarians often portrayed themselves as radical and even socially progressive: but at root libertarianism claims to be radicalizing the familiar (individualism, freedom, rights) rather than to be familiarizing the truly radical.

Indeed so! Professor Bird, however, believes that radically insisting (as libertarians do) that the government be bound by all of the same basic rules of decency that bind individuals does not really render libertarians radical. As I recently wrote in this space, if by “radical” we mean consistently sticking to sound principles, then libertarians are indeed radical—and radical in a way that deserves praise.”

Sex, Stress & Drugs

From ToI

  • “A survey by the Delhi Commission for Women (DCW) shows that 22.5% of the sex workers were addicted to marijuana, heroin and other drugs. At least 75% of the sex workers surveyed were either randomly or regularly using various addictive substances such as gutkha and cigarettes.
  • The report prepared by DCW along with NGO STOP is based on a survey of a representative sample of 400 sex workers carried out at the end of 2008 and collated into a study.
  • The survey states that 90% of the sex workers constantly chew tobacco mainly to kill their appetite and deal with stress, 57.5% smoke and 20% consume alcohol. At least 10% revealed that they had used heroin and another 5% had smoked marijuana. At least 7.5% admitted to have tried other varieties of drugs.
  • As per the study, 70.7% of the respondents said that they want to quit substance abuse but are finding it extremely difficult to do so. The DCW report asserts: ‘‘GB Road has a huge market for drugs and one exploitative industry is supporting illegal trade of deadly drugs.’’
  • The data shows that 60% of the respondents were unable to get adequate sleep while another 33.3% complained of tension.
  • Besides this, health problems abound among sex workers. As many as 46.5% of those surveyed admitted to have suffered from sexually transmitted diseases. That many are vulnerable to HIV\AIDS is highlighted by the fact that 50.5% sex workers admitted to not using condoms. The remaining of the respondents said that they were using protection.
  • According to social activists, sex workers end up getting hooked to alcohol as the customers sometimes carry their own liquor and the sex workers themselves too offer liquor to appease customers. Some of the clients even carry potent drugs like heroin and ask the sex workers to try them”

Tuesday, March 23, 2010

Doctoral Fellowships in Education

Pay for perseverance, hard work and patience

The flight of birds had fascinated him since he was a boy, but it was years later he realised that he wanted to fly aircrafts. After finishing school, he took up Physics at St. Joseph’s College, Trichi, but towards the end he was dissatisfied. When he discovered aeronautical engineering, he regretted having lost three precious years.But he was glad to have discovered Leo Tolstoy, Thomas Hardy and F. Scott Fitzgerald and other English poets in his college time.

The problem with professional intellectuals

Grant Morgan reviews Sowell’s New Boook

  • “Thomas Sowell’s provocative new book looks at this question. Intellectuals and Society will make both public intellectuals and their supporters decidedly uneasy. In this book, Sowell argues that . Specifically, he argues that people defined as “intellectuals” have, for at least the past century, promoted a centralized, statist, and anti-democratic vision which undermines both individual freedom and the effective functioning of the state. Furthermore, they have done so without facing any consequences for the results of their (mostly failed) ideas.

  • Sowell’s thesis on the effect of intellectuals on society has several distinct elements. To start, he defines “intellectuals” as the class of people who produce ideas as the primary end product of their work. Thus, engineers and neurosurgeons, while certainly possessing specialized knowledge, are not intellectuals per se. The problem with professional intellectuals, according to the author, is not that they possess specialized knowledge but that they assume that this specific knowledge also endows them with expertise on unrelated matters.

  • Thus, in order to implement this general expertise, intellectuals consistently advocate a political vision characterized by a strong central state which will allow them greater technocratic control over human activity. This vision, Sowell argues, in fundamentally flawed because intellectuals, while possessing specialized knowledge in a single field, do not possess the consequential “on the ground” knowledge necessary to make wise decisions in most cases. For example, the Soviet Union employed large numbers of economic planning experts, but they could not efficiently set the prices of the 25 million different consumer goods over which they had control, because they could not possibly know the local demand for each product at all times.

  • Because intellectuals face no consequences if their ideas fail they can continue advocating them and be lauded by their peers for their “principles” even if those principles are counter-productive. Where respect from other intellectuals (and approval, in matters such as awarding tenure) is the primary currency, Sowell argues that being faithful to the “vision of the anointed” is more important than being correct.

  • The author outlines several areas in which he believes intellectuals have distorted the debate or advocated poor policy because of their lack of knowledge of the concrete consequences of their ideas.”

Script Banks of Indus River

“But I don’t know why you need mathematical models to know it’s a language. You just have to look at the damn thing.”

How you see is more important than what you see!

“As human beings, we automatically make observations throughout the day. Some of these are good, and some bad. These observations are also known as our perception of a person, place, or situation. We all know we shouldn’t judge someone the first time we meet them, and yet, we’ve all heard that little voice in our head making a comment and forming an opinion. That is our perception of the person we are meeting.”

Monday, March 22, 2010

Complicated wired world

THOMAS L. FRIEDMAN on kids, education and ideas:

  • The most important economic competition is actually between you and your own imagination. Because what your kids imagine, they can now act on farther, faster, cheaper than ever before — as individuals. Today, just about everything is becoming a commodity, except imagination, except the ability to spark new ideas.

Uttarakhand Registrar recommends a banning of IIPM

Mohammed going to the mountain, the mountain will come to Mohammed!

Sanjaya Baru on Higher Education

  • ….a decade of destruction under the whimsical and arbitrary leadership of two policy dinosaurs, Murali Manohar Joshi and Arjun Singh, their ideological thought-managers and bureaucratic know-it-alls.

  • Defending his latest initiative, the proposed Foreign Educational Institutions (Entry and Operation) Regulation Bill 2010, in a television interview to Karan Thapar last week, Mr Sibal likened his initiatives for education reform to the economic reforms of the early 1990s. The opposition to his proposed foreign education Bill was coming, Mr Sibal said, from the same kind of quarters that criticised economic liberalisation in 1991.
  • Look where India is now. QED, suggested Mr Sibal, today’s critics will be tomorrow’s beneficiaries. In 1991, the opposition to reform melted quickly as middle class households saw tariff rates come down and stock market indices go up! Rahul Bajaj was hamara, but the Mumbaikar did not like his Bombay Club.

Mr.Fuad Lokhandwala’s Toilets Business in New India

Sudheendra Kulkarni wrote a nice piece in last Sunday Express.

Some excerpts;

  • The story of how Fuad Lokhandwala, who has constructed some of the best public toilets in Delhi and Mumbai, made the transition from his dollar dream in the US to this “dirty” business in India, is as inspiring as it is instructive. He had a plush, globe-trotting job with a multinational food company in Chicago when India conducted a nuclear test on May 11, 1998. Washington reacted angrily by slapping economic sanctions. “That night I was watching TV news when a barbed comment by the anchor pierced me deeply,” says Lokhandwala. “Here is a third world country, the anchor remarked, that does not even build clean toilets for its teeming millions, but has built a nuclear weapon. More than anger, I was filled with shame because the remark accurately described the Indian reality. That very night, I decided to go back to India and start a business in sanitation.”

  • Building toilets is not rocket science. But where Lokhandwala’s work distinguishes itself from the rest, including from that of Sulabh, which runs the largest number of public toilets in India, is on the all-important criterion of maintenance and aesthetics. “Why should public toilets be always smelly and ugly?” he asks. “And why should we have good-looking toilets only in five-star hotels or in the homes of the rich? In my toilets, I try to maintain inauguration-day quality all throughout by institutionalising the most rigorous and regular inspection, conducted mostly by myself and my wife. They have waterfalls, aquariums, potted plants, and even small patches of garden wherever space is available. If the aam aadmi and aam aurat have access to top-quality public conveniences, they will start demanding quality in all other public services. This will also slowly change their personal habits and civic behaviour. When I die, I’ll have the satisfaction of having made at least a tiny difference to sanitation in my country.”

  • Lokhandwala’s ‘lemme-make-the-difference’ path hasn’t been smooth. Indeed, he has encountered more thorns than petals so far. I say this from personal experience, having tried to help him find his way in the corruption-infected innards of the political-bureaucratic establishment both in Delhi and Mumbai. In spite of my introducing him to the seniormost leaders of the Shiv Sena and BJP, Lokhandwala had to encounter harassment from extortionist corporators in Mumbai. One of them even sent hooligans to attack him and his men for not paying up. Bureaucrats created hurdles for the same reason. So far Lokhandwala has been able to construct only nine toilets on Mumbai’s municipal plots. In New Delhi, NDMC’s bribe-seeking officials have refused to renew his contract at many places. A less gritty person would have quit this business long ago.

  • Lokhandwala’s business model is based on the recovery of capital and maintenance costs mostly through revenue generated by advertising on the toilets’ exterior walls. Although replicable in many places in urban India, it has inherent limitations. Therefore, the primary responsibility of public sanitation still rests on central, state and local governments. They must allocate necessary resources and put in place effective policies of public-private partnership with NGOs and entrepreneurs. However, what is of nationwide relevance in Lokhandwala’s model is his utmost commitment to quality of maintenance, which can only come from a belief that clean public toilets in slums, railway stations, bus-stands and schools (lack of sanitation in rural and slum schools is a major reason for the high dropout rates among puberty-age girls) are a more important yardstick to measure India’s emergence as a developed nation than the sudden surfeit of advertisements of luxury toiletry brands in glossy magazines and on TV channels.”

Laurels and Students of India

Friday, March 19, 2010

Bananas could help protect against AIDS


“The humble banana may hold the key to powerful new treatments that can protect against the deadly AIDS virus, a new study has claimed. BanLec, a naturally occurring chemical in banana, is as effective against the AIDS virus as two anti-HIV drugs now in use, T-20 and maraviroc, the Daily Mail reported. In laboratory tests, American researchers observed that the lectin inhibits HIV infection by blocking the virus’ entry into the body. The chemical acts on the protein ‘envelope’ that encloses HIV’s genetic material. The researchers believe therapies based on BanLec could be used alone or in conjunction with other anti-HIV drugs.

Milton Friedman in Ballia!!

The Ballia district administration website gives some famous quotes by different personalities. One of them is certainly not so famous among economists in India but the world!

The district administration mentions Milton Friedman’s one of very often quoted, probably misquoted one. What is that quote?

“If you give the Sahara Desert to the government, there would be shortage of sand in few years”. -Milton Friedman

Thursday, March 18, 2010

What is good education?

An econometrician, academician and politician turned Yoginder K Alagh writes what is good education? Though he did not do much when he was in charge of some university in India!

  • “The interesting part of the current debate is that there is no discussion of what good education is all about. The focus is on the needs of parents who very legitimately want to send their children abroad. Senior civil servants, high profile politicians who left teaching decades ago and entrepreneurs and geeks who know everything also want foreign education. This is good because it is the purchasing power that matters. And those who don’t know their customers suffer.
  • There are two characteristics of good education. It is a long haul business, so if I start today, I may have to wait for five to ten years before the product comes out. Second, it is not a standard assembly line product like a sausage. You can’t sit on a teacher when he reads, writes or lectures, so you may judge him or her only by outcomes.
  • The only real way we can make the best in the world bond with us is to make Indian academia professionally exciting to them. That means reform at home. It means encouraging the best and the brightest. It means giving autonomy to institutions of higher learning at home and making them achieve mutually accepted goals. It means letting the best here pair up with the best abroad in research and teaching. It means rewarding them if they perform and punishing them when they don’t.
  • Nobody is talking of this. A university teacher of arts is suspended without due process, his student is arrested and not allowed to complete his exam and his results are still not declared after three years. A defeated politician is made chancellor of a university for a lifetime. We will have to build firewalls to stop all this before we can use the best elsewhere.”

MNREGS distorted labour market

From BS Editorial:

  • "It is true that, at 119 crore person-days, the employment created this year by the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS), the government’s flagship programme, is tiny, a fraction of one percentage point of the total employment in the country. But a more meaningful way of looking at its potential impact, however, is to see that around half the country’s workforce has registered for a job under it (21.5 crore individuals have registered for MNREGS job cards so far this year, and 9.7 crore have got them, out of the total workforce of around 45 crore). In other words, in just three years, the programme has come a long way. Indeed, while there are no all-India figures, there are enough reports of a shortage of labour for agriculture in several key states in the harvesting season. This, in turn, has led to wage rates in the country going up. In other words, what various minimum-wage statutes and the large bureaucracy that mans them haven’t been able to achieve, the MNREGS has achieved in a relatively short period of time.

  • The success of the scheme, however, is also its main weakness. What was started as a social security scheme to provide employment in times of need has now morphed into a full-fledged employment programme that is in danger of supplanting the labour market it was meant to supplement. To begin with, the government changed the definition of those entitled to a job under the scheme from just one member per household to any adult member — theoretically, this at least doubled the number of potential beneficiaries. The daily wage rates offered, ranging from Rs 84 to Rs 99 this year, are also far in excess of the wages for casual employees across the country — while a higher MNREGS wage is a good thing from the point of view of what it does for wage levels, it distorts the market. So, in a situation where employers do not pay the minimum wages in rural areas (typically, wage levels rise during harvest and sowing seasons), a typical family may prefer the option of registering for the government scheme at a higher wage. What this will do to employment is anyone’s guess and depends on whether workers choose to use the government jobs, which are available for only 100 days a year, to supplement or supplant their current work patterns — all of this underscores the need for India to get real-time employment data. This can only get worse with the passage of time. For one, there is the demand to increase wage rates further — Finance Minister Pranab Mukherjee is on record, in his Budget speech last year, to provide a real wage (indexed to inflation, that is) of Rs 100 per day as an “entitlement”. In other words, as time goes by, MNREGS is taking on the form of an entitlement and not as a payment for a minimum amount of work done. If the government is keen to ensure it does not hamper genuine job creation, it needs to rethink the MNREGS and the wage levels under it. Also, if rural workers are going to get a direct cash transfer, or close to it, the government may wish to rethink other programmes, such as the Right to Food one, that are also aimed at ensuring a higher standard of living for people in these areas."

Save by this process

P. V. Indiresan on Higher Education Bill:

“According to Mr Krishan Khanna, who is doing a study on the education process in India, the country sends abroad over 150,000 students every year for higher education, and, in the process spends $10-$12 billion. That, if true, is a huge amount that deserves to be saved. Foreign universities will probably do so to some extent.

Is that good or bad? Was it good that Professor Ramakrishnan went to the US and then earned a Nobel Prize or was it bad that he was lost to the country? Probably, it was good; if he had remained here our bureaucracy would probably have cut him down to size.

What will they do? I do not know! I fear the worst because, frankly speaking, many of the Ministry's ideas on the functioning and regulation of Indian universities are rather unintelligent.

The march of Liberalism in India and Asia

Dr.Parth J. Shah’s interview with Young Asia Television

Wednesday, March 17, 2010

Sam’s mantras

The following is from Dr.Sam Pitroda’s recent interview with Indian Express.

Some excerpts:

DHIRAJ NAYYAR: You were here in the early ’80s, when you worked with Rajiv Gandhi, and you are here again for the last six years. How do you think the Congress’s thought processes have changed?

I don’t think much has changed at the political level. In fact, to some extent, it was much more exciting then, in the Rajiv Gandhi era, because we had a huge mandate. We did not use it effectively, but that was a different issue. We were all young then, in our 40s. On the other hand, India is very different today. We have over a 100 billion dollars worth of foreign reserve. The IT success story has given us a lot of confidence. We have our own multinationals.

SHEKHAR GUPTA: Tell us some anecdotes from Rajiv Gandhi’s time.

I had never met Rajiv Gandhi until I went to Mrs Gandhi’s residence to give a presentation in November 1980 or ’81. I was all psyched up and prepared. We did not have PowerPoint and laptops and computers those days, so I was armed with my 35-mm slides. When I got there, I was told Mrs Gandhi was running late. While waiting, I saw four young men—Arun Nehru, Arun Singh, Vijay Dhar and Rajiv Gandhi. (Rajiv and I) were of the same age and we clicked. When I started talking about my idea of indigenous development—digitisation of networks, Indian talent, local production, rural communication, access and other things, he got it. While I was making my presentation in front of Mrs Gandhi, Rajiv was with her, constantly explaining things to her. After that, I hardly talked to Mrs Gandhi as I developed a bond with Rajiv Gandhi.

When the then President of the USSR Gorbachev came here, I told Rajiv I wanted to meet him. We prepared a presentation. Then Rajiv called and said he could not do it because the bureaucracy on both sides would not let us. Since Gorbachev was going to have dinner at Rajiv’s house, I asked him to arrange a tea meeting with him. After dinner, Rajiv asked Gorbachev to tea in the adjoining room—where we had already set up the projector—and mentioned our presentation. We gave him an hour-and-a-half-long presentation. In between, Gorbachev took some ilaichi by mistake and he did not know what hit him! Rahul and Priyanka were coming in and we told them to bring in more ilaichi. Those were interesting times.

Another anecdote I remember is about a meeting to celebrate India’s 40th Independence Day. Rajiv was on the podium and I was in the audience. He was looking very bored and I was really bored. So we started sending notes to each other through the security guys.

DHIRAJ NAYYAR: You have been an entrepreneur yourself, but largely in the US. Do you think India is still a difficult place to be an entrepreneur?

I have lived in the US for 45 years and I have never visited a government office there. I have only signed documents that my lawyer gave me and started tonnes of little companies. I will have a difficult time opening a business here. But that is just me.

DHIRAJ NAYYAR: Do you believe the new theory that the balance of economic power is shifting away from the US to India and China?

I don’t think so. I don’t think people realise the amount of assets that have been created in the US over the last 50 years in terms of roads, infrastructure, universities. We will take a long time to bridge that gap. Look at the think-tanks in the US. It will take a long time for China and India to catch up. We still have basic problems like lack of water and sanitation.

COOMI KAPOOR: Can you tell us about your journey from a very humble beginning in an Orissa town to an inventor and innovator in the US?

I was born in a little town in Orissa. My mother had eight children. We were Gujaratis settled in Orissa and the only connection we had with Gujarat was Gandhiji and Sardar Patel. When Sardar Patel died, my parents decided that my brother and I should go to Gujarat to study. There I got a degree in physics and later a Masters in the subject. A few days later, I read in the newspaper that President Kennedy had decided to send a man to the moon. It sounded romantic and I decided to go the US.

I got there, went to college, studied electrical engineering and went on to get a Ph.D. in physics and found out that it took seven years to get a Ph.D. I had a girlfriend then and I thought to myself, to hell with the Ph.D, let me just get married to her. After I got the engineering degree, she came to the US and we got married.

I started my business in 1974, built it up to 2,000 people in 1979 and sold it for $50 million. Then I came to Delhi because I had never seen Delhi before. From the Taj Mahal Hotel, I called my wife, but after a series of hellos, I could not get through. The arrogance and ignorance on my part made me decide that I was going to fix this. I got interested in ‘fixing telephones’, started commuting and sort of bumped into Mrs Gandhi.

Then I had a heart attack, ran out of money. I went back to the US and started another business, then realised the next big thing is knowledge. Knowledge is going to be the key to India’s growth, because for 8-10 per cent growth, you needed a lot more skills. I went to the PM and talked to him about the Knowledge Commission, which he liked. Having done that, the next big idea was Information Infrastructure Innovation. I am 68 years old; I have had two quadruple bypasses and cancer; I have limited time. It looks like the next nine-10 years will be very interesting in terms of doing this.

On gender

Niranjan Rajadhyaksha writes: “The new Economic Survey that was released by the finance ministry on 25 February has some interesting data on public and private sector employment by gender between 1991 and 2007. Male employment fell from 23 million to 22 million. Female employment went up from 3.8 million to 5.3 million. The numbers are still in favour of men, but the trend seems to be working in favour of women because a lot of employment has been generated in sectors such as “finance, insurance, real estate etc.” and “community, social and personal services”.

Also read Rajesh Shukla’s Children of a lesser god”

A mockery approach to reform higher education

Holistic approach to education by Arun Nigavekar

In Education, ignore the color of competition by Bibek Debroy

Leaps and bounds in Indian Economics

Those who have not read the chapter 2 of latest economic survey should at least read the following paragraphs which are something like a basic economics textbooks should teach students in a holistic way!

  • "For achieving inclusive growth there is critical need to rethink the role of the state. The early debate among economists about the size of the Government can be misleading. The need of the hour is to have an enabling Government. India is too large and complex a nation for the state to be able to deliver all that is needed. Asking the Government to produce all the essential goods, create all the necessary jobs, and keep a curb on the prices of all goods is to, at best, court failure, and, in greater likelihood, lead to a large, cumbersome bureaucracy and widespread corruption.

  • The aim must be to stay with the objective of inclusive growth that was laid down by the founding fathers of the nation, but to take a more modern view of what the state can realistically deliver. This is what leads to the idea of an enabling state, that is, a Government that does not try to directly deliver to the citizens everything that they need. Instead, it (1) creates an enabling ethos for the market so that individual enterprise can flourish and citizens can, for the most part, provide for the needs of one another, and (2) steps in to help those who do not manage to do well for themselves, for there will always be individuals, no matter what the system, who need support and help. Hence we need a Government that, when it comes to the market, sets effective, incentivecompatible rules and remains on the sidelines with minimal interference, and, at the same time, plays an important role in directly helping the poor by ensuring that they get basic education and health services and receive adequate nutrition and food. This rollback of the Government in the former will enable it to devote more energy and resources to and be more effective in the latter. This changing view of the state will briefly be elaborated upon and then some detailed policy suggestions taken up.

  • In many poor nations the Government takes the stance that, when in doubt about the goodness or badness of two or more adults voluntarily conducting an exchange, stop them. An enabling state, on the contrary, takes the view that, when in doubt, do not interfere. There are, of course, many actions of individuals and groups that will need to be stopped for the welfare of society at large. But the default option of an enabling state is to allow rather than stop, to permit instead of prevent. This altered conception of the state can have dramatic effect on the functioning of an economy, in general by promoting greater efficiency and higher productivity.

  • The main challenge is to direct the money already allocated to help eradicate poverty. The inability to do so has more to do with ideas than vested interests. Some propositions are obvious as soon as one gives them some thought; but not obvious when one gives them a lot of thought. These are the ones prone to policy mistakes. And once a policy is put into effect and kept in place for a while, vested interests gather in its favour and those interests resist change. But beyond that it is a question of having a road map of where we can go and demonstrating to the larger public that it is a potential beneficiary of the proposed change. Fortunately such a road map is feasible. There are systems of delivery of subsidies to the poor that can be vastly more effective, entail substantial savings and involve no extra organizational cost. In discussing these, it is useful to keep a few principles in mind. For goods that are important for the poor, it is only correct that the state should intervene to cushion the poor. The standard way to do this is by using some kind of a subsidy. However, a common mistake is to suppose that a subsidy scheme has to be coupled with price control.

  • This is typically a slippery slope. In a large and complex economy, it is difficult for the state to gauge what the right price of a good is. Moreover, once the Government becomes involved in setting the price of a commodity, this becomes a matter of politics and lobbying, which cumulatively adds to the distortion. Hence prices are best left to the market. If we want to ensure that poor consumers are not exposed to the vagaries of the market, the best way to intervene is to help the poor directly instead of trying to control prices, which almost invariably does more harm than good in the long run, and often even not so long a run. On agriculturesector policy and price control there is need to go the way India did with industry in 1991. Keeping this in mind, it is possible to outline systems of supporting the poor which are more efficient and better targeted than the present ones.

  • Through a vast network of public distribution system (PDS) outlets across the nation, we try to deliver some minimal supplies of heavily subsidized grain to our below poverty line (BPL) households and also some to our above poverty line (APL) households. The PDS stores are first given this subsidized grain and then instructed to deliver it at below market price to these specified households. It is believed many of these storekeepers (i) sell off this subsidized grain on the open market, and (ii) then adulterate the remaining grain and sell the diluted product to the BPL and APL households, who have no choice in the matter. We may harangue about the dishonesty of PDS store-keepers and all those entrusted with delivering the subsidies. It is indeed true that personal integrity, honesty and trustworthiness in the citizenry are vital ingredients for a nation’s economic progress—there is enough crosscountry evidence of this. But when crafting policy, there is need to be realistic about the system within which we work. To assume that all those entrusted with the task of administering the programme will do so flawlessly and then to blame them when the system fails, is not the mark of a good policy strategist. For effective policy, what is needed is to take people to be the way they are and then craft incentive-compatible interventions.

  • This paragraph outlines an altered system that, once in place, will be no more costly to run than the existing one and is likely to be much more effective. The plan suggested here is not novel and has been suggested on occasion by Indian policymakers and even in Budget documents. However, it has never been fully spelled out. The two planks of this system are (i) the subsidy should be handed over directly to the households, instead of giving it to the PDS store-keeper in the form of cheap grain and then have him deliver it to the needy households and (ii) the household should be given the freedom to choose which store it buys the food from. Suppose the BPL household gets a net subsidy of Rs x for wheat each month. Instead of giving this by charging the household less than the market price for wheat, it should be given coupons worth Rs x, which can be used at PDS stores in lieu of money when buying wheat. Under this new system no grain will be given at a subsidized rate to the PDS stores and they will be free to charge the market price when selling grain irrespective of who the customer is. The only change is that the PDS stores are now allowed to accept these coupons which they can then take to the local bank and change to money, and the banks, in turn, can go to the government and have them changed to money. Further, households that get these coupons should be allowed to go to any PDS store of their choice.

  • (ii) the household should be given the freedom to choose which store it buys the food from. Suppose the BPL household gets a net subsidy of Rs x for wheat each month. Instead of giving this by charging the household less than the market price for wheat, it should be given coupons worth Rs x, which can be used at PDS stores in lieu of money when buying wheat. Under this new system no grain will be given at a subsidized rate to the PDS stores and they will be free to charge the market price when selling grain irrespective of who the customer is. The only change is that the PDS stores are now allowed to accept these coupons which they can then take to the local bank and change to money, and the banks, in turn, can go to the government and have them changed to money. Further, households that get these coupons should be allowed to go to any PDS store of their choice.

  • Such a system will be more impervious to corruption. Since the store owner will get the same price for grain from all buyers, poor and rich, he will have no incentive, to turn the poor buyers away, as happens currently, and cater to those buying at market price. (If it is felt that changing coupons to money is a bother, we can have a provision for paying store owners an extra 2 per cent when they change coupons to money.) Second, since BPL buyers can go to any store with their coupons, they will be able to boycott stores that try to sell them poor-quality grain or mix gravel with the grain.

  • Moreover, it may be desirable to not impose any restrictions on farmers selling off the coupons. If the recipient of a coupon decides that she does not want to buy fertilizers but would rather spend the money on buying a television set instead, we have every right to have misgivings about this preference, but it is not a good idea to use the state’s enforcement machinery to correct this. Modern behavioural economics reminds us that there are situations where individuals act against their own interests because of lack of self-control or inconsistencies in their inter-temporal preferences, and so some paternalistic interventions can be good for them. While this is true, Government action to redirect individual choice ought to be measured and minimal. To try to meddle excessively in individuals’ preferences is a mistake because it encourages Government to reach out to doing more than it realistically can, creating unnecessary bureaucratic hurdles and breeding corruption.
  • India has one advantage over most emerging economies and even some industrialized ones–its vibrant democratic institutions and independent judiciary. This has greatly helped India gradually take its place among the leading global economies of the world. While this has helped the nation, there is another feature that has been a hindrance–India's high bureaucratic delays. Thanks to recent data collection from around the world on bureaucratic transactions costs, there are now hard statistics on where India stands.
  • If one were to look at this from a brighter angle, India’s unpardonably large bureaucratic costs are like a valuable resource buried under the ground, waiting to be excavated and used. Cutting down these costs is like unearthing a free, valuable resource that was lying idle. It can release large energies in the nation and boost productivity and growth. Ironically, this can be India’s gold rush.
  • This problem is at times put down to the size of India’s bureaucracy. But that is not right. A complex economy such as that of India’s does need substantial numbers to regulate and run it. By comparison with even some vibrant market economies, the actual number of people running the Indian Government is not large (see Box 2.3 for illustration in the context of India’s tax administration). Further, there is a lot of talent in the Indian bureaucracy, since the selection process is highly competitive. The problem lies elsewhere, in our conception of the state, to wit that it has to directly deliver on every front and not be content with an enabling role; and also in the rules, regulations and procedures inherited from our colonial times, and made more cumbersome with layers of further procedures and regulations added like on a palimpsest. The situation is like a traffic jam–asking each person to move is useless advice. The need is to reform the system. If the current system of subsidies can be reformed, this itself will release a lot of human resource that is presently tied up in the pointless complexities of running an inefficient system. Also the changes in the tax system—the Goods and Services Tax and the Direct Tax Code— that are being contemplated can have substantial impact on not just improving the efficiency of the taxes but on simplifying the procedures for paying taxes."

Economics education in Indian Schools

Like in US, there are also few attempts undergoing at present in Economics education in Indian Schools. But there is a long way to go.


Hayek Propped Up by Government Intervention

Defending My Homeboy Hayek from Freakonomics

Tuesday, March 16, 2010

Thought fit by the government

Sunil Jain on RTE

"Education minister Kapil Sibal doesn’t believe unrecognised private schools teach anything, but why doesn’t he get his own testing done on a regular basis or, more important, just focus on improving the government schools? Unrecognised private schools that don’t teach will then die a natural death.

Postscript: While Sibal is categorical that foreign/private colleges will not have to reserve seats for SC/ST/OBC since they haven’t been set up with government money, he has little compunction in asking private schools to reserve seats for these groups! Though several private schools are threatening to go to court, I wouldn’t worry too much about this — when telecom firm STel went to court and won its case against the government’s arbitrary allocation of licences to a handful of chosen firms, the government simply asked it to stop operations in the places it had licences. So, the company wrote a note saying it never wanted any more licences anyway and the government used this to try and convince the Supreme Court not to rule on the matter! Basically, no one can take on the government when it resorts to strong-arm tactics."

Monday, March 15, 2010

Most damaging kind

Tavleen Singh own words speaks thousand lights:

Some excerpts:

"Another passionate supporter of 33 per cent of Lok Sabha seats being reserved for women has been Shrimati Sonia Gandhi. She gave one of her rare interviews to declare on NDTV that she is ‘very happy’. What is it about Sonia-behn that makes her lend her name to the worst, most retrogressive measures? It is thanks to her that we spend thousands of crore rupees on NREGA, which nobody will ever get rid of because it has become such an easy and lucrative source of corruption. While wandering about rural India recently I asked a politician at what point the money starts disappearing into people’s pockets and he said, ‘Right from the top and right down to the bottom. Now that there is a move to exclude sarpanches there may be some trouble.’ It was also under the benign guidance of Soniaji that we pushed through that law to distribute what remains of our forests to Adivasis.

Of all these retrogressive measures, the most useless but irreversible is the Women’s Reservation Bill. It is tokenism of the most damaging kind. Ninety-nine point nine per cent of Indian women will get nothing from it but they will be told how wonderful it is for them because they are now ‘empowered’. It will make no difference to the horrible reality that nearly all abortions in India are of girl babies. No difference to the fact that most illiterate Indians are female. No difference to the sickening truth that little girls make up nearly half the prostitutes in India and that most children who are trafficked to the brothels of Mumbai and Delhi are female. But, women will be fed this travesty of empowerment in the hope that they forget the rest.

If they have not done so it is because the real noise and fury is not about empowering the women of India so much as empowering a handful of politically ambitious women who think it will be easier now for them to get into the Lok Sabha. For this we will pay by weakening the foundations of our Parliamentary democracy. It is the one institution that distinguishes us from our neighbours. The one institution that China with all its infrastructural successes has not been able to build. What a tragedy that our political leaders are so paralysed by political correctness that not one of them has the courage to stand up in public and admit that the Women’s Reservation Bill needs to be tossed into the garbage bin."

An alibi for trade unions to sabotage

If anyone have read Mr.Nandan Nilekani’s book of Imagining India would know how many lawsuits Mr. Manish Sabharwal have been facing in the various aspects. It is more than 1,500!!!

OK, Mr.Manish Sabharwal of Teamlease Services writes in today’s ET about the trade unions tragedy in understanding of free market and financial:

  • “THE trade union arguments of class struggle and tyranny of capital are well-known, ancient and stale. But Indian trade union leaders have now updated their rhetoric with wrong lessons from the global economic crisis — a recent letter to the prime minister said, “The global financial and economic crisis is structural and the current free trade paradigm is a major part of the problem. The financial crisis has shown that free markets and free trade cannot correct themselves.” Global unions are not far behind, with the International Trade Union Federation saying, “We warned business and politicians of dangerous instability in the global economy, but most were more than happy to continue to reap the short-term benefits of the failing model of deregulation. Business and governments created this crisis on their own, but they won’t be able to solve it unless they work with unions to stop the global jobs haemorrhage, kickstart the world economy and put a proper regulatory framework in place.”
  • “Thus, the average person in the world of 1800 AD had the same life expectancy as the average hunter gatherers of 100,000 BC. Stature, a measure of quality of diet and of children’s exposure to disease was actually higher in the Stone Age than in 1800 AD. But modern free market economies are now 20 times better off than the 1800 AD average.”
  • But trade union prescriptions may be worse than the disease because they confuse financial markets with free markets and mirror image the error of market fundamentalist in recommending that the state should substitute for markets or reduce their volatility. This misunderstands the sources of prosperity and job creation.
  • It would be a tragedy if the global financial crisis becomes an alibi for trade unions to sabotage our march of entrepreneurship and poverty reduction.”

Saturday, March 13, 2010

Let’s not erode the Framework of NATURAL rights of MAN

Everything that is governed by The State is not RIGHT!

In this globalised era of interdependent world of humanity. The one word which is often made as limelight in the public is RIGHT. There is no meaning of asking The State to give or make as RIGHT. As Rohini Nilekan says “..Currently, we are witnessing a march of socio-economic rights. Many rights are already enshrined in our law, the latest being the right to work and the right to information. The right to water is being deliberated. The right to land is being talked about all over again. These have created an exciting climate where people expect rapid social change and shifts in the balance of power.”

But she is right saying : “In the divine din of our democracy, there are many approaches to and many ideologies about justice. The roles of the state, markets, communities and individuals are differently constructed in each philosophy. Yet there is a broad agreement that we need to find better means for the distribution of resources.”

Find it easier to view things

When I read the two lines below a decade back I was not really sure of how many of them know about. Even if they know how they tend to believe in it. Of course I read in details with the help of my friend who is always interested in knowing of not just who writes about it but also how they personal education matters in public life and things life that.

“The Nehru-Gandhis were all dull students. Rajiv failed in Cambridge, Indira failed in Oxford, Sanjay failed in high school and Nehru didn’t shine at Trinity

Read full column The catholicity of Soni” by Aakar Patel in today’s Mint

Friday, March 12, 2010

Empower parents to make choice in education

Yesterday I had gone to CCS’s Student First discussion at IHC. The subject putout for discussion was Implementing the 25% in RTE Act: Developing a Model”.

The newly joined Associate Director for School Choice Campaign Mr Jan Sjunnesson Rao made a presentation highlighting the following issues:

  • How are weaker and disadvantaged sections defined and verified?

  • How will the government select these students?

  • Should there be any admission criteria?

  • How can the admission process be made simple and easy for weaker sections and disadvantaged groups?

  • Would the admission lottery be conducted by each school or neighbourhood or by entire village/town/city? How would the supply-demand gaps in each neighbourhood be addressed?

After listening different viewpoint I felt a mixed feeling I mean the whole debate even officially ignores the ROLE OF PARENTS in the child education. Whatever the criteria set by government to enroll these children will be based on who the parent is? And how we define the whole set of institutional setup which will allow them to play what is good for them. Undermining their role in the process of educating child will face nightmare like the present higher education system.

There was little or no discussion on the following issues but was highlighted as core issues:

  • What will be the mechanism for reimbursement to private school?

  • How will the government monitor the whole process? What type of external vigilance/social audit would be allowed/encouraged on the process?

  • What would happen if some of these students need to be change school in higher classes?