U & ME

Communicating Bihar...

2011-11-21T12:40:00.000-08:00

What strikes most when one thinks of today’s Bihar: the people living there or those beyond in other states or even abroad? But to many, another question may seem no less pertinent: other than the 100th year of its separation from the then Bengal , are there enough reasons demanding a serious relook at Bihar (that has always been known for its strong identity, mostly in conflict with the dominant trends)?
Common to almost all the major discussions and writings on the state is the underlying hope, on all fronts, of not only doing well but also doing so very fast. This could mean catching up with Gujarat in economic terms, Kerala in social terms and Delhi in educational terms.
And, what is it that fuels this all pervasive hope?

Destined to rise like a phoenix

First, the rock-bottoming of economic growth for nearly three plan periods along with a near absence of faith in the law and order till a few years ago, especially during 1990-2005. Bihar watchers of all hues almost shared this perception about the then state of affairs: this far and no further and it is nothing short of nadir from where it is destined to rise like a phoenix!
Second, the mandalization of politics that was allowed to retard economic growth and reduce the people’s confidence in the state machinery that had become a mere semblance of what it was at the time of independence ( In 1951, Bihar was one of the best administered states in the country), also weakened the caste rigidities and created a sort of Pan- Bihari feeling, especially in those who were forced to go out of state ( Delhi, Punjab, Maharashtra) in search of better life: better incomes, better education, and of course, recognition of their worth.
How could this happen?

Political empowerment vs. development

With one caste pitted against another and no improvement in the all round economic situation for three full assembly terms led by Lalu Prasad’s party of whichever denomination , there was only poverty ( and related deprivations resulting in conflicts of all sorts) to be redistributed among the teeming millions.
Even the 80’s generation of the upwardly mobile middle castes were quick to realize that the benefits of post-1991 liberalization had almost bypassed the state; and, that blaming the upper caste dominance of yester years for everything good that was not happening there wouldn’t stand in the face of hard facts.
During the same period, most of the BIMARU states (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh) were making strides on the developmental front.
No doubt, the 1990-2005 years also saw the emergence of a new found confidence resulting from socio-political empowerment unleashed by the politics of reservation that was aimed at increasing the share of the middle castes in governance at all levels. And, this was no less important than economic development per se. But can it be denied that in a poor country like ours, socio-political empowerment in due course of time tends to speed up the thickening of discontent resulting from reduced economic opportunities? In fact, may be the faster the process of socio-political empowerment, the quicker the disillusionment with its leaders who invariably fail to deliver on the economic front. At least, the Bihar of the last two decades testifies to this.

Emergence of cosmopolitan Harries

It is in this context that mere efforts aimed at maintaining law and order and putting the government institutions in place got overwhelming support from the people: both living in Bihar and beyond.
Though the middle class in Bihar doesn’t constitute a major chunk even today, there is no denying the fact that the last few years have seen the coming of a Cosmopolitan Bihari who could belong to any age group. Thanks to being ridiculed by others for having belonged to Bihar, he is ready to think beyond his caste affiliations as he finds that a growing home state at least earns him the much needed recognition and respect in the eyes of the people from outside. Seen through the eyes of others and testified by his daily experience, he found that any thing despicable had become synonymous with Bihar( It is a different matter altogether that much of this, at least in the domain of competitive exams, could also be attributed to envy borne out of failure to compete with Bihari students).
No wonder such cosmopolitan Biharis ( call them Harries in the post-liberalization global lexicon , if you wish)headed for Bihar months before the first phase of 2010 Assembly Elections and decided to stay back till the final phase was over: this was just to ensure that the Nitish-led coalition came back to power. For many this was a matter of now or never: would they be forever identified with poverty and floods that had come to be associated with Bihar for quite some time or with a Bihar that was now back to rails with growth rates touching double digits and where no one could take the state power for a ride, not even a Minister, MP or MLA of the ruling coalition.

Delhi’s loss is Bihar’s gain

During this period( August-December 2010), the production in scores of Delhi-based industrial units had almost stumbled because of severe man power crunch ; and, the agriculture in the Punjab was no different on account of unusual delay in the return of migrant workers who constitute the most of farm workforce there.
But the loss of Delhi and the Punjab was Bihar’s gain. The traditionally illiterate migrant voters had decided to defeat the retrograde designs of the well-entrenched and even educated ones. The former being trained in the ‘campuses of universities of life’ with no match in the universities most of whom have reduced themselves to mere degree distribution agencies in Bihar as elsewhere in the country( In the top hundred institutions in the world, there is not a single university from India).

Renaissance of sorts

It may not be a coincidence that the Bihar government is putting all its might behind resurrecting the ancient Nalanda University that was destroyed almost a thousand years ago and till then it was unquestionably the best known global destination for knowledge seekers. Encouraged by this and many such initiatives, a significant section of non-resident Biharis may be heard saying that the state is waiting to be swept by a renaissance driven by an unshakable faith in the future of Bihar.
Today talking of Bihar or writing about it is just communicating this faith that has the backing of an enviable past starring, to name a few, Lord Mahavira, Lord Buddha, Kautilya, Chandragupta Maurya, Ashoka the Great, Aryabhatta, and Sher Shah Suri (who built the Grand Trunk Road connecting Tamraluk on the north western coast of the Bay of Bengal and Peshawar in Pakistan along its borders with Afghanistan).

Bridge to a reassuring future

However, a collective faith of this kind needs to be rooted in a vibrant present that acts as a bridge between the past and the future.
Not to mention, the state had been in the desperate need of this bridge that could evenly connect its awe-inspiring (‘The Owner’s Pride and the Neighbour’s Envy!) past to a reassuring future. Thankfully, it has one such bridge today, the happening present, for which it has gone through a rather longish and agonizing labour pain marked by a turbulent social and political churning in the recent past. Not unlike the mythical ocean-churning by the gods and demons together, this too has its own share of Amrit (nectar) and Vish (poison), the two sides of the same coin. It’s time the current dispensation in Bihar accepted this in letter and spirit in order to create conditions in which even thugs struggle hard to become honest leaders, leaders aspire to become statesmen and statesmen go to any length of personal sacrifice to reach the summit of sainthood.

Indian Economy: A Brief Overview

2010-03-27T01:17:00.000-07:00

(This study material was prepared for BJMC-II students by Ms. Shilpi Jha & Dr. C P Singh.Source: Wikipedia, March 2010)

Introduction

The economy of India is the twelfth largest economy in the world by nominal value and the fourth largest by purchasing power parity (PPP).In the 1990s, following economic reform from the socialist-inspired economy of post-independence India, the country began to experience rapid economic growth, as markets opened for international competition and investment. In the 21st century, India is an emerging economic power with vast human and natural resources, and a huge knowledge base. Economists predict that by 2020. India will be among the leading economies of the world.
India was under social democratic-based policies from 1947 to 1991. The economy was characterised by extensive regulation, protectionism, and public ownership, leading to pervasive corruption and slow growth.. Since 1991, continuing economic liberalisation has moved the economy towards a market-based system. A revival of economic reforms and better economic policy in 2000s accelerated India's economic growth rate. By 2008, India had established itself as the world's second-fastest growing major economy.However, the year 2009 saw a significant slowdown in India's official GDP growth rate to 6.1% as well as the return of a large projected fiscal deficit of 10.3% of GDP which would be among the highest in the world.
India's large service industry accounts for 62.6% of the country's GDP while the industrial and agricultural sector contribute 20% and 17.5% respectively. Agriculture is the predominant occupation in India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%.The labor force totals half a billion workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, information technology enabled services and software.
India's per capita income (nominal) is Rs.46440, ranked 139th in the world, while its per capita (PPP) of Rs. 131940/- is ranked 128th. Previously a closed economy, India's trade has grown fast. India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to the World Trade Statistics of the WTO in 2006, India's total merchandise trade (counting exports and imports) was valued at Rs. 13230/- billion in 2006 and India's services trade inclusive of export and import was Rs. 6435 billion. Thus, India's global economic engagement in 2006 covering both merchandise and services trade was of the order of Rs. 19665 billion, up by a record 72% from a level of Rs. 11385 billion in 2004. India's trade has reached a still relatively moderate share 24% of GDP in 2006, up from 6% in 1985.
Despite robust economic growth, India continues to face many major problems. The recent economic development has widened the economic inequality across the country. Despite sustained high economic growth rate, approximately 80% of its population lives on less than Rs.90 a day (PPP). Even though the arrival of Green Revolution brought end to famines in India, 40% of children under the age of three are underweight and a third of all men and women suffer from chronic energy deficiency

Features of Indian Economy

Structural features of Indian economy imply structure of the economy which is as following:
(a) Mixed economy: It is a mixture of private and public enterprises
(b) Dual economy: There is traditional agriculture and modern industries
(c) Agrarian economy: prominence of agriculture in the economy both as a contributor to the GDP as well as to the generation of employment.
An estimate by Cambridge University historian Angus Maddison reveals that "India's share of the world income fell from 22.6% in 1700, comparable to Europe's share of 23.3%, to a low of 3.8% in 1952

From 1947 to 1991

Indian economic policy after independence was influenced by the colonial experience. Five year plans in India resembled central planning in the Soviet Union. Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries, were effectively nationalized in the mid-1950s. Elaborate licenses, regulations and the accompanying red tape, commonly referred to as License Raj were required to set up business in India between 1947 and 1990

Since 1991

In the late 80s, the government led by Rajiv Gandhi eased restrictions on capacity expansion for incumbents, removed price controls and reduced corporate taxes. While this increased the rate of growth, it also led to high fiscal deficits and a worsening current account. The collapse of the Soviet Union, which was India's major trading partner, and the first Gulf War, which caused a spike in oil prices, caused a major balance-of-payments crisis for India, which found it facing the prospect of defaulting on its loans. India asked for a $1.8 billion bailout loan from IMF, which in return demanded reforms.
In response, Prime Minister Narsimha Rao along with his finance minister Manmohan Singh initiated the economic liberalization of 1991. The reforms did away with the License Raj (investment, industrial and import licensing) and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors. Since then, the overall direction of liberalization has remained the same, irrespective of the ruling party, although no party has tried to take on powerful lobbies such as the trade unions and farmers, or contentious issues such as reforming Labour laws and reducing agricultural subsidies.
Since 1990 India has emerged as one of the fastest-growing economies in the developing world; during this period, the economy has grown constantly, but with a few major setbacks. This has been accompanied by increases in life expectancy, literacy rates and food security.

Agriculture

India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 16.6% of the GDP in 2007, employed 60% of the total workforce and despite a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role in the overall socio-economic development of India. Yields per unit area of all crops have grown since 1950, due to the special emphasis placed on agriculture in the five-year plans and steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies since Green revolution in India. However, international comparisons reveal the average yield in India is generally 30% to 50% of the highest average yield in the world.
India is the largest producer in the world of milk, cashew nuts, tea, ginger, turmeric and black pepper
It also has the world's largest cattle population: 193 million. It is the second largest producer of wheat, rice, sugar, wheat, cotton, silk, peanut and inland fish. It is the third largest producer of tobacco. India is the largest fruit producer, accounting for 10% of the world fruit production. It is the leading producer of bananas, sapotas and mangoes.
India is the second largest producer and the largest consumer of silk in the world, with the majority of the 77 million kg (2005) production taking place in Karnataka State, particularly in Mysore and the North Bangalore regions of Muddenahalli, Kanivenarayanpura and Doddaballapura the upcoming sites of a INR 700 million "Silk City"
INDUSTRY AND SERVICES
Industry accounts for 20% of the GDP and employ 17% of the total workforce. However, about one-third of the industrial Labour force is engaged in simple household manufacturing only. In absolute terms, India is 16th in the world in terms of nominal factory output. India's small industry makes up 5% of carbon dioxide emissions in the world.
Economic reforms brought foreign competition, led to privatization of certain public sector industries, opened up sectors hitherto reserved for the public sector and led to an expansion in the production of fast-moving consumer goods. Post-liberalization, the Indian private sector, which was usually run by oligopolies of old family firms and required political connections to prosper was faced with foreign competition, including the threat of cheaper Chinese imports. It has since handled the change by squeezing costs, revamping management, focusing on designing new products and relying on low Labour costs and technology.
Textile manufacturing is the second largest source for employment after agriculture and accounts for 26% of manufacturing output. Tirupur has gained universal recognition as the leading source of hosiery, knitted garments, casual wear and sportswear.Dharavi slum in Mumbai has gained fame for leather products. Tata Motors’ Nano attempts to be the world's cheapest car.

India is 15th in services output. It provides employment to 34% of work force, and it is growing fast. It has the largest share in the GDP, accounting for 62.6% up from 15% in 1950.

Business services (information technology, information technology enabled services, business process outsourcing) are among the fastest growing sectors contributing to one third of the total output of services in 2000. The growth in the IT sector is attributed to increased specialization, and an availability of a large pool of low cost, but highly skilled, educated and fluent English-speaking workers, on the supply side, matched on the demand side by an increased demand from foreign consumers interested in India's service exports, or those looking to outsource their operations. The share of India’s IT industry to the country's GDP increased from 4.8 % in 2005-06 to 7% in 2008. In 2009, seven Indian firms were listed among the top 15 technology outsourcing companies in the world. In March 2009, annual revenues from outsourcing operations in India amounted to US$60 billion and this is expected to increase to US$225 billion by 2020.

Organized retail such supermarkets accounts for 24% of the market as of 2008. Regulations prevent most foreign investment in retailing. Moreover, over thirty regulations such as "signboard licenses" and "anti-hoarding measures" may have to be complied before a store can open doors. There are taxes for moving goods to states, from states, and even within states. Tourism in India is relatively undeveloped, but growing at double digits. Some hospitals woo medical tourism.
Banking and finance
The Indian money market is classified into: the organsized sector (comprising private, public and foreign owned commercial banks and cooperative banks, together known as scheduled banks); and the unorganized sector (comprising individual or family owned indigenous bankers or money lenders and non-banking financial companies (NBFCs)). The unorganized sector and micro credit are still preferred over traditional banks in rural and sub-urban areas, especially for non-productive purposes, like ceremonies and short duration loans.
Prime Minister Indira Gandhi nationalised 14 banks in 1969, followed by six others in 1980, and made it mandatory for banks to provide 40% of their net credit to priority sectors like agriculture, small-scale industry, retail trade, small businesses, etc. to ensure that the banks fulfill their social and developmental goals. Since then, the number of bank branches has increased from 10,120 in 1969 to 98,910 in 2003 and the population covered by a branch decreased from 63,800 to 15,000 during the same period. The total deposits increased 32.6 times between 1971 to 1991 compared to 7 times between 1951 and 971. Despite an increase of rural branches, from 1,860 or 22% of the total number of branches in 1969 to 32,270 or 48%, only 32,270 out of 5 lakh (500,000) villages are covered by a scheduled bank.
The public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.[90] Since liberalization, the government has approved significant banking reforms. While some of these relate to nationalised banks (like encouraging mergers, reducing government interference and increasing profitability and competitiveness), other reforms have opened up the banking and insurance sectors to private and foreign players. More than half of personal savings are invested in physical assets such as land, houses, cattle and gold.

NATURAL RESOURCES
India's total cultivable area is 1,269,219 km² (56.78% of total land area), which is decreasing due to constant pressure from an ever growing population and increased urbanization. India has a total water surface area of 314,400 km² and receives an average annual rainfall of 1,100 mm. Irrigation accounts for 92% of the water utilization, and comprised 380 km² in 1974, and is expected to rise to 1,050 km² by 2025, with the balance accounted for by industrial and domestic consumers. India's inland water resources comprising rivers, canals, ponds and lakes and marine resources comprising the east and west coasts of the Indian Ocean and other gulfs and bays provide employment to nearly 6 million people in the fisheries sector. In 2008, India had the world's third largest fishing industry.
India's major mineral resources include coal, iron, manganese, mica, bauxite, titanium, chromites, limestone and thorium. India meets most of its domestic energy demand through its 92 billion tones of coal reserves (about 10% of world's coal reserves).
India's huge thorium reserves — about 25% of world's reserves — is expected to fuel the country's ambitious nuclear energy program in the long-run. India's dwindling uranium reserves stagnated the growth of nuclear energy in the country for many years. However, the Indo-US nuclear deal has paved the way for India to import uranium from other countries. India is also believed to be rich in certain renewable sources of energy with significant future potential such as solar, wind and biofuels (jatropha, sugarcane).
Petroleum and Natural gas
India's oil reserves, found in Bombay High, parts of Gujarat, Rjasthan and Eastern Assam, meet 25% of the country's domestic oil demand. India's total proven oil reserves stand at 11 billion barrels, of which Bombay High is believed to hold 6.1 billion barrels and Mangala Area in Rajasthan, an additional 3.6 billion barrels.
In 2009, India imported 2.56 million barrels of oil per day, making it one of largest buyers of crude oil in the world. The petroleum industry in India mostly consists of public sector companies such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Limited (HPCL) and Indian Petrochemicals Corporation Limited (IPCL). There are some major private Indian companies in oil sector such as Reliance Industries Limited (RIL) which operates the world's largest oil refining complex.
Pharmaceuticals
India has a self reliant Pharmaceuticals industry. The majority of its medical consumables are produced domestically. Pharmaceutical Industry in India is dotted with companies like Ranbaxy Laboratories, Dr. Reddy's Laboratories, Cipla which have created a niche for themselves at world level.
Today, India is an exporter of countries like United States and Russia. In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year. Indian Pharmaceutical Industry is often compared to Pharmaceutical Industry in the USA.

External trade and investment
India's economy is mostly dependent on its large internal market with external trade accounting for just 20% of the country's GDP. In 2008, India accounted for 1.45% of global merchandise trade and 2.8% of global commercial services export. Until the liberalization of 1991, India was largely and intentionally isolated from the world markets, to protect its economy and to achieve self-reliance.

India's exports were stagnant for the first 15 years after independence, due to the predominance of tea, jute and cotton manufactures, demand for which was generally inelastic. Imports in the same period consisted predominantly of machinery, equipment and raw materials, due to nascent industrialization.

Since liberalization, the value of India's international trade has become more broad-based and has risen to Rs. 63,080,109 crore in 2003–04 from Rs.1, 250 crore in 1950–51. India's major trading partners are China, the US, the UAE, the UK, Japan and the EU. The exports during April 2007 were $12.31 billion up by 16% and import were $17.68 billion with an increase of 18.06% over the previous year. In 2006-07, major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver.
India is a founding-member of General Agreement on Tariffs and Trade (GATT) since 1947 and its successor, the WTO. While participating actively in its general council meetings, India has been crucial in voicing the concerns of the developing world. For instance, India has continued its opposition to the inclusion of such matters as Labour and environment issues and other non-tariff barriers into the WTO policies.
Income and consumption
• 77.7% of the population lives on less than $2.50 (PPP) a day, down from 92.5% in 1981. This compares with 80.5% in.
• 65.6% of the population lives on less than $2 a day (PPP), which is around 20 rupees or $0.5 a day in nominal terms. It was down from 86.6% and compares with 73.0% in Sub-Saharan Africa.
• 24.3% of the population earned less than $1 (PPP, around $0.25 in nominal terms) a day in 2005, down from 42.1% in 1981.
• 41.6% of its population is living below the new international poverty line of $1.25 (PPP) per day, down from 59.8% in 1981. The World Bank further estimates that a third of the global poor now reside in India.
Today, more people can afford a bicycle than ever before. Some 40% of Indian households owns a bicycle, with ownership rates ranging from around 30% to 70% at state level. Housing is modest. According to Times of India, "a majority of Indians have per capita space equivalent to or less than a 10 feet x 10 feet room for their living, sleeping, cooking, washing and toilet needs." and "one in every three urban Indians lives in homes too cramped to exceed even the minimum requirements of a prison cell in the US." The average is 103 sq ft (9.6 m2) per person in rural areas and 117 sq ft (10.9 m2) per person in urban areas.

Around half of Indian children are malnourished. While poverty in India has reduced significantly, official figures estimate that 27.5% of Indians still lived below the national poverty line of $1 (PPP, around 10 rupees in nominal terms) a day in 2004-2005. A 2007 report by the state-run National Commission for Enterprises in the Unorganized Sector (NCEUS) found that 65% of Indians, or 750 million people, lived on less than 20 rupees per day with most working in "informal Labour sector with no job or social security, living in abject poverty."
Since the early 1950s, successive governments have implemented various schemes, under planning, to alleviate poverty that have met with partial success. All these programmes have relied upon the strategies of the Food for work programme and National Rural Employment Programme of the 1980s, which attempted to use the unemployed to generate productive assets and build rural infrastructure. In August 2005, the Indian parliament passed the Rural Employment Guarantee Bill, the largest programme of this type in terms of cost and coverage, which promises 100 days of minimum wage employment to every rural household in all the India’s 600 districts. The question of whether economic reforms have reduced poverty or not has fuelled debates without generating any clear cut answers and has also put political pressure on further economic reforms, especially those involving the downsizing of Labour and cutting agricultural subsidies.
Employment
Agricultural and allied sectors accounted for about 60% of the total workforce in 2003 same as in 1993–94. While agriculture has faced stagnation in growth, services have seen a steady growth. Of the total workforce, 8% is in the organized sector, two-thirds of which are in the public sector. The NSSO survey estimated that in 1999–2000, 106 million, nearly 10% of the population were unemployed and the overall unemployment rate was 7.3%, with rural areas doing marginally better (7.2%) than urban areas (7.7%). India's labor force is growing by 2.5% annually, but employment only at 2.3% a year.
Official unemployment exceeds 9%. Regulation and other obstacles have discouraged the emergence of formal businesses and jobs. Almost 30% of workers are casual workers who work only when they are able to get jobs and remain unpaid for the rest of the time. Only 10% of the workforce is in regular employment. India's labor regulations are heavy even by developing country standards and analysts have urged the government to abolish them.
Unemployment in India is characterized by chronic underemployment or disguised unemployment. Government schemes that target eradication of both poverty and unemployment (which in recent decades has sent millions of poor and unskilled people into urban areas in search of livelihoods) attempt to solve the problem, by providing financial assistance for setting up businesses, skill honing, setting up public sector enterprises, reservations in governments, etc. The decreased role of the public sector after liberalization has further underlined the need for focusing on better education and has also put political pressure on further reforms.
Child labor is a complex problem that is basically rooted in poverty. The Indian government is implementing the world's largest child labor elimination program, with primary education targeted for ~250 million. Numerous non-governmental and voluntary organizations are also involved. Special investigation cells have been set up in states to enforce existing laws banning employment of children (under 14) in hazardous industries. The allocation of the Government of India for the eradication of child labor was $10 million in 1995-96 and $16 million in 1996-97. The allocation for 2007 was $21 million. In 2006, remittances from Indian migrants overseas made up $27 billion or about 3% of India's GDP.

Issues

Agriculture

The low productivity in India is a result of the following factors:
• According to "India: Priorities for Agriculture and Rural Development" by World Bank, India's large agricultural subsidies are hampering productivity-enhancing investment. Overregulation of agriculture has increased costs, price risks and uncertainty. Government interventions in labor, land, and credit markets are hurting the market. Infrastructure and services are inadequate.
• Illiteracy, slow progress in implementing land reforms and inadequate or inefficient finance and marketing services for farm produce.
• The average size of land holdings is very small (less than 20,000 m²) and is subject to fragmentation, due to land ceiling acts and in some cases, family disputes. Such small holdings are often over-manned, resulting in disguised unemployment and low productivity of Labour.
• Adoption of modern agricultural practices and use of technology is inadequate, hampered by ignorance of such practices, high costs and impracticality in the case of small land holdings.
• World Bank says that the allocation of water is inefficient, unsustainable and inequitable. The irrigation infrastructure is deteriorating. Irrigation facilities are inadequate, as revealed by the fact that only 52.6% of the land was irrigated in 2003–04, which result in farmers still being dependent on rainfall, specifically the Monsoon season. A good monsoon results in a robust growth for the economy as a whole, while a poor monsoon leads to a sluggish growth. Farm credit is regulated by NABARD, which is the statutory apex agent for rural development in the subcontinent.
India has many farm insurance companies that insure wheat, fruit, and rice and rubber farmers in the event of natural disasters or catastrophic crop failure, under the supervision of the Ministry of Agriculture. One notable company that provides all of these insurance policies is Agriculture Insurance Company of India and it alone insures almost 20 million farmers.
India's population is growing faster than its ability to produce rice and wheat. The most important structural reform for self-sufficiency is the ITC Limited plan to connect 20,000 villages to the Internet by 2013. This will provide farmers with up to date crop prices for the first time, which should minimize losses incurred from neighboring producers selling early and in turn facilitate investment in rural areas.

Corruption
Corruption has been one of the pervasive problems affecting India. The economic reforms of 1991 reduced the red-tape , bureaucracy and the License Raj that had strangled private enterprise. Yet, a 2005 study by Transparency International (TI) India found that more than half of those surveyed had firsthand experience of paying bribe or peddling influence to get a job done in a public office.
The Right to Information Act (2005) and equivalent acts in the Indian states that require government officials to furnish information requested by citizens or face punitive action, computerization of services and various central and state government acts that established vigilance commissions have considerably reduced corruption or at least have opened up avenues to redress grievances. The 2009 report by Transparency International ranks India at 84th place and states that significant improvements were made by India in reducing corruption.
Education
India has made huge progress in terms of increasing primary education attendance rate and expanding literacy to approximately two thirds of the population. The right to education at elementary level has been made one of the fundamental rights under the Eighty-Sixth Amendment of 2002. However, education is still far behind developing countries such as China and continues to face challenges. Despite growing investment in education, 40% of the population is illiterate and only 15% of the students reach high school. An optimistic estimate is that only one in five job-seekers in India has ever had any sort of vocational training.

Infrastructure
Development of infrastructure was completely in the hands of the public sector and was plagued by corruption, bureaucratic inefficiencies, urban-bias and an inability to scale investment. India's low spending on power, construction, transportation, and telecommunications and, at $31 billion or 6% of GDP in 2002 had prevented India from sustaining higher growth rates. This has prompted the government to partially open up infrastructure to the private sector allowing foreign investment which has helped in a sustained growth rate of close to 9% for the past six quarters.

Indian Economy: Basic Applied Concepts

2010-03-27T00:56:00.000-07:00

( This material was prepared by our colleague Ms. Shilpi Jha for students of BJMC-II.
Dr. C P Singh)
Economic growth

Economic growth is a term used to indicate the increase of total GDP. It is often measured as the rate of change of gross domestic product (GDP). Economic growth refers only to the quantity of goods and services produced; it says nothing about the way in which they are produced. Economic development, a related term, refers to change in the way goods and services are produced; positive economic development involves the introduction of more efficient or "productive" technologies or forms of social organisation.
Economic growth is that branch of one,which deals with the study of rate of change of gross domestic product,referring to the quantity of goods and services produced.Economic growth can either be positive or negative. Negative growth can also be referred to by saying that the economy is shrinking. Negative growth is associated with economic recession and economic depression.
Gross national product (GNP) is sometimes used as an alternative measure to gross domestic product. In order to compare multiple countries, the statistics may be quoted in a single currency, based on either prevailing exchange rates or purchasing power parity. Then, in order to compare countries of different population sizes, the per capita figure is quoted. To compensate for changes in the value of money (inflation or deflation) the GDP or GNP is usually given in "real" or inflation adjusted, terms rather than the actual money figure compiled in a given year, which is called the nominal or current figure.GDP per capita is not the same thing as earnings per worker since GDP measures only monetary transactions for all final goods and services in a country without regard to who receives that money.
Development economics
The latter half of the 20th century, with its global economy of a few very wealthy nations and many very poor nations, led to the study of how the transition from subsistence and resource-based economies to production and consumption based-economies occurred. This led to the field of development economics, including the work of Nobel laureates Amartya Sen and Joseph Stiglitz. However this model of economic development does not meet the demands of subaltern populations and has been severely criticized by later theorists. PROTAP
Economic development is the increase in the standard of living of a nation's population with sustained growth from a simple, low-income economy to a modern, high-income economy.Its scope includes the process and policies by which a nation improves the economic, political, and social well-being of its people.Gonçalo L Fonsesca at the New School for Social Research defines economic development as "the analysis of the economic development of nations.The University of Iowa's Center for International Finance and Development states that:
"'Economic development' or 'development' is a term that economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. Modernization, Westernization, and especially Industrialization are other terms people have used when discussing economic development. Although no one is sure when the concept originated, most people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism.
The study of economic development by social scientists encompasses theories of the causes of industrial-economic modernization, plus organizational and related aspects of enterprise development in modern societies. It embraces sociological research on business organization and enterprise development from a historical and comparative perspective; specific processes of the evolution (growth, modernization) of markets and management-employee relations; and culturally related cross-national similarities and differences in patterns of industrial organization in contemporary Western societies. On the subject of the nature and causes of the considerable variations that exist in levels of industrial-economic growth and performance internationally, it seeks answers to such questions as: "Why are levels of direct foreign investment and labour productivity significantly higher in some countries than in others?"[6]
Mansell and Wehn state that development has been understood since the second World War to involve economic growth, increases in per capita income, and attainment of a standard of living equivalent to that of industrialized countries. Economy Development can also be considered as a static theory that documents the state of economy at a certain time. According to Schumpeter (2003)the changes in this equilibrium state to document in economic theory can only be caused by intervening factors coming from the outside.
Economic growth versus economic development
Economic development refers to social and technological progress. It implies a change in the way goods and services are produced, not merely an increase in production achieved using the old methods of production on a wider scale. Economic growth implies only an increase in quantitative output; it may or may not involve development. Economic growth is often measured by rate of change of gross domestic product (eg., percent GDP increase per year.)[10] Gross domestic product is the aggregate value-added by the economic activity within a country's borders. Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. GDP does not take into account important aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic wellbeing have been proposed. A country's economic development is related to its human development, which encompasses, among other things, health and education.
Intensive versus extensive growth
A closely related idea is the difference between extensive and intensive economic growth. Extensive growth is growth achieved by using more resources (land, labour and capital). Intensive growth is growth achieved by using a given amount of resources more efficiently (productively). Intensive growth requires development.
Does growth create development?
Dependency theorists argue that poor countries have sometimes experienced economic growth with little or no economic development; for instance, in cases where they have functioned mainly as resource-providers to wealthy industrialised countries. There is an opposing argument, however, that growth causes development because some of the increase in income gets spent on human development such as education and health.
According to Ranis (2000)[11], we view economic growth to human development as a two-way relationship. Moreover, Ranis suggested that the first chain consist of economic growth benefiting human development with GNP. Namely, GNP increases human development by expenditure from families, government and organizations such as NGOs. With the increase in economic growth, families and individuals will likely increase expenditures with the increased in incomes, which leads to increase in human development. Further, with the increased in expenditures, health, education tend to increases in the country and later will contribute to economic growth.
In addition to increasing private incomes, economic growth also generate additional resources that can be used to improve social services (such as healthcare, safe drinking water etc...). By generating additional resources for social services, unequal income distribution will be limited as such social services are distributed equally across each community; benefiting each individual. Thus, increasing living standards for the public.[12]
To summarize, as noted in Anand’s article (1993)[13], we can view the relationship between human development and economic development in three different explanations. First, increase in average income leading to improved in health and nutrition (known as Capability Expansion through Economic Growth). Second, it is believed that social outcomes can only be improved by reducing income poverty (known as Capability Expansion through Poverty Reduction). Thirdly, (known as Capability Expansion through Social Services), defines the improvement of social outcomes with essential services such as education, health care, and clean drinking water.
How to measure economic development?

Economic development can be measured in many ways but first of all it is important to point out that an economy can grow without developing. Development is a qualitative measure of an improvement in the quality of life.
It can be measured by GNP and GDP per capita, by measuring birth rates and literacy rates, by measuring life expectancy, urbanisation, energy consumption, population growth and distribution of income.

Questions: Outline the differences between economic growth and economic development. Discuss how economic development may be measured. Outline how globalisation may impact upon a nation’s development. (Where appropriate make reference to a relevant case study.)
Answer: Although economic growth and development are similar in meaning, they have some essential differences. Economic growth refers to the increasing ability of a nation to produce more goods and services. Economic development basically implies that individuals of that nation will be better off and takes into account changes in economic and social structures that will reduce or eliminate poverty. Economic development can be measured in a number of different ways including the Human Development Index, a Gender Empowerment Measure, a Human Poverty Index and a Human Freedom Index. All of these measures were developed by the United Nations Development Program. The World Bank also has its own indicator called the World Bank Development Indicator. Globalisation can have both negative affects on a nation. It can impact on the levels of economic growth a country may experience, impact on levels of unemployment or it may impact on a country’s quality of life.
Economic growth is the expansion of a country’s productive capacity. This leads to a rise in total national output. Growth can occur in two different ways; the increased use of land, labour, capital and entrepreneurial resources by using better technology or management techniques and increased productivity of existing resource use through rising labour and capital productivity. While theoretically having an increasing national output means greater material welfare and a rise in living standards, it does not equate to having higher levels of well being for individuals in that nation. Economic growth can, in fact, have negative impacts on a nation including environmental degradation and the loss of traditional cultural values. It also may mean there is greater inequality between different classes in society, that is, the gap between the rich and the poor may grow. It is for these reasons that economic development measurements are also used.
Economic growth as a measure fails to account for other important social and economic factors such as the size of the black market, domestic work which is not given a financial value, the level of damage to the environment and inequalities in income distribution. Various indicators have been developed to compensate for the limitations of economic growth measurements. Rather than just measuring the economic living standards in a country, development indicators measure the welfare of individuals in that country. The main development indicator used is the Human Development Index (HDI). It was devised by the United Nations Development Program (UNDP) to measure the economic achievements of a nation in combining economic growth as well as social welfare. The HDI takes into account three major factors:

• Life expectancy at birth: High levels of longevity are critical for a country’s economic and social well being.
• Levels of educational attainment: The HDI measures adult literacy and the ratio of people in primary, secondary and tertiary education.
• Gross Domestic Product per capita: seen as being a measurement of the ability of people to access goods and services.
The HDI is essentially a score between 0 and 1. A score of 0 would mean no human development has taken place and a score of 1 is the maximum amount of human development. In 2000, the Human Development Report places Canada as the top ranked nation with a HDI of 0.935. Australia was ranked fourth, with a HDI of 0.929 behind Norway and the United States. The lowest ranked nation was Sierra Leone with a HDI of 0.252. When comparing the HDI of certain countries, the GNP per capita should also be considered. A nation with a much higher-ranking HDI than GNP per capita has had a relatively high level of economic development given their level of economic growth. Examples of this are Tajikistan (+43) and Cuba (+40). In contrast, some nations may have a higher GNP per capita ranking than their HDI ranking. This indicates that there is a very high level of inequality, that is high income levels are only enjoyed by a small proportion of the population. A country with this problem is South Africa with a GNP per capita ranking 54 places higher than their HDI ranking.
The UNDP has also developed a number of other indicators. It has developed a specific Gender Development Index which compares the HDI between male and female populations, a Gender Empowerment Measure, which shows gender inequality in economic and political opportunities and a Human Poverty Index (HPI) which measures similar outcomes to the HDI, but examines the extent of disadvantage faced by people who are being deprived of human development. The HPI is adjusted for developing and developed countries.
In 1991, the UNDP developed a one off indicator called the Human Freedom Index (HFI). This included such things as the right to travel in ones own country, the right to teach ideas and receive information, the right to have an ethnic language, the freedom from forced or child labour, the freedom from compulsory work permits, the freedom from censorship, the freedom for political, legal, social and economic equality for women, social and economic equality for ethnic minorities and the existence of independent trade unions. The UNDP discontinued this measurement as it was based on subjective facts and would not be a consistent measurement from year to year.
The World Bank Developed its own indicator called the World Bank Development Indicator (WBDI). This was made to supplement the Human Development Index. The WBDI mainly measures the quality of life, the success of measures to alleviate poverty, the current account balance, malnutrition, traffic congestion, tax rates, life expectancy, population size, educational standards such as literacy and infant mortality.
Another smaller economic development indicator is one developed by economists, James Tobin and William Nordhaus called the Measurement of Economic Welfare. This index takes into account real GNP per capita plus the value of a family’s work. It also takes into account the balance of hours spent in leisure and work, pollution levels and the rate of environmental damage.

Globalisation can impact a nation in a variety of ways. A positive effect of globalisation for many nations is that it allows for them to achieve higher levels of economic growth. With higher levels of trade, world output will increase which inturn should mean higher levels of economic growth followed by increased standards of living. This has been particularly true for rapidly developing economies such as Thailand, Malaysia, Korea and Singapore. They have seen phenomenal growth figures throughout the nineties, although many were sent back to recession in 1997 after the Asia crisis. However, nations which had been struggling with achieving sustainable growth and standards of living, may have been further negatively affected by globalisation. With countries such as Africa opening up their markets, they have been inundated with imports, but at the same time unable to sell their exports. This equates to lower levels of growth for these countries and lower standards of living.

Globalisation has also affected unemployment rates. It has created millions of jobs throughout the world. Twenty-seven million jobs worldwide are now related to exportation. Even with these jobs being created, unemployment is still a major problem for most countries. With increased competition from transnational corporations, domestic employers must remain competitive and to do this they seek improved efficiency. This may mean reducing the amount of staff they have. Also, globalisation has meant that new technologies have been developed to improve efficiency. When new technology is implemented it generally means some jobs are made redundant. Another reason domestic unemployment may rise because of globalisation is that free trade has made many sectors of the domestic market uncompetitive with the global market. An example of this is the European Union, which have subsidised their beef exports. This has meant cattle farmers in Kenya have been unable to compete and have been removed from the market.

Rates of inflation can also be affected with increased globalisation. A country with a high rate of inflation will be less competitive globally because their products will be priced higher than others, so they are less competitive. Governments around the world use monetary policy to control the rate of inflation for this reason. If a country is unable to maintain low levels of inflation then its export sector is at high risk of collapsing.
Globalisation also impacts the quality of life for nations. It seems that the poor keep getting poorer. When countries open themselves up to international competition governments must apply economic rationalist principles. They may cut government spending in essential areas such as health, welfare and education thus reducing the quality of life in this nation. Also, countries with minimal government regulation often attract large transnational companies. This could result in the exploitation of the workers and the environment in countries where quality of life may already be low.
Poland is a country, which has opened itself up to the global economy. It became a free market in 1990 and since has made strong progress. Although in the very early nineties Poland experienced a sharp decline in GDP, it has since resumed steady growth. In 1999 its GDP growth was 4.1%. The private sector now accounts for over 55% of the total GDP. In early 1990, Poland was experiencing hyper-inflation with levels of up to 1200%. In 1999 the inflation rate was lowered to 7.3%, which although is still high by developed world standards, is slowly dropping. Also in the early nineties, Poland had huge unemployment rates with most sectors at around 30%. This has now been lowered to 13%, which again is high by developed nations’ standards but is a lot less than the rates experienced early in the decade.
Essentially, the difference between economic growth and economic development is that one is a quantitative measure (growth) and the other is a qualitative measure (development). Economic development can be measured using a variety of indicators, mostly developed by the United Nations Development Program (UNDP), though another widely used indicator was developed by the World Bank. Globalisation can have many affects on nations, depending on their government policies and also on their economic status.
Developing country
Developing country is a term generally used to describe a nation with a low level of material well being. There is no single internationally-recognized definition of developed country, and the levels of development may vary widely within so-called developing countries, with some developing countries having high average standards of living.[1][2]
Some international organizations like the World Bank use strictly numerical classifications. The World Bank considers all low- and middle- income countries as "developing". In its most recent classification, economies are divided using 2008 Gross National Income per capita. In 2008, countries with GNI per capita below US$11,905 were considered developing.[3] Other institutions use less specific definitions.
Countries with more advanced economies than other developing nations, but which have not yet fully demonstrated the signs of a developed country, are grouped under the term newly industrialized countries

Taxes: definition, direct and indirect taxes

To tax (from the Latin taxo; "I estimate", which in turn is from tangō; "I touch") is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.
Taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid). A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government […] a payment exacted by legislative authority."[1] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government […] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."[1]
In modern taxation systems, taxes are levied in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency such as Canada Revenue Agency, the Internal Revenue Service (IRS) in the United States, or Her Majesty's Revenue and Customs (HMRC) in the UK. When taxes are not fully paid, civil penalties (such as fines or forfeiture) or criminal penalties (such as incarceration)[2] may be imposed on the non-paying entity or individual.

Purpose of taxation: Taxation has four main purposes or effects: Revenue, Redistribution, Repricing, and Representation.

The main purpose is revenue: taxes raise money to spend on roads, schools and hospitals, and on more indirect government functions like market regulation or legal systems. This is the most widely known function. A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections. A third purpose of taxation is repricing. Taxes are levied to address externalities: tobacco is taxed, for example, to discourage smoking, and many people advocate policies such as implementing a carbon tax. A fourth, consequential effect of taxation in its historical setting has been representation.[3] The American revolutionary slogan "no taxation without representation" implied this: rulers tax citizens, and citizens demand accountability from their rulers as the other part of this bargain. Several studies have shown that direct taxation (such as income taxes) generates the greatest degree of accountability and better governance, while indirect taxation tends to have smaller effects.[
Direct and indirect taxes
Taxes are sometimes referred to as direct tax or indirect tax. The meaning of these terms can vary in different contexts, which can sometimes lead to confusion. In economics, direct taxes refer to those taxes that are collected from the people or organizations on whom they are ostensibly imposed. For example, income taxes are collected from the person who earns the income. By contrast, indirect taxes are collected from someone other than the person ostensibly responsible for paying the taxes. In law, the terms may have different meanings. In U.S. constitutional law, for instance, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership. Indirect taxes are imposed on rights, privileges, and activities. Thus, a tax on the sale of property would be considered an indirect tax, whereas the tax on simply owning the property itself would be a direct tax. The distinction can be subtle between direct and indirect taxation, but can be important under the law.
Economic sectors
An economic sector is a certain type of business activity within an economy. Economics is part of the social structure of a society and is concerned with how people produce and consume goods and services. What types of goods and services are produced and consumed in a society depend on geography and social customs. The three major economic sectors are: primary, secondary and tertiary.
The primary economic sector includes obtaining and refining raw materials such as wood, steel and coal. Primary economic sector workers include loggers, steelworkers and coalminers. All types of natural resources industries such as fishing, farming, forestry and mining are a part of the primary economic sector.
The secondary economic sector deals with the processing of raw materials into finished goods. Builders and potters are examples of secondary economic sector workers. Lumber from trees is made into homes and clay from the earth is made into pottery. Brewing, engineering and all types of processing plants are part of the secondary economic sector.
The tertiary economic sector has to do with services to businesses and consumers. Dry cleaners, real estate agents and loan officers fall into the category of tertiary economic sector workers. Transportation, banking, tourism and retail stores are all part of the tertiary economic sector. The movement of goods and services through the primary, secondary and tertiary sectors is referred to as the "chain of production." For example, trees are sourced to make paper, then the pulp is processed to create the paper and then the finished product is sold in stores. Some people consider government and education to be solely part of the tertiary sector, while others add the quaternary economic sector and the quinary economic sector to the three main sectors.

Public sector
The part of the economy concerned with providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare for the poor. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service (such as public education), and services that encourage equal opportunity.
In India, public sector undertaking (PSU) is a term used for a government-owned corporation (company in the public sector). The term is used to refer to companies in which the government (either the Union Government or state or territorial governments, or both) owned a majority (51 percent or more) of the company equity.
A government-owned corporation, state-owned enterprise, or government business enterprise is a legal entity created by a government to undertake commercial activities on behalf of an owner government, and are usually considered to be an element or part of the state. There is no standard definition of a government-owned corporation (GOC) or state-owned enterprise (SOE), although the two terms can be used interchangeably. The defining characteristics are that they have a distinct legal form and they are established to operate in commercial affairs. While they may also have public policy objectives, GOCs should be differentiated from other forms of government agencies or state entities established to pursue purely non-financial objectives that have no need or goal of satisfying the shareholders with return on their investment through price increase or dividends.
GOCs can be fully owned or partially owned by Government. As a definitional issue, it is difficult to determine categorically what level of state ownership would qualify an entity to be considered as "state-owned", since governments can also own regular stock, without implying any special interference. As an example, the Chinese Investment Corporation agreed in 2007 to acquire a 9.9% interest in the global investment bank Morgan Stanley, but it is unlikely that this would qualify the latter as a government-owned corporation. Government-owned or state-run enterprises are often the result of corporatization, a process in which government agencies and departments are re-organized as semi-autonomous corporate entities, sometimes with partial shares listed on stock exchanges.
The term government-linked company (GLC) is sometimes used to refer to corporate entities that may be private or public (listed on a stock exchange) where an existing government owns a stake using a holding company. There are two main definitions of GLCs are dependent on the proportion of the corporate entity a government owns. One definition purports that a company is classified as a GLC if a government owns an effective controlling interest (>50%), while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC.
A quasi-governmental organization, corporation, business, or agency (parastatal) is an entity that is treated by national laws and regulations to be under the guidance of the government, but also separate and autonomous from the government. While the entity may receive some revenue from charging customers for its services, these organizations are often partially or majorly funded by the government. They are usually considered highly important to smooth running of society, and are sometimes propped up with cash infusions in times of crisis to help surmount situations that would bankrupt a normal privately-owned business. They may also possess law-enforcement authority, usually related to their functions.

Private sector
The part of the economy that is owned and controlled by private individuals and business organizations such as private and public limited companies. In a free enterprise economy, the private sector is responsible for allocating most of the resources within the economy. This contrasts with the public sector, where economic resources are owned and controlled by the state.
Monetary policy
Monetary policy is the process by which the government, central bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy.[1] Monetary theory provides insight into how to craft optimal monetary policy.
Monetary policy is referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply. Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy involves raising interest rates in order to combat inflation. Monetary policy is contrasted with fiscal policy, which refers to government borrowing,
Monetary policy tools
Monetary base: Monetary policy can be implemented by changing the size of the monetary base. This directly changes the total amount of money circulating in the economy. A central bank can use open market operations to change the monetary base. The central bank would buy/sell bonds in exchange for hard currency. When the central bank disburses/collects this hard currency payment, it alters the amount of currency in the economy, thus altering the monetary base.
Reserve requirements: The monetary authority exerts regulatory control over banks. Monetary policy can be implemented by changing the proportion of total assets that banks must hold in reserve with the central bank. Banks only maintain a small portion of their assets as cash available for immediate withdrawal; the rest is invested in illiquid assets like mortgages and loans. By changing the proportion of total assets to be held as liquid cash, the Federal Reserve changes the availability of loanable funds. This acts as a change in the money supply. Central banks typically do not change the reserve requirements often because it creates very volatile changes in the money supply due to the lending multiplier.
Discount window lending: Many central banks or finance ministries have the authority to lend funds to financial institutions within their country. By calling in existing loans or extending new loans, the monetary authority can directly change the size of the money supply.
Interest rates: The contraction of the monetary supply can be achieved indirectly by increasing the nominal interest rates. Monetary authorities in different nations have differing levels of control of economy-wide interest rates. In the United States, the Federal Reserve can set the discount rate, as well as achieve the desired Federal funds rate by open market operations. This rate has significant effect on other market interest rates, but there is no perfect relationship. In the United States open market operations are a relatively small part of the total volume in the bond market. One cannot set independent targets for both the monetary base and the interest rate because they are both modified by a single tool — open market operations; one must choose which one to control.
In other nations, the monetary authority may be able to mandate specific interest rates on loans, savings accounts or other financial assets. By raising the interest rate(s) under its control, a monetary authority can contract the money supply, because higher interest rates encourage savings and discourage borrowing. Both of these effects reduce the size of the money supply.
Fiscal Policy
Measures employed by governments to stabilize the economy, specifically by adjusting the levels and allocations of taxes and government expenditures. When the economy is sluggish, the government may cut taxes, leaving taxpayers with extra cash to spend and thereby increasing levels of consumption. An increase in public-works spending may likewise pump cash into the economy, having an expansionary effect. Conversely, a decrease in government spending or an increase in taxes tends to cause the economy to contract. Fiscal policy is often used in tandem with monetary policy. Until the 1930s, fiscal policy aimed at maintaining a balanced budget; since then it has been used "counter-cyclically," as recommended by John Maynard Keynes, to offset the cycle of expansion and contraction in the economy. Fiscal policy is more effective at stimulating a flagging economy than at cooling an inflationary one, partly because spending cuts and tax increases are unpopular and partly because of the work of economic stabilizers. See also business cycle.
Thus fiscal policy is the use of government spending and revenue collection to influence the economy. It can be contrasted with the other main type of economic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy:
• Aggregate demand and the level of economic activity;
• The pattern of resource allocation;
• The distribution of income.
Fiscal policy refers to the overall effect of the budget outcome on economic activity. The three possible stances of fiscal policy are neutral, expansionary, and contractionary:
• A neutral stance of fiscal policy implies a balanced budget where G = T (Government spending = Tax revenue). Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.
• An expansionary stance of fiscal policy involves a net increase in government spending (G > T) through rises in government spending, a fall in taxation revenue, or a combination of the two. This will lead to a larger budget deficit or a smaller budget surplus than the government previously had, or a deficit if the government previously had a balanced budget. Expansionary fiscal policy is usually associated with a budget deficit.
• A contractionary fiscal policy (G < T) occurs when net government spending is reduced either through higher taxation revenue, reduced government spending, or a combination of the two. This would lead to a lower budget deficit or a larger surplus than the government previously had, or a surplus if the government previously had a balanced budget. Contractionary fiscal policy is usually associated with a surplus.
The idea of using fiscal policy to combat recessions was introduced by John Maynard Keynes in the 1930s, partly as a response to the Great Depression.

Economic effects of fiscal policy
Governments use fiscal policy to influence the level of aggregate demand in the economy, in an effort to achieve economic objectives of price stability, full employment, and economic growth. Keynesian economics suggests that adjusting government spending and tax rates are the best ways to stimulate aggregate demand. This can be used in times of recession or low economic activity as an essential tool for building the framework for strong economic growth and working toward full employment. The government can implement these deficit-spending policies to stimulate trade due to its size and prestige. In theory, these deficits would be paid for by an expanded economy during the boom that would follow; this was the reasoning behind the New Deal.
Governments can use budget surplus to do two things: to slow the pace of strong economic growth, and to stabilize prices when inflation is too high. Keynesian theory posits that removing funds from the economy will reduce levels of aggregate demand and contract the economy, thus stabilizing prices.
Some classical and neoclassical economists argue that fiscal policy can have no stimulus effect; this is known as the Treasury View[citation needed], which Keynesian economics rejects. The Treasury View refers to the theoretical positions of classical economists in the British Treasury, who opposed Keynes' call in the 1930s for fiscal stimulus. The same general argument has been repeated by neoclassical economists up to the present. From their point of view, when government runs a budget deficit, funds will need to come from public borrowing (the issue of government bonds), overseas borrowing, or the printing of new money. When governments fund a deficit with the release of government bonds, interest rates can increase across the market. This is because government borrowing creates higher demand for credit in the financial markets, causing a lower aggregate demand (AD), contrary to the objective of a budget deficit. This concept is called crowding out; it is a "sister" of monetary policy.
Other possible problems with fiscal stimulus include the time lag between the implementation of the policy and detectable effects in the economy, and inflationary effects driven by increased demand. In theory, fiscal stimulus does not cause inflation when it uses resources that would have otherwise been idle. For instance, if a fiscal stimulus employs a worker who otherwise would have been unemployed, there is no inflationary effect; however, if the stimulus employs a worker who otherwise would have had a job, the stimulus is increasing demand while labor supply remains fixed, leading to inflation.
Disinvestment
Disinvestment, sometimes referred to as divestment, refers to reduction of some kind of asset for either financial or ethical objectives or sale of an existing business by a firm. A divestment is the opposite of an investment. Firms may have several motives for divestitures. First, a firm may divest (sell) businesses that are not part of its core operations so that it can focus on what it does best. For example, Eastman Kodak, Ford Motor Company, and many other firms have sold various businesses that were not closely related to their core businesses.
A second motive for divestitures is to obtain funds. Divestitures generate funds for the firm because it is selling one of its businesses in exchange for cash. For example, CSX Corporation made divestitures to focus on its core railroad business and also to obtain funds so that it could pay off some of its existing debt.
A third motive for divesting is that a firm's "break-up" value is sometimes believed to be greater than the value of the firm as a whole. In other words, the sum of a firm's individual asset liquidation values exceeds the market value of the firm's combined assets. This encourages firms to sell off what would be worth more when liquidated than when retained.
A fourth motive to divest a part of a firm may be to create stability. Phillips for example divested its chip division called NXP because the chip market was so volatile and unpredictable that NXP was responsible for the majority of Phillips' stock fluctuations while it represented only a very small part of Phillips NV.
A fifth motive for firms to divest a part of the company is that a division is underperforming or even failing.
Disinvestment in India
In May 2004, Government adopted the National Common Minimum Programme (NCMP), which outlines the policy of the Government with respect to the public sector. The relevant extracts of NCMP are given hereinunder:
“ The UPA Government is committed to a strong and effective public sector whose social objectives are met by its commercial functioning. But for this, there is need for selectivity and a strategic focus. The UPA is pledged to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment. Generally profit-making companies will not be privatized.
All privatizations or DISINVESTMENT OF GOVERNMENT SHARES IN THE PUBLIC SECTOR COMPANIES will be considered on a transparent and consultative case-by-case basis. The UPA will retain existing “navratna” companies in the public sector while these companies raise resources from the capital market. While every effort will be made to modernize and restructure sick public sector companies and revive sick industry, chronically loss-making companies will either be sold-off, or closed, after all workers have got their legitimate dues and compensation. The UPA will induct private industry to turn around companies that have potential for revival.
The UPA Government believes that privatization should increase competition, not decrease it. It will not support the emergence of any monopoly that only restrict competition. It also believes that there must be a direct link between privatization and social needs – like, for example, the use of privatization revenues for designated social sector schemes. Public sector companies and nationalized banks will be encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors
Subsidies
A subsidy (also known as a subvention) is a form of financial assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry (e.g., as a result of continuous unprofitable operations) or an increase in the prices of its products or simply to encourage it to hire more labor (as in the case of a wage subsidy). Examples are subsidies to encourage the sale of exports; subsidies on some foodstuffs to keep down the cost of living, especially in urban areas; and subsidies to encourage the expansion of farm production and achieve self-reliance in food production.[1]
Subsidies can be regarded as a form of protectionism or trade barrier by making domestic goods and services artificially competitive against imports. Subsidies may distort markets, and can impose large economic costs.[2] Financial assistance in the form of a subsidy may come from one's government, but the term subsidy may also refer to assistance granted by others, such as individuals or non-governmental institutions, although these would be more commonly described as charity.
Types of subsidies
There are many different ways to classify subsidies, such as the reason behind them, the recipients of the subsidy, the source of the funds (government, consumer, general tax revenues, etc). In economics, one of the primary ways to classify subsidies is the means of distributing the subsidy.
In economics, the term subsidy may or may not have a negative connotation: that is, the use of the term may not be prescriptive but descriptive. In economics, a subsidy may nonetheless be characterized as inefficient relative to no subsidies; inefficient relative to other means of producing the same results; "second-best", implying an inefficient but feasible solution (contrasted with an efficient but not feasible ideal), among other possible terminology. In other cases, a subsidy may be an efficient means of correcting a market failure.
For example, economic analysis may suggest that direct subsidies (cash benefits) would be more efficient than indirect subsidies (such as trade barriers); this does not necessarily imply that direct subsidies are good, but that they may be more efficient or effective than other mechanisms to achieve the same (or better) results.
Insofar as they are inefficient, however, subsidies would generally be considered by economists to be bad, as economics is the study of efficient use of limited resources. Ultimately, however, the choice to enact a subsidy is a political choice. Note that subsidies are linked to the concept of economic transfers from one group to another.
Economics has also explicitly identified a number of areas where subsidies are entirely justified by economics, particularly in the area of provision of public goods.
Budget
Definition: A budget is a spending plan along with proposals to finance the plan and is used to allocate resources to achieve a set of objectives. This financial tool coordinates anticipated expenditures in an effort to maximize resources. A budget is time-specific, and it must be flexible to respond to financial and programmatic changes. A budget, in effect, serves as a financial road map for country, state or an organization.

Rajiv Gandhi's Political Inexperience was India's Asset

2009-05-08T22:11:00.000-07:00

(This article was written in response to N R Mohanty’s write-up Rahul Gandhi must not repeat the mistakes of his father and grandmother on May 3, 2009 by N.R Mohanty, a former Resident Editor, The Hindustn Times, and posted on http://sangharshindia.wordpress.com/2009/05/03/rahul-gandhi/ )

Keeping in view the short span of Rahul Gandhi’s active role in politics, his blend of maturity with freshness is remarkable. It is possible that he takes over the PM’s mantle if numbers are in his party’s favor. His uninhibited interactions with one and all reminds one of the early days of his father’s tenure as PM. He may turn out as much development-oriented as his father was or may be more.
I am able to post this comment to you, thanks to his tech-savvy father’s Technology Mission led by Sam Pitroda. On this front I can’t remember any politician who can match him. In fact, he may also be credited with having conceived liberalization by putting Economists such as Dr. Montek Singh Ahluwalia & Dr. Manmohan Singh in the key decision making position that were earlier held by only bureaucrats. Didn’t he give free hand to V P Singh, his finance minister, a free hand?
True, VP Singh proved too ambitious to be happy doing the FM’s job. But that is democracy. He had all the prowess to beat a doing PM on the turf of sale-purchase-process of Bofors guns. He utilized it to the hilt and you have a very different grammar of politics that is by far more democratic. Politics of equality, under whatever circumstances, had got over the politics for development. Later the development, read liberalization to a tolerable level, was to have its sway starting 1991 under Prime Minister Narsimha Rao with Manmohan Singh as his finance minister who was informally known as, Prime Minister, Finance.
So much for Rahul Gandhi to learn from his illustrious father whose political inexperience was an asset for the country, if you go by facts. Did any experienced PM had the guts to say what he had about he share of development money ( less than 15 %) going to the target groups? Did anybody had the vision of technology for the 21st century India as he had? Could anybody muster strength to actualize that vision when in power? Unfortunately most of us want saintly people in positions of power and since they are extinct, we are happy with the crooked lot. The one who is just a human mix of good and bad is not acceptable to us because he/she mirrors the reality. We are hypocrites and deserve the same.
Now about why is this article discouraging (http://sangharshindia.wordpress.com/2009/05/03/rahul-gandhi/) . Much of the political spectrum is dotted by dynasty-driven parties, hence we should accept it? Intellectual or mental slavery is the worst of all, and this article smacks of it. I would side with a victim of any kind who in the thick of the perpetration of the crime at least thought of breaking free of it rather than mentally resigning g to the same.

Recession in India is more psychological than real...

2009-02-22T03:47:00.000-08:00

Saturday, 21 February 2009
Recession in India is more psychological than real…

Recession is the product of irrational consumer-expectations and the manipulation of markets by the financial sharks. Before we fight it, we can really avoid it through the combined efforts of the government and the corporates, said Prof. B B Bhattacharya , Vice Chancellor, JNU. He was addressing a gathering of industry leaders, faculty and students at the Faridabad Institute of Technology, MR International University( MRIU). The herd mentality, he observed, of the consumers and investors is also a factor leading to such crises world wide. The consumption not matched by income of the neo-rich has also contributed to the slow down in India in particular.

Glaring questions
Welcoming the eminent experts, the MRIU Executive Director Col. (R) V K Gaur raised the questions that need to be addressed for better future of the world. These include: how far the trade protectionism in different countries will help restore the normalcy? Will Bharat bail out India from the current situation? How will a highly decentralized polity remedy the problem plaguing quite a centralized economy that is India?

Recovery in the third quarter
Recession in India is more psychological than real and what we see today is just a slowdown, said T K Arun, Editor, The Economic Times.. Sensex being not the real indicator of economic growth in India, he added, stock market-generated recession will give way to recovery in the third quarter of the current fiscal itself. The growth in telecom sector as registered in January this year, about 15 million connections, is a testimony to it.

Greed the culprit
Echoing the same perception, ARPL India’s MD Vijay Sardana said that the greedy managers trained at the best B-schools have punctured the optimism and the buying powers of the urban buyers in India. Reality sector is an example of this.

Recession or opportunity?
On the other hand the SMC Global president Rajesh Jain wanted the industry leaders and strategists to look at the current hyped slowdown as an opportunity and encash on the cost-cutting drive of the developed economies by way of cheap labour and strong knowledge base. This slowdown is just a cycle like any other and it will leave us more efficient and cost-effective at the end of the day.

Retaining the old customers and employees
The challenge today is not how best to sustain growth in the short run, opined UIMS Executive Director Neeran Gautam, rather the real challenge is retaining the old customers and employees who carry with themselves loyalty and the twin-jewels of experience and initiative. He was surprised at the media hype about recession in India that is only next to China with the capacity to bail out the world economy from the current crisis.

Good things are round the corner
Good business practices, innovative products and creative marketing tools are about to overwhelm us , thanks to the recession in the West and the fear of recession in the East, said Venkatesh Mahadevan, Director, Information Technology ( Asia), Motorola. We need to revisit our plans and connect to the customers.
MRIU Vice Presidents Prashant Bhalla and Dr. Amit Bhalla received the guests on behalf of the Chancellor, MRIU, Dr. O P Bhalla and Brig. ( R) S N Setia, Vice Principal, FIT, proposed the vote of thanks to the dignitaries.

Global Recession: Questions Begging Answers

2009-02-02T08:04:00.000-08:00

The big, bad and the weak

With the US, Europe, and Japan officially in recession, the global financial and economic crisis keeps getting worse. No less distressing has been the speed at which the cumulating financial crisis has throttled real economic activity worldwide since summer 2008.

IMF: Changing forecasts now and then

Also, the rapid onset of recession in advanced countries has overwhelmed the forecasting abilities of many institutions, including the IMF. There is overwhelming uncertainty about the depth and duration of the current global recession. But the majority of expert opinion now concedes that this will be the worst recession since the Great Depression of the 1930s.

India: sectors likely to be hit

What about India? What are the sectors likely to be worst affected and which are the ones with the capacity to withstand or even benefit from it? Will the adverse impact on India be in commensurate with its limited integration into the world economy? Will the IT and ITES along with exports and the financial sectors will be hit the hardest and the agriculture the least? Will the health tourism, education and the like be reaping benefits of the current gloom?

The industry-wide indications after September 2008 are uniformly gloomy. There are reports of significant declines in output of automobiles, commercial vehicles, steel, textiles, petrochemicals, construction, real estate, finance, retail activity and many other sectors. Exports fell by 12 percent in dollar terms in October and advance information points to a similar decline in November. The latest IMF estimates put the GDP at 5.1 for 2009-10. The equivalent figures for China and USA are 6.7 and -1.6 respectively.

Policy options

What about economic policy options to insulate our growth momentum from the global economy almost 60 percent of which has slipped into recession? Don’t we share the same planet as the USA, Europe, Japan and China?

Bharat to bail out India?

Or, can the Bharat with its over 250 million below-the –poverty-line consumers save the India of the rich and the affluent from the global recession that took its birth in the womb of America? Also, how to look at recession—as cause or effect?

Can private capital, purely for legitimate profit, penetrate this 'market' more efficiently than state capital can in the form of siphoned-off handouts? Could, for instance, Tatas' Lakhtakia Car inspire another industrialist to come out with a Rs 900 'people's bicycle'? Could Usha produce low-cost sewing machines for aspiring rural men and women? Could someone make and market a 400-rupee computer for village schools? If rural telephony and banking can be can be runaway successes, why can’t other services and products? Will all this not require the economies of both Bharat & India joining hands as it has happened in China?

Heading for non-dollar economies

Furthermore, shouldn’t India search for markets in non-dollar economies such as the African, East, South-east and West Asian?

Political decentralization vs economic centralization

India has seen significant political decentralization during the last few decades. Has the economic decentralization kept apace? Or has it really even on the agenda of the decision-making elite? Could a decentralized Indian economy have been better-positioned to deal with this or future such recessions?

Caste system providing security ?

How do different communities deal with the adverse impacts of recession on their own? Even in the current scenario, how does the traditional social security provided by the caste system empower its members to fight the onslaught of recession, if any?

In the Indian scenario, we can be face-to-face with the following questions:

• Global Recession & the Indian Economy: Emerging Prescriptions
• IT & the IT Enabled Services: The Search for New Markets & Practices
• Fighting Recession with Decentralizing Polity and Centralizing Economy
• Global Recession & the Response of the Caste System to it

Maya-Birthday-Bash: How many deaths will it claim?

2008-12-27T01:21:00.000-08:00

The reported death of a PWD executive engineer following beating and torture by a ruling BSP's MLA because the former couldn't collect 50 lakh rupees to be donated as birthday gift by the MLA to the party supremo Ms Mayawati, raises doubts on our claim that we are a robust democracy. An elected representative of the ruling party is accused of pulling out the engineer at late night hours, his accomplices push off the wife of the victim, give him electric shock and beat mercilessly, and , finally hand him, almost dead, over to police saying: 'put him behind bars.He is a goon'. The engineer is declared brought dead by the doctors and the police register case after strong demands for action against the MLA start pouring in from across the country.

We don't tire forecasting that we will be number one or two country in the world in the next few decades; Pakistan can't beat us because we are a well-functioning democracy and they a military dictatorship; we are very tolerant towards others, et al.

Are we going to be a strong nation by pushing our honest citizens and officials into submission and empowering those who are the killers of democracy?

The killing of an official because he is not succumbing to political pressures of demanding bribe and passing on part or whole of it to political bosses is not the killing of an individual. It is direct attack on the vitals of our democracy. It is more threatening than the Mumbai terror attacks. As the Mumbai attacks or the 26/11 are easy to identify, catalyze us all into acting against the evil of terrorism, helps us melt our petty differences for a national cause, and, gives us an opportunity to repair the gaping holes in our counter-terror machinery.

On the contrary, the engineer's killing has sent very strong signals to honest officials: honest you may be but you refuse to pay the BIRTHDAY TAX only at the cost of your life. If this can happen to an Executive Engineer, it can happen to you as well.

Now it is for the nation, for all of us, for every citizen of all castes, religions and colours, to decide: are we going to have a birthday party in a democracy that consumes not only money but also the lives of those who can't pay the money? Baba Saheb Ambedkar's soul must be turning in his grave as he would have refused to pen a constitution that would end up begetting a political party and rule that was anything but democratic and human.

When will we start refusing to do things that kill our basic rights: the most important of these being the right to life?

Why any terror attack mustn’t deter us from celebrating life as usual?

2008-12-19T09:25:00.000-08:00

My friend Tabrez Ahmad was very happy that Muslim religious leaders had decreed to keep the Bakr-Id or Id-Ul- Joha festivities a low key affair. He was also happy that it was the best time for the Muslim community to express solidarity with their Hindu brethren. Apparently it sounds logical, even politically correct.

Now let’s look at a different scenario: the way terror attacks of one or the other kind are increasing in number and ferocity, a day may come when we have to go without celebrating a festival even during the whole year. Can there be a better gift to terrorists than this? Then, in the name of remaining politically correct, one community may find it difficult to celebrate a festival even it wishes. Also, others might start a business where you may go and celebrate a festival away from the glare of those who have been victims of terror attacks.

Finally, one community may trust or distrust the other communities based on the latter’s not celebrating or celebrating their festivals in the face of attacks on the former. Consequently, festivities will vanish from our life as no festivity without popular participation is of any social significance. Celebrating festivals can’t be a private affair. It is the social expression of happiness of a community against all odds.

Why is it that the best of songs are folk songs? They don’t come from the rich generally? The poor and the underdog celebrated life with whatever they had to make with. Even today’s quite a few Bollywood hits are inspired by the folksongs of yester years. In the face of chaos following political anarchy and onslaughts on personal and religious freedom during different patches of medieval history in various parts of India, we had saint poets like Kabir, Nanak, Meera Bai, Dadudayal, and Tulsi singing to the tune of life and bringing communities together. Tulsi doesn’t find it worth mentioning the attacks on temples in Banaras, Mathura & Ayodhya. He has Abdur Rahim Khan-e-Khana , one of the most powerful members in Akbar’s court, as his friend and yet refuses to accept royal patronage. Not to forget, to Tulsi, Rahim was a poet first, Royal Commander later.

Why can’t we do the same to the gems of every community, including our own, today even if we are not politically correct? Being politically correct during the Non-cooperation Movement during 1920s did pay to India and its supreme leader of the time, Mahatma Gandhi, in the short run. He had supported the Indian Muslims’ resistance to the abolition of Caliphate in Turkey by its popular leader Kamal Pasha to increase their participation in the freedom movement. It did happen but at what cost? The nation lost a great opportunity to integrate Muslims with the national cause on secular grounds.

The Mahatma, who sincerely believed in the purity of means to achieve his or societal ends, erred on this count. The result: partition of India in the face of widespread killings, rapes, loot and arson. This didn’t stop here. We saw further division in the subcontinent with the creation of Bangladesh in 1971. But this is only territorial. The division that permeates our hearts is more dangerous. Are we bold enough to accept it? Are we ready to let ourselves sign the papers authorizing social doctors to perform surgical operations of sorts on the cancerous cell called political correctness?

Can’t we quiz an average Muslim friend?
Why Akbar is low on your list of venerable leaders and Aurangzeb on the top? Why Sheikh Ahmad Sarhindi, who preached hatred against non-Muslims, was shown the door by Akbar? And, Sheikh Saifuddin who favoured any kind of punishment to non-Muslims and was also the grandson of Sarhindi, was venerated by Aurangzeb? Why could Dara-Shikoh, who represented the best of Kabir and the best of Akbar, not become a role model to Muslim intelligentsia even after more than 350 years of his execution at the hands of his younger brother Aurangzeb? Why even today Maulama Abul Kalam Azad remains least understood and appreciated by them? Why do the KHANs – Shahrukh, Amir, Salman—lord over the hearts of Indians most of whom are Hindus?

Can’t we quiz an average Hindu friend:
Why does your kitchen become polluted with the entry of a Muslim into it? Does your pronouncement of ‘the whole world is a family’ hold any water in reality? Why Raja Man Singh, whose sister was married to Akbar, is looked down upon by most Hindus? If Maharana Pratap is loved for his sacrifice and valour, why can’t Raja Man Singh’s efforts at cementing the gap between two communities be equally appreciated? Is it against DHARMA or DUTY to convert to another faith in the hope of getting at least the bare necessities of life? Why the practitioners of other faith give proof of patriotism every time there is a national crisis or a hotly contested cricked match between Pakistan & India?

Can’t we quiz ourselves:
Why do we hesitate in speaking against things we don’t like? Why do we not praise things we like? Why do we not accept that we get the leaders we deserve? When will we realize that no religious tenets of yester years will fully apply to the realities of modern life? Why do we accept the backbenchers to lead the society from the front?

Teachers as brand ambassadors of ideas

2008-12-15T11:09:00.000-08:00

In media what is most valued and envied is the freshness of ideas. The ideas that can set you apart. The ideas that help you rake in moolahs. How? By way of high visibility on TV or in newspapers. And, the ideas that help you identify with a product such as Fair & Lovely cream or service such as Reliance Mobile. How does it happen? Is it God-gifted? Or you can do this practice? Do you see the influence of your early role models, quite likely teachers, in this?

My daughter had a miscarriage

I remember my Sanskrit teacher and warden Dr. B N Upadhyay stopping me outside his office to say: Jaante ho meri beti nichha gai hai. Oh! Kitna khoon or kitna dard ? (You know, my daughter had a miscarriage? How much bleeding and the consequent pain she might have had?). I stood speechless. As a 9th standard student, straight from village, I was hearing these words for the first time and trying to comprehend them. Though partially successful, I got the message that my teacher was very sad and something very bad had happened to his daughter.

A mundane mishap to an Indian woman communicated with extraordinary simplicity and
courage. The first thing that struck me was: can I share such things with Upadhyayjee? Will he not feel offended? The next moment I got the answer: I had not felt offended with what he had said, why should he? Don’t you recall the most popular of our times: AN IDEA CAN CHANGE YOUR LIFE?

You sahriday and he an actor

It was my first lesson in compassion, communication, empathy, and courage of thinking out-of-box. Why so? Because you feel as if you are one with the speaker (here, the teacher), like a sahridaya of Bharat Muni’s famous treatise Natyashashtra.

Who is a sahridaya? The one who is in communion with the communicator, in Bharat Muni’s case an actor, male or female. How does it so happen that the communicator and the communicated are on the similar wavelength? Bharat Muni has the answer: the actor through his expertise, dedication to the art of acting, and empathy is able to create the same picture of a situation in the sahriday’s mind (here a member of the audience) as his. This process is called sadharnikaran. Simply put, it means simplification of a complex situation in terms of articulation or putting it across to others.

Sharing is strength, not a weakness

Why this analogy? My teacher told me so many things in a few words: sharing of one’s agony is strength, not a weakness. Done in simple words and with honesty, it arouses empathy. No incident or fact of life is without a simple way of its expression. And, most of all, as a teacher you need to go to the level of the taught to strike a chord with him.

And, all this happens through the act of communication. After all, what does an ideal teacher do all his life? He spells complex things to his taught. These things may be old, evolving or absolutely new. But, the process of communication is always fresh because no two situations or two people are in the same mental state at two different points of time. The newness of situation gives birth to new ways of saying or looking at the same thing. Put differently, the teacher who embodies courage to say and listen to even the mundane things with extraordinary simplicity and empathy, becomes a harbinger of new ideas. He does it because of his faith in the creed that says ‘ let thousand flowers bloom’.

A good teacher and unprepared

The second lesson came in college, seven years later when my development economics teacher Dr. Hari Om Verma, a Ph.D. from Delhi School of Economics, had this to say immediately after entering the classroom: I couldn’t prepare for the class last night. Please point out if I am inconsistent or off the topic. Was it crisis management? Was it an exercise in confidence building aimed at his students? Or creative response to a harsh reality, i.e., he had not got time to prepare for the lecture?

Irrespective of the reasons, it was a very powerful way of telling or communicating a situation. What is so great about it? The ‘idea’ that accepting a mistake can be more inspiring that covering it up. The ‘idea’ that not only good students but even good teachers can be unprepared for the class?

Loloo Prasad at his best

Those who watched the debate preceding the Trust Vote in the Indian Parliament for the Congress-led government at the Centre on July 22nd 2008, may recall the response of the Railways Minister Laloo Prasad to the opposition’s attempts to shout him down. He said: …sab koi PM ban-na chahta hai. … mai bhi ban-na chahta hoon… mujhe koi jaldi nahin hai… harbari ke biaah mein kanpati par sindur…(… everybody wants to become a PM… even I do… but I am in no hurry…lest I look like a groom who instead of putting sindur on the middle of his bride’s forehead did it on her temple…)
Is not Laloo Prasad darling of media? Is he not a teacher to millions of people, mostly villagers, who say most of the complex things in their own rustic ways? Is he a lesser brand ambassador of ideas for the people who say less of KAGAD LEKHI (bookish knowledge) and more of ANKHIN DEKHI (experiential knowledge)?

Classroom without borders: Dancing to the tune of fun and learning

2008-12-15T10:35:00.000-08:00

Who doesn’t want a break from the mundane and monotonous activities of life? This helps you recharge your batteries for taking up professional and personal challenges with renewed vigour. It is this in view that the department of Journalism and Mass Communication (JMC) organized an educational-cum-recreational trip to Chail-Kufri-Shima-Chandigarh for all its students, faculty and staff from November 13, 2008 to November 17, 2008.

From pony ride to getting snaps with live python held around the neck (with its mouth tied), from waist-breaking, at times floor-breaking, dance to being at their creative best in doing mishchiefs, delaying the bus while trying to have the best make-up, inventing dozens of ways of preferring junk food over the normal, writing excellent poems and stories to plagiarizing, hiding in the vast expanse of the Chandigarh Rock Gardens to getting a chance to touch and get touched on the merry-go-rounds, keeping awake through the night to interviewing those who ( the poor fellows!) had gone into deep slumber---- they had it all.

For the accompanying teachers it was a cocktail of nightmare and fun. Nightmare because they had to deal with a classroom beyond the precincts of the campus, out in the hills and mountains under the sky, in the sun, and the shivering cold. No rules in operation. In fact, the only rule was “no classroom tactics, please!” Yes, it was a fun learning with students telling you how best to teach, communicate, love, be loved, enjoy, fight without ill will, and what have you!

But the best was yet to come. Lo it did! It was at the Indian Institute of Advanced Studies, Shimla that each one of the group whispered: Wow! what a grand building with equally grand academic achievements and majestic surroundings! Yes, earlier this building housed the India’s President’s entourage during his summer visits. It was here that the group saw the photographs of the meetings that changed the course of Indian history forever: what’s and how’s of dividing India into India and Pakistan.

The return journey to Delhi witnessed a night out at a roadside restaurant-cum-dhaba till 2 am. Everybody dancing to the tune of her inner music that also had supporting casts from shops nearby.

From the very next day, it would be classes and writing for the travel newsletter based on the trip. For another three weeks or so, the faculty and students were in for another trip to Chail-Kufri-Shimla-Chandigarh. But this time, it was down the memory lane. Amen.

India: A Country or a Continent?

2008-12-15T10:28:00.000-08:00

India: A Country or a Continent?

A country is generally defined by the presence of homogenous elements like region, culture, religion, ethnicities etc. On the other hand, a continent is marked by vast size, diversities of all kinds such as regional, cultural, ethnic, religious.

India competes both as a country and as a continent. Country because of broad cultural unity and regional continuity; and, continent because of diversity of various types- cultural, regional, religious, ethnic, and economic.

There is hardly a major religion that is without its followers in India, with three religions that have their birthplace in India: Buddhism, Jainism, Sikhism. This is in addition to Hinduism that is technically not a religion because of absence of a Holy Book or Prophet. However, it has almost 80 per cent of the population as its followers. Hinduism is defined as a way of life marked by a set of duties (dharma) that every faithful has to fulfill towards his family, fellowmen, society and the world. Add to this, that India is home to about a dozen races from around the world such as Dravidians, Negros, Aryans, Huns, Sakas, Abhirs, Austric, Mogoloid, Turks, and Pathans.

It may be surprising to note here that possibly before Europe had its first Christian, India already had in 56 AD with the arrival of St. Thomas on its western coast. Similarly, much before India came under Muslim rule in the 13th century, Islam had reached the western coast of Malabar in 7th century with the Arab traders. The Persians took refuse here to protect their life and faith from the Arabian invaders in the 7th century.

India of today has more than 50,000 registered newspapers in than 18 standard languages most of which are descendents of the Indo-European family of which Finnish is also a member along with Greek, modern European and north Indian languages. Add to this about 4,000 dialects spoken by 1.3 billion people divided into 7,000 castes/sub-castes that represent a system of social hierarchy unique to India in particular, and Pakistan & Bangladesh ( erstwhile parts of the undivided India till July 1947), in general. It was the time when India was bordered by the Middle-East on its western and South-East Asia on the eastern borders. On the north, it boasts of The Great Himalays and the Indian Ocean and the Arabian Sea surrounding the Indian peninsula on three sides. Interestingly, it is the only nation after which an ocean, i.e., Indian Ocean, is named because of its strategic location for international trade for over two thousand years. No wonder, all the European Imperial powers vied with each other to colonize India to gain control over the International trade.

Keeping all this in mind, India presents a picture of stark contrasts in every domain of life: with the size of its middle class population equal to that of the US population, India has the maximum number of people below the poverty line in the world; with the third largest pool of technical and skilled man power, it has the highest number of illiterates in the world; with the record of almost never invading a country and having the most inclusive Dharma, the country has witnessed a large of killings in the name of religion, ethnicity, regional identity, etc.; of 34 states and UT’s, the undivided state of UP ranked 8th in population ( or size?) in the UN list and , the population of some of the metros such as Delhi & Mumbai are equal to that of some nations like Australia & New Zealand; with NRIs spread all over the world, there is hardly a major country without them in the decision-making capacity—from President, Prime Minister to Corporator in local bodies, India also has the highest number of people( more than 100 million) suffering from one or the other kind of disability.

To cap it all, most of the problems that we see today have their origin traceable to the British rule. Except for the reign of Aurangzeb, all the Mughal rulers were liberal towards other faiths. In fact, the majority of Hindus had accepted the descendents of invading Muslims as part of their life and so did the latter. This is evident from the fact that a good number of Bhakti Movement leaders came from the Muslim community: Kabir, Jayasi, Raskhan, Taj. The origin of the modern Hindi is traced to Amir Khusro, a saint poet during medieval period.

The challenge before India is to develop tools of solving its current problems that are unique to its history, size, population, diversities and economic circumstances. The Indian elite till recently had been glossing this over. Over the last decade or so, India has
opened its economy to embrace liberalization and globalization and has benefited from it by way of InfoTech business and back office support operations by way of BPOs. It has also reaped the benefits of not being fully integrated with the global financial system, as is apparent from the limited effects of the economic depression that is engulfing the developed world. This proves beyond doubt that other models can just supplement the Indian model of development, not supplant it. Fore example, the models in currency in the USA, China, Singapore or Russia can just be instructive, not prescriptive for India.

On the political front, India can safely be said to be largest functioning democracy with all its limitations of caste and regional disparities. Almost all its neighbours and many other Asian and African countries that gained independence from the foreign rule about the same time as India, have had one or the other kind of dictatorship during the last six decades.

The Indian genius is at its best in acquiring and imparting education on the one hand, and, steering clear of myriad social and cultural problems on the other. Acceptance of others as one of them is in their DNA if the dominant pattern of inclusive thinking is not challenged. This has worked like a vitamin in the education sector as well. Here the students with arts background have excelled in IT.

The other important factor is absence of adequate opportunities in the public institutions. There the competition being tough, many able and desirous students can’t get admissions. It is here that the private universities have to play a very important role. In the recent years the number of universities in the private sector has shot up. This has reduced the burden of the public sector institutions in a big way. Here the major challenge is to balance the private profit with public interest without compromising on quality parameters. Indian business culture, particularly in education, is yet to pick up the best practices. It may be hoped that pressures of liberalization and globalization will act like correcting agents in this field as well.

However, what is to be kept in mind is that India’s opportunities and problems both are continental in nature because of its size (geography& population, ) , location, links with the rest of the world for over 25 hundred years, presence of PIOs & NRIs in over 80 countries, diversities of all kinds; and a very amenable and intelligent working force. But this is not enough. The Indian character of inclusiveness and the spirit of rising above the things that are only material pervade every aspect of its life. (Inspired by a talk with Col.(R) V K Gaur, Executive Director, MREI)