Civil Services Reforms and India Inc

Recently, Government of India has directed the DoPT (Department of Personnel and Training) to prepare a proposal over lateral entry in energy and infrastructure related departments of government at mid to senior level decision making. This step of government will not only has bearings upon the civil service personnel, but to a larger scale on the economy and industries also. This is because, still the critical public goods and infrastructure are provided by government only. And lateral entry will directly impact this decision making

Lateral entry is the entry of domain experts from private and social sector into specific government role, will improve the collective knowledge and understanding of decision making group. This will reduce the time taken in decision making by government authorities, bring advance practices into government machinery and more synergy between public and private space. For India Inc, this speed in decision making will save time, money and interests on borrowed money. Energy and Infrastructure sector which has been marred by coal scam and poor decision making (regarding risk allocation in PPP infra projects) respectively, will definitely be benefited by this arrangement.

Also, with entry of private counterparts, civil servants can’t afford to be lethargic and will be performance oriented (given senior level posts are open to both public and private individuals). This will improve the situations in other fields like contract enforcement, getting electricity connection and registering land titles etc. All these will have direct bearing on India Inc, and in positive way. But, this reform has many lacunae and issues that need to be sorted out first.

One of the major issues with lateral entry is whether it will be contractual or instill individuals permanently. If contractual, what are the limitations on further employment of individuals after end of contractual period? Are they allowed to be hired by private enterprises as lobbyists, or affect decision making of government (since he/she would be an insider) like that of Tony Blair hired by consulting firm and PE firm as adviser? And given India’s lack luster Judiciary, it will be very tough to enforce discipline amongst contractual entrants.

If permanent, will it not be a deterrent for already serving civil service personnel? Will it not de-motivate the serving civil servants? Also, given the varieties of post created with no distinct division of power, how effectively will be the decision being taken by inducted lateral entrants? For example, construction of road requires coordination with land department, utilities department like CPWD and other, in absence of trust how only one infrastructure department can bring change with lateral entrants?

Including this, there is also the major concern of nepotism and favoritism by political bosses. Questions are many, but solutions are also out there in form of case studies and practices in advanced nations.

Strong regulatory institutions, upright professionals into regulatory bodies, responsive judiciary are few need of the time for making this initiative successful. Together they will enforce discipline and with clear guidelines, they will enforce transparency in selection of late entrants. In the past, we have few such initiatives and it has provided us with stalwarts like Manmohan Singh, Montek Singh Ahluwalia, Viay Kelkar and others; and if continued with right intentions, it will create wonders.

**Political reforms however is the prerequisite to large scale civil services reforms

Can Capitalism bring Inclusive growth?

In the recently concluded Millennium Development Goals of UN, inclusive growth has been put at the forefront. The yearly data on GINI ratio that measures the inequality specific to countries further highlight the growing inequality in world. The most famous book of twenty first century “The Capital” by Thomas PIketty also highlight this inequality (lack of inclusive growth) and how it has grown since last three centuries. The problem is clear, to achieve inclusive growth; and the method to achieve that are many from capitalism model of development, socialist model of development or mixed economy. But what’s the best solution? Before answering this question, we should rather look into these model of development.

Capitalism involves private ownership of the factors of production with prices and allocation of resources is determined on basis of supply and demand, to be precise by the market. Capitalism further includes different models of development like laissez faire model, state capitalism or welfare capitalism. Socialism involves state’s control over the factors of production and price fixation. Erstwhile USSR was a good example. And mixed model is in between the previous two, with both private and public involved into economic activities. India is currently following this model of development.

Here, we are limiting the case to capitalism. Capitalism in its true sense means laissez faire model or free market economy. Here, decisions are taken as per market forces and private individuals are the owners of all decision making activities. It works on the principle of Survival of the fittest. The most competitive firm survives and thus it gives rise to innovations, development and discoveries. But at the same time, since decisions are taken on principles of demand and supply of market; needs of people who are unable to pay are not served. The poor are marginalized in such systems and it heightens inequality. The low GINI index of USA represents the poor inclusivity in American growth story. India on other hand has better GINI index although with one-tenth size of US economy and triple of its population.

But at the same time, innovation brought in by Laissez faire capitalism can directs towards inclusive growth. The birth of Sachet packaging is one such innovation of market economy serving needs of the bottom of pyramid. This enabled poor to use best products and improve their quality of living with access to better resources. But the catch here is “ability to pay”. If one is unable to pay, capitalist class doesn’t have the motivation to innovate. And that’s why majority of innovation is into luxurious products. But such growth is unsustainable and dangerous. As Edward Abbey writes

"Growth just for the sake of growth is the ideology of cancer cell"

Further, the surplus arises out of economic activities in capitalist system accrued to capitalists only. And very little benefits trickle down to worker class. This unequal growth has also been highlighted in Alternate theory of Distribution by Ricardo; where surplus accrues to capitalists and landowners.

In the past, mercantilism was one of the previous forms of capitalism, which gave rise to colonialism. And it divided the world into two halves with haves and have-nots. The third world of today comprising of Africa and South Asia is a result of greed of this capitalism. Thus, even on past experiences it has never proved to be inclusive.

However, other models of capitalism like state capitalism and welfare capitalism which involves state intervention in form of regulation do give a way out for inclusive growth. Here in this model, the excess of capitalism gets regulated and the poor are being supported by state machinery. Long gestation development activities for masses which are not undertaken by private players are rather provided by state. The experience of Nordic countries regarding availing education and health to all from surpluses of capitalist economy is one such positive example.

Also, many of welfare economists like Joseph Stiglitz directs responsibility of state in a market economy towards ensuring rights and growth of poor and destitute. And the excess of capitalism like monopoly practices or cartelization which aims towards maximizing profits at the cost of welfare of consumers need to be checked through regulators. SEBI or TRAI or CCI (Competition Commission of India) are some very good examples which ensure welfare of masses against excess of market economy.

Capitalism in theory do has potential to bring inclusive growth with its innovation, best use of resources and accompanied with welfare state. But the baseline of capitalism i.e. profit motive when combined with human greed in real world, all the diversion starts. And similar is the case with other model of development like socialism. The unsustainable inclusive growth of USSR is one such example. Although, in beginning it promises good result but in absence of competition (ensured by capitalism) people had become complacent and innovation died down.

Inclusive growth requires best use of available resources with equal distribution of surplus benefits. Capitalism do provide this opportunity, but in a world dominated by human decision making, realism always overtakes theory. And reality is human emotions, greed and jealousy which need to be curtailed through regulations and legal standards. In absence, no model can guarantee inclusive growth and neither will capitalism.

Will 2016 be the next Recession?

George Soros, a major hedge fund investor who once towed down Bank of England has predicted over next slowdown in 2016 (published in The Economist). And the likely indicators are Chinese slowdown, negative interest rates in Europe and Japan, low commodity prices. But, at the same time there seems to be some bright spots like US and India with decent growth numbers. But is that so? When India is performing below its potential growth rate (8% on basis of incremental capital output ratio) or US showing low consumption demand (recently concluded Christmas month), Can we count on these bright spots? Or when China is putting best effort to shift to consumption driven economy rather than export driven, Can’t we wrong in putting it into dark spot? Let’s start from last century debacle and learning (1930 Great Depression)

The world has followed the learning of 1930s Great Depression crisis in the post 2008 Great Recession through Keynesian approach aided with monetarists (linked with fiscal expansionism and monetary easing). After Great Depression of 1930, New Deal of FDR (Roosevelt) focused on public expenditure adding jobs and increased buying power of people in USA. It was a major event in bringing American economy out of recession. After 2008 recession, following same lines of boosting demand to recover economy has been followed. And this has been tried through monetary easing, buying toxic assets from market by Fed and giving easy money in hands of people (Keynesian approach includes targeting demand rather than supply in an economy). And this approach is based on assumption that public expenditure will crowd in private investment and private production and economy start rolling.

In 1930s it was direct government involvement or fiscal route while in post 2008 it was through monetary route. This easy money has been offloaded to developing nations like India, China and ASEAN in search for better returns. And since financial markets are dominated by few investment giants (in words of Piketty, another case of rising inequality), this has not been a difficult task. As a result, crowd in effect has not been that substantial as expected. And recent low consumption data and poor output data in US points to same (US still not recovered). What was successful in 1930s and subsequently can't be repeated again in this financially connected global economy.

In aftermath of 2008, there appeared many other dark spots in various other parts of world. The Europe has still not recovered of Greece crisis of 2010-11 owing to poor coordination, negotiation and understanding. And recent Refugee crisis of 2015 has imposed existential threat to Euro area with ban on free movement of labour. Also, low commodity prices specially of crude oil has further limit the development expenditure of oil rich nations (like OPEC and Russia). This has negatively impacted the infrastructure firms to its maximum (like that of L&T, with major orders in Gulf countries). This very low (<$30) price of oil is although good for importing nations like India and China; but on global level this is hurting. In fact, crude oil price <$40 and >$80 always hurts the global economy. Too low a price, hamper global expenditure while too high a price, a drain of resources.

Amidst all this, China which was earlier the major bright spot of world economy (when India was suffering with scams and policy paralysis) has also cooled down. With global demand declining for Chinese exports (US and Europe distress) and production shifting to consuming nations (thanks to 3D printing technology alike), Chinese economy is shifting its gear towards consumption driven. And change of economy fundamentals is time taking and rough. If not handled soundly, China can become the trigger of another slowdown.

The only bright spot available are India and Africa, but they are too small to boost the global economy. They are always in the shadow of political instability or policy paralysis.

Taking account of all the recent events, data and economic health of nations; the world seems to be at the brink of another recession. And so is any normal economy, which runs on a knife edge equilibrium of trusts and faith between suppliers and consumers. If that trust and faith are being restored by political class of world, there will be instead a growth story. And that faith can be restored through easy landing of Chinese economy without hampering other nation’s growth (through avoiding deliberate devaluation), making monetary decisions on global cues and not just domestic, global mutual solution to refugee crisis and economic interests over political ones (US-Russia and Iran-Saudi Arabia enmity). 

Interview Transcript

Board: Ms. Kilemsungla Ma'm
Date of Interview: 21/05/2015


(The transcript is created based on memory. The interview actually was more unstructured and I fumbled with member 4 and member 2)


Me (reaching at the chair) : Goof Afternoon Ma'm, Good afternoon sirs
Chairman: Please sit
Me: Thank you ma'm

Chairman: What is the economic policy of India?
Me: At the moment?(how can she ask such a subjective question in the beginning only)
Chairman: Yes
Me: (thinking a while) Economic policy of India is towards indicative planning, where govt. is facilitating the private individuals to start with economic activities and involve in manufacturing and services. With the new govt. coming to power after last year elections, emphasis has been led upon manufacturing which has not been given due emphasis to. Emphasis has been given towards fulfilling gaps in infrastructure.

Chairman: Will Land acquisition will bring development into India?
Me: (Such a debatable topic) Yes man

Chairman: Why you feel so?
Me: It will increase the manufacturing and mining activities, which will create jobs and enable movement of disguised employed in agriculture to more productive activities. The concern is there regarding lack of inclusive growth which for long decreased faith of locals into these developmental activities whose concern should be taken care of. They need to be benefited from these activities.

Chairman: Corruption is very acute problem of India despite presence of RTI and Lokpal....(some more enlightening words) ...What do you think?
Me: (forgot the gist of question, only corruption remained in mind) Ma'm Corruption is existing because of shortcomings from both supply and demand side. (Seriously, what I have said, just now)  From demand side, institutions need to be strengthened reformed to implement the provisions like Lokpal more effectively. While from supply side, general public still not aware of benefits of RTI and need to be aware.

Chairman: (clarifying his question over my vague answer) But why these institutions are not being successful?
Me: (thinking for a while) Institutions and stakeholders need reforms in human resource management which should provide them motivation to ensure transparency and accountability by setting targets and linking them to their growth inside organization. (Why I am saying all this, such a vague answer)

Chairman passed it to Member 1

M1: (Very well dressed, cordial and elegant) You have billiards as your hobby. But it is said, billiards is a proficiency of misspent youth. Do you agree?
Me: (Unable to get his questions) Sorry Sir, can you please repeat the question (smilingly)
M1 repeated it again

Me: No Sir, I don't agree with it. Billiards is a sport that teach us a lot from concentration to a balance between body posture and sport. Although, the infrastructure required for the sport is expensive and not easily available in general. And available only at few selected clubs.

M1: What do you think US foreign policy is? I am giving you four options: moral, pragmatic, self interest and stupid?
Me: (Don't know why I misinterpreted it as US economic policy) Sir, Can I take some time to think over it.
M1: Yes Sure, you can have some water also.
Me: No Sir, Thank you. (after a while, realized my lips were dry like hell). I think I should. (drank whole glass of water with everyone watching me closely)

After a while
Me: Sir, US economic policy is more towards self interest where capitalism is the main guiding principle. It's main emphasis on individuals to start with their firm and business.

M1: But I asked you about foreign policy? (asking smilingly)
Me: Oh, Sorry sir. I am very sorry. I feel US foreign policy is guided by self interest.

M1: And why do you think so?
Me: Sir, the US action in Iraq and Middle East in early part of last decade was motivated with oil diplomacy. with no development of shale reserves in US. But in later half, with shale oil development, they refrain from interfering into Yemen crisis. (some more lines on saudi arabia interference into Yemen)

M1: And what's the other?
Me: US forming Trans Pacific Partnership in pacific ocean with countries like Japan, Phillipines but sidelining China. As China is seen to be a growing competitor to US.

Passed on to member 2

M2: Are you aware of the electricity charges collected by distributing firms? What is the mechanism behind the tariff rates?
Me: Sorry Sir, I am not fully aware of the mechanism behind this. I know that there is electricity regulatory authority which decides upon the limit of tariff and if distributing firms have any issue with tariff, they bring it to authority

M2: What is ponzi scheme?
Me: Ponzi scheme is the practice of alluring investors with huge return with no underlying asset, where money is returned to first set of investors from money garnered from second set to claim authenticity and chain continues. At the end, the scheme is wrapped overnight. (didn't able to remember clear definition, so explained what I knew then).

M2: Why its in news recently?
Me: It's in news because of scams like Saradha in west bengal.

M2: What is microfinance?
Me: Microfinance is the practice of lending small loans to poor people of society like village vendors, rickshaw pullers in order to start a micro businesses and have a dignified life.

M2: Any other countries where it has revolutionize the living of poor people?
Me: Yes Sir, Our neighbour Bangladesh is a clear example of this

M2: Which is the organization involved?
Me: It is probably Grameen Bank

M2: Who is the person involved?
Me: I am not sure, Sir, but probably he is Mohammad Yunus.

M2: Do you know, who is Thomas Piketty?
Me: Yes Sir, infact at the moment I am reading his book "Capital in the 21st century" but not finished it yet.
M2; (smiling and looking at ma'm) And what's it about?
Me: Sir, It is about economic inequality which as per book has been increased in the last two three centuries.
M2: And how he explained that?
Me: He explained that rate of return on capital being in the hands of affluent group has been higher than the growth rate of the economy which decides the growth rate of middle and lower income group of people.
M2: Is there any learning from that?
Me: Yes Sir

Passed on to member 3

M3: (explained about water shortage in Gaya and Palamu) Because of which there is poppy cultivation being practised. (Me surprised look with this fact) Are you aware of this?
Me: Sorry Sir, I am not aware of this. But it is opium cultivation?
M3: Yes it is opium cultivation. What do you think it should be allowed or not?
Me; (thinking for a while) No Sir, I don't think it should be allowed.

M3: Why?
Me: This region is marred with lack of development, illiteracy, lack of employment. And with easy availability of opium locally, it would be a greater social problem in the future.

M3: But, it would be a loss of income for poor people?
Me: But there are other opportunities also like there are crops which can be grown in less availability of water. Also with government programmes implemented honestly, it can be contained.

M3: As a DM, What would be the 3 steps being taken by you?
Me: Three steps: 1. Implementing govt. social welfare programmes specially in those regions like MGNREGA, IAY. 2. Rejuvenation of closed industries of the region like cotton mill in Gaya and cement factory in Daltonganj.....

M3: Don't you think, you should implement legal measures against opium cultivation?
Me: Trying to explain my point on providing better options to them.

M3: (Getting furious) Don't you think it's necessary to implement legal measures?
Me: Yes Sir, there is the need of that one. Thank you Sir

Passed on to member 4

M4: What do you think of reforms in Indian Agriculture? Tell three in priority order.
Me: 1. Investment into agriculture infrastructure

M4: What do you mean of agri infrastructure?
Me: irrigation, availability of roads, warehouses. 2. Investment in R&D, and bringing them on to field (explained a bit) 3. Uniform national market to enable farmers to get benefited directly.

M4: (explained about potato shortage in West Bengal) Bengal govt has restricted export of potato. Is it justified?
Me: In the emergency situation, this is justified.

M4: But don't you think that it will against the federal structure of India. Tomorrow, Orissa can say that it will restrict Chickenpea.
Me: But Sir, This is an emergency situation and concerns of local states need to be taken care of.
 (A lot of conversation was there with M4 and M5 too)

Chairman: Thank you
Me: Thank you Ma;m, Thank you Sirs Thank you Sirs

The best part was "Chalo beizaati to nahi hui naa". And no questions on personal, which was a big relief. 

MUDRA Bank: New Initiative

Introduction

MUDRA bank the term coined in this year Union Budget 2015-16 stands for Micro Units Development and Refinancing Agency. This public institution has been created with the aim of funding the unfunded 5.2 crore micro and small business spread across the length and breath of India employing more than 12 crore individuals. It has been formed with a corpus of 20000 crore INR and credit guarantee of 3000 crore INR (2000 crore claimed by few sources too)

What is micro and small business?

As per the definition given by the RBI, micro units are those where the investments into plant and machinery is not more than 25 lacs INR (for manufacturing, production or processing) and less than 10 lacs INR in case of services. So who all comprises micro businesses? They are none other than tailor shops, cycle repairing shops, electrical and electronic repairing shops, weaving shops and industries and many others.

Same is the case with small businesses, with only difference of investment limit which is between 25 lacs and 5 crore for manufacturing and in between 10 lac and 2 crore INR for services. Local soap factories, paper industries (recycling of paper) are few examples for these.

Why them?

These micro and small businesses employ more than 12 crore unskilled, low skilled and skilled individuals (majority of work force) but only 4% of them have access to bank credit. They usually borrow from individual lenders at exorbitantly high rate (to the tune of 36% per annum) and thus very less fund available to them to invest in training their employees or in machinery. This on one hand reduces productivity of labor (calling for Skill India Mission) and technological backwardness of industries on other hand (calling for investment in R&D).

Funding these businesses can serve multiple purpose like skilling India and innovation in manufacturing and services. Also, it's the MSME sector only who are responsible for bringing new technology and innovation in industries which later on followed by bigger firms.

The other benefits include more jobs creation, increased savings, increased standard of life style and sociological change towards uplifting depressed section of society (as many of them are owned by people from lower and downtrodden section of society).

Hasn't Government done anything for them?

Government has taken many steps towards this direction and SIDBI is one such initiative. SIDBI (Small Industries Development Bank of India) and Mahila Bank (credit to women entrepreneurs) are such few initiative. SIDBI lend to public sector and private sector banks for their exposure to MSME sector and also through direct credit to needy units and achieved success in few industrial clusters.

But, given the large number of needy units in MSME; one SIDBI is not enough and more such institutions are required. Also, because of political interference in disbursal of loan through public sector banks (local MLA directing list to poor bank managers regarding beneficiaries) only a certain group/community reap the benefits. It has also been responsible for high NPA for PSB and RRB. And thus there is need for autonomous institutions with no government influence and can distribute  credit directly to needy individuals.

Can MUDRA solve this?

Answer to this question lies in its implementation. For now, MUDRA acting as NBFC under the guidance of SIDBI also given the task of micro-finance regulator. In future, if MUDRA would not be kept out of government influence the fate would be similar to SIDBI with little benefits reaching to micro businesses and more NPA.

Also, given the task of regulating MFI (micro finance institution) as well as funding micro businesses can be contradictory for MUDRA bank effective functioning. Alone, it can't serve the vast needs of 96% of 5 crore businesses and more such institutions are necessary (both in public and private sphere) to augment their businesses.

HDI and Union Budget 2015

The topic seems a bit strange but when at international level, development of a country is measured through indices prepared by various world organizations like UN, World Bank etc. And Union Budget is an exercise (planning exercise) by union government of India regarding growth of economy and benefitting every citizen of India. Then why not, judging the decisions taken under Union Budget in the light of those indices. And how the steps taken under union budget umbrella will make us improve our indices (representing growth and prosperity)

Now, Human Development Index (HDI) is one such index calculated by United Nation Development Programme (UNDP) that not only measures the economic growth of a country but also emphasize on people and their capabilities. HDI is the aggregator of health of an individual, knowledge level of people and standard of living of the citizens. They are calculated through:

1. Health is assessed through the life expectancy at birth (minimum value of 20 and maximum of 85 years)
2. Education is assessed through average year of schooling for adults till 25 years and expected years of schooling for children entering in school.
3. Standard of living is assessed through gross national income per capita adjusted for their PPP (Purchasing power parity). Logarithm of income is taken to take into account of diminishing importance of income with increasing GNI

Now judging the Union budget decisions under the light of these three criteria:

Health: Health of an individual is dependent upon sanitation, water, healthcare facilities and nutrition. Now, there is no need to mention the Swachh Bharat Mission, AYUSH, ASHA (Accredited Social health activists). However, government steps in budget regarding Swachh Bharat is commendable with 100% tax benefit in contribution to Swachh Bharat fund (susceptible to corruption and lackluster use) and high duty on polymer bags. Government has also emphasized on the construction of toilets with target of 6 crore units and health insurance through PMSBY (Pradhan Mantri Suraksha Bima Yojana) and establishment of more AIIMS and research institutions in medical field. As it seems government has lost its will to renovate the public health care system and trying to cover private health expenditure bill. 

On comparison at international level, India is still spending only 1% of its GDP on health while countries like China spend 3% and US spend more than 8% of its GDP on healthcare.

Education: Education requires infrastructure both in form of schools, colleges and in form of trained teachers and professors. Besides this, it requires social security to families that enable children to attend schools (MGNREGA is one such example in places where it has been successful). This year budget has led to opening of IITs, IIMs, AIIMS and other educational and research institutions with few in north Indian states (institute for film in Arunachal Pradesh), increased expenditure on MGNREGA by additional 5000 crore INR and allocated approx 68000 crore to education.

But the main problem of Indian education is its quality (highlighted in ASER report by Pratham NGO) and it has not even been addressed in budget. In fact, regarding the educational infrastructure the problem is regarding the governance rather than funding and resources. Also reviving the syllabus, making it more close to job skills are few of important concerns to be taken into account by government rather than just increasing numbers (either of colleges, schools and universities)

Living Standard: This is dependent more on the earning potential and actual earning of the individual. Regarding the potential which is more dependent on skill level and for actual earning the requirement is available of opportunities in industries, production, infrastructure and entrepreneurship. This budget seems to have a lot in this direction from encouraging entrepreneurship and MSME through MUDRA bank, incubator with 1000 crore under NITI for startups and easy availability working capital finance; to emphasis on developing skills of the youth through Deen Dayal Grameen Kaushal Yojana, National Skill Mission and scholarships. The budget has incentivized private corporate to invest through reduction in corporate tax and generate employment (what happens if they spend on labor reducing technology as usual since 1991).

The budget seems to prioritize growth through industries over education and health. May education and health find its true worth in next year budget or in governance improvement initiative throughout the year. And only then, we can expect of improving our HDI rank with respect to other nations.

How I see this Budget (Part1)

It has been said that there aren't big bang reforms in this budget. The point here is, we are living in a democracy and in a democracy government's future (parliamentary and assembly elections) is dependent upon majority. In India, this majority is formed by middle and lower class people. And they must be taken into account while formulating budget. Subsidies can't be wiped out in one go without building institutions to streamline distribution of subsidies. And institution building takes time. JAM (Jan Dhan, Aadhar and Mobile)  as coined in Economic survey as best tool for limiting the leakage in subsidy will take time to be resilient and successful.

Tax benefits can't be provided leniently without compromising with government revenue (many expecting tax limit to increase to 3 lacs). At the same time, government needs more fund to invest in infrastructure and minimize deficit. But still, government has given hint of following direction of fiscal expansion by reducing fiscal deficit to 3% by next three years instead to 2 years.

Now looking at the measures announced:

1. Ease of doing business

• Bankruptcy laws help resolving insolvency (one measure of easing of doing business)
• Other measuring units are getting electricity, registering property, getting credit, enforcing contracts, paying taxes, protection of minority shareholders, dealing with construction permits. Improvement in these require more of governance reforms rather than budgetary reforms
• Few of the governance measures announced includes encouraging compliance and dispute resolution, simplifying tax procedure and implementing recommendations of TARC (Tax Administrative Reforms Commission)

2. Agriculture

• In urgent need of public investment towards capital building like irrigation, there is also growing demand of making a national market for agriculture products. Both these need has been addressed in this budget
• 25000 crore fund to Rural Infrastructure Development Bank, 5300 crore to Micro Irrigation Programme, watershed development and PMKSY (Pradhan Mantri Krishi Sichai Yojana)
• Farmer's credit to the tune of 8.5lakh crore

3. Infrastructure

• Infrastructure bottleneck is due to lack of funds, non viability and litigants in PPP projects, delay in land acquisition
• Funds problem has been tried to solve through 70,000 crore additional fund to Infrastructure from Union government, tax free bonds, and revitalizing the PPP projects with government bearing maximum risk
• To improve the functioning of public sector ports; they will be encouraged to come under Companies Act.
• Emphasized Research through Atal Innovation Mission with 150 crore to foster culture of innovation in development of infrastructure.

4. Financial Sector

• Indian financial sector that enable the companies and developmental organizations to raise funds for investment and infrastructure building and opportunity for investors has many shortcomings (insider trading,
• Forward Market Commission (which looks after commodity trading) is proposed to be merged with SEBI (can be said to be moving towards one uniform regulator)
• For a very long time now, economists have been arguing in favour of an independent debt management office, which in the Indian discourse is called " National treasury management agency" or debt management agency, so that RBI can be relieved of the burden of being the Centre's investment banker. And Public debt management agency being formed is one of the recommendation of IFC (given by  Financial Sector Legislative Reform Commission)
• PJ Nayak Committee has recommended Banks Board Bureau for appointment of chairman to PSU banks to ease them off government controls. This has been approved of in new budget
• Gold imports has been a major concern since last two to three years for India; to case off gold monetization has been attempted through Sovereign Gold Bond (equal to holding gold) and Indigenous gold coin with Ashok Chakra

5. Industries

• At present, India has seen a surge in entrepreneurial activity across the sectors. These activities bring innovation in industry and need to be promoted. Indian democracy can be best justified if it enable its weakest individual (financially)to dream of becoming a millionaire by just business. And establishment of Mudra bank with initial capitalization of 20,000 crore to finance micro-finance firms  who lend to small units.
• Regarding the high class educated entrepreneurs willing to start in technology related business, SETU incubation programme  has been launched with funds coming through NITI.
• Regarding the big corporate houses, corporate tax will be reduced to 25% over four years (nothing in this year) with end to all the exemptions phase wise (exemptions are responsible for reducing effective tax). It is believed that this will boost investment; but when already companies are sitting on pile of cash worth 8-9 lacs crore and not investing, this justification seems questionable. 

FFC and Cooperative Federalism

FFC stands for Fourteenth Finance Commission. Finance Commission is a constitutional body  constituted under Article 280 with the main task of division of resources among centre and state government through tax devolution and grants in aid. Besides this, it also give recommendations to problems as requested/directed by the government of India.

FFC was constituted under the leadership of Y V Reddy (erstwhile RBI governor, IAS officer renowned for sailing India out of BoP crisis and appreciated by Nobel Laureate Stiglitz for his work as RBI governor during global financial crisis) . FFC was further given the task of:

1. Effect of GST on finances of state and Union governments
2. Amendments to FRBM Act
3. Pricing of Natural resources
4. Subsidies level for inclusive growth

The recommendations of FFC is aiming towards achieving cooperative federalism (equal say to states and centre on developmental activities). Also, this is in line with recent trend of growing decentralization in decision making which was started with 73rd and 74th amendment in early 1990s.

Funds and Grants in Aid

FFC major recommendation is regarding fund given to states through tax devolution to 42% from current 32% ( recommended by 13th FC) and change in weightage of factors like per capita income distance, forest cover, population, demography and area. To be precise, tax devolution will now on the basis of distance from highest per capita income district (50%), Population (1971 census, 17.5%), demography (2011 census, 10%), area (15%) and forest cover (7.5%). This changed formula has given more funds to special category states (states like Arunachal Pradesh, HP, Mizoram, Nagaland, Sikkim with difficult terrain and near border and strategically located). It will also benefit states with high forest cover like Jharkhand, MP and Chhattisgarh, but definitely a loss to UP and Bihar with population as low weightage.

Regarding the grants in aid which are more discretionary in nature; FFC  recommended a specific institutional arrangement be introduced for this purpose. And Inter State Council has been suggested to expand its role into this area. If implemented with true intention, this can be a milestone in achieving fiscal federalism among states and union.

Local Bodies

Local bodies often complain of less fund available, to take care of amenities. FFC has gone further towards decentralization in this with more fund to local bodies to tune of 2.8 lacs crore over five year period. And recommended states to pass advertisement tax to local bodies. FFC has kept check on working of local bodies by incorporating performance grant to funds being granted.

FRBM

As usual, FC commented on reducing fiscal deficit of centre to 35 ceiling level by 2016-17 and zero revenue deficit by 2019-20. And reduce the debt of centre to  36.3% by 2020 (from 45%). All these measures are suggested to be part of amendment to FRBM act. Or alternative to that, FRBM should rather be replaced Debt ceiling and fiscal responsibility legislation (as per Article 293). 

GST

Even FFC unable to estimate the loss of revenues to states amidst absence of clarity and design of GST. However, it recommended the same system as was used in VAT compensation (for three years, 100%, 75% and 50% respectively) but for five years (first three years as 100% then 75 and 50%). Also, Y V Reddy has given the suggestion of autonomous independent GST compensation fund to decrease the discretionary power of centre in such issues (seems his experience at RBI with centre government interference implicitly)

Pricing of Public Utilities

The only major recommendation is regarding the amendment to Railways Act through Railway Tariff Authority as statutory body rather than advisory body. This will rationalize the tariff in India. Currently, India has lowest passenger tariff and there is cross subsidization through freight revenues. But at same time, needs of poor need to be taken in account through use of technology in subsidizing rail travel.

In nutshell it can be said that FFC has given ample room to states to act on its own and share a higher fiscal responsibility for implementing the various central schemes. This will take care of diversity and inequality among states. GST matter is still left uncleared with lack of clarity and may take more time to come into existence. And as usual being a democratic nation, every recommendation's success depends upon the political will power of the party in the government. Although, this government has shown the right mood by accepting greater funds devolution to states.  

Railway Budget: This time its different

When I think of Indian railway, the picture that comes to mind is overcrowded stations, late running trains, tracks full of filth at stations and long lines for enquiry and ticketing. It may be because I was limited to north and East India, most populous region. But, when 65% of an organization's customer are not satisfied with the facilities, it must need to be restructured.

The status of Indian railway can be judged from the facts that only 200 km/year has been added since independence to Indian Railway infrastructure. Also, new trains were announced every other year to woo the voters of whichever states undergoing assembly elections; and they had to run on same limited track length. In last 30 years, only 317 projects out of 676 sanctioned projects have been completed. All this shows the poor decision making and operational efficiency of Indian railway.

This railway budget 2015-16 represented by Suresh Prabhu is bit different as there isn't any announcement of newer trains and jinx regarding focusing on transparency and accountability has been broken. The railway budget rather can be viewed from different angles like

Transparency and Accountability

In order to take care of projects running and prevent time delay, a new delivery mechanism and monitoring system (to prepare deadlines and make sure deliveries sticking to deadlines ) has been proposed. Further management inside railways has been said to be revamped to the need of time and increase the operating efficiency of railways. Training to front line  employees has been proposed to enhance accountability.

Services

Various measures are taken from installing CCTV cameras in Women compartment to declaring 182 as the helpline number . Although, it's efficiency depends on time that whether someone would be there to pick that phone or repair the faulty cameras or not. A separate department is going to be established for cleanliness which will ensure training of employees, coordinate with RDSO regarding vacuum toilets or with NIFT regarding linen that is in use inside bogies.

Technology

This year special emphasis has been given on use of technology by railways to efficiently serve customers. Use of Ipads by TTE, bar code on parcel handling, unreserved tickets available on smartphones are few such measures. But, how railway is going to implement such measures is yet to be seen because it's the same country where there is more than 95% enrollment to schools one side and 8th standard student unable to divide on another side. (truly, we are in a diverse nation). Also, there is emphasis on applied and fundamental research with new centre proposed to be established in four universities.

Infrastructure

The much needed boost to infrastructure has been given in this budget with eyeing finance from international development banks and pension funds, joint ventures for developmental projects with revamped PPP model (specially the contractual clause part), stress on satellite railway terminal to ease off overcrowding at metros and junctions. Also, to increase the freight handling capacity of railway that make it earn 67% of its revenue, private participation has been encouraged through freight terminal scheme.

This railway budget seems realistic with emphasizing completion of already undertaken projects, call for participation of NGO and MPs (through MPLADS), revamping the services being provided by railways and not on populist measures like bullet train. Rather, it led stress on research and use of technology in existing infrastructure. And as said in hard core economics, "All can't be satisfied with sops but can with hope" and this hope seems achievable. 

Fiscal prudence versus Fiscal deficit

In a country like India with mixed economy, government plays a major role in economy from investment to making availability of social goods and from running social benefit programmes to supporting the less developed market of certain goods. The recent debate on fiscal discipline versus fiscal expenditure is important because of this role of government in economy and state of Indian economy over last four years.

The first question that comes to mind is what is fiscal discipline. Fiscal discipline is phenomenon where government try to limit its expenditure to the extent it earns from tax, disinvestment and others. Or if there is excess expenditure, it must be controllable (regarding payment of interest) and justifiable (stimulus during recession or capital building).

 In absence of fiscal discipline, government used to have less room for spending during crisis situation. Also, it would be difficult for government to borrow from international markets (because of poor rating which depend upon fiscal numbers), huge interest to be paid to borrowers and adverse impact on exchange rate  causing low export numbers.  The high exchange rate is a result of high interest rate which would be a result of crowding out phenomenon by government borrowing. Amidst this, fiscal discipline is important and necessary.

But, at the same time fiscal deficit is also important. For a developing country like India, the resources available to the government are often not enough to spend on capital building as well as running social benefit programmes. Under such situation, it is advisable to borrow from market (both national and international) to spend on productive work.

If not, it would take a long time for the nation to come out of poverty, unemployment and malnutrition (prevalent problem of developing economy). Also, going by Keynesian thought fiscal deficit is justifiable if used to augment business activities either during depression or through infrastructure building.

Indian economy which has seen 8-9% growth rate in pre 2008 has declined to below 5% growth rate in 2012-14 (excluding the change in base year, recently done). Amidst this low growth, there was the change of government at the centre in mid 2014. At the time, government was reeling under high deficit of 4.9% of GDP in 2012-13 and 4.5% in 2013-14. This was definitely far beyond comfort level of 3% as specified in FRBM Act . Rather, the main problem is regarding the use of this deficit causing money which was spent heavily on subsidies and less on capital building. And subsidies in India has been very poorly targeted with leaking organizations like TPDS, MSP, Fertilizer subsidy ill targeted.

As a result of high deficit, there was less capital available to private sector leading to slowdown in business activities. Further, government itself has not been spending on capital expenditure, causing infrastructure bottlenecks. And worst of all, more money is available to the people without increase in business activities and production causing inflation.

But in the recent past, fiscal status has been improved with prudential expenditure and reduced international oil price. Now the conflicting point is that to go either for fiscal consolidation through reduced expenditure or go for fiscal expansion with stress on building infrastructure to support production. The resulting fiscal expansion if used judiciously will be cyclical in nature and not structural, but it purely depends upon the intention of the ruling party. Or else, go for fiscal consolidation but  then infrastructural bottlenecks need to be overcome through private players (which in present situation, not capable enough).

Disaster of Kedarnath

Kedarnath has been one among the most religious and pilgrimage place for Hindus in India. Kedarnath temple is famous for its historical importance, association with Lord Shiva and connection with some great personalities of the past like Shankaracharya and Raja Bhoja. These personalities were believed to be behind the construction of this temple in 10th -11th century. But, in the present it has been infamous for the natural disaster of 2013 in form of cloud burst resulting to massive flood.

Kedarnath temple is made up of schist stone found locally in middle Himalayas. The temple was built over a single rock as its platform and it's a totally dry construction. Dry construction is the kind of ancient construction with absence of any binding material like mortar or cementitious material. Dry construction gains its strength through gravity in vertical direction and interlocking of building blocks in horizontal direction. The building blocks are huge Schist boulders locally available in the region and cut into specific shape and size. This prevents the vertical and horizontal movement of the building blocks. And in fact, this aspect of Kedarnath temple prevented it from flash flood carrying millions of gallons of water. At the same time, all the modern construction in the vicinity of temple was washed out. 

 

The intensity of the damage can be guessed from the above image. There was massive landslides and undercutting; infact, the Mandakini river has changed its course during and after the calamity. But Kedarnath temple survived the force of nature by luck and by use of engineering. The flood brought with itself huge volumes of water and massive boulders (some of even size of 10m x 2m x 3m). These boulders were the reason behind the annihilation of Rambara town falling into the course of river. But for the temple, one among such boulder was the savior.

First, small boulders came from top along with water, which got settled in the rear side of temple. Then, a huge boulder of size 10x2.5x3 (m3) came and bifurcated the flow of water along the sides of the temple. Also, since the temple is of dry construction with use of interlocking among building blocks at same level; the damage was minimized. 

Damage was there mainly into projections spreading out from main structure like few columns of the Mandapa (middle portion of temple). Few of the building blocks were broken or missing from the corner of the temple, which can be repaired with locally available stones stitched to remaining one. 

Above figure demonstrates the damaged column of the temple, which for temporarily supported with stone bricks available locally. The only concern regarding the temple is its foundation where water gets deposited after the flood. The exact location of water has to be found in order to pump out; but the concerned technology is not available in India. And the only solution of digging is not there in the list because of sanctity of the area as fixed the so called religious guards. And it's very difficult to make them understand the engineering. The existence and durability of this great Kedarnath temple structure depends on this, which will be decided by time only.

What I learn from my friends (Roorkee chapter)

Families teach us social behavior and along with that certain constraints. Constraints can be in term of what not to do as a part of social behavior and it is a result of familial experience over time. But, it's among the friends, where we learn beyond those constraints. This happens because of equal say amongst friends and collective risk taking while adventuring unconventional activities.

This is my experience at IIT Roorkee with an entirely different set of friends and my learning from them. At the time of my admission into IIT Roorkee, I was introvert, refrain from public speaking, under-confident (inferiority feeling when met with a student with fluent English) and in a habit of lying to hide my weakness or status. But on positive note I want to remain honest to few, have a decent aptitude and believe in hard work to learn and excel.
Once inside the campus and in next four years, after interacting with friends I learned a lot what to do and not to do and this had a deep impact on my personality. The results of these learning are visible over a period of time into my behavior and character. Some of my key takeaways from few friends:

Friend 1: I never had seen such an individual who is so much confident, fearless and intelligent. Inside a GD room during campus placement, I would never ever ask for pen from panel itself (obviously because of introvert nature); but this guy did that. And he taught me to be natural, not to fear of societal bondage and rituals. But at the same time, he was not consistent and having a poor emotional quotient (gradually improved a lot with exposure to friend circle).

Friend 2: This guy's simplicity and no nonsense attitude is worth to be learnt and practiced in real life. I although inspired from this but couldn't bring that into my life till now. But what I learn from him regarding not to do is never following a path blindly. You should always keep your eyes and ear open while preparing to achieve something.

Friend 3: I didn't have any sense of style, either in dressing or in conversation. This guy reminded me of the importance of presentation and sharpness in life (still lacking a lot). Also from him, I learn how not to waste time. And from his experience in life, I realized the importance of farsightedness and rational decision making in life.

Friend 4: This guy made me realized that extreme of everything is bad. And you have to balance your family, friends, love life and academics at the same time. But one thing that made this guy stand apart was his people skills and this quality was the savior for him. People skill is something, I always wish to master.

Friend 5: I never understood the rationality behind his behavior. Only learning, I am having from this guy is what not to do. He may act in a way, that show me 'the way' not to be followed. It may be a disaster for him but a learning for others like me.

Friend 6: This guy has a lot of traits to be learnt. But the problem here is inside me, because I never took the initiative or feeling of learning from him because of my competitive nature. I always tried to excel more than him and rarely took notice of his abilities and behavior to be followed.

I don't feel that after graduation I became perfect with my learning from these pals. But I do feel that my personality has improved a lot and it will take time to personalize those envious traits. But one thing I can confidently say, that forty years down the line, these guys will definitely have a contribution to my success (up to whatever extent that success will be).

Missing girl from the classroom

Education system of India, can only fulfill the dream of developed India by making Indian demography a dividend rather than being a disaster as going by current trend of poor skills of Indian youths. But this education system (government funded institutions) is suffering from poor teaching skills, absence of teachers in government funded schools and poor attendance of students. And often, one leads to another; absence of teachers demotivates students from attending schools and absence of students has been an excuse as given by teachers.
Well, these are the obvious reasons, but beyond there are few other infrastructural and sociological reasons. And I realized this on one of my trip to a girls high school in Jharkhand. As I entered a class-room of official strength of 100 but there were meagre 30 girls in the classroom. I enquired into the reason and beyond the usual reasons of low skill level of teachers and their absence; the reasons were unavailability of transportation fare to schools for poor girls (who comprise a major chunk of students), unavailability of time to girl child to go to school after finishing household activities.
These institutions are the only hope for poor tribal and rural students. And the institutions are mainly located in cities and towns, and access to such institutions require distance to be covered by bus, jeep , train or even auto-rickshaws. But these require the cost to bear for transportation, and for those daily wage earners it was very difficult to give 20INR as transportation cost to their wards to attend school.
Girls get the opportunity to visit the (sacred) school only when their parents get the wage.
While for girls from cities and towns, the sociological factors are inhibiting factors in accessing schools. In morning, they are first entitled to feed their brothers and fathers as well as cleaning the house and then go to schools. As a result, many a days they don't find time to attend the school.
And when I enquire about the so called usual reasons; the response are quite different. Their expectations are not that huge from teachers but the problem is regarding the time, infrastructure and money being provided by their families/government to reach and attend schools.

Life is an experience and not just a bunch of paychecks

And every day, from school bus ride in the morning to a film in the night; we wish for possession of lot many materialistic things related to cars, bikes, gadgets and many others. If not, we are (so called) motivated by relatives and neighbors to be jealous of competing friends regarding aiming for bigger salaries, bigger cars and bigger homes. And in the way, we would tend to miss many life changing opportunities.
Risk is an eternal part of life that makes it enthralling, beautiful and memorable. Maybe, because of that in the previous times Kings used to hunt and went for wars (although ethically and morally wrong). But this important ingredient is missing from the life of a middle class family; that further lead to missing such opportunities in life. Either going for a start-up or leaving the job to work on a social cause or following passion like photography, painting or any other; the middle class mindset (risk averse) prevent us from following such.
Such opportunities (successful or failure) beyond their monetary importance are implicitly carrying the messages of innovation and inner happiness. But the paychecks rarely have such implicit meaning and only have obligations, so called secure obligations. But in life, what remains after all the events are the thrill associated with it, the adrenaline rush and the memories; which can't be purchased with the paychecks but through experience (with those opportunities). That's what life is.

MGNREGA

A lot of hue and cry going on over the tweaking of labor:material ratio from 60:40 to 51:49 as well as over the overall benefit of MGNREGA the so called ROI.
MGNREGA standing as the Mahatma Gandhi National Rural Employment Guarantee Act was started in 2005 is a demand driven right to work programme to rural India. It aims at ensuring 100 days of productive work to rural households during off agricultural season ensuring a minimum wage. The purpose behind the programme included ensuring a minimum wage rate to agricultural labourers by providing them a bargaining tool, preventing the off season migration from undeveloped rural areas, reducing poverty through wage based empowerment of poor, women empowerment through increased women labor force participation ratio, uplifment of oppressed classes like SC and ST and implicitly increasing literacy level among destitute's children by providing working opportunities to parents. The program is very noble in its objectives and labor:material ratio of 60:40 is in right direction towards labor intensive works to be carried.
Now 9 years after its deployment, time has come to analyze the actual benefits caused by MGNREGA and at what costs. It has been observed that number of days an average worker is provided with work is a meagre 46 days in 2013-14 with a outlay of 33000 crore of INR. Also, the quality of infrastructure built under MGNREGA are of inferior standards. A lot many reasons are there behind this debacle, starting from poor governance in job card distribution, poor coordination among departments over transfer of funds leading to delay in payment of wages, poor coordination among different social sector programmes like PMGSY, MGNREGA, NBA (Nirmal Bharat Abhiyaan transferred to Swachha Bharat Abhiyaan), poor implementation of information, education and communication of programmes among rural people, awareness among PRI over their power in conducting social audits of programme, and mal-functioning grievance redressal mechanism. Another major cause which has been said to be responsible for poor quality of infrastructure is less inclusion of material expenditure. Another ground on which MGNREGA has been criticized is the rising food inflation in India and the blame is on increased rural wages in agriculture (MGNREGA minimum wage has been increased from 67 in 2006-07 to 132 in 2013-14).
Under such reasons, there are talks of scrapping MGNREGA to improve the quality of constructional works being carried out and focus towards infrastructural built up to boost manufacturing.
At this point, we should rather revise the major objectives of MGNREGA and its role in achieving those and then look at the reasons behind its failure. And if those failure can be rooted out in a sustainable and profitable manner or to scrap the programme. MGNREGA achievement has been mixed across the states, while it has been more successful in southern states of Andhra Pradesh and Tamil Nadu who together provided 23% of working hours under MGNREGA using smart card, social audit by panchayats, use of ICT in payment of wages and closing all loopholes and dedicated grievance redressal mechanism. While in poor states like UP, Bihar, Jharkhand, Orissa there are the major leakage in the funds. But the impact is more widespread in these backward states only reducing the migration from the tribal areas of Orissa and Madhya Pradesh with availability of works and high involvement of women (near about 45% ) which has actually been one of its major objective.
Coming to quality of construction, in the rising awareness towards environment and world moving from GDP level of growth to Gross Happiness Index and Happy Planet Index of development, there is need to carry out eco-friendly construction practices and use of natural resources. And this is what has been practiced in many of the rural blocks in rainwater harvesting, irrigation infrastructure and development projects and if it has not been done, professional teams have to be deployed at rural level to achieve this. To the point of MGNREGA causing inflation, it's contribution to inflation is very less with respect to structural causes (protein based diet and low output of pulses and livestock, poor agricultural infrastructure in terms of cold storage and warehousing, increase in MSP under rich farmer lobbying). Anyway inflation is synonymous to decreasing unemployment as per philips curve and if that inflation is coming on the empowerment of poor agricultural labourers, it must be accepted. And efforts should be rather on decreasing structural causes.
The recent govt. initiative for special focus on 2500 backward blocks through enhanced funding and deployment of Cluster based professional teams to assist the panchayats in carrying out productive work in an environmentally friendly manner is in the right direction of streamlining MGNREGA. At the same time, learning is there for poor performing states from states like AP and Tamil Nadu which has shown the way of blocking leakage through use of ICT initiatives. MGNREGA has been a great innovation towards achieving equality in rural society which need to be nurtured rather than scrapped.

Inflation

1. Inflation is the phenomenon of rise in prices of the goods and services over a period of time. It can be both desirable and non-desirable depending upon the quantitative limit of Inflation and is caused out of a number of reasons from demand supply gap more often, rise in prices of raw materials, disdain in the supply chain of the system, black-marketing and hoarding and many others.
2. Inflation can be measured in a variety of different ways. One way is to measure it at different levels of supply chain like at whole price level and is known as Wholesale Price Index (WPI) and at retailer level called as Consumer Price Index (CPI). Also number of goods and services included inside them can vary depending on the decision making body of the country or the state. It can be calculated differently for different sets of people depending on their consumption pattern like CPI-Industrial workers (CPI-IW) and CPI-Agricultural Labors (CPI-AL). In India they are collected and published by different organizations from Ministry of Statistics to Ministry of Labor.
3. Inflation is desirable when it is in limits and in coherence with development and growth in terms of production and demand. Different central banks across the world target a sustainable inflation rate which is normally in the range of 2-4% year on year. Such inflation rate has proven to be in line with growth in GDP and assures benefit to all the stakeholders of the system. Federal Bank of US target inflation rate of 1--2% to sustain a growth rate of 3-5% of their economy, similarly European Central Bank targets inflation rate of 2% to sustain growth rate of 3-4%. German Bundesbank (before formation of ECB) has proved its mettle in fighting inflation to keep it below 2% and this sustained high growth for german manufacturers throughout the cold war period.
4. While on the other hand inflation may proved to be undesirable when it is beyond the comfortable range of 4-6%. Such inflation rate is not sustainable and mainly caused out of abrupt hike in prices of raw materials, increased cost of production out of regulatory reasons, hoarding, black-marketing or may be because of lack of competition in the market. Such high rate of inflation is harmful  because of increase in prices of goods and thus hampering its consumption and thus hampering the demand and ultimately growth of the sector. It also erodes the faith of foreign investors into the economy of the country and lead to flight off of foreign investors. Along with high inflation, demand of the goods come down and as per Demand Supply curve; this will further pull down production leading to unemployment and less investment into the economy. In the short run, this will cause slowdown and high inflation prolonged for a long time duration will push the sector into recession.
5. In context of India, since independence inflation has been predominant out of number of factors. At some instant, inflation is there in food grains in pre green revolution era out of drought and crop failure limiting the supply of food grains; at other instant inflation is there in capital and durable items because of increase in prices of raw materials and regulatory reasons like that of vehicles because of shortage of coal and electricity inflating price of steel and then to vehicles. Inflation has thus, a wide reaching affect to multiple sectors. The worst form of inflation is due to malpractices like hoarding of goods creating artificial shortage with motives of earning high profits. Such practices are very common to India from the time of britishers and specially in the food grains as they are essential items of consumption.
6. In the current scenario, inflation is high and is hovering around 8-12% in case of CPI because of reasons including high govt. expenditure through MGNREGA and other social assistance programmes pushing more money into the market, continuous increase in MSP (minimum support price) of cereals and other food items pushing cost at the procurement level, as well as malpractices of hoarding.
7. Although all sections of society is affected by high inflation as it leads to wiping off the savings of the families and individuals. But the worst effected people are marginally poor who are continuously moving in and out of the poverty line and specially because of high inflation in case of foods and essential items. In the absence of govt. support, they have been pushed below the subsistence level
8. Govt. across the world use to take multiple steps to check high inflation. The leading fight against inflation is carried on by central banks who through target based inflation increase/decrease the interest rates to control the flow of money into the market (more money in the hands of people pushes up the demand of the goods). This they do through changing the rates at which they lend money to the banks and other regulated institutions and thus affecting cost to money. In case of India, Reserve Bank of India is leading in this fight with target inflation of 4+_2%, through repo and reverse repo rates.
9. Besides this, govt. across the world ensure the prices of the goods and commodities not to breach a certain level by controlling the import and export of those goods and commodities. Further controlling the prices of essential commodities through acts and laws like Essential Commodities Act in case of India. Laws across the world have been made to check hoarding of commodities and black-marketing of such goods.
10. In-spite of such measures high inflation is prevalent in society sometimes because of poor implementation of laws and rules, poor forecasting in case of central banks, natural calamities and poor planning at production level. The war against high inflation has to be continuously fought through existing and innovative tools with firm hands in the interest of the society and economy as a whole.

Give a try....

Not only in present times, even our previous generation or the generations much before them; youths always would have fallen in love with someone or other in their life. And most of time, they used to have a background check of the special girl/boy and very few used to have the courage to accept the feeling in front of him/her. And many a times, most of them let the feelings fade on grounds of the boy/girl being from different religion, class or caste of the society. The basic deterrent here is the social malaise like communal-ism, caste-ism, class difference and others on the basis of which we limit our emotions. 

Now, going against the usual process which very of us used to practice also; in-spite of the human created deterrent if we go along with the divine feeling of love and accept that feeling in front of him/her. There can be series of consequences, either accepted or dejected or in a between of the two. Well, the motive here is neither to force your feeling on the other nor to be dis-heartened by the rejection; the basic motive to promote these feelings is to respect free thinking and feelings and more than that to get over the social malaise of casteism, communalism regionalism and others. 

Because in the later part of our life, when we come across the real life incidents of murder, riots and mass murder in the name of religion or inequalities in society on grounds of caste and favoritism; rather than taking sides in such conflicts we should respect that godly feeling of love. And amid all these conflicts, we should rather strengthen harmony. The evils that we used to encounter in our later life can be encountered only with feeling of love and some rosily experience with family and loved ones that we encounter in our early life and it is these experiences that keep us going in the right directions in presence of evils all around us. 

Indo-US relations: How it can shape in future?

India after independence, despite being founding fathers to Non Aligned Movement was more aligned to USSR owing to its inherent socialism in domestic development policies adopted by Indian politician. But after 1991 i.e. end of cold war, India review its foreign policy and developing closer ties with European ties and US; also taking care of its investment need in infrastructure and technological needs after New Economic Policy 1991.
In the present uni-polar world growing more towards multipolar; India relations with US is not in upswing corroborating to Khobragade issues as well as other contentious issues at WTO negotiations. But with single party govt. in India and changing world with west asia crisis, Ukraine crisis, South china sea crisis and many more, Indo-US relations will depend on different happenings at different fronts.
Nuclear Energy Front
After the signing of Henry J Hyde Indo-US Peaceful Atomic Cooperation Act which paves the way for India to buy US nuclear reactors and fuel for civilian use also including the 123 agreement on same; there is growing hope for peaceful cooperation. Although, the bone of contention can be the liability clause for US firms engaging into the same.
Trade Relations Front
India need for transfer of technology and measure to boost foreign trade and with US as major market for IT outsourcing, trade relations will move on more healthier path. India balance of trade surplus with  US has grown twice to $20 billion from 2009 to 2013. Although, at WTO and Climate change conferences and negotiations, US strongly pressing against benefits enjoyed by India and China as a developing economy rather than being into emerging economy.
Strategic Front
US being awry of China and its China containment policy with supporting Japan and Taiwan in East will go for supporting India in the west. Also with a history of restrained Indo-China relations and china policy of encircling India through string of pearls and Maritime Silk Route; India will prefer to have heavyweights by its side. In the recent past, US relation with Pakistan is in frills because of growing Islamist extremism and US drone attacks on Pakistan Afghanistan border. This further alienates India in recent future to have bilateral talks with US at much higher level.
Besides, that US still had pressing situations in Afghanistan and Iraq and premature withdrawal from america's commitments in those countries would make US to have asian ally for reconstruction. And these perfectly suits Indian viewpoint where Afghanistan stability is important from regional security and Iraq's political stability is needed to take care of India's burgeoning energy import bills.
Russia, India's closest ally but recent incidents of military helicopter sale to Pakistan and growing proximity with China after Ukraine crisis force India to raise concern with Russia at talks with US by its side.

Innovation in public service

In India, public service is theoretically in the hands of elected leaders and the task of ope-rationalizing and executing the plans are practically in the hands of bureaucrats and govt. officials. Such a massive task of executing tens and hundreds of crores of development activities are in the hands of  these people. And at the ground level, many of these bureaucrats have an average qualification or exposure to best practices and innovation in operations management or planning or the practices of collaborator in social/public projects. (leaving aside very few candidates with very good credentials entering the services these days) Although, govt. do have experts of these at highest level of policy framing and policy monitoring in forms of planning commission or various other commissions. 

At the same time, there are literally thousands of bright stars who are graduating and post graduating from best to average colleges and working in various Indian and MNC firms. And there only aim is to have fat cheque at end of month, have decent lifestyle and metro culture. Although many of them are capable of qualifying for govt. bureaucracy but rarely do they bother about that on many grounds. Corruption, political pressure, remote location, lack of will power to serve society in large, meagre probability of success in qualifying examination and above all the most diminishing factor to bright candidates is lack of innovation opportunity in such jobs. And only one who used to prepare or have motivation to enter this field is because of huge power vested to these bureaucrats, social prestige associated with that. Also most of these students are from areas where importance to power is known over innovation and money.

Well, there are restrictions in this public service job, but also there are freedom to implement projects and policies at ground zero level. And taking consideration of shoddy states of affair, there is great scope for improvement. You may not change the system, but you can surely establish a university or a hospital taking help of private firms CSR initiatives by acting as a collaborator. You may not control the corruption in system but you can definitely improve the grievance redressal mechanism by ICT initiatives. You may not change the ethics of govt. employees but you can definitely input practices of operation management in ensuring timely delivery of projects deliverable. Opportunity is immense, only thing needed is candidates who are motivated towards innovation in public distribution and public service and obviously who see his smile in the satisfied face of destitute ones.

Educated and Enlightened

Atmosphere is getting hot not just because it's April, rather more because of election. Rise of middle class against the corruption, crony capitalism or nepotism in govt. or corporate circles is going to shape the Central govt. Leaders, activists and even general enthusiasts are talking about importance of education to uproot corruption. A lot more emphasis is given on education. But is education enough to solve all the problems India is facing from ground level at Panchayat or district official level to streets of planning commission and other secretariats?

I doubt this fact? Just by educating the uneducated rarely going to make an honest society and environment to thrive. Presently, a lot many of educated individuals specially belonging from lower middle class to middle class are eyeing govt. lucrative jobs. And they are lucrative from the point of black money or unprecedented power. And why they are eyeing all these? Because of the previous generation's deeds regarding making a fortune while being at that lucrative position and their practice of boasting in public meetings. 

On one hand, these educated parents want their wards to be educated to the best level. While on other side, expecting them to be at same or higher such lucrative jobs and make another fortune for the family. 

Just education is not enough in the present scenario, enlightenment is also must. 

Just enlightenment will make you a better citizen but never a better husband or a son or a father. Because it is through education (either acquired in schools or from experience) only, one can earn and live a decent life. It's only combination of education and enlightenment that can transform a society into corruption free hamlet.