Wherever and whatever I read on economy these days, I do get hold of at least few articles on India Euphoria and how India is supposed to grow by double digits for the next 20 years. The reasons these economist present are perfectly rationale and make it a sound theory for us to believe. Increasing working population, increasing public and private investments, changing demographics all point to same direction of consumption led growth story. But, aren't we missing a critical point here?
In the last 20 years after liberalization in 1991, the biggest contributor to India's economic growth has been the 'Services' sector, particularly IT and BPO services. If we think back, the question is Why these services were outsourced to India? And we all know the answer - Availability of cheap and abundant labor. The share of GDP from Services has increased from 41% in 1991 to 55% in 2010 indicating India's increased reliance on services.
The point is that as India develops with increase in GDP and per capita income, wages are surely going to increase significantly from present levels. And as wages grows, the cost advantage India holds in the outsourcing sector will start decreasing unless additional value is added to those services.
The fact of the matter here is that very little is being done for the value addition part. The Government is not emphasizing on vocational courses (that can help masses to get professional training specifically for jobs). Neither do MNCs seems very enthusiastic in providing advanced training to their employees and increase their training costs. Illustratively, Planning Commission report says that only 5% of youth (age group 20-24) undergo vocational training as compared to 60% in industrial countries.
Thus, the picture could sound and look quite gloomy, if you view it from a different angle.
Adios!!
Tuesday, June 21, 2011
Tuesday, May 3, 2011
RBI Dilemma
As I write this post, the Indian stock market continues bleeding over the steps taken by RBI yesterday to curb inflation, as they say. This RBI action and policy seems highly irrelevant to me, keeping in mind the nature of inflation at this point of time in India. The inflation is predominantly due to Supply side factors and is highly dependent on external factors. The RBI intent to reduce the demand is really not going to give substantial relief to the Government.
When I write this, I believe RBI Governors to be this cognizant of the situation and well averse in economics. Then why did this policy? The only reason I come out with is their hidden intent of reducing fiscal deficit through decrease in demand, primarily with imports. India is reeling through high amounts of fiscal deficit and it is going to shoot up seeing that there is no one time windfall gain like last year(It was 6.5% excluding the cash inflows of 3G auctions). The high debt levels of 78% makes Indian economy susceptible to economic shocks. Also, north bound oil prices are creating pressure on the Government to reduce the demand as a $10 rise in crude prices led to 0.3% increase in fiscal deficit of India.
Thus, this monetary policy of RBI is more governed by the Finance Ministry over reducing the nation's deficit. But the flip side is that it can lead to permanent/long term 'Crowding Out' of Private investments. The Growth rate estimates have declined to below 8% and could ruin the honeymoon period of the companies. But the valid question is whether double digit growth sustainable in an economy that is democratic, with limited/less natural resources (primarily energy) and an immature manufacturing sector? Moreover, Indian economy is highly dependent on the big developed countries for its revenues from service sector and it also does not peg its currency as China does to boost the exports. Keeping in mind these constraints, it is really a very difficult challenge for RBI to grow the economy by double digit while maintaining, if not reduce, the fiscal deficit at current levels.
When I write this, I believe RBI Governors to be this cognizant of the situation and well averse in economics. Then why did this policy? The only reason I come out with is their hidden intent of reducing fiscal deficit through decrease in demand, primarily with imports. India is reeling through high amounts of fiscal deficit and it is going to shoot up seeing that there is no one time windfall gain like last year(It was 6.5% excluding the cash inflows of 3G auctions). The high debt levels of 78% makes Indian economy susceptible to economic shocks. Also, north bound oil prices are creating pressure on the Government to reduce the demand as a $10 rise in crude prices led to 0.3% increase in fiscal deficit of India.
Thus, this monetary policy of RBI is more governed by the Finance Ministry over reducing the nation's deficit. But the flip side is that it can lead to permanent/long term 'Crowding Out' of Private investments. The Growth rate estimates have declined to below 8% and could ruin the honeymoon period of the companies. But the valid question is whether double digit growth sustainable in an economy that is democratic, with limited/less natural resources (primarily energy) and an immature manufacturing sector? Moreover, Indian economy is highly dependent on the big developed countries for its revenues from service sector and it also does not peg its currency as China does to boost the exports. Keeping in mind these constraints, it is really a very difficult challenge for RBI to grow the economy by double digit while maintaining, if not reduce, the fiscal deficit at current levels.
Thursday, October 1, 2009
The dilemma
Like many others, I was also in great dilemma on the decision of going to student exchange to Europe or not. The initial trade off was all the positions of responsibility and the numerous competitions which happen in this part of the academic year. I somehow, managed to take a decision and chose Belgium as my destination for these 3 months in March 2009.
In the previous 2-3 months, I developed quite a lot of anxiety over my decision over exchange and have pondered over the thought of even skipping it. I could not reach to the conclusion if the reasons were significant enough to leave Eurotrip opportunity. Today, after spending 2 weeks in Belgium and packing for Switzerland tomorrow, I came to some other conclusion related to it. The previous reasons were very important but the exchange experience is very very nourishing.
I have heard people saying that Euro trip could be made in 20-25 days with less money expensed. The problem is that till you do not stay at one place for few days, you neither know about the culture, the people of the place , nor do you enjoy it to the fullest. While living in a student hostel with students of different nationalities and color, I am learning a new way of living your life. In India, we believe that Europeans are rude and do not care much amongst themselves. Atleast till now, my experience is totally opposite. The people here have helped us much more than than what we guys help steppers in IIM Calcutta. (except few nice girls :P)
The culture of giving respect to pedestrians and saying hello to everyone on the road is just too different from India. The differences between both the cultures make my stay here worth the money spent and the reasons which I overlooked. :)
Cheers!
In the previous 2-3 months, I developed quite a lot of anxiety over my decision over exchange and have pondered over the thought of even skipping it. I could not reach to the conclusion if the reasons were significant enough to leave Eurotrip opportunity. Today, after spending 2 weeks in Belgium and packing for Switzerland tomorrow, I came to some other conclusion related to it. The previous reasons were very important but the exchange experience is very very nourishing.
I have heard people saying that Euro trip could be made in 20-25 days with less money expensed. The problem is that till you do not stay at one place for few days, you neither know about the culture, the people of the place , nor do you enjoy it to the fullest. While living in a student hostel with students of different nationalities and color, I am learning a new way of living your life. In India, we believe that Europeans are rude and do not care much amongst themselves. Atleast till now, my experience is totally opposite. The people here have helped us much more than than what we guys help steppers in IIM Calcutta. (except few nice girls :P)
The culture of giving respect to pedestrians and saying hello to everyone on the road is just too different from India. The differences between both the cultures make my stay here worth the money spent and the reasons which I overlooked. :)
Cheers!
Euro trip-1
I am on a student exchange visit from IIM Calcutta, India to Katholieke University Leuven (KUL) in Belgium for a period of 90 days. Why I chose this university? The reason was that few of my good friends were going to the nearest university to KUL, so I chose it.
After spending first week relaxing in my room at 11th floor and enjoying the Belgian beer at room only, we finally decided to clip off our laziness and to start our Eurotrip.
Last weekend ie: 22-26 September 2009, we went to Germany to visit the very famous Oktoberfest. The trip, indeed started with lots of excitement with we missing our train on the very first day. And the reason was not our laziness as in most of the times but it was the rare train delay in Europe. So, we came back to Brussels for night stay and shifted our all plans for the next day. The night was the traditional 'bakar' night with lots of beers and plans overflowing. The next day, all 8 of us started for Frankfurt. The time filler in the train was our beloved '29'- the card game. We reached Frankfurt at 4 in the evening, had some burgers at Burger King and rushed to the big Auto show which closes at 7 in the evening. We were dual minded over paying 7.5 euros for just 2 hours of glamorous models (included car models too :P)
The Auto show was indeed phenomenal. It was vast and watching Merc, Audi, BMW, Ferrari, Maybach, Lamborghini and others was worth spending our time. The big point of the auto show was the girl dancing around the pole in the Harley Davidson section.
At midnight, we had our trains scheduled to Munich for Oktoberfest. The station was pretty big and we spent our time at station and nearby roads roaming around. We reached Munich at 6 in the morning and it was dead cold at that time. We all shivered till 9 when the Oktoberfest started. We took our seats in the tent and ordered big one liter beer mugs with some snacks. In a few hour time, the environment was contagious with everyone standing over their seats singing and dancing. It was great fun and the whole tiredness went away with the yummy beer. We even bought Oktoberfest beer hats as souvenir to our memories.
We then wandered around the old city in the evening capturing beautiful churches, buildings and hustlers. The German people were looking at us in our hats with joy and surprise. One lady even asks us to take a snap with her :P. The train back to Brussels was at 3 in the morning, so we slept at the station with our luggage. We returned back to Leuven at around 11 in the morning on Tuesday, took bath and slept in peace.
This weekend (means from Friday 02 October 2009 morning), we are checking out the trains and other places of interest. Once I am back, will update you.
Cheers!!
Bon Voyage!
After spending first week relaxing in my room at 11th floor and enjoying the Belgian beer at room only, we finally decided to clip off our laziness and to start our Eurotrip.
Last weekend ie: 22-26 September 2009, we went to Germany to visit the very famous Oktoberfest. The trip, indeed started with lots of excitement with we missing our train on the very first day. And the reason was not our laziness as in most of the times but it was the rare train delay in Europe. So, we came back to Brussels for night stay and shifted our all plans for the next day. The night was the traditional 'bakar' night with lots of beers and plans overflowing. The next day, all 8 of us started for Frankfurt. The time filler in the train was our beloved '29'- the card game. We reached Frankfurt at 4 in the evening, had some burgers at Burger King and rushed to the big Auto show which closes at 7 in the evening. We were dual minded over paying 7.5 euros for just 2 hours of glamorous models (included car models too :P)
The Auto show was indeed phenomenal. It was vast and watching Merc, Audi, BMW, Ferrari, Maybach, Lamborghini and others was worth spending our time. The big point of the auto show was the girl dancing around the pole in the Harley Davidson section.
At midnight, we had our trains scheduled to Munich for Oktoberfest. The station was pretty big and we spent our time at station and nearby roads roaming around. We reached Munich at 6 in the morning and it was dead cold at that time. We all shivered till 9 when the Oktoberfest started. We took our seats in the tent and ordered big one liter beer mugs with some snacks. In a few hour time, the environment was contagious with everyone standing over their seats singing and dancing. It was great fun and the whole tiredness went away with the yummy beer. We even bought Oktoberfest beer hats as souvenir to our memories.
We then wandered around the old city in the evening capturing beautiful churches, buildings and hustlers. The German people were looking at us in our hats with joy and surprise. One lady even asks us to take a snap with her :P. The train back to Brussels was at 3 in the morning, so we slept at the station with our luggage. We returned back to Leuven at around 11 in the morning on Tuesday, took bath and slept in peace.
This weekend (means from Friday 02 October 2009 morning), we are checking out the trains and other places of interest. Once I am back, will update you.
Cheers!!
Bon Voyage!
Tuesday, April 28, 2009
Winner's Curse
Like most of people of similar age and background like me, I am also not a bit supportive of the caste based reservations being provided and recently even increased to Other Backward Castes by the Great Mr. Arjun Singh. The implication of increased reservations in IITs and IIMs is going to really dilute the brand image as well the performance of the institute. In a pretty decent and educated cabinet lot of Dr. Manmohan Singh, Arjun Singh is like a scar who does not know anything beyond caste politics. Anyways, this is not the stuff I am talking about because it could lead to long, hot and endless discussions.
What I am talking about today is looking at the reservations strategy and its perceived benefits from a different angle. It’s from the perspective of those category students who have got admission in IITs and IIMs and who are treated as ‘benefitted’ from the system.
Are they really benefitted? Or do they suffer from the "Winner’s Curse"?
The official data from various IITs and IIMs on the academic performance of these students over their stay supports the latter. The majority of students in the lowest 15-20 % of students ranked according to their academic performance in both of the prestigious institutes are from the category students in every year. As an example, in IIM Calcutta, students of CGPA less than 4.5/9 are told to repeat their first year and failing to improve their performance in the second year might lead to their expulsion without the degree. Atleast three out of four students in this list is from the reserved category. It not only leads to those students’s loss of precious two years and a huge amount of money but also reduces their confidence to a large extent. Similar examples could also be taken from other IITs and IIMs too on request.
The selection which was thought to be a boon for those students and was supposed to create equality increased the rift in reality. The biggest reason for this situation is that the academics in IITs and IIMs are quite hectic and are maintained at international standards. The reservations are only to provide an easy way of entrance to the category students and did not apply to their studies inside the institutes. The result is those students getting flunked and not been able to cope up with the system. I have seen those students totally depressed and clueless on not being able to perform like other classmates despite trying hard.
Thursday, April 23, 2009
The Race for being powerless
Yesterday while surfing through net, I came across an interview of Infosys founder Mr. Narayanmurti in which he talked about his latest released book, his favorite politician and party and also about his ambitions. I was quite surprised to see that his book is just a collection of 36 of his previous speeches given at some point of time. I had an odd feeling that how that book could be of much relevance in the present scenario which is quite different than the context of those speeches.
Secondly, he talked about writing over the solutions to 10 basic problems in India... corruption, communalism, Indo-Pak issue and all. He also reiterated his previous ambition of entering into politics which has now subsided down. However, he hinted his wish of becoming President of India in the near future which raised quite a few doubts in my mind. First APJ Abdul Kalam and now Mr. Narayanmurti, why the hell people having such immense caliber and intelligence want to fight for the post of President. In the Indian context, the post of President is designed to be the shadow of the Central Cabinet and is totally powerless and worthless. Not only all the important decisions regarding internal matters but also in all the major International meets, Prime Minister only enjoys all the responsibility of representing India. It makes the President post a total waste of 5 important years for such brains. They could be used in the other fields of strategic planning and scientific research.
If these people sincerely wants to help India in its planning and decision making, they should enter into the politics at local level or national level. But the irony is that nobody wants to clean the mud, but enjoy the fruits.
I seriously urge Mr. Narayanmurti, that if he and other entrepreneurs and educated lot joins Indian politics, we could still see light at end of the tunnel. Otherwise, if not us, then our next generation could face such PM's which can only think of banning computers and setting up his/her statues as way of India's development.
~ Till last we hope..thats our strength
Secondly, he talked about writing over the solutions to 10 basic problems in India... corruption, communalism, Indo-Pak issue and all. He also reiterated his previous ambition of entering into politics which has now subsided down. However, he hinted his wish of becoming President of India in the near future which raised quite a few doubts in my mind. First APJ Abdul Kalam and now Mr. Narayanmurti, why the hell people having such immense caliber and intelligence want to fight for the post of President. In the Indian context, the post of President is designed to be the shadow of the Central Cabinet and is totally powerless and worthless. Not only all the important decisions regarding internal matters but also in all the major International meets, Prime Minister only enjoys all the responsibility of representing India. It makes the President post a total waste of 5 important years for such brains. They could be used in the other fields of strategic planning and scientific research.
If these people sincerely wants to help India in its planning and decision making, they should enter into the politics at local level or national level. But the irony is that nobody wants to clean the mud, but enjoy the fruits.
I seriously urge Mr. Narayanmurti, that if he and other entrepreneurs and educated lot joins Indian politics, we could still see light at end of the tunnel. Otherwise, if not us, then our next generation could face such PM's which can only think of banning computers and setting up his/her statues as way of India's development.
~ Till last we hope..thats our strength
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