The Revival Of Hope !!!

In my blog " The Death Of Hope " I had mentioned how Anna Hazare and his team had to chip away at the system and had to out fox the foxes. Well the wily gadfly Subramanium Swamy has done exactly that. Based on a petition which he had filed alleging corruption charges  against the Telecom minister , the Supreme Court of India passed a decision that every citizen has the right to petition for  approaching the investigating authority to investigate charges against corrupt public servant without having to go through the lower courts. If the appropriate authorities do not take action within a certain time period, then the petitioner should assume that it has been cleared and the petitioner has the right to approach the court directly. It has taken Swamy over three years,but working persistently within the system and with the fortunate timing of having a active Supreme Court , he has been able to achieve what team Anna with all their sound and fury were not.

The implications of this judgement are enormous.The Supreme Court has effectively given the Government a deadline of four months to pass the law which formalizes this. The Government will I am sure try and find ways to stall this, as they have been doing for all charges against corrupt officials over the years, and as they have effectively done with the Lokpal Bill, but for once they have met their match. This opens the door wide for charges against all corrupt politicians and civil servants. I am hoping that this will be the turning point in the fight against corruption but it is a bit early to start the celebrations. We have been disappointed time and time again.

The opposition party particularly the BJP appear to be over joyed and are taking this as a blow against the Congress Party. Unfortunately there are enough skeletons in their own cupboards which will also be brought out into the open and what they say and what they do when the bill is brought to Parliament might be different. 

By its independent stand on some issues such as this  the Supreme Court has once again restored the faith in the judicial system. I hope that this trend will continue and will filter down to the lower courts as well. In the courts in India,  we still refer to the judges as his Lordship and in closing let me re phrase  a old gospel song and sing "  O'  Lord(ships)  show us the way " !!

How the Credit Wheel Turns ?

Over the years the Credit Rating Agencies have taken a beating ( in most cases deservedly so ) for not being fast enough to  monitor the deteriorating of credits, whether it of corporates or sovereigns. Of late they are trying to change and it is interesting to see how the credit ratings of the developed countries, particularly those of the European Union have been downgraded , whereas those of the emerging markets such as India and Indonesia have been upgraded.

The EU countries with a common currency the Euro , were seen as part of  an integrated economy. It was a exclusive club everyone aspired to join. Entry to it meant that they had "arrived". Turkey has for the last decade tried hard to join, but of late has been loosing interest.

You really have to wonder how the rating agencies and the risk managers failed to see the signs both for the sub-prime crises in the United States and elsewhere .The risk managers at banks and the investors instead of doing their own due diligence relied on the ratings to take on their exposures.

Similarly in the EU,  the banks perhaps based on the Alexandre Dumas tagline from his book The Three Musketeers " All of one and one for all " felt that they would be safe in buying the bonds issued by EU countries. They obviously neglected to drill down deeper on  some basics such as total debt, use of proceeds and other things which you would normally focus on while setting credit limits,  relying instead on the EU band of brotherhood to be bailed out. . Unfortunately for countries such as  the Portugal, Ireland, Italy ,Greece and Spain  the summer party finally ended and like the proverbial grasshopper are now hoping that the German burgher ant will open doors to let them in from the cold.

If you really want to see the neglect ( and I am being kind here in assuming that they were neglectful instead of being totally stupid) I would recommend you to read two books by Micheal Lewis -" The Big Short" which deals with the sub-prime crisis and " Boomerang" which deals with the EU and Iceland disasters. He also touches upon the problems to be faced at the state level in the United States by including a chapter on California. These are easy to read books which explains in layman's language the two crises.

After reading about  how   the Icelandic fishermen turned  into investment bankers overnight  and started investing all over the world and Greek  bishops speculating in property ,  you might wonder what  the bankers and institutional  investors were doing lending to these Icelandic and Greek  institutions.or purchasing their debt.  

Education In India

Extracts from Various News Papers about the state of education in India. 

The Issues


Times of India December 6th 2011


UP minister for small-scale industries draws salary as principal, teacher
 LUCKNOW: Uttar Pradesh minister for small-scale industries Chandra Dev Ram Yadav, who is already under the Lokayukta's scanner for doubling up as a serving headmaster in his home town Azamgarh, holds a third lucrative charge. In a chance discovery on Thursday, Lokayukta Justice NK Mehrotra found that Yadav had been functioning as manager at Kashi Vidya Mandir, a primary school in Azamgarh's Hajipur.

While his contribution as manager to the school is still not clear, the assignment is making him richer by approximately 4,50,000 a month as salaries of all 17 teachers in the staff, was found to be credited to his account regularly. It was discovered that the list of teachers was fictitious.

Kashi Vidhya Mandir, is one of the 83 (highest number in UP and Uttarakhand) schools in Azamgarh that get a special monthly grant from the state social welfare department for having on their rolls an unusually high number of scheduled caste students.

Going by the testimony of the district welfare officer SN Dwivedi, it is the only school of the district where teachers salaries do not go to their respective bank accounts but credited to the bank manager's account.

The practice followed by the KVM is to send in a demand note every month with a signed paper to the bank manager certifying that the teacher mentioned by name, carried out his duty during the specified month.


 https://pritamkabe.wordpress.com/2011/10/17/basic-education-in-india-lack-of-teacher-accountability-not-technology-is-the-real-issue/
 Basic Education in India – Lack of Teacher Accountability, NOT Technology, is the Real Issue.
 Conclusion:
Lack of technology, or lack of funds, is NOT the real issue in the Indian education system. All the current educational programs in India are shying away and NOT addressing the root cause of the educational issues. At least from what i saw in India, the real issue in the public education system in India is the lack of accountability, in particular teacher accountability. And unless this issue is addressed, the quality of education in India will NOT improve. It is time we stop ignoring the customer (the parent/student) and start empowering them. The teacher accountability issue in India is a very complicated and difficult issue to deal with. Addressing it will require the will of the Indian government, and an improvement in the quality of demand – in the form of a cultural shift and support from the educated mass. And technology can play its part in creating a positive change ONLY if used the right way, by thinking in terms of the local context – by taking into consideration the social, cultural, and economic conditions.

Action taken by the state(s) 
  
Extract from Op-ed in the Indian Express on Oct 8th, 2011.


The failure of the Indian education system must count as the Indian government’s greatest failure. Over 90 percent of students drop out of school by the 12th grade and only six percent go on to tertiary education, to cite just one dismal statistic. We have to understand that the failure is primarily due to flawed policies that the government has consistently imposed on the education sector. Aakash, like its predecessor the “$10 laptop”, is just another distraction, but a very costly distraction.
It is costly in many ways. First, the government should not be subsidizing consumer electronics. Electronics is the most competitive industry in the world and extremely competent huge corporations are constantly innovating with the result that costs move downwards monotonically. Governments are incapable of choosing winners in technology, and the Indian government has demonstrated particular ineptitude in that regard.
Second, the lack of real commitment to fix primary education is especially hard on the poorest sections of the society. Promoting digital gizmos at immense public costs only widens the gap between the haves and the have nots. Something like half the 7th standard students cannot read, write or do simple arithmetic. Where a hundred million suffer illiteracy, attempting to promote digital literacy cannot but be a cynical exercise in self-promotion and aggrandizement.


A press conference saying that India has invested in providing blackboards and teachers in 100,000 schools that lack them would not be as headline grabbing as one which parades a me-too device hyped as an “iPad killer.” A policy of funding toilets in schools (needed to alleviate the suffering of girl children especially) does not have the sex appeal of a policy of handing out digital gizmos. But the production and distribution of hi-tech gadgets offer immense opportunities to profit for the producers and the government – never mind at what cost to the public.


Press releases that repeat the claim by the government that the Aakash tablet will be sold in tens of millions of units fail to do basic arithmetic. The subsidy costs could run into billions of dollars. Like so many other government schemes, the Aakash tablet, in the unlikely event that it is actually produced, will ultimately be funded by the poor through increased inflation. Unlike Mr Sibal, the poor suffer when the government runs the printing presses at the mint overtime.


http://www.livechennai.com/detailnews.asp?newsid=2883

Jayalalitha inaugurates Free Laptop - Cattle scheme 

 

Chief Minister J Jayalalithaa today  inaugurated the flagship schemes at a function here as part of the 103rd birth anniversary celebrations of dravidian leader C N Annadurai.

At an official function held at neighbouring Tiruvallur District, Jayalalithaa launched distribution of free fans, mixies and grinders to women folk, laptops to Plus one and two students in government and government-aided institutions, special incentives for Class X, 11 and 12 students, cross-bred jersey milch cows to rural poor and four goats/sheeps to the poorest of the poor at a total cost of Rs 2,353 crore this year.

The free schemes would cover 1.85 crore families who draw rice from the Public Distribution System and was aimed at bringing about inclusive growth and eradicate poverty and improve the standard of living of the people.

To monitor the distribution of Wet Grinders and Mixies for housewives, laptops for students of higher secondary classes and college, milch cows, goats and sheep for weaker sections in rural areas, a Special Programme Implementation Department was created by the Chief Minister.

In the first year of its implementation, the government would provide mixies-grinders-fans for house wives at a cost of Rs 1250 crores covering 25 lakh families.    

Under the Free laptop scheme, aimed at empowering, nurturing and enriching students, besides enhancing their skills by taking advantage of the IT revolution, 9.12 lakh laptop computers would be distributed at a cost of Rs 912 crores.

 

Stuck In A Time Wrap

Over the week end we went to the Cottage Industries Emporium at Janpath after a long time. While Delhi continues to change with  malls and shopping centers sprouting in every neighborhood, The Cottage Industries Emporium remains  unchanged.It seems to be stuck in a time wrap.

We have been going to this cornucopia of  Indian delights since the sixties. It had a mix of of inexpensive and expensive handicrafts, sculptures, carvings, textiles,silver and brass gifts and furniture. Also thrown in was a mini boutique selling leather goods and a picture framing gallery . When I first left for the United States in the early seventies, I bought some gifts for my host family.   After getting married, we furnished part of our house in Singapore with Indian furniture.Every time we visited from Hong Kong or Singapore a stop at the Emporium was a must.

The idea of having all the handicraft at one place for the tourist was a excellent idea. In Hong Kong  when I arrived there in nineteen seventy five, there was China Products Emporium which was a broad based department store and you could buy anything from a sewing machine to household furniture to sweaters to fine carvings and porcelain, all at  very reasonable prices. The designs might not have been the most stylish, but were functional and  served the purpose. I have cashmere sweaters bought there from the eighties and still going strong. The objective of the store was to earn hard currency for China. There were four or five of them scattered over Hong Kong. In addition there were one or two China Arts and Crafts which sold  a smaller variety of products and as the name implied, concentrated on arts. However starting from the mid-nineties, as China started opening up, China Products gradually started shrinking and by the late nineties had pretty much disappeared. In the meantime China Arts and Crafts went up market and and brought in designers for their garments and started selling wood, stone carvings, porcelain and paintings by master craftsmen, all bearing certification of authenticity. Price range for some of the items could be in hundreds of  thousands of dollars It is still one of my favorite stops, even if I do not buy anything.

The Cottage Industries Emporium could  follow the example of China Arts and Crafts and concentrate on selecting  the best of the best,arts and crafts from each state. This is now easier to do since most states now have their own emporiums  as well and they can sell a mix of low end handicrafts.It  needs to upgrade the contents,design and visuals and truly make it a show case of the best of the best of what India has to offer.

 The payment system has not changed since it first opened. Although the various departments are scattered over a few floors, payment still  has to be made by queuing up at the ground floor at the few counters where there appears to be a competition among the cashiers as to who can win the prize for being the slowest. Once the payment is made, you then have to go to another counter to pick up the goods which might not have arrived. Finally before leaving, a guard at the exit has to punch your sales ticket which he does without bothering to check whether the goods match the sales ticket. I know we need to create employment, but this is taking it to an extreme. Perhaps the concern is that of shop lifting. Department stores all over the world sell hundreds of items scattered over several levels with more than one cashier at every level. Surely the Indians and the visiting tourist do not constitute  a larger number of kleptomaniacs.  Why not have a cashier at each level ? This would make it more efficient. 

Having said that, it is not all bad, the store does have a good mix of offerings such as textiles, fabrics, sculptures and  furnishing. The sales staff when ever they are not chatting among themselves are reasonably polite and they do know the provenance of the goods sold.

Get rid of some of the departments, concentrate on the arts, high end textiles and fabrics in a pleasant , welcome environment and  you will see turn over going up significantly. Open a food court with food from different states so that people can not just visually feast their eyes, but also enjoy the taste of Incredible India.  But then perhaps the objective here is not to make money......and who gives a damn ?

The Death Of Hope

The start of the year began with a lot of hope of brighter things to come. Now that 2011 has come to an end I would like to amend slightly the line of a popular song "What a difference a year makes". At the beginning of the year thing India was still shining, economic growth was being predicted at 9 percent , the stock market was doing well. The media was highlighting the Commonwealth Games corruption scandal. The social  activists using Anna Hazare as their mascot started raising their voice. Twelve months later, the picture looks rather gloomy. Economic growth is now being predicted at 7 percent  or below. While  a few people involved in some of the corruption scandals were jailed, some of them are out on bail. No one has been convicted. The activists got carried away with their own importance and seem to have underestimated the wily politicians.

The picture on the economic side is staring to cause concern. There is now talk about India going down Greece's path. While we enjoy the comfort of the over 300 billion  dollars in reserves it covers nine months of imports. In addition there is a substantial portion of the foreign currency borrowings coming due. Yes, obviously exports will partially offset the off flow, but take into account the outflow of FDI and overseas investments by Indian companies. In the meantime the credit markets are tightening up and the ability of Indian companies to roll over their foreign currency borrowings ( loans, bonds  and convertibles ) becomes more difficult.  If oil prices go up, the margin of safety becomes perilous. There is a reasonable chance that one or more Indian companies could possibly default or restructure their borrowers.

In the meantime with their eye on the forthcoming critical state elections in some states and longer term , the politicians are playing their usual games. They are trying to out do each other in terms of hand outs and creating obstacles to obstruct legislation which would encourage foreign investments or reduce corruption. As a result some of the states are running huge deficits. In some states to influence the farmer vote bank, the state governments have been providing free electricity as a result of which these state utilities are unable to pay the power generators. This in turn compounds the problems of the generators who bid aggressively for the privatized power  generation and are now being squeezed by non-payment of receivables on one hand, and  rising costs on the other. Also the non-availability of the feedstock. As the string unravels the banks who financed these power projects are now seeing the non-performing  loans continuing to mount. This is just one aspect of it. One could go on about education - subsidized lap tops and and tablets, food subsidy and so on, costing the tax payers billions of dollars. None of the governments targets for power,education, highways, have been met. The Center for Science and Environment, a 22-year-old New Delhi -based advocacy and research organization has in a recent report mentioned that "71 cities in India "....had devastated its surface water, it was depleting its ground water and it had no plan for managing its water or waste water" and its rivers have in effect become drains for the expanding cities.

Anna Hazare's team   had the wind behind the sails in the early stages, but his key lieutenants got a little carried away  and started dictating terms.It had to be the Anna way or the high way. In the meantime some of the skeletons in their own  cupboard started  emerging. Also instead of focusing on just  corruption  they started opining on other sensitive political matters.In the process they forgot that India is a democracy and  no matter how well meaning your intentions are, you cannot over rule the Constitution or the whole country falls apart.  In this, they underestimated their opponents, the crafty politicians, who managed to stall the passing of the anti-corruption bill , with all parties pointing fingers at each other.With its continued criticism of the Congress Party , the activists are increasingly being seen as fronts for the BJP. It might not be the case, but both parties have enough dirty linen. To spare one gives the impression that you are not neutral.  A lesson to be learnt is that you cannot topple the edifice built over decades with a few thousand people,  unless you resort to violence and that is not the Indian /Gandhian way. You have to chip away at it as Mahatama Gandhi did and get the support of the population and the media. You have to take and live the moral high ground and ultimately outfox the foxes as Gandhi did with the British. 

What has also been interesting is that finally the business leaders have started voicing their concerns over the state of affairs and that there is no captain steering the air-craft carrier. Yet in some of the scandals in the telecom,mining and other industries, it is some of these names which  are  household names or business icons  which have been dragged in the mud. Whether they are guilty or not remains to be seen. Also some of the larger groups are investing more overseas than in India.  Prime Minister Manmohan Singh recently chastised the business tycoons in his own gentle version of " Let he who is without sin cast the first stone". 

As we start the new year, it is becoming increasingly obvious that hard decisions have to be made, and all political parties have to set aside their personal agendas and  come through as they did in the early nineties to prevent another crisis.Otherwise we will be reverting back to the Hindu rate of growth. Without accelerated growth and its increasing youthful population, the politicians will be faced with the Indian basanti  revolution .