Volume - I No.2

August 2013

Challenging to Change - Sustainability Issues In India!!

Social Networking Sites and Social Science

Special Interview with Prof. Daniel Miller

Macroeconomic Effect in Brazil due to upcoming FIFA World Cup and Olympics Street protests: an EPS perspective Too Many Too Little

Debtanu Dutta Surbhi Verma

EPS Co-ordinators (Batch 2012-14) eps@iimk.ac.in Manjunatha Belgere Ajinkya Lokare

Faculty Advisory Board
Prof. Kausik Gangopadhyay Prof. Subhasis Dey Prof. A. F. Mathew Prof. Sthanu Nair Prof. Venkat Raman Prof. Rudra Sensarma

Editorial Board
Biswa Prateem Das Debtanu Dutta Manjunatha Belgere

Presented by

Economics Politics & Social Sciences Interest Group Indian Institute of Management Kozhikode

Editorial

After an inspiring success of the inaugural edition, we are very happy to present you the second volume of “Pragati”, magazine from Economics, Politics and Social sciences (EPS) Interest Group of IIM Kozhikode. This time it is much inclusive and much bigger. We received articles from students of the esteemed colleges of India and published the best among them. This is a result of tireless effort and dedication from the student members of the group and endless inspiration and help from the faculty members of our “Faculty Advisory Board”. EPS Interest Group is a cohort of enthusiasts on economic, political and social issues. Main aim of this group is to create awareness about recent related issues and sensitize the community on the importance of human initiatives. As a group we facilitate debate, discussion, article writing, social live projects and other activities. Our teachers always say that creating awareness is the first step of mobilizing people. EPS strives to engage people in various activities to create a vibrant and sensitive human community. The second edition of Pragati deals with pertinent issues which have shaken India and the entire world. This magazine brings together the voices of agitated students against policy debacles to novel perspectives shed by academicians to current socio-economic issues. We received guest articles from different diaspora of authors. You will get to know about negotiation behaviour of Chinese people; how social networking affects human lives and how a very common issue in Railways can be addressed by innovative approach. In our best article you will find a hope to create a sustainable future to our country. We hope this second attempt of ours is a good read and is successful in triggering your thoughts towards society and sensitizing you to the burning problems of our country and beyond. Please do provide us any feedback to make it a more worthwhile experience for you and others. Hope all of you will enjoy the magazine!

Sincerely, Team EPS eps@iimk.ac.in

Contents
An interview with Professor Daniel Miller .........................................................................................1 Challenging to Change—Sustainability Issues In India!! .................................................................3 Direct Cash Transfer: A game changer or a political gimmick?......................................................6 Fiscal Deficit: Curbing the menace .....................................................................................................9 Land Acquisition Policy in India: Towards a Pragmatic stance ....................................................12 Reforming India’s Political Funding.................................................................................................15 Too many too little: An anatomy of a white-collar crime................................................................19 Towards Healthcare for All Indians..................................................................................................22 Reforming Indian Education System ................................................................................................26 Cultural Determinants of Negotiations Behavior.............................................................................30 Social Networking Sites and Social Science......................................................................................33 Indian Style Management is required for indigenous problems ....................................................37 India’s journey towards sustainable growth- In the global sphere of things ................................40 Current Macroeconomic policies of India ........................................................................................44 The National Food Security Bill ........................................................................................................46 Indian Economy: Rise of the Indian Entrepreneur .........................................................................49 Street Protests: An “Economic, Political & Social” perspective.....................................................52 LIBOR Scandal ...................................................................................................................................56 Economic impact and investing opportunities of the two upcoming mega events in Brazil – 2014 FIFA World Cup and 2016 Olympic Games ....................................................................................59 6th All India Conference of China Studies (AICCS) .......................................................................63 Financial Inclusion - Will the mission be accomplished? ................................................................64

An interview with Professor Daniel Miller
Prof. Daniel Miller has done his PhD in Anthropology and Archaeology from Cambridge University in 1983. He is professor of Material Culture in the Department of Anthropology, University College London. Currently he is on research leave for research on the impact of social media in seven countries.

How has social media influenced the life of students? What is the difference in the effects on students of residential colleges and normal colleges? Miller: Students who are receiving their education in non-residential colleges usually miss the intensity of interaction outside classroom. Social media compensates providing a platform for them to interact. We have seen students from different geographies to schedule a particular time in a day to come on social networking site to interact and even do their study discussions. In this way social media recreates the same conditions akin to a class room to bring these people together and help increase interaction among them.

Is social media creating family disconnect due to more online presence? Miller: I don’t think so. Social media is breaking the barriers created by society. Its main attraction is autonomy. They can do more freely whatever they want online which is sometimes suppressed in physical world. Let us consider a young woman. She constantly faces societal barriers right from her childhood to married life. The tremendous control after marriage suppresses some of her self-expression. These may then emerge more freely in social media. There is less control and there is potential privacy from family members. So, I would rather call it an entitlement which empowers to challenge fundamental controls of society.

Do social media create different personalities in the same person – one who exists physically and other who exists in virtual world? Miller: Before social media entered the scene, an illusion existed that personality was homogenous. All of us have different personalities. It is only natural to behave differently in different situations. The same person behaves as a mother, a daughter, a wife, a sister in different situations and these personalities are very different from each other. But in many cases different personalities are suppressed. Social media basically provides another avenue to express different personalities. It also bridges the gap between distant people who can know each other better.
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How do you see the use of social media in political protests? Miller: I have a completely different angle on this. If we see it carefully we will understand that this platform is used by both people and police equally. It has been used by people to stage and coordinate their protest against oppressors and while police or governments use it to identify protestors and gather more information about possible uprisings. So, it opens up different avenues. For me freedom does not only mean removing constraints; that is a very naïve definition. I believe freedom includes freedom from powerful people. Freedom also means freedom of speech. But one has to careful about the freedom of speech. We can see that powerful people grab even open platforms to propagate their views more than weak people. Such powerful people can even hurt weak people using the same platform as they possess more power and use that to deprive weak people. So, social media needs to be used in a way where everybody gets equal chance to participate and voice their own opinions, which should be backed by some evidence. Also, the law should have tighter regulations so that such freedom is not exploited. Then only the promise of freedom will be fulfilled.

What are your views of the internet changing the education landscape and its benefits? Miller: Internet has made possible what we can call “e-education”. This is a tremendous benefit as well as a very cost-effective solution. “e-education” will be very less dependent on physical infrastructure and hence will bring down cost heavily. Best education should be made available to every one for free. But nowadays even education has a price. There are many people who cannot afford costly education. It will give them opportunity for education. This “e-education” will be open, accessible and friendly to as many people as possible. It should support open access, free publications. It should stimulate a breakdown in hierarchies of education. But, more importantly the academicians should remove this obfuscation in education to provide for a richer experience in learning.

How do you see a subject/topic like anthropology and social media impacting students in a B-school? Miller: I believe that such topics will have great impact on business students. This is more effective than the theories they learn as this will directly help them understand consumer behavior and demand. We directly go to the consumers’ rooms and try to understand their behavior by spending time with them. So, our research gives sneak peek into actual consumer interests or habits. In order to succeed in business students need to understand these things.

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Challenging to Change—Sustainability Issues In India!!
Vishal Poojara Batch of 2013-15, PGDM, NITIE “You need to understand whether development means affluence or whether development means peace, prosperity and happiness.” --- Sundarlal Bahugana

Introduction:
Sustainable development as defined by the Brundtland report (1987) states that “Sustainable development is development that meets the needs of the present generation without compromising the ability of future generation to meet their own needs.1” Sustainable development is not a destination; it is a continuous journey towards improvement. The biggest issue that the “Shining” India faces today is not just on quantity of development but also the quality of development. We may be improving as far as the efficiency is concerned but loosing direly on the front of Efficacy of our development. That is what needs to be fixed for a better, healthier and a more a holistic development that is not just for classes but for the masses too.

Environment and Social Sustainability:
India is undergoing a dramatic demographic change wherein the needs and aspirations of the people are changing every second. The priorities of the people are changing. They now aspire to achieve what there developed counterparts have already achieved. There is this direct comparison of the Living standards of the developed world and the developing world. Top three concerns regarding the Environment and Sustainability in India include Over-Population, Over-Production and OverPollution which collectively result in deforestation, pollution, land degradation and energy deficiency. We share a dual responsibility of maintaining the Environment Sustainability as well as the Social Sustainability. Environment Sustainability refers to continual economic development while preserving the ecological diversity. There is no denying that development alters the ecological composition and damages the atmosphere but foregoing it completely would neither be pragmatic nor possible. The catch is to maximize the growth by using the limited resources in a judicious, prudent and more importantly a responsible manner. The Social Sustainability should ensure that the developmental process is homogenous and spread over the complete strata of our country such that it leads to social cohesion and reduces the inequities. Any form of social excursion might lead to social harmony (which actually is the case. e.g. Maoist activities, trouble in North Eastern states, etc.) due to which the overall business and growth suffers. The other aspect of Social responsibility is the “Inter-Generational Equity”. We must not consume resources available at hand in such a way that they become inaccessible to our children!! A balanced focus on these two aspects is the hallmark of sustainable development.
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Issues at hand:
Deforestation: India has seen a dramatic increase in the use of forest products which invariably means cutting down the most valuable natural resource. It is estimated that total industrial round wood consumption in India could exceed 70 million m3 per year by the end of the decade (350,000 large shipping containers), while domestic supply would fall short of this figure by an estimated 14 million m3.2 Pollution: The annual cost of environmental degradation in India amounts to about Rs.3.75 trillion ($80 billion) equivalent to 5.7% of GDP," stated the report. The major culprit was loss due to PM10 along with the lack of access to clean water supply, sanitation and hygiene, stated the report.3 Land Degradation: An estimated 32 per cent of India's total land area is affected by this phenomenon, most of which is undergoing desertification, which has adverse effects on the way of life and their food security.4 The most gruesome fact is that 81.45 million hectares or 24.8 per cent of the country's geographic area is undergoing desertification.5 Energy Deficiency: The Northern Grid Blackout of 2012 aptly shows how energy crisis has been insinuating India’s developing story of being energy sufficient. 620 million were affected in that mass power failure that wreaked havoc and chaos and led to a situation of anarchy. We need to learn the lesson fast. Fast-growing economies must meet the challenge of providing sufficient energy for households and businesses and the blackout has amplified concerns about whether India can continue to grow and develop without massive new investment in her energy industry. In 2011, 289 million people – 25% of India’s population – had no access to electricity and that figure in rural area is 33%. Estimates from the International Energy Agency suggest that even in 2030, not all Indian homes will have electricity, according to AEA calculations. Clearly we are an Energy deficit nation.6

The Way Ahead:
As a Consumer we must be proactive and should be inclined towards products that are environment friendly. The menace of Deforestation is the outcome of Dollar Hungry Corporates and if they can deplete the forest the reforestation responsibility too should lie with them. As a small initiative we must learn from US which has certifications like Forest Stewardship Council (FSC) that give certifications to companies that use the paper products in the best possible way. Politics also play a vital role in curbing the environmental threats that we are facing today. India is a country where if there are Laws there aren’t good policies to back them up. If there are good policies then there aren’t any laws to make them effective. If everything falls in place then there isn’t a political will to implement the law due to corporate lobbying and personal gains.
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National Green Tribunal Act could very much prove to be decisive in India’s endeavor to curb the pollution menace. Energy Conservation and looking for new, clean and renewable sources of energy should be the main motive of this decade. As highlighted in the 12th Five Year Plan which clearly states our motto is “Faster, Sustainable and more Inclusive Growth” we seem to be on the right track. We can look at new pilot scale plants in windmill energy, energy from shale gas and even energy from algae which are one of the most researched arenas in today’s search for a clean fuel. Be the change you want to Be--- We as consumers must be rational and environmental conscious while choosing are products. Even a small change like closing our tap while brushing can save 8 gallons of water per day. So these little things add up to a huge change. Be responsible and remember that you don’t OWN this Earth from your parents…You OWE this Earth to your Children. Go Green, Its Clean.

References:
1. 2. 3. 4. 5. 6. Brundtland report (1987) International Timber Trade Organization, Review of the Indian Market. Diagnostic Assessment of Select Environmental Challenges, 2013 Environment Ministry Report, 2011 United Nations Convention to Combat Terrorism (UNCCD), 2010 Energy Statistics 2013

EPS welcomes the new batch on Kampus
EPS organized introductory sessions for incoming batch PGP17 on preliminary ideas of economics, political affairs and social issues. This helps them get acquainted with the academic curriculum at IIMK.

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Direct Cash Transfer: A game changer or a political gimmick?
Pritam Banerjee Batch 2012-14, PGP, IIM Ahmedabad

Introduction
Direct Cash Transfer (DCT), a scheme which aims to cater to 261 million people was rolled out on January 2013 in 51 districts across India. As the name implies, DCT ensures delivery of entitlements and subsidies directly to the bank accounts of the beneficiaries bypassing the layers of intermediaries and hence reducing the time required to disburse funds. By bringing more transparency into the current method of fund disbursement, DCT aims to reduce leakages in the system. With benefits accruing to millions of rupees, the scheme is hailed as “panacea” and “one stop solution” to India’s social problems. On the other hand, economists and academicians are averse to DCT. The think tank believes that the infrastructure in India is not yet ready to support a roll out. It is merely thought of a political gimmick and a pawn just before the vital 2014 elections. This paper delves into the matter and analyzes the case for and against DCT.

The case for Direct Cash Transfer
Direct Cash Transfer is not completely a new idea. There has been several cash transfer schemes in the world which has been very successful. One such program is the Bolsa Familia program of Brazil. The program aimed at 30 million people has been able to reduce poverty, increase school enrolment by 5.5% for grades 1-4 and 6.5% for grades 5-8, decrease in dropout rates, and improvement in the conditions of the poor. Similar programs are operational in many countries around the world: the Opportunidades in Mexico, Familias en accion in Columbia, Child care and old age pension schemes in South Africa to name a few. All these schemes have been widely accepted and have shown to produce some tangible results. In the wake of rising subsidy bill and high current account deficit (CAD), savings to the Government due to efficient distribution of social benefits is the need of the hour. The social security net in India is highest in the world with a whooping INR 2642 billion been budgeted for 2013-14.Out of this food, fuel and fertilizer subsidies form a major chunk. (Exhibit 1) According to the estimates of Planning Commission of India, the leakage in certain welfare programs is as high as 57%. If these leakages can be plugged through DCT, then a substantial amount of money can be saved.

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There have been several studies which attempt to estimate the amount of savings due to DCT. According to an estimate of IMF, savings can accrue to the tune of INR 45 lakh crore (which is almost equal to 0.5% of GDP). This estimate is based on the assumption that there is 15%-20% leakage in all the welfare schemes which is plugged by DCT. This is a fairly conservative estimate given the current situation. In another study, National Institute of Public Finance and Policy (NIPFP) estimate savings of INR 1 lakh crore over the period of 10 years. This is after accounting for the costs of integration with Aadhar. According to the study, the IRR of the projects fans out to more than 50%. Although the NIPFP estimate is based on several assumptions which are sometimes not realistic, this figure can be taken as an upper-bound of the quantum of savings to the Government. (Exhibit 2)

Macroeconomic effects of DCT
DCT will remove distortions in the market caused due to subsidies. Manufacturers and retailers will now have to sell goods at the prevalent market rates. This will remove the problems associated with dual pricing of the products. With biometric information being used as an authentication mechanism, the number of ghost beneficiaries can be eliminated. The effect of DCT on the aggregate demand is complex. It is worth noting that by merely removing ghost beneficiaries, there can be a reduction on Government expenditure. This will lead to lower aggregate demand. On the other hand, DCT will transfer the purchasing power from the middlemen to the beneficiaries. As the beneficiaries have a greater propensity to consume than middlemen, this scheme will lead to an increase in Consumption. This increase in the fiscal multiplier of every rupee spent by the Government will offset the decrease in Aggregate demand. Therefore DCT will lead to a rise in the consumption and aggregate demand.

Benefits to recipients
DCT will not only ensure efficient delivery of welfare programs but will also give beneficiaries freedom to spend the money in whatever way they like. There have been concerns that recipients of DCT will spend the money on the consumption of “bads”. A study done by the India development foundation and SEWA Bharat refutes this claim. According to the experiment, it is shown that Cash transfer did not adversely affect Food security. The total amount of nutrition per person did not change at all. In fact it has provided the households with an opportunity to increase consumption of other nutritious options in the non-cereal segment. The experiment results showed that there was no consumption of alcohol by the households. There have been some spillover effects of DCT which became evident from the SEWA study. It was shown that DCT has led to more women empowerment, more spending on healthcare, repayment of loans and has also improved the condition of PDS shops. This improve can be attributed to the fact that these shops now faced competition from the private segment.

The case against DCT
There are several challenges in implementing the scheme on a nationwide scale. DCT rests on two pillars namely Aadhar enrolment and banking accessibility. India is lagging behind both these pillars of implementation. Banking penetration in India is mere 35%. Seeding of bank accounts and Aadhar card is a major bottleneck in this regard. Data from the Planning Commission shows that the progress in the first phase of roll out has been very
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slow with only INR 22 crore being disbursed through the Aadhar payment bridge. Out of the beneficiaries identified by the Government foo the first phase only 4.2% beneficiaries have Aadhar number seeded to their bank accounts. However data from RBI delineates that the numbers of banking correspondents have been increasing at a fast rate. This financial inclusion drive by the RBI will soon bring the country under the banking ambit (Exhibit 3 and 4) There is increasing concerns among think tanks that the DCT scheme can be merely a political gimmick for the Government and that the program will lose momentum after the 2014 elections. It is a widely known fact that cash transfer schemes require effort and political will from the ruling Government. All the successful Cash transfer schemes in the world had strong support from the Government. A reduction in momentum will make all efforts futile. However, there is a lacuna in this line of argument. With the current deployment of infrastructure DCT will take at least another 3 years to be properly implemented. Therefore the benefits of this scheme will be enjoyed by the party which comes to power in 2014. As it will give the then incumbent party a positive image, there is little chance of a decrease in momentum.

Conclusion
Direct Cash transfers can be a game changer for the Government if implemented properly. It will not only save substantial amount of money to the Government but will also aid in reducing the fiscal deficits. With benefits accruing up at the Centre, states and individual recipients, this scheme can create a win-win situation for all the stakeholders. However there is a dire need of proper infrastructure before the rollout. Banking penetrat6ion needs to increase and more accounts needs to be seeded with Aadhar numbers. The business correspondent model of the RBI can bridge this gap and can make India infrastructure ready. With proper infrastructure and political will, DCT is all poised to be the largest successful Cash transfer scheme in the world.

References
     “An Experimental Pilot Cash transfer in Delhi” by SEWA Bharat and IDF Research 2013-14 Union Budget documents (indiabudget.nic.in) “Show me the money” – Financial express Reserve bank of India (www.rbi.org.in) “Can India’s Ambitious Direct Cash Transfer Work?” - Knowledge@Wharton

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Fiscal Deficit: Curbing the menace
Saurabh Jain MBA Student, NMIMS
P Chidambaram in a recent interview said that India currently cannot afford to cut expenditures it has to find ways to boost revenues. Government and Central Bank with best economists lot in their armour is struggling to find ways. RBI Governor Mr. D Subbarao himself admitted recently that it is hard to predict the trajectory of rupee and attributed international market fluctuations as a major reason for it. Mr. Subbarao has been adamant in the past regarding the timing of rate hikes, refusing to bow down to the pressure of government, but the most surprising part is that country is reeling under sustained fiscal pressure despite having top 3 economist of the country at the helm. PM Dr. Manmohan Singh widely known for visionary liberalization policies, P Chidambaram, a lawyer with MBA from Harvard Business School and Mr. Raghuram Rajan, a newly inducted star international economist, have been unable to consolidate the shaky pillars of economy. Reasons may not only be about their intellectual capability but also political obeisance as admitted by former top official, who have worked closely with these gentlemen in the past. Now that RBI is burning the midnight’s oil to stop this dangerous rupee slide, Government can do lot better than just advising RBI for rate hikes. India, a $2 trillion economy, is currently having fiscal deficit 4.9% of GDP for the year 2012-13. Though better than actual projections (attributed to lower gold demands), government urgently needs to look into some other fiscal consolidation measures. Few of them, which can make huge difference in revenue receipts of the government, are as follows:

Taxing Tantrums
Tax evasion is one of the most cancerous elements in Indian economy. In fact it has been one of the major reasons for Greece financial meltdown. Same is the reason also for some debt wracked nation in the past. India has collected total Tax revenue of 10.38 lakh crore for previous fiscal year. Even though the government has achieved its tax target set by finance minister but deeper investigation into the breakup reveals that contribution of direct tax has actually fallen and has been complemented by indirect tax. Official data of 2011 shows that only 2.11 percent of India’s 1.21 billion populations pay personal income tax, while In US 45 percent of the population pays taxes, which means despite large population more American than Indian, actually pays taxes. According to Credit Suisse Global Wealth Report, India has 1500 ultra-high net worth individual with assets more than $50 Million and 700 individuals having assets more than $100 Million. P Chidambaram has levied a 10% surcharge this year that would be applied to people having annual income of more than 10 million rupees. But this will be applied to only 43000 individuals in this country, even though the actual numbers are believed to be the thrice of government records. This clearly indicates the loopholes in our taxation system which needs to be plugged immediately. It is true that 80% of people are working in unorganized sector making it difficult to track their income levels, but that does not mean that people working in these sectors are not rich. Taxes paid by people in these categories are underpaid and evaded through loopholes in the system. A large of chunk of these cases is settled by bribing tax officers. It is difficult to track bribe givers but income level of bribe takers can be closely scrutinized. Income tax has 60,000 personnel on its payroll across 500 cities. Expected tax revenue range can be estimated region wise by leveraging technology and Data Analytics. Better area profiling will help Income tax department to set up expected revenue range region-wise. In this way more parity can be brought in tax collected and tax expected. It is estimated that one fifth of India’s annual gross domestic product is lost due to unpaid taxes. According to FICCI reports Rs.45 lakh crore black money is stashed in tax haven countries. India so far have not been able to create international lobby
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to put pressure on these countries to share the details of account holders and amount stashed. One tenth of the money stashed could actually bring the entire economy in surplus.

Railway: A Potential Cash Cow
India has never been able to realise the true potential of Indian Railways since its inception. Massive subsidy burden and inefficient bureaucratic structure have been a major bottleneck in its possible growth and contribution to India’s GDP. India is having the fourth largest railway network in the world covering 64,000 km approximately and serving 25 million passengers daily. India receives a major chunk of railway revenue through freight charges. An interview with a railway ticket traveller revealed that vigilance drive in a train on an average consists of 100 without ticket traveller and minimum fine imposed on without ticket traveller is Rs. 250. Recently Head Ticket examiner of CST collected 12 lakh rupees in a month, as fine for travelling without ticket for suburban and outstations trains. Needless to say the amount of revenue country wide drive could bring in, with 7000 trains running across the country. Of course, bribing of ticket officials remains a huge bottleneck in this process which can only be discouraged by taking severe actions against the guilty and upgrading the pay scale of railway employees at the same time. One major source of revenue could be the unused or underutilized railway land. Indian Railways network occupies a land area measuring about 10.65 lakh hectares, major portion of which is directly under railway tracks, Yards, workshops etc. Railway has around 43000 hectares of land not required for operational use, which can be utilized for commercial purpose. Rail Land Development Authority was created in 2006 especially with the purpose of identifying these potential unused lands and monetize it. But so far only 305 sites have been identified for commercial usage, majority of which have not started generating revenue. 60 Sick PSUs of country also consists of 20,000 hectares of unused land. Government have been too late in realizing the true potential of these lands and have finally estimated that it can bring India a windfall of 1 lakh crore, which could be a great respite in burgeoning fiscal deficit. But realization and implementation have always been a rare phenomenon in Indian Government or Organizations context. Cash strapped Air India was given a land worth 700 crore to develop a housing colony for its employees which was never used. Lukewarm response of Land Authorities in tenders also discourages potential investors to invest in these areas. Land being a scarce resource needs to be utilized to its utmost potential rather than wasting it. Not using it is also wastage of land, especially in current economic scenario, where agricultural lands are issued for industrial purposes.

Austerity Measures: Charity Begins at Home
India being a multiparty system incurs huge expenditures for the convenience of Political Parties, MPs, MLAs and other functionaries. Self–gifted pay hike in 2010 can be quoted as one of the best example of conflict of interest in Indian Political History. India’s MPs have given themselves three fold hikes in salary, which is 68 times the average salary of its citizen, and that too at time when the country was feeling the heat of recessions and unemployment was scaling new heights. Here is the revised pay scale of MPs of India:

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Unlike India, countries like Japan and France salaries of MPs are determined in relation to the salaries of bureaucrats. In Switzerland Parliamentarians do not get their salary or allowance. Mexico do pays their MPs handsomely but then they cannot hold any other office of profit. Parliamentarians holding an office of profit and posts which can create conflict of interest are quiet common phenomenon in India. An MP who has a stake in Oil Company is allowed to be in Oil reforms committee. Hence, unsurprisingly personal wealth of an average Lok Sabha MPs have zoomed 200% in their 5 year tenure. This is also in parallel to the fact that majority of funds allocated to these MPs for their constituency development have remained unused, a clear indication of where they spent most of their time. On the basis of previous pay scale, cost incurred for 543 MPs of the parliament was around 855 crore which after revised pay scale will almost double. Government, on one hand is asking corporate to adopt austere approach in these tough times and, on the other hand, is splurging vulgar amount of sums on its MPs. It’s time for the government to seriously internalize this issue and set things straight for all. Amount saved from this measure will not significantly lighten the load on fiscal deficit, but would be much required tokenism from the government side that it is serious about the job. Economy, undoubtedly, has much to do with market sentiments and creating a positive environment to boost investor confidence will only help. RBI is undoubtedly struggling to hold rupee slide and will continue to struggle owing to unpredictable international monetary policies, but government can get its act together and grab the opportunity to do much on internal front and consolidate the base of economy. This will help India to weather economic storms which are unpredictable and inevitable. REFERENCES         http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS http://articles.economictimes.indiatimes.com/2011-10-09/news/30260214_1_rlda-vacant-landrail-land-development-authority http://www.sebi.gov.in/cms/sebi_data/attachdocs/1326345117894.pdf http://www.indianmirror.com/indian-industries/2013/railway-2013.html http://in.reuters.com/article/2013/05/31/india-economy-fiscal-deficit-idINDEE94U04I20130531 http://articles.timesofindia.indiatimes.com/2013-04-05/india/38305732_1_tax-havens-jeanjacques-augier-secret-accounts http://www.incometaxindia.gov.in/ccit/rtipage.asp http://www.rediff.com/news/report/tax-target-for-fy-2012-13-achievedchidambaram/20130406.htm

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Land Acquisition Policy in India: Towards a Pragmatic stance
Megha Jain, Mainak Guha, Himank Khulbe, Arvind Ratan, Soumya Chattopadhyay Batch 2012-14, PGP, IIM Kozhikode

History:

Of the total 3,287,240 sq. km land of India, 60 % of land is under cultivation. India has been an agriculture dominating country before the reforms. But as the economy opened up, India started developing fast. This required infrastructure development, industries, educational institutions, SEZs, etc. All of this necessitated acquisition of ‘Land’ which was under agriculture or forest. Taking away agricultural land makes farmers unhappy, and taking away forest land destroys ecology. Also many people depend on forests for their livelihood. Now the issue comes ‘how should we effectively allocate the land for agriculture, industries, and infrastructure, for inclusive growth’. Existing ‘Land Acquisition Act in India’ is not at all in congruence with India’s policy of inclusive growth. This has led to several issues in the past like Singur, Nandigram, POSCO, etc. In this paper we evaluate the ideas of some of the researchers for a good Land acquisition bill. We also present what is there in LARR,2011. The paper concludes by giving recommendations from author.

Issues with current legislation:
Capitalists Discourages investors Will be helpful for society as it will lead to social development Will boost industrial growth of the country Provide employment to the previous land owners Socialists Good for land owners Forceful usurping of land from poor farmers Will harm the poor farmers Will take away the employment of many dependents – direct as well as indirect Exploitation by government in payment of prices Government does not value their natural resources

Strong compensation policy Govt should be able to acquire land for private investors More land to be converted to industrial More industries

What farmers do

Holding out

Value of land

Farmers overvalue their land

LARR 2011:

Main features of LARR are:  The bill gives a definition of public purpose. Land can be taken away for public purpose  It provides compensation for both the land owners and livelihood losers  Multi cropped area cannot be acquired for industrial purpose
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 Provision for compensation: Bill proposed the compensation to be 4 times the market value of land in case of rural areas and 2 times the value of land in case of urban areas. Provision of additional benefits for land owners. Bill also proposes adequate compensation for livelihood losers.

Drawbacks of LARR:
      The bill prohibits acquisition of multi-cropped land, but not of irrigated lands. This may be good for fast acquisition of land, but can disappoint many farmers No provision for stopping forced displacement: the final decision of land acquisition still rests with bureaucracy and thus the farmer can be displaced without his consent. Government can still acquire the land for private companies. There is no reason for this clause to be present in the Bill. Bill provides no safeguard against unfair negotiation. Easy transfer of agricultural land to nonagricultural land. But this may pose serious concerns regarding food security in India. Public purpose is defined too broadly and it is left to bureaucracy to decide. Thus there seems a need to define ‘public purpose’ more stringently.

Alternatives suggested by researchers:
1. Sujata Marjit: Sujata suggests adaptation of a model which relies on pre-determined annual payments to the farmers. She proposes that seller can have a claim in the future value of the land. Government will tax a portion of increased value from the buyer and redistribute it to the landowner. The role of government will be that of a legal tax authority instead of a negotiator. 2. Maitreesh Ghatak, Parikshit Ghosh: There propositions mainly encompasses an auction-based approach with following points  Transfer price of land should be determined by land auction and not to be left to state’s discretion.  Public purpose to be defined precisely  Natural resources should also be taken into account while calculating the value of land  Livelihood losers should also be compensated 3. Sebastian Morris, Ajay Pandey: Advocates awarding coupons (Transfer Development Rights or TDRs) embodying rights to development to such persons whose land is so taken over. A market has to be developed for TDRs. This will give sufficient compensation to the land owners. The prerequisites for this approach are reducing the transaction cost to minimal and removing unnecessary regulatory constraints.

Recommendations:
While a perfect land acquisition bill is almost impossible to achieve in a country with so diverse opinions, a bill in favor of weaker section of society will be helpful to the country. Protecting the interest of farmers is required more than promoting tourism with the point of view of food security
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and not forgetting the fact that agriculture still provides employment to most of the population of the country. However, industrialization can’t be forgone. Keeping in view above points, we recommend following things:  There has to be a much larger role for Gram Sabhas. Their role should not be limited to consultation; instead their opinion should form a part of final decision. Their opinion should be taken for all matters from acquisition to R&R benefits  No acquisition of land should be provided in areas occupied by tribes. This is to preserve language, culture and community life. And because providing compensation in momentary terms, don’t equate everything else  A multi member land pricing commission or authority to be established, this will collectively decide and finalize the price of acquired land  Compensation to the farmers should be more than market value of the land on the date of acquisition. Also, a pension scheme for the farmer for a period to restore themselves or permanently employment for one per family may be mandated. Also, a consultative approach involving the local communities and elites may be mandated in this case  Farmers should be given adequate opportunity to express their concerns, grievances, demands and opinions. Also no ‘forced acquisition’ of land should take place. This can also include removing the clause of government acquiring land for private players  The whole land acquisition procedure may be looked over by committee representative of the public and may include well-known public figures to safeguard the right of the farmers set to lose their land  A diversity in the compensation may be offered (Cash vs. non-cash settlement)

References:
 “Developing a Land Acquisition Policy for India”, Maitreesh Ghatak & Dilip Mookherjee, Ideas for India, Ideas for Growth, posted online on 5th Sept, 2012, http://www.ideasforindia.in/article.aspx?article_id=41 “Developing a Land Acquisition Policy for India”, Maitreesh Ghatak & Dilip Mookherjee, Opinion, Live Mint, posted online on 5th Sept, 2012, http://www.livemint.com/Opinion/nc5Ugb37flDiUOp9GK91uM/Developing-a-land-acquisitionpolicy-for-India.html “The land acquisition debate: A review”, Kanad Bagchi, Observer Research Foundation, posted online on 16th Aug, 2012: http://www.orfonline.org/cms/sites/orfonline/modules/analysis/AnalysisDetail.html?cmaid=4086 7&mmacmaid=40868 “Land Acquisition: Resettlement & Rehabilitation”, business.gov.in, Government of India, http://business.gov.in/land/issues_problems.php “LAND ACQUISITION ISSUES”, M.M.K. Sardan, Discussion Notes, Institute for Studies in Industrial Development (ISID), http://isidev.nic.in/pdf/DN1001.pdf

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Reforming India’s Political Funding
Mayank Bharti, Shrutika Gupta, Pragya, Shaheen Malik, Sneha Tulsyan Batch 2012-14, PGP, IIM Kozhikode

As per the National Election Audit, 1999 conducted by CSDS, the average election expense by a Lok Sabha than permissible Rs.1.5mn)! With such huge money involved, there emerge challenges like corruption, which are bound to change the face of Indian Democracy. This paper aims to bring out these issues and propose a suitable Regime for Funding the Election Campaigns, to address these issues. candidate is Rs.8.5mn (six times higher

Political parties apply various methods to raise money for campaign and routine activities, which come under the domain of political finance. As per the 2011 statistics, only 11.89 per cent of the Congress income and 22.76 % of the BJP income in the 2009-10 and 2010-11 financial year have come from donations received in excess of Rs.20,000 !!! Is it possible that the remaining percentage of their total earnings can be volunteer donations below Rs.20000? We think it is Impossible!! Corruption is the major reason for the issues associated with political funding in India. Source of funding, misuse of funds, insufficient funds, and misrepresentation of funds by the political parties are the major causes of unrest in political funding. This calls for reforms in India’s Political Funding so as to make the electoral process more fair and transparent.

Through this paper, we would try and understand:     The various sources of election funding India’s current campaign financial regime; its pros and cons Explore the option of Funding by State (Central Government) Propose a plausible Funding Regime for the Indian political scenario

Sources of Election Funds
There are four main sources used by political parties worldwide to raise funds:  Grass root fund raising; wherein the funds are raised from general public in small denominations. This method is used by candidates who do not have much media coverage and contest mostly in opposition to big corporate houses or lobbying groups.  Corporate funding; one of the main sources of funds for most of the political parties; takes place through a number of legal and illegal ways. This situation exists even after government has prescribed a maximum cap equal to 5% of the average profits of last three years on the donations from corporate houses.  Public subsidies are subsidies in the form of cash grants, tax credits or free media access, given by the government to political parties to fund its activities.  State funding, i.e. funding by central government, is one of the most transparent sources that brings small political parties at par with the national parties, thereby, making the election contest very fair and devoid of undue corporate influence.

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India’s Current Campaign Financial Regime
The campaign finance system in India can be explained by four policy instruments:  Contributions: The corporate can fund a maximum of 5% of their average net profit over the last three years. The individuals, however, can contribute any amount without any upper limit.  Expenditure: Any prospective Member of Parliament can spend a maximum of INR 40 lakhs during his campaign while the upper cap for Assembly elections is INR 16 lakhs. This, however, varies with the size of the constituency.  Transparency and Disclosure: The candidates are required to disclose all their assets and liabilities in the form of an affidavit to the Election Commission, at the time of filing their nomination. Also, after the elections, they are mandated to file their campaign expenditure within 30 days of the election. For any contribution above Rs.20,000, the parties should file their income tax returns in a separate report.  State Support: As on September 2009, the State has recognized 7 political parties at the national level and 49 at the state level. Any donation to these recognized parties is exempted from income tax. Also, these parties are provided free media time like on radio, Doordarshan by the government. Legal loophole – Exp I, Sec 77(1) of Representation of People’s Act, 1951 allows political parties to spend any amount over and above the individual ceilings provided there is no direct co-ordination or mention of candidate. Although private funding fosters civic involvement and prevents government from showing bias towards those in power or with political influence, it has a number of social, legal and economic implications. Not only are these caps way below the actual campaign expenditures; these promote Black economy, with the candidates sourcing money through corrupt practices and making false expense declarations. Also, such huge expenses push up the cost of everything in the country, thus, causing inflation. The economy suffers from ‘Poverty Trap’ as the decisions taken by the government are not pro public, but pro donor. Such biased government investments and policies reduces the productivity in the lower sectors and causes fiscal drains. Thus, besides the vertical integration at various levels of government hierarchy, corruption also spreads horizontally to public institutions, legislatures, judiciary, media and independent professions. This clearly reflects the fallacies in the Indian regime, which not only lacks transparency with no strict measures to monitor the expenses, but is also marred by the fragile Indian laws that allow criminals to become law makers, thus, bringing black money and illegal practices into the system.

Issues with State Funding
Many proposals regarding state funding have been coming up. But it is important to understand certain drawbacks with the state funding that need to be addressed. First of all, there is no specific criteria which can be used to apportion the state funding amongst the various political parties. The allocation based on the number of seats in the parliament would be biased as generally the big parties hold most of the seats. Thus, they would end up getting most of the state funds, even when they are capable enough to generate those themselves. The small less recognized parties would get marginalized. These funding, if given to party leadership, would empower the leaders. Also, these leaders may be biased in the intra-party allocations. Thus, power would be handed out to leaders at the cost of some less powerful or influential candidates. This can be corrected only if the parties follow internal democracy and most of the parties are reluctant to do so. Redistribution of power is not favored by the party’s higher command. One of the major concerns with state funding is that it may lead to creation of fake parties. Candidates may contest elections only to divert government
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funds. One of the ways govt. attended this issue was by restricting the tax exemption only to recognized parties. This however is unfair to the genuine political parties in dire need of state funding. Apart from this, the proposals for state funding are being strongly opposed by citizens as they consider it to be providing the parties an additional source of leakage. Also, if the parties become too dependent on this system, it may reduce the participation of the citizens in the entire process.

Proposal for a Funding Regime
The government can possibly adopt a matching grant system wherein for every “x” amount generated by candidate through grass root funding, the government would give an equal “x” as a grant to the candidate to finance his election expenses. This can be on the lines of “loan” as the candidates would be mandated to pay back the net grant for which he/she could not submit the expense receipts. Some highlights of this regime could be:  Contribution Limit: one may think that this system would lead to every person raising a meagre amount and then expecting the government to allocate him some more. For this, there would be a minimum cap on the contribution limit which every candidate would be required to generate. Government should maintain a separate campaign account to transfer funds to the candidates and also to monitor the expenses made by candidates. The above recommendation would be valid only if government sets a paper trail limit on the candidates’ transactions, under which candidate would be obligated to transfer or use money only through credit cards, online transfers or mobile payments, which can be easily tracked by government. The period for which the expenses should be considered under contribution should be predecided and set close to the elections to stop the candidates from submitting years old expenses as receipts. The existing limits on the campaign expenditure should be removed as it leads to the parties under-reporting their expenditures. This would also prevent the mis-use of money in votebuying. There should, however be a ban on the illegitimate expenditure. To avoid funding from dubious sources or corporate that gives undue advantage to some parties, there should be a detailed verification of the sources of funding like the name of the donor, his address, occupation, income and the amount donated by him. Also, there has to be some incentive for the public to participate in this process, which could be in the form of tax exemption. But a tax exemption based on person’s income would be unfair as if the people lying in different tax brackets make the same amount of contribution, the richer donor in the higher tax bracket would get a higher exemption. This problem could be solved by giving tax credits to people. There should be a ban on the corporate funding as it would lead to companies unfairly dictating their terms at the time of policy making. There would, thus, be no incentive for the parties to keep the economy regulated. Also, with the policies being tilted in favor of the corporate, people would not get a fair share in the governance process and the societal interests may, therefore, be side-lined.

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The above proposal may seem difficult to implement and fund raising might also be insufficient due to the absence of grass root funding culture in India. The public could be unwilling to donate money to the candidates. Another thought related to this theme is that if a candidate is able to generate huge amounts of funds, should he be eligible at all for funding. In spite of all these concerns, the above proposal of matching grants could be really helpful in removing inefficiencies from the system and also would provide the candidates with a level playing field in the long run.
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Some Other Recommendations
 Progressive state funding of political parties for election purposes only for recognised national and state level parties. It could be executed by providing rent free accommodation & telephone, free time slot on Doordarshan/AIR for campaign, provision for specified quantity of petrol or diesel for the vehicles used for election campaign and provision for specified quantity of paper for used for various printing during election. Such a measure would not only formalize the election process, but also reduce money supply in the system, thereby, reducing the corporate dependence of political parties. Creation of separate Election Fund. Both the central and the state governments could provide some fixed minimal amount per electorate during the elections. Certain money could be reserved for allocation to the parties on quarterly basis during non-election period to carry out routine activities. This will ensure that all parties, irrespective of their size and stature get equal money for campaigning and other activities.

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References
     Missing the Focus- article dated 19th January, 2013 “Reforming the Campaign Finance Regime in India”- notes by Rajendra Kondepati, published in Economic & Political Weekly “Needed, urgent electoral reforms” by Navin Chawla, published on January 2, 2013 in The Hindu “Talk of curbing corruption will remain just that without reform” published on 9 NOV, 2012 on ET Bureau “Funding of Elections - Case for Institutionalised Financing” by B Venkatesh Kumar published in Economic & Political Weekly

Omnipresent EPS in Social Media
EPS has its presence in every popular social media site. Be it Facebook, Google+, Twitter, Youtube, you will find us everywhere. So, come and join us at the following links. https://www.facebook.com/groups/eps.iimk/ https://www.facebook.com/eps.iimk https://twitter.com/eps_iimk http://www.youtube.com/channel/UCY7lJKIOKFzWDjktA8sDk3g?feature =watch https://plus.google.com/u/0/107924325764330673263/posts/p/pub

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Too many too little: An anatomy of a white-collar crime
Aakarshit Mehra Batch 2012-14, PGP, IIM Ahmedabad
“Your legacy is the cumulative effect of all your actions from the first breath to the last – so you either die a legend or you never were one.” Rajat Gupta, the fallen wall-street titan, was sentenced to a 2-year imprisonment on 24th October, 2012 after being found guilty of insider trading. He was found guilty of disclosing boardroom information of Goldman Sachs, to his friend, Mr. Rajratnam. Revealing insider information is a common norm in the ‘Higher Corporate World’ and is considered an offence only if one is caught doing so. Whether done for monetary gains, or merely as a friendship gesture as claimed by his side of the court, the incident presents several key takeaways, not just for people of similar stature, but also for the government and the highly ambitious Indian middle class, for whom he has always been a role model, ‘The Original Global Indian.’

1971

Graduated from IIT Delhi

1973

Received MBA from Harvard and joins McKinsey

1994

Worldwide managing director of McKinsey

2006

Director at Goldman Sachs

Key events in the life of Mr. Rajat Gupta

For the middle-class youth in India, looking to make it large, this incident seems a classic example to be incorporated in to a Moral Science text-book. Ambition is one thing, greed or lust is another. From humble beginnings in India, he rose to the upper echelons of the global corporate world. His journey from IIT Delhi to HBS to top positions in McKinsey and Goldman Sachs, is a dream path for any Indian student who aims to make it big in the corporate world. Being the first to head a major Western business, the kind of money and respect that he earned, made him an automatic role-model for many looking to embark upon a similar journey. Involved in serious philanthropic work, his respect in the society far outweighed his monetary worth, believed to be in the region of $100 million.. But the desire to make it bigger, something commonly perceived to be emanating from his association with Mr. Rajratnam, whose net worth is believed to be close to $1billion, seemingly led to his downfall. He said recently “I have lost my reputation that I have built over a lifetime.” He may not have benefited directly from the information he disclosed, but his association with Mr. Rajratnam surely had some financial aspects to it. To the “common” Indian, this entire incident, presents two vital school-level learning. The first is, do not attempt to overfill your well by comparing the water in your well to that of your friends’. Each well has a different size and cannot hold more. Never be greedy, be content with what you have. The second is a common lesson given to any ten year old kid in India, “Choose your friends wisely”. Sometimes, as one moves higher up the ladder, he tends to move further away from his learning as a child. The success of the Indian middle-class system, however, revolves a lot around ‘lessons of life’ given to us by our parents as a child. Ethics and Relationships are two hygiene factors in the quest for success, and at a more fundamental level, they deserve the importance that is often attached to them.

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The 2year imprisonment and a fine of, an otherwise not so paltry, $5 million may not be the largest for what could have been, or rather should have been awarded for an offence of that magnitude. Thanks in no small part to his philanthropic work and popularity and respect amongst the who’s who of the globe, he seems to have gotten away rather lightly. Nevertheless, his conviction does pose in front of us, a lot of questions about the functioning of the Indian Judicial System.

July 29, 2008
•Mr.Gupta and Mr.Rajratnam discuss the Goldman Sachs board meeting

Sept. 24, 2008

April 13, 2010

May 22, 2012

June 15, 2012

October 24, 2012

•A tapped call of •The Wall Street •Mr.Gupta's Journal trial begins Mr.Rajratnam publishes about revealing details of the meeting Mr.Gupta being examined for to a trader his conversation with Mr.Rajratnam

•Mr.Gupta is •Mr.Gupta is found guilty on sentenced to 2 three fronts yrs imprisonment and a fine of $5million

Timeline of the Rajat Gupta case

As evidenced by the timeline, the time that passed by between his telephonic conversation with Rajratnam and the verdict of the court was just over four years, a mere fraction of the time taken for similar white-collar crimes to reach any kind of conclusion in India. Prime Convict * Hindustan Lever (5 directors) Samir Arora (Fund Manager, Alliance Capital MF) Harshad Mehta Ramalinga Raju (Satyam Computers) Dilip Pendse (MD, Tata Finance) Rajiv Gandhi (CFO, Wockhardt) Year of Crime/Confession 1998 2003 1992 2009 2006 1998 Year of Final Verdict Pending Pending 2001** Pending Pending 2008

Recent white-collar crimes in India

* The designations/company names specified are at the time of committing of crime **Harshad Mehta died in 2001, but trials of 27 out of 28 cases against him are still on-going

The table above illustrates some incidents of insider trading or financial manipulation in India over the past two decades. The list is extensive and the unusually long time taken to settle these cases, if at all they ever are settled, highlights the ineptness of the Indian Judicial System. The evidences against Mr. Gupta and Mr. Rajratnam were drawn from the tapping of Mr. Rajratnam’s phone orchestrated by the Federal Bureau of Investigation (FBI). The rules and checks with regards to tapping of phones by Federal authorities are far less stringent in India. However, this, by no measure, has translated into faster rulings against the offenders. The Securities and Exchange Board of India (SEBI) has always portrayed a much graver stance towards the issue and has been quick to come out with its verdict.
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The case of Hindustan Lever (HLL) is a prime example of this, where the accused directors were penalized by SEBI immediately after charges of insider trading against them were substantiated. The charges however, were withheld by the Ministry of Finance (MoF) when the convicted directors approached MoF. SEBI retaliated by moving court without much delay. Fourteen years hence, the case is still pending and any ruling is far from imminent. The SEBI is requesting the government for additional powers to tap phone calls to gather evidence more rapidly and ensure a prompt verdict. The government now has the option to shrug off its fair share of critics and signal a firm stance towards high-profile crimes. A weak outlook will only serve as an invite to other such potential offenders who will look to get away without much damage.

List of Sources
 Lessons that the Rajat Gupta case holds for India (2012, October 26) Rediff Business. Retrieved January 12, 2012 from http://www.rediff.com/business/slide-show/slide-show-1-special-lessonsthat-the-rajat-gupta-case-holds-for-india/20121026.htm#1 Trial and Error: The Rajat Gupta case holds lessons for India (2012, October 26) Business Standard. Retrieved January 12, 2012 from http://www.businessstandard.com/india/news/trialerror/490713/ Shaili Chopra (2012, October 30), The Dark And The Sublime: The Story Of Rajat Gupta, Tehelka.com. Retrieved January 12, 2012 from http://tehelka.com/the-dark-and-the-sublime-thestory-of-rajat-gupta/ Joginder Singh (2012, November 12), Lessons we must learn from Rajat Gupta case, The Pioneer. Retrieved January 12, 2012 from http://www.dailypioneer.com /columnists/item/52817-lessonswe-must-learn-from-rajat-gupta-case.html Gaurav Khanna (2012, June 19), All Too Human - Why The Rajat Gupta Case Reminds Us Of Ourselves, 's, Gaurav Khanna Instablog, Retrieved January 12, 2012 seekingalpha.com/instablog/988028-gaurav-khanna/753441-all-too-human-why-the-rajat-guptacase-reminds-us-of-ourselves

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EPS is socially responsible
In an endeavor to create close links between management students and society, EPS floats unique live social projects where students work on real social issues. This year EPS brought on Kampus “Last Mile Project” ideated by retired IAS officer Mr. Gopalan Balagopal. As part of this project students will visit local districts to measure the working efficiencies of various government health schemes and suggest possible improvements. This whole project is being promoted by various departments of Kerala government and local as well as international NGOs.

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Towards Healthcare for All Indians
Abhishek Nandan, Koustav Bandyopadhyay, Nayanika, Nikita Gupta, Swati Chhabra
Batch 2012-14, PGP, IIM Kozhikode

Healthcare performance of an economy depends on the economy and also on the health care systems of the economy. In various societies, investment in health is not only desirable but also essential priority. It is to be noted that countries that have weak health conditions and weak education scenario face difficulty in gaining a sustained growth. Economic evidence confirms that a 10% improvement in life expectancy at birth of a country is linked to an increase in economic growth of around 0.3-0.4 %points per year. Wealthier countries like France and United States of America generally have healthier population, which is mainly indicated by the high life expectancy of the people of the country. The impact of poverty on the health of a nation is a negative one, which implies that as the poverty increases, the infant mortality rate increases and life expectancy decreases.

Context
Health expenditure of India is mere 1.4% of GDP as against the global median of 5% which is inclusive of counterparts like China and Bangladesh. The healthcare expenditure statistics of India project an alarming situation of lack of resources deployed to ensure health safety of all its citizens. The current demographic shift in terms of growing population and rise in life expectancy puts forward an increased need for health coverage. The rising income levels have empowered with greater purchasing capacity. With the rising literacy levels, awareness on preventive and curative healthcare is plummeting. Modern living has witnessed more lifestyle related illnesses. The positive side to the healthcare is that the infant mortality rates and maternal mortality ratio has been decreasing. What still remains unattended is the poor overall access to healthcare facilities to most Indians.

Solutions to address healthcare issues in India: Government Schemes implemented till date
1. National Rural Health Mission (2005) NHRM was the first Government Scheme and was implemented through PPP model. NRHM attempted to reform home grown health traditions through AYUSH infrastructure. This is achieved through two features:  AYUSH (Ayurvedic, Yogic, Unani, Siddhi and Homeopathic) medicines included in the drug kits and generic drugs for common ailments at PHCs and CHCs included AYUSH  AYUSH practitioners appointed at PHC and CHC level Every village had a representative called ASHA (Accredited Social Health Activist) elected by and answerable to the Gram Panchayat. ASHA was the interface between the society and the public health system. They were given induction training and provided with a drug kit containing generic AYUSH medicines. They were given a performance-based compensation for promoting inoculation, referral services for reproductive child health and supplementary health programs. There was also a provision of 24-hour service in half of the Primary Healthcare Centers.

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The success factors of this scheme include allowing the state governments to divert resources to the health sector thereby strengthening the public health system including its workforce. Also, the investment in this sector has had a positive impact on several health indicators like immunization, institutional deliveries and antenatal care. The problems faced in the implementation of this scheme were mostly related to deficiencies in infrastructural facilities. There was lack of proper feedback and grievance redressal system. Lack of nurses and doctors to provide services in the rural extremes was also a constraint leading to ineffective implementation of this scheme. Shortage of equipment and medicines was another hindrance. The RKS needs to be reinforced as it can screen the health delivery arrangements and also solve some of its deficiencies through its funds. 2. National Health Insurance Scheme ( Rashtriya Swasthya Bima Yojana ) RSBY – aims to improve poor people’s access to quality healthcare. The scheme provides for annual cover of up to Rs.30,000 per household. The policy covers hospitalization, day-care treatment and related tests, consultations and medicines, as well as pre-and post-hospitalization expenses, for some 700 medical and surgical conditions and procedures. Modus Operandi The mission aims to provide quality healthcare services via public and private hospitals. The plan allowed hospitals to bill insurance companies and government subsidized the annual premium for beneficiaries. Smart card technology was adopted for identification and control. The smart card could be used by the beneficiaries to obtain cashless treatment using at the enlisted hospitals. A fully subsidized insurance premium of Rs.750 per household, up-to 5 members was paid by the government for the beneficiaries. Outcome of RSBY in Karnataka – A Case Study Only partial awareness was achieved as an outcome of the awareness program by several departments including Panchayati Raj Institutions, Women and child development and Health department. Households often needed to go to another village in order to enroll. In some cases, households were asked to attend enrolment camps located in a neighboring gram Panchayat. There were extreme delays in the issue of smart cards. Therefore, at least 38% of registered households did not benefit from RSBY in the first six months. Lack of technological knowledge in hospitals to use the smart cards was another source of quandary. Data inconsistency on smart cards and lack of preparedness among empanelled hospitals was one of the main issues. Very less number of healthcare camps was conducted by hospitals and insurer which caused a communication gap. Problems were reported about the reimbursement system and in some cases the hospitals were reimbursed only a fraction of the submitted bill due to which some of the empanelled hospitals backed away from providing service. 3. Rajiv Aarogyasri Scheme in Andhra Pradesh (2006) The Aim of this scheme is to provide medical care for BPL families up to a value of Rs.2 lakh per year for tertiary surgical and medical treatment of serious ailments to help them avoid a debt trap. Modus Operandi It is a public-private partnership (PPP) model known as the Aarogyasri Health Care Trust (AHCT) between Star Health and Allied Insurance, the corporate hospitals and state agencies. There is a network of corporate and private hospitals, district and area hospitals, and government medical colleges while it has no role for the Primary Health Centers. All the information is stored and
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maintained real time. The beneficiaries are members of BPL (Below poverty line) families as enumerated and identified by the Rajiv Aarogyasri Health Card/BPL Ration Card. Each family is allowed a total reimbursement of Rs.1.50 lakh with a buffer of Rs.50,000 per annum availed individually or collectively. Outcomes The scheme has been successful to a certain extent because it was the first of its kind to be implemented in the state of Andhra Pradesh. It brought health on the political map in the state and highlighted the importance of healthcare. Corporate hospitals take the majority of revenue of this scheme as they provide modern tertiary medical and surgical care. The insurance company is paid a straight twenty percent of the bill paid by the patients and so they do not have any incentive to monitor the functioning of the hospital practices. One of the major drawbacks is that doctors have an incentive to use only the modern methods for treatment irrespective of whether a conventional method being more apt for the patient. The diseases that do not require surgery are uncovered under the scheme like malaria, typhoid, cholera, etc. and so there is no way to treat these.

The idea of Universal Health Coverage (UHC)
“Ensuring equitable access for all Indian citizens, resident in any part of the country, regardless of income level, social status, gender, caste or religion, to affordable, accountable, appropriate health services of assured quality (promotive, preventive, curative and rehabilitative) as well as public health services addressing the wider determinants of health delivered to individuals and populations, with the government being the guarantor and enabler, although not necessarily the only provider, of health and related services” The High Level Expert Group (HLEG) set up by the government to study and analyze the idea as well as implementation of Universal health coverage recommended an entitlement of a basic National Health package to every citizen to provide cashless primary, secondary and tertiary care. The patient will be free to choose among the public sector facilities or those of the contracted-in private providers.

Critical areas identified by HLEG to make Universal Health Coverage a success
 Health Financing and Financial Protection: It included provisions like improving the tax-GDP ratio and public spending on health with main focus on primary health care, direct purchases by the government and no role of private insurance companies. It also suggested integrating the capabilities of RSBY like smart cards use and government funded insurance schemes into the core of UHC.  Health Service Norms: These included up gradation of the health infrastructure like district hospitals and bed capacity and adherence to the Indian Public Health Standards (IPHS).  Community participation and citizen involvement: This involved organizing regular health assemblies which would enable community review of health plans, proper grievance redressal mechanisms, strengthening the role of NGOs, panchayats to increase motivation and accountability of health bodies.  Human resources for health(HRH): It aims at increasing the number of well-trained health staff by increasing the number of educational institutions, decentralizing medical education, improving

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the quality of HRH education and training and equipping the nursing staff, community health workers with adequate skills so that primary health care is no more doctor dependent.  Access to medicines, vaccines and technology: It suggests use of IT enabled patient records for rational use of drugs, setting up of national and state drug supply logistics corporations to realize economies of scale, there should be price regulation and protection of domestic industry  Management and Institutional reforms: These include setting up of national health IT network, streamlining financing and budgeting systems, investment in R&D and creation of All India and state level Public Health Service Cadres.

Recommendations for the viability of UHC in Indian context
UHC can be successfully implemented in India with some proactive measures adopted and enforced. The critical areas identified by the HLEG must be put into action in addition to a number of steps to be implemented:  Improving medical education and training along with merit based medical entrance tests. Education on preventive and early diagnostic health care should be provided to the masses.  Special incentives should be provided to encourage colleges in rural areas, in the northeast and hilly regions.  More paramedical courses with an effective public-private partnership model.  A high level of political commitment and personal interests in health improvements. Health Ministry should engage in interaction and dialogue, and formulate policies in close coordination with the relevant departments and ministries to improve the health care system.  The pharmaceutical industry should be regulated along with an increased funding for R&D and special incentives for medical equipment and technology industry should be given.

Financing Model for UHC
The financing would be dealt in the following split of responsibilities between the public and the private sector:  A central role of the State on public financing and provisioning of the National Health Package  The services are to be provided by the public sector as well as contracted services of the private sector and a vital role for communities and civil society. There should be a phased introduction of UHC with the people immediately benefiting from the change which would ensure proper monitoring and accountability at each step so that the universal health coverage is attained.

References
1. Zakir Hussain: “Health of the National Rural Health Mission”, Economic & Political Weekly, January 22, 2011 2. Rajan Shukla, Veena Shatrughna: “Arogyashree Healthcare Model”, EPW, December 2011 3. Shyam Ashtekar, “NRHM: A Stocktaking”, EPW, August 2011 4. Anil Gupta, “Universal Access To Healthcare: Threats and Opportunities”, EPW, June 2011 5. Binaiffer Jehani, “Where the Outlook Is Healthy”, Economic Times, July 2, 2011

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Reforming Indian Education System
Ankit Agarwal, Anuj Kr. Loomba, Prateek Gupta, Sahil Jindal, T Durgalakshmi Batch 2012-14, PGP, IIM Kozhikode

INTRODUCTION
India is known to have a huge pool of talented workforce which can be leveraged to propel its growth in the future. With India having 40% of its population under the age of 18, India is likely to reap rich demographic dividends in the coming years. To utilize this potential workforce efficiently, it is important to understand the quality of prevailing education and improve upon the same. Through this paper, we aim to understand and evaluate the existing education system, study Government initiatives towards the same, and provide recommendations to improve the same. An average Indian is expected to be 29 years old in 2020, compared with an average age of 37 years in China and the US, 48 in Japan, and 45 in Western Europe. This creates a large, growing labor force which can be a source of growth and prosperity for the country. The sustainability of the economic growth will depend to a large extent on how this section is built up and utilized. Providing right type of education to the right people is a key to human resource formation. This compels us to ensure more educational participation and high school retention. Hence, we need to reform the Education system. The figure below presents a clear structure of the Indian Educational and Skill Development in India. Appropriate measures need to be taken at all levels for an effective Education system.

While the enrollments have increased over the years with a corresponding decrease in the dropout rates, the education system still has a gap of about 100 million seats which will require a capital expenditure of approximately $600 billion by 2021. Further, the effectiveness of the current education infrastructure is a concern that can be explained by issues with the schemes initiated by the government at various levels as discussed in the next section.

GOVERNMENT INITIATIVES
The Government of India has taken several issues over the years to tackle the problem of education. Some of them include: Ratification in the Constitution under article 45; National Policy on Education,

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1968; New Policy on Education , 1986; Programme of Action , 1992; Declaration of education as a fundamental right, 1993; Right to Education Act, 2009

SCHOOL EDUCATION
The main issues in the education system can be discussed under three areas: Access, Quality, and Parallel structures 1) Access: Access can be broadly discussed in two perspectives, with respect to exclusion from education as well as in terms of drop outs. Of 27 million children who enrolled in class I in 1993, only 10 million reached class X. Drop outs are increasing even in progressive states like Gujarat and Tamil Nadu. With the implementation of RTE, drop outs have declined from 9.1 % in 2009 to 6.1% in 2010. There are several reasons for exclusion from education:  Poverty: 23.3% of boys and 22.3% of girls were not attending school because they were engaged in an activity like paid work, household work or taking care of siblings.  Gender: Girls are at a disadvantage because of the general discrimination against them in the society and are the first to be pulled out of school in the case of family need.  First generation learners: There is inherent difficulty for an illiterate parent to cope with the procedures involved in the enrolment of a child. The multitude of forms , as well as provision of several certificates deters them from the process.  Health: Malnutrition and repeated illness combined with a lack of healthcare facilities lead to many children not attending school.  Socially disadvantaged: Programmes have been instituted to help traditionally disadvantaged groups (SC, ST, and OBC) to attend school. However educational access and retention remains unsatisfactory. 2) Parallel Structures: With increasing entry of private schools and the government focus on numbers and not on quality, there appeared stark differences in the quality. The deplorable government schools on one hand and the private schools began existing as parallel structures within the Indian education system. The school one attended was a reaffirmation of one’s caste, creed and status, and only increased the inequity in the society. Education, which was aimed at removing inequality, only ends up strengthening it further. 3) Quality: The ASER 2012 released by the NGO Pratham found that 53.2% of students in Class V could not read Class II level text.. The reasons for poor quality include, 1) Teachers: High absenteeism, poor status and training of primary school teachers, lack of accountability and simply the lack of qualified teachers affects the quality of education; 2) Funds: Spending has always been less than the committed 3% of GNP; 3) Education system: The system is such that there is no annual examination till class VIII- no means of determining students’ understanding; 4) Infrastructure: There are no sanitation facilities in 12.4 % of the schools, and the use of a classroom for more than one grade provides an unattractive learning environment. The key challenge ahead is to develop a high quality system of education, which is inclusive and available to all at low cost. Recommendations: For improvement on the quality aspect, there is a need to increase quality and frequency of teacher training and increase community participation in monitoring teacher performance. Systems to
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improve accountability of teachers along with a provision of feedback to students should be in place. There should also be a constant upgradation in curriculum. Also an increased public spending on education along with Public Private Partnerships is required. For reducing the number of drop outs, decentralization of education system is required that gives autonomy to the schools to absorb older children and make arrangements for their education as part of the school system and not as a parallel activity. Greater autonomy should be given to teachers to decide what they should teach, how they should teach and to assess children to bring them on par with others. Community mobilization, making schooling a social norm and generate resources to ensure improved provision should be promoted. Greater participation of primary health centres and subcenters in promoting health programmes for the poorer sections in the villages, and particularly for children, may reduce the dropout caused by ill-health. Review administrative arrangements that result in drop out and develop reforms that enhance progression and retention. These can include easier registration procedures for enrolment in school, automatic promotion to higher grades, regular monitoring of attendance and achievement. More use of the informal schooling system through Sishu Shiksha Kendras, NCLP (National Child Labor Project) schools.

HIGHER EDUCATION:
The higher education in India is provided by about 545 State and Central Universities and 65 centrally funded technical institutions like IITs, IIMs, NITs, IISc. The number is still insufficient to meet the demand of 144 million people in the age group of 18 -23 years. Key Issues: The issues can be broadly classified into 4 categories: Demand supply gap (to achieve an aim of 30% GER by 2021, an additional 800-1,000 universities are needed), Quality, R&D (average spending on research in India is less than 0.8% of GDP providing fewer opportunities to the technical institution), and Scarcity of faculty (Around 35% posts are vacant in central universities and around 25% vacant in IIMs) Recommendations: Government should offer tax concessions/fiscal incentives for setting up campuses of higher education by private sector. There should be a growing acceptance of distance learning courses and expansion of open-university system. Good salary packages and benefits should be offered to the faculty so that good brains can be attracted to this profession. Encourage entry of foreign universities independently or in collaboration.

VOCATIONAL EDUCATION:
As per the census 2011, India has a working age population of around 550 million, corresponding to which we have a skill development capacity of less than 4.3 million annually. To bridge this huge gap, the government will have to spend over $100 billion in capital expenditure and create an additional 6 million trainers. The National Policy on Skill Development aims to train 500 million people by 2022. Several industry associations and international bodies such as FICCI, ILO and World Bank are also actively involved in the policy discussions to address this issue. Issues and Reforms: The various issues and corresponding reforms for the segment include:

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1) Employment outcomes of graduates are poor and are irrelevant to the needs of the labor market. Thus, the focus should be to reform the system to make it more demand responsive and not just on expanding the scope 2) A fragmented management lacks the basis for informed policy decisions. To counter this a clear demarcation of functions of the various departments is required, also involving the employers in the decision making process. 3) No incentives available for institutions to respond to market needs. Involving private sector, where there is greater autonomy in institutional management, will ensure good quality vocational education 4) Financing of the schemes is done on an ad-hoc basis which does not give any incentive to the different departments for an improved performance. Transferring resources on the basis of input or output criteria will motivate the departments to excel and hence ensure a better outcome both in terms of quality and quantity

CONCLUSION:
Given the issues highlighted with respect to quality of education and greater dropouts, the schemes should ensure that the focus is not merely on building the infrastructure but to ensure that it facilitates the intended objective of providing relevant and quality education. To achieve this, a targeted approach needs to be taken. Under this different policies should be formed for retention of different age-groups of children in the schools. Gender and regional dimension are other important factors to be considered. A concerted approach with poverty eradication, expansion of elementary education and economic growth going hand in hand is the need of the hour. Convergence and better coordination between the SSA, Rural Development schemes, NREGS, and child labour eradication programme through spread of NCLP schools would succeed in securing a better future for the children and the country.

REFERENCES:
   ASER 2012 (Rural), Jan. 17, 2013; Human Resource and Skill Requirements in the Education and Skill Development Services Sector (2022), Jun 2009; NKC Recommendations on School Education, Feb 2007; RTE Act 2009: Critical Gaps and Challenges, by Praveen Jha, Pooja Parvati, March 2010

EPS promotes healthy debate
Besides its flagship event “Talk & Tease” on Kampus, EPS came out with an online debate event “Type Rs.n Tease” on its Facebook Page. Recently we did a 24 hours online debate during the Independence Day. This is poised to become a very flexible and favorable platform for opinion leaders to express their ideas. People from across globe participate in this new initiative just like they follow the EPS Facebook group and voice their opinion in that global forum. This concept is just in line with the message of IIMK – “Globalizing Indian Thought”.

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Guest Article
Cultural Determinants of Negotiations Behavior
G Venkat Raman Assistant Professor, Humanities & Liberal Arts area, IIM Kozhikode
Let me start with few of my personal experiences during my seven years stay in Beijing (2003-10). Strangely I got the taste of some of the experiences which I was to encounter as Business Development Manager of Essar steel in their representative office while dealing with my university’s authorities when I was about to be awarded my doctoral degree from the School of Government, Peking University. The story goes like this. In Peking University the PhD programme comprises of fulfilling the credit requirements followed by a four step process. The first two comprises of the comprehensive exam and the synopsis presentation where your proposed thesis title is registered and approved. The third and the fourth stages comprise of the internal defense of one's thesis followed by the final defense. The final defense is preceded by a blind review of external experts and then a date is fixed for the PhD defense. As I was a Cultural Exchange Programme Scholar under the China Government Scholarship, a senior official said that I am allowed to write my thesis in English but I have to defend my thesis in Chinese. I thanked God for the concession and went on doing my work. After undergoing the grueling process and finishing my final defense I got a phone call from the office of the School of Government asking me who gave me the permission to write my thesis in English. I looked for the concerned person but by that time the person was retired. In Chinese universities you get two types of degrees after completion of an academic programme. The first degree certifies that you have successfully completed the academic programme (bi ye zhengshu) whereas the second one is the open which certifies that you are conferred a degree (xuewei zhengshu). Thereafter it took me one year to negotiate with the university authorities to get my well-deserved degree. What did I do and what lessons did I learn from this experience? Speaking about the mutual knowledge Indians and Chinese have of each other I have two anecdotes to share. Once when I went to a Shanghai as part of a business visit I was asked by a Chinese about Rabindranath Tagore (Chinese name is tai ge er) and the Taj Mahal (Chinese name tai qi ling). So far so good but what followed this was a classic. The Chinese friend asked me is Tai Qi Ling the mausoleum of Tai Ge? In English it doesn’t make sense, for, it translates to ‘Is Taj Mahal mausoleum of Rabindranath Tagore’? This doubt came to his mind due to Chinese names given to Tagore and Taj Mahal exposing his ignorance about India. Now let me narrate a story from the other side. Once when a business delegation from India came to visit Beijing I was asked why the Chinese have doctored with English language while spelling Chinese sounds. For instance why Beijing is spelled ‘peiching’ (‘bei’ which means north but pronounced ‘pei’ and ‘jing’ which means capital is spelled so but pronounced as ‘ching’). Our Indian friend was unaware that it is not the Chinese who have devised the so called ‘pinyin’ system (‘pin’ means to spell and ‘yin’ means sound) but it’s the foreigners who have devised a system of spelling Chinese names in English alphabets. The first anecdote is to highlight important aspects which one should bear in mind while dealing with Chinese. The other two anecdotes are to highlight how little we know of each other. Now let’s go to my doctoral degree story. I was told that since I don’t have a written document from the person who allowed me to write my thesis in Chinese the university authorities have to take a call. Despite support from my Dean and Assistant Dean and my supervisor it took another year to work out the modalities under which I was awarded my degree. What happened during this one year? It transpired that in more than one hundred years old history of Peking University, degrees were conferred on foreign students who wrote their
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dissertations/thesis in a foreign language and came to the Peking University under the university to university exchange programme. However till the university came across my case there was no precedence of the University awarding a degree to a doctoral candidate writing a thesis in a foreign language under the government to government exchange programme. Later I was told that I am the first doctoral candidate on a country-to country level exchange programme to be awarded a doctoral degree. Two convocations passed by and I was getting more tense about my fate. Finally I get a call that the university has worked out a formula. I was told by the University authorities to give a 10,000 character Chinese summary of my doctoral thesis and also write a letter in Chinese to the university as to why I wrote my thesis in English. Interestingly I was also given broad guidelines as to what I should write. One of the things which they wanted me to write was something like this. India and China share a historical relationship and have had many cultural exchanges in the past and therefore and it is for the benefit of both countries that such exchanges continue to take place. I asked my Dean what has India-China friendship got to do with my academic degree and he countered by asking me whether I want my degree or an answer to my question. So what are the important lessons from this episode and what does it tell us about Chinese negotiations behavior? First, negotiations with Chinese take a lot of time. Second, they have a very deep sense of history and in this sense their interactions are based on the premise of them being citizens of what Martin Jacques calls, a ‘civilization state’ and not a nation-state. Despite rapid international economic rise of China, ‘roots of the Chinese identity still remain intact and in many ways the Chinese consider themselves to be racially and ethnically superior to rest of the world’. Third, instead of asking repeatedly why they are not going to address your concerns negotiating with Chinese involves what Frankenstein calls a ‘zigzag’ approach or what Ghauri and Fang call the ‘ping pong’ style where points are discussed in detail and finally both sides agree on how to tackle an impasse (in Chinese it is called renji hexie or interpersonal harmony). Fourth it pays to be patient with Chinese. In my case it took a year but ultimately the problem was sorted out to the satisfaction of both the sides. Instead if I would have run to the Indian embassy as a victim of the Chinese mindset then this would have escalated the problem leading to mutual posturing and hardening of stances helping no one’s cause. In every meeting one used typical Chinese cultural aspects like the concept of ‘face’ and old friendship(in Chinese called ‘mian’ and ‘lao pengyou’) to solve the problem and how a University of the stature of Peking University can deny me my degree. Fifth, I never gave the impression that I don’t ‘trust’ the Chinese system to deliver justice. One also showed the endurance to fight for something which one was already entitled (in Chinese called chiku nailao, which can be roughly translated as eating disappointments and patiently wait for results). There is a vast body of literature that deals with culture and its impact on international business negotiations and broadly speaking there are four approaches, namely, structural-processual approach, negotiator’s behavior approach, cognitive-strategic approach and the stages approach. The structural– processual approach talks about factors like context/situation, processual/behavioural aspects and other strategic goals/ outcomes.1 The negotiator’s behavior studies impact of culture on negotiations and surveys are conducted to access, analyze and explain cultural impact on negotiations bhaviour. The cognitive-strategic approach links behavior and actions of negotiating players to cognition and this approach describes negotiations from the perspective of influence cultural dispositions have on negotiations behavior of parties involved. The stages approach involves examination of cultural impact on negotiations behavior in terms of stages. For instance, Ghauri and Fang have done research on cultural determinants of Chinese negotiations behavior and they divide the negotiations process into three stages, namely, pre-negotiations, negotiation across table and finally post-negotiations.
1

Under this approach culture’s impact on negotiations is considered as part of context by some scholars while others study role of culture as part of context, process and strategy 31 | P a g e

Frankenstein characterizes Chinese negotiations as a ‘spiral model’ where one witnesses the indirect and bureaucratic nature of Chinese negotiations practices. He emphasize on aspects like personal relations (guanxi), sincerity, mutual feelings, importance of being ‘old friend' (lao pengyou), striving for consensus. Woo and Prudhomme in their study of Chinese negotiations have enumerated eight facets of Chinese negotiations behavior, namely, face, trust, friendship, guanxi, ambiguity, patience, and the lengthy and formal Chinese protocols. Graham and Law similarly speak about guanxi (relationships), role of intermediaries (zhongjian ren), relevance of social status (shehui dengji), interpersonal harmony (renjie hexie), holistic thinking (zhengti guannian), thrift, face (mian) and endurance (chiku nailao). Herriot once quipped ‘culture is what remains when one has forgotten everything else’. Culture is a way of thinking and acting and in this sense people of different cultures think and act differently. The challenge is to have a healthy respect and mutually understand and appreciate how culture affects inter-cultural interactions when they come together to negotiate a deal. These negotiations more or less do involve a ‘zigzag’ approach necessitating mutual give and take and these are never ‘unilinear’. According to an ancient Chinese 'only devils move in straight lines’. Therefore, negotiations invariably involve mutual courtesy which is more often than not a patient and pain staking process. Familiarity with different cultures enables people to get familiar with other cultures and in the process become empathetic to the other sides’ concerns and feelings. This in turn enables them to equip themselves better while preparing for inter-cultural negotiations.

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Guest Article
Social Networking Sites and Social Science
Shriram Venkatraman
PhD Scholar- University College London (Supervised in field by Dr. Anupam Das, IIM, Kozhikode)

Introduction
The following article strives to provide a very brief introduction/review of the concepts of Social Networks and Social Networking Sites from an Anthropological perspective. It will also provide a brief introduction to a Global Anthropological study of New Media and specifically that of Social Networking Sites (called the Global Social Media Impact Study with which the author is associated as a Researcher with Dr. Anupam Das, IIM, Kozhikode as his field supervisor in India). Though the concept of Social Networking is not new and has a very detailed quantitative framework (though derived from Social Sciences at some point of time), one of the earliest fields to concentrate on Social Networks as a concept was that of Anthropology. Though, an exhaustive review of the concept and development of Social Networks or the concept and development of Social Networking Sites might be beyond the scope of this paper, an overview of the same as an introduction will be dealt with briefly.

Social Networks
The study of Social relationships acts as one of the strong pillars of Social Sciences and for Anthropology in particular. The study of small scale societies by Anthropologists dealt with the social relationships and kinship ties that a member of the society shared with his/her counterparts within the society. Further, studies showing relationships between two or more communities as a whole and how individuals play a part in such relationships also became prominent (e.g.: Kula Ring of Malinowski (1922)). The positions and placements of individuals and their corresponding roles/responsibilities within a certain relationship structure were given a lot of importance. It was clear that there were patterns and activities in a society that could be understood by studying the network of social relationships rather than the official structure of a society (Blau, 1964). While classical kinship studies focussed on understanding relationships between individuals in a society who had or were hypothesised to have family ties (Haviland et. al, 2010), social networks emerged as the study of social relationships that encompassed kinship and other social relationships that existed in a society (Mitchell, 1969). Barnes (1954) and Bott’s (1957) study of social networks is of significance. The network concept developed by Barnes (1954) used participant observation rather than surveys as a predominating aspect in studying networks. As Mitchell (1969) observes, though communication flow among people was also interpreted in the study by Barnes (1954), the significant aspect of the study was the relationship of the linkages in the network and the implications of these relationships in social behaviour and action. Barnes (1954) (through Mitchell, 1969) observed the field of social relationships as being made of “ties of friendship and acquaintance which everyone growing up in … society partly inherits and largely builds for himself”. Mitchell (1969) states that most network studies concentrate on the nature of the links between people in a network which Barnes (1954) called a “mesh” and Bott (1957) “connectedness”. The relative permanence and the temporality of relationship links between kinship ties and other network ties of an individual’s social world was studied by Bott (1957) (through
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Mitchell, 1969 and Micheli, 2000). Micheli (2000), states that Hollinger and Haller (1990) conclude that the “importance of friends in people’s social network is inversely proportional to the importance of extended kin” based on their study of Europe. However Micheli (2000) also states that there exist societies such as Italy where both kinship and non-relative networks remained strong. It might be worth quoting Bott’s (1957) (through Micheli (2000)) distinction between a difference in small-scale society and urban industrialized society “In England and other Western European industrialised societies work groups are seldom recruited on the basis of kinship, individuals may earn a living without depending on relatives for their means of livelihood, productive resources may be owned by individuals who are not related to one another (...). This reduced importance of kinship in economic affairs is associated with a narrower range of kin recognition, with absence of corporate groups of kin (...), with less frequent and intense contact among relatives”. Contrasting this situation to India, it might be worth observing the importance of family/kin and caste networks in general and as Vidyarthi (1984), Parry (2001) and De Neve’s (2005) study the importance of kinship in Indian work situations. This might be of special interest in an Indian corporatized work scenario given the constant migration and non-existent kins in such work environments.

Social Networking Sites
As scholars such as Miller, (2012), Castells (2000), Rainie and Wellman (2012), Boellstorff (2008) agree, the rise of digital culture is one area that would serve as the destination that is unavoidable for Social Science research and reflection and Anthropology is no exception. With the development of the internet and several websites which host and provide the platform for networking, the intensity of networking has considerably developed. SNS are fast becoming a powerful tool for communication among people. Online social networking today provides a remarkably compelling way in which users develop relationships with other users as well. However, one cannot easily categorize the study of SNS as just the study of Social Networks alone, as the SNS brings its own complexity in terms of networks, technology, access to technology, how they are used and accessed and several other such significant aspects for consideration. Further, there emerge even further complexities based on the space/time where the SNS is used and perceived. While sociologists such as Castells (2000) and Rainie and Wellman (2012) view networks and specifically networks over the internet as informational networks, Miller (2012) clearly suggests that SNS are closer to Anthropological study of social relationships. Miller (2012), also states that SNS is not dispersed as the internet and in sites such as FB, several networks including kin based, peer to peer friendships, work networks and several others come together. Today, there are several SNS such as Facebook, MySpace, LinkedIn, Orkut, Bebo, Hi5 available (Dalsgaard, 2008). Based on the interests of members they are drawn together to a specific SNS, example: for professional interests - LinkedIn, for romantic interests - e-Harmony and for social interests - Facebook (Burgess, 2009). MySpace and Facebook seem to be the best known SNS on a worldwide basis (Boyd, 2006; Ellison, 2007; Dalsgaard, 2008), while on YouTube, a public videosharing website people can experience varying degrees of engagement with videos, ranging from casual viewing to sharing videos in order to maintain social relationships. The participants maintain social networks by manipulating physical and interpretive access to their videos (Lange, 2008). As Broadbent (2011) and Miller (2012) state, the social networking sites are bringing together kinship,

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friendship, work and other networks in an overlapping terrain and is closer to studies of sociality and social networks. Most studies of Social Networks in Anthropology/Sociology have been around offline social networks. Empirical data through ethnographic research has been collected through such studies. The study of online social networking sites is a new area in Anthropology. The pioneering ethnographic study that was performed completely online on a SNS site that was significant and attracted considerable attention was that of ‘Coming of Age in Second Life’ by Tom Boellstorff (2008). However, a combination of a study of Online social networking sites with corresponding ethnography is still under development while, ‘Tales from Facebook’ by Miller (2011) is a promising endeavour in that direction. Though, detailed discussions of online versus offline personas of individuals are discussed in length, the maximum has been a sociological survey interpreted quantitatively. The holistic perspective in understanding the continuum by understanding the society that people live in and how have they perceived/accepted/rejected a technological change such as SNS in their daily lives is worth observing. Only a detailed Ethnography can act as a perfect tool to understand the real impact of SNS in the daily lives of people in a small town environment. As a bridge in connecting both the offline and the online aspects, and at the same time using this as an opportunity to go back to the original Anthropological idea of comparative studies, a Global Anthropological study called the Social Networking Sites and Social Science is in progress at University College London. The Social Networking Sites and Social Science Research Project more popularly called the Global Social Media Impact Study is an Anthropological study which primarily aims to understand the effect of New Media, specifically that of the Social Networking Sites (SNS) in small town environments across eight different field sites in seven countries namely Brazil, China, India, Italy, Trinidad, Turkey and UK (one more field site would be added very shortly). The study in India is a part of this larger comparative Anthropological project (SocNet), funded by the European Research Council. The SocNet project primarily aims to be a comparative project in Anthropology with eight simultaneous ethnographies in small town environments across the world on SNS. The study which involves understanding the impact of New Media and transformation in society will culminate in an in-depth ethnography from each field site involving 15 months of fieldwork. The study aims to be a holistic ethnography that will strive to understand the society in general in order to better understand and appreciate the effects, consequences, adaptation with or without revision, rejection, perception and usage of social media by a representative sample of the community/society under study. The ethnographic study will majorly concentrate on aspects that are not necessarily complementary to each other and together form the life of an individual and that of a society. The idea would be to understand aspects of considerable importance that form the pillars of Anthropology such as social and kinship relationships, social movements, migration and diaspora, politics, power, privacy, religion, sex and romance, age, death, grief, memorialization, class, caste, work and life in detail in order to understand the nature of such aspects and events in a society. The SocNet project aims to be a comparative project in Anthropology with eight simultaneous ethnographies in eight small town environments across the world and differs by not doing a usual US centric work on SNS. As McClard and Anderson (2008), Miller (2011) discuss, it is rather obvious that Facebook (FB) is the best known SNS phenomena that has more than a billion people (facebook.com) and has attracted a lot of media attention, discussion and research among social scientists and a digital culture that cannot be ignored. The study will focus on FB, as 82% of users outside US/Canada (Facebook.com). The countries in the study account for approx. 20% of the FB population (barring China where QQ will be studied). However, the idea is to be flexible and not

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restrict oneself to FB alone. The study will duly acknowledge and accommodate the use of other suitable SNS found in the field sites too.

References
Barnes, J.A.(1954). Class and Committees in a Norwegian Parish Islands. Human relations, vii: 39-58 Blau, P. M. (1964). Exchange and power in social life. Transaction Publishers. Boellstorff T (2008) Coming of Age in Second Life. Princeton: Princeton University Press. Bott, E. (1957) Family and Social Network. London: Tavistock Institute. Reprint (2001): London: Routledge. Boyd, D. (2006) Friends, friendsters, and MySpace Top 8: Writing community into being on social network sites. First Monday [online], 11 (12). Broadbent, S. (2011). L'intimité au travail.. FYP éditions. Burgess KR(2009) Social Networking Technologies as Vehicles of Support for Women in Learning Communities. New Directions for Adult and Continuing Education,122. Wiley Periodicals,Inc, 63-71. Castells, M. (2000). The Rise of the Network Society, Volume I of The Information Age: Economy, Society and Culture. Massachusetts: Blackwell Publishing Dalsgaard S (2008) Facework on Facebook: The presentation of self in virtual life and its role in the US elections. Anthropology Today, 24(6), 8-12. De Neve, G. (2005). The everyday politics of labour: Working lives in India's informal economy. Berghahn Books. Ellison, N. (2007) Social network sites: Definition, history and scholarship. Journal of Computer-Mediated Communication, 13(1), 210-230. Haviland, W. A., Prins, H. E., McBride, B., & Walrath, D. (2010). Cultural anthropology: The human challenge. Wadsworth Publishing Company. Lange, P.G. (2008) Publicly Private and Privately Public: Social Networking on YouTube. Journal of Computer-Mediated Communication, 13(1), 361–380. Malinowski, B. (1922). Argonauts of the Western Pacific: An Account of Native Enterprise and Adventure in the Archipelagos of Melanesian New Guinea. London: Routledge & Kegan Paul. McClard A and Anderson K (2008). Focus on Facebook: Who Are We Anyway? Anthropology News, 49(3), 10-12. Micheli, Giuseppe A (2000). "Kinship, Family and Social Network: The anthropological embedment of fertility change in Southern Europe." Demographic Research 3.13 (2000): 1-34. Miller, D., (2011). Tales from Facebook. Cambridge, UK: Polity Press. Mitchell, J. C. (Ed.). (1969). Social networks in urban situations: Analyses of personal relationships in Central African towns. Humanities Press International. Parry, J. P. (2001). Ankalu's errant wife: sex, marriage and industry in contemporary Chhattisgarh. Modern Asian Studies, 35(04), 783-820. Rainie, L., & Wellman, B. (2012). Networked: The new social operating system. MIT Press (MA). Vidyarthi, L. P. (1984). In Vidyarthi, L. P. (Ed.). Applied anthropology in India: principles, problems, and case studies. Kitab Mahal.

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Guest Article
Indian Style Management is required for indigenous problems
Dr. George Joseph Themplangad, MBBS, MBA. Public health activist, author and founder of www.railwaysHit.com It calls for a whole new mind-set. I have been involved since October 2 of 2006, Gandhi Jayanthi, on a singular mission - to address and solve what I consider to be one of the top ten environmental and public health disasters on the planet. A shame on the people who manage, own and operate one of the largest corporate organizations in the world, based and operating in India. I got off a train on that day and since then, my life has a single purpose – to get Indian railways stop violating laws of India regarding air, water and environmental pollution, which they are doing daily in criminal neglect of, causing death by the thousands and serious disease to millions. Those of you keen to understand the matter, may go to the website www.railwaysHit.com and read the case details to have a deeper understanding of the intricate details. I shall refrain from repeating the statistics and details that can be found in the website mentioned, regarding the Indian railways, the world’s largest employer, bigger than Walmart, GM, GE, Infosys or any other. Know though, that it is government owned, operated and “unsafe at any speed”, as Ralph Nader said of GM in the 1960’s just as I am saying now of IR. Since my appeal in the High Court of Kerala, in 2006, the Ministry of Railways has been headed by 6 different persons and very little has been done to address the issue. During the reign of Lalu Prasad Yadav, an initiative was taken to setup “Green Toilet” for the railway system and an amount of Rs.4000 Cr. was allocated. The plan was to spend Rs.1000 Cr. a year and complete the work within 4 years. It is 2013 and we are yet to start off. Now that we are 7 years down the road, I am back in the court, asking where has the money gone, and why has this problem not been solved yet? Meanwhile, I have also submitted a document to the government, through the court that we can produce electricity from the human waste that Indian Railways is dumping. As per the estimate, a minimum of Rs.5000 Cr. per year can be generated as income from this eco-friendly activity, if the company and the ministry would take the matter seriously. An open letter has been written to the Prime Minister and it is part of a book that is soon to be released and published by me. It was written a few years ago, and it had got the attention of those that matter in New Delhi. Having given this information I am now going to switch the gears and let all know that the ball is in our court. How and what we-the citizens of this country-can do is the question. It also is a stinking, difficult, politically mismanaged, corrupt, inefficient situation, and the risk involved is as huge as the opportunity given. My actions have been spearheaded with the agenda that I have described as best as I can in my favorite phrase “Indian Railways Need a Diaper”. The roadmap ahead include, me going on a speaking tour of India, visiting colleges and University campuses. There is a plan to produce a movie that will highlight the issues in a humorous as well as a

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tech-challenge and an activist theme with a reality context built in. Anyone keen on working with me are most welcome to contact me. As much as India is an emerging economic super power, there is a major public health failure that is moving to crisis and epidemic proportions. The fact that Indian railways - a single corporate entity wholly owned by Govt. of India, with a huge budget of over $20 billion US a year, in its operations, continues to dump human fecal matter on to the 40,000 plus mile track network all across the country, causing disease, mortality and morbidity to millions of people daily. This needs to be addressed quickly. The Prime Minister of India, and the President of India must make this issue a priority. This story – a real life one – has a presidential connection, a very interesting one, that I think is all too vital for me to share with you. I met former President Dr. A P J Abdul Kalam, a great scientist. He recollected that he was the President when I had filed the case and that he had taken efforts to ensure that the railway Board addressed the issue and the funds were allocated. He also answered my question, in the affirmative, that we can produce energy from this waste. My life has not been the same since my meeting him. We, the public can help. If you don’t know how to, is my statement to the government of India and the operators of this malady. Since they refuse to give me a decent hearing, maybe the combined force can make them listen to, as well as give us a hearing. The question is, do we want to solve the problem? Do we care at all? Our “yes” in chorus can bring respite. The government is not sure, and the courts have said – that the Government is refusing to take the matter seriously, and the court has strongly in a recent order castigated them. Yet, they don’t seem to care. I am not merely blaming the government, but I am stating as clearly as possible that this is a best example of a management failure. We want the problem to be solved. Our effort towards that noble task should not rest until the problem is solved. This again is my management philosophy. Once you have identified a genuine problem, go all out to solve it, and never give up. I was told by a Nobel Prize winner a few years ago, that the “problem” was really in identifying a problem when it came to success in business, politics or R & D. Once you can zero in on a real problem, then the solutions will evolve if one remains true to the cause of finding a solution. Yes folks, he even told me, that I had succeeded in doing just that, and mentioned that I was on the right track. I keep counting the years that I am on this railway track issue… and it sure beats any problem I have seen elsewhere. A simple question for those becoming aware of this matter of gigantic proportions is - Do you know how polio is caused? The answer my friends, is through the oro-fecal route. A person drinks the virus through water, contaminated by a polio affected person’s fecal matter. Indian railways are in my opinion the single cause of numerous polio patients in India. Sure the vaccine has helped reduce the tragedy. However Dengue fever, Malaria, Leptospirosis, malnutrition and so many other diseases including lung diseases in India is directly caused by the air and water contamination by Indian railways’ fecal dumping. My friends, as a physician and an MBA in international business, I am unable to stand by and look the other way, just closing my nose, when I see before me the sad reality of a failed administration. I am determined to do what I can, and I seek your full-fledged involvement. What has the govt. done about this issue of human waste being dumped on railway tracks, spreading disease? It is a fair question, and all the more relevant. Again, if we are true to our calling as experts of management, we must ask the right questions and not sweep things under the rug, if we want to succeed at solving problems. A political issue, as any, as well as a management and public health issue, all rolled into one.
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The public interest litigation against the Indian Railways and the Govt. of India was filed in November 2006. The public health case against the Union Govt. was admitted in Kerala High Court, as a matter under the cause and purview of public interest litigation. The problem continues to exist, even as I edit this article for publication on July 15, 2013. How long will the Indian public have to wait, before this problem is solved? Not long, if the IIM’s make it a matter that needs to be solved. This problem must be solved using just in time management methodology. A period of 1 single year is what I say it should and can be solved in – particularly, if I have a say or role in the matter. That strategy, I will be glad to speak with you in person, when I visit you at IIM campuses. In conclusion, I say this one thing. I love India, and as an Indian citizen, who has returned to India after living, working as well as studying for my MBA in New York, US. It is not Bill Gates or others who are going to solve our basic problems in India, such as this issue. It is our duty, and that is what has made me move back to India, following the footsteps and example shown by Mahatma Gandhi. He taught us to be vigilant, to stand up for our rights, to be peace loving, to be honest, to be concerned about our fellow citizens in the country and on the planet, he taught us to be ecofriendly, rural emancipation oriented and all of which is a cause being conveniently forgotten and being laid aside. My young friends of India, I say, arise, awaken, reform, perform, the future is yours, this is the Asian century. No problem in India affects as many people every day, in an unseen manner as this we speak of here. Multi-disciplinary, out-of-the-box thinking and collaboration is what can solve this problem. Let us make this our challenge like the cricket team of India make a target score their goal, for a victory and go for it.

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India’s journey towards sustainable growth- In the global sphere of things
Janani ganesh Batch 2012-14, PGP, IIM Kozhikode “Sustainability” is an often-used favorite of corporates and the governments alike. Sustainable development relates to a concept of inter relatedness between environmental and human development and one without the other would ensure that neither succeeds. At the 1972 UN Conference on Human Environment at Stockholm, out then Prime Minister Mrs. Indira Gandhi stressed on the fact that removal of poverty is as integral a part of the goal to a sustainable environmental strategy for the world as are initiatives to maintain ecological balance. Inequalities have been in existence since time immemorial. Three fourths of the world’s population lives in developing countries while one fifth of them are classified as below the poverty line. The ones that house the remaining prosperous quarter of the world’s population are those countries that have achieved industrialization in totality. The developing countries and the economies in transition are undergoing their cycle of rapid industrial development and it is at this juncture that Climate change is being touted as one of the biggest problems facing mankind. Global forums under the United Nations have convened numerous conventions to arrive at a world consensus for action by pressing for mandates. The effectiveness of the results achieved by these summits is before all to see. The only convention that can possibly be deemed a success was the 1992 Rio Convention that resulted in the setting up of the United Nations Framework Convention on Climate Change (UNFCCC). In 1997, parties to the Rio convention concluded the Kyoto protocol in Kyoto, Japan, the first ever agreement to the broad outlines of emission targets for developed nationsin line with their anthropological emissions. Countries around the world have over the years been formulating national level regulations in place that formulate regulations that are enacted into laws that mandate industries across sectors in their respective countries to comply to stringent norms and standards in terms of permissible levels of toxins, effluents, discharge, toxicity, air, water and soil pollution to ensure that economic development does not happen at the cost of environmental and human development. India is on the one hand facing unprecedented rapid economic growth and on the other, saddled with the looming threat of climate change that threatens to alter the distribution and quality of India’s natural resources. The rapid industrialization along with depletion and pollution of the natural resources threatens to adversely affect the lives of the people dependent on agriculture, forestry and water sources for their daily bread. The need of the hour for the policy makers is to develop an integrated strategy and a roadmap that takes into account the needs of the environment, social and economic development of the nation.

Business case for sustainability for key sectors
Every industry sector has specific sustainability challenges and every sector’s role in the corporate contribution to sustainable development is crucial. Repeated instances of market failure have reaffirmed the business case for sustainability. Increasingly corporates are realizing the benefits of disclosure of responsible business practices. The financial services sector is increasingly
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under the scanner and is being held accountable for not just its own direct impacts but also the impacts of those they finance. Cement sector has traditionally faced risks related to Environment, Health and Safety issues (EHS) issues and hence the need to shift to sustainable practices. Probably the most impacted of the sectors is Electrical Utilities with tremendous investments in wind and solar

among other forms of renewable energy to mitigate environmental impacts of conventional sources. In India Wind energy has achieved grid parity for industrial and commercial customers while Solar has achieved grid parity for commercial consumers. It is set to achieve grid parity for industrial consumers by 2015 by which time wind would have achieved grid parity for domestic consumers, especially with the cost per MW of wind and solar dropping by more than 60%. The automobile sector can gain competitive advantage through technology

aimed at region specific needs. Also, proactive green supply chain/green value chain is likely to give this sector an edge in terms of achieving sustainable business practices. Sectors such as Oil and gas, mining and metals etc. have tremendous environmental and social impact on account of the nature of their operations. Finally, the FMCG sector too faces questions about sustainable operations particularly in the light of consumer health and safety, environmental friendly packaging material, responsible marketing and business practices.

Indian Government’s Response to Climate Change
The Indian government’s response to Climate change and energy efficiency improvements began in 2001 with the Energy Conservation Act followed by the Electricity Act of 2003. The Indian government also proactively ratified the Kyoto protocol in 2002 indicating its support for the global cause. Under the Kyoto protocol, developing countries like India and China are not mandated to cut down emissions. The treaty recognized that developed countries have contributed to the anthropogenic buildup of CO2. Now, the developing countries and economies in transition have been allowed to increase emissions in accordance with their rate of growth. What is interesting is that the Co2 emission per capita is very low for developing countries compared to developed countries. (2.9 tonnes in 2010 versus 10.4 tonnes in 2010) The Energy Conservation Building code was the next to be brought in, in 2007. In a first in 2008, the Prime Minister’s Council on Climate Change drafted the National Action Plan on Climate Change (NAPCC) as a national strategy to adapt to climate change and to enhance the ecological sustainability of India’s development path. With belief in the principle of equality that each inhabitant of the earth is entitled to their share of the global atmospheric resource, India has committed to curtain its emissions to levels that would not exceed those of the developed countries despite an increasing population and rapid industrialization to cater to the demands of the population.

The NAPCC
The NAPCC takes an inclusive approach to the problem of climate change in India by addressing the concerns of the poor and vulnerable sections of the society, achieving national growth objectives along with Commitment to reduce the emissions intensity of the key industry sectors in India by 20-25% by 2020, in comparison to the 2005 level. The mitigation action was accorded to the principles and provisions of the UNFCCC and would be voluntary without legal binding. This was India’s big leap into transitioning to a low carbon economy.
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The key action points were to earmark polluting sectors for speedy reforms, creation of a market mechanism to incentivize investments in cleantech, cap and trade mechanisms and domestic and international carbon trading along with research, development and sharing and transfer of technology. The NAPCC looks at a multipronged integrated approach with focus of eight key areas namely solar, energy efficiency, sustainable habitat, water, Himalayan ecosystem, Green India initiatives, Sustainable agriculture and knowledge on

sustainability . The implementation of these missions is to be under the purview of the respective ministries. In August 2009, the PM’s council on climate change approved the solar mission and the National Mission on Enhanced energy Efficiency (NMEEE), sending a message of the country’s willingness

to contribute significantly to meeting the global challenge of climate change. The rationale behind the NMEEE was that the reduction of energy intensity of the country’s growth areas would in turn reduce the carbon intensity.

Perform Achieve and Trade Scheme – PAT
Under the NMEEE, the Perform Achieve and Trade Scheme, a market mechanism to enhance cost effectiveness of improvements in energy efficiency in the Designated Consumers(DC) through certification of energy savings that can be traded. Each designated consumer will be mandated to reduce its specific energy consumption (SEC) by a fixed percentage within a specified time period (3 years). Compliance could be achieved in two ways: (1) Underachieving- A DC can buy Energy Saving Certificates (ESCerts) to meet the SEC targets or pay a penalty pre fixed by the committee (2) Over Achieving- A DC that achieves more than its target reductions in SEC can convert the savings into ESCerts and sell it to underachievers The scheme has the potential to cut down on about 5% of the national energy consumption by 2015 which amounts to an avoided excess capacity addition of 10000MW

Where do we stand today?
Although the objective behind the institution of the NMEEE has been to push the key industry sectors to invest in superior technology thereby reducing emissions, the slow off take of the market mechanism, the question of fungibility and the cost versus benefit analysis of investing in technology visa-vis falling short of targets and paying the penalty has not been favoring the PAT scheme. The cascade started with the delay from the authorized agencies to release the list of corporates who were issued mandates. The initial list went for further revision based on representations from industry groups regarding the definition of baseline Specific energy consumption. The revised DC list was smaller and many corporates escaped from the mandates. Also, the cost of investing in technology was formidable in several cases and in the absence of stringent penalties is not a serious motivating factor for industries to switch to a new technology, as the switching costs don’t end with just the new technology. The integration costs need to be accounted for. Under such circumstances, as the penalty for failure to meet targets is a paltry sum, corporates are better off paying the penalty and maintaining status quo in terms of operations, thereby defeating the very purpose of the scheme. Also, the market for trading ESCerts has not picked up as anticipated. Thus, even though the strategic think tank of the government has managed to draw a roadmap with a vision for at least 10 years, there are gaping holes in the implementation and execution of the roadmap.

Will the world come to a consensus?
Today the carbon market is virtually nonexistent. Without an enforceable mandate, there is no incentive for developed countries to invest in cleantech in developing countries or to purchase costly carbon credits. Until the end of the first commitment period of the Kyoto
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Protocol, the carbon market was seeing stellar performance. This largely benefited developing countries as cleantech investments were easier to come. Even though the developed nations were not directly reducing their own emissions, they were contributing to

the cause of CO2 emissions indirectly through the purchase of carbon credits. With the collapse of the Clean Development Mechanism due to lack of consensus on post 2012 situation of Kyoto protocol, the carbon market crashed and further investments in cleantech have been steadily decreasing in the wake of policy uncertainty and market outlook. Carbon liability of firms has become a deterministic factor in investment decisions. Environmental due diligence is conducted on firms before investors deem them safe enough to invest in. Investors are weary of environmental liability that comes with a company as regulations become more stringent and compensation lawsuits have dramatically increased over the year. However, the other side of the story is bleak with convention after convention ending in a limbo with no clear visibility on the way forward towards firm

commitments on emission cuts from those countries that emit the most. The developed countries demand that India and China reduce their emissions while it is undeniable that the developing countries are doing far more given their limitations, in their commitment to the cause. Canada’s withdrawal from the Kyoto protocol has come as a major setback and has further intensified the debate between the existing parties. The question remains as to whether nonstandardizes national level regulations which are already plagued by poor implementation and execution are solution enough for the crisis that climate change is to the world at large. If not, where are we left with to go, when organizations of the stature of the UN are unable to bring a closure to debates that have been plaguing the world for decade.

References:
   http://www.moef.nic.in/divisions/ic/wssd/doc4/consul_book_persp.pdf National Action Plan on Climate Change (Prime Minister’s Council on Climate Chance), GOI Cleantech Industry Attractiveness Report- Ernst & Young

Type ‘n Tease
EPS has always believed social media can play a bigger role in bringing people from different verticals together and organizing constructive intellectual activities. That is where the Type ‘n Tease arise. And what else can be better than Facebook as the platform of this online debate. Hence, EPS started its online debate in the EPS Facebook page. We had the following Type ‘n Tease events:  Type ‘n Tease-1 was on the topic “Is patriotism a roadblock for globalization”  Type ‘n Tease-2 on “Is a Nation Better off by Privatizing its Education Sector?”  Type ‘n Tease-3 on “Vision 2020? United States of India!”

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Current Macroeconomic policies of India
Parthi Kumar S Batch 2012-14, PGP, IIM Lucknow Deng Xiaoping’s most famous remark was “It doesn’t matter if a cat is black or white provided it catches mice”. This fits better to the current economic reforms of India outlining the fact that growth is the ultimate goal. The global meltdown in 2007 did not have much of an impact over India as it had its influence in other economies like USA, Japan, and China. India’s ability to stay immune prone to recession was helped by the fact that it is much less dependent than most countries, on global flows of trade and capital. India relies on external trade for about 20% of its GDP (China’s is roughly double, USA’s and Japan’s are significantly higher).The country’s robust as well as large internal market accounts for the rest in GDP. Indians continued producing goods and services for other Indians, and that kept the economy in a better position. In managing the nation’s macroeconomic health, fiscal policy goes hand in hand with monetary policy. The US has combined loose monetary policy with a consumer stimulus delivered via the budget deficit. During the crisis, the US economy has grown by 1.2% in four years. Meanwhile China, which combined expansionary monetary policy with an investment- led stimulus, has experienced more than 9% annual average growth throughout the four years of the financial crisis. India had consistently maintained growth percentage around 8+ in the recession days 2007-2011 though it follows the loose monetary policies with consumer stimulus like US. This is due to the fact that strong economic policies were being followed. In India we have strictly regulated market by active participation of financial regulators like Reserve Bank of India, Securities and Exchange Board of India, Ministry of Finance, Ministry of Corporate Affairs. These regulators ensure that although Indian Markets have exposure to many foreign players they have lesser vulnerability to global risks than other countries. Participatory Notes (P Notes) is one of the measures taken by Government of India (GOI) to control the Foreign Institutional Investment (FII). During recession stock markets gets plummeted if foreign players pull out their investments, P Notes is the key to check that such incident never happens. There are many such policies which had enabled GOI to run Indian Market as a tightly controlled unit. India’s conservative financial system played a vital role .Its banks and financial institutions were not tempted to buy the mortgage-supported securities and credit-default swaps that ruined several Western financial institutions. Nationalization of Indian banks in 1969 facilitated GOI in forcing certain policies like high Cash to Reserve Ratio (CRR), stringent credit policy and regulation of lending rate. This control over banks has proven to be a boon to India as recession started in U.S. due to the burst of Sub Prime Bubble which happened due to the uncontrolled usage of excess power vested with the financial institutions. In managing the nation’s macroeconomic health, fiscal policy goes hand in hand with monetary policy. Over the last two years, with all-commodity inflation raging at close to, and occasionally above, the 10% mark and food inflation breaching even the 20% mark on some months it has indeed been a challenge synchronizing and running both sets of policies. India has responded to the inflation by using a combination of fiscal contraction, liquidity tightening and, above all, deft monetary policy. Monetary policy for controlling inflation and balancing between the objectives of employment generation and price stability is one of the hardest policy exercises that a nation has to conduct. In India, The Reserve Bank of India (RBI) usually did this by the raising the repo and reverse repo rates and on occasions raising the Cash Reserve Ratio (CRR). Industrialized nations are plagued by stagnation similar to emerging ones plagued by inflation. As a consequence of growth stagnation and the risk of a second round of recession, industrialized nations have tried different forms of macroeconomic stimulus. In the U.S. this consisted of two rounds of hefty quantitative easing. In the second of these rounds—the so-called QE2--the US
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Fed injected 600 billion dollars into the economy by buying up long-term bonds .In addition, these economies and also Japan have kept their interest rates extremely low. On the trade policy front, unification of dual exchange rate, along with current account convertibility (CAC), increased the potency of exchange as a trade policy instrument and improved foreign exchange availability for exporters. There are still challenges ahead. Reform is pursued hesitantly by a coalition government constantly wary of voters' reactions. A decision to de-regulate petrol and diesel prices has sparked massive street protests and stoked fears of rampant inflation. Privatization of India's bloated public sector has been slow. The country's infrastructure remains woeful. Power shortages are frequent. Some 40% of the population still lives below a poverty line drawn just this side of the funeral pyre. One critical input for high growth is — fiscal policies for higher infrastructural investment, which is a vital ingredient. The path is fraught with risks. Run up excessive deficits, and a crisis can have the debt-GDP ratio spiral upwards as happened in several Eurozone countries in recent years and threaten a crash. Planning Commission has talked about a target of one trillion dollars of infrastructural investment during the 12th Five-Year Plan, 2012-17, with about half of this being raised from the private sector. Another could be export-oriented FDI, which is one of the main reasons for china’s economic success. But the success will depend a lot on the government’s policy. This is the kind of gamble that India has to consider taking, as it ponders whether to make the next Five-Year Plan the big leap to industrialization. This is the kind of big heave that Deng Xiaoping’s China undertook in the late 1970s with Success. India is simultaneously tackling the "hardware" of development (Infrastructure –Roads, Ports) and its "software" (Education and Healthcare). Success will not occur overnight, but progress has been impressive and is continuing.

References:
  http://www.indiainbusiness.nic.in/studies_survey/banking_systemsurvey.pdf http://www.eastasiaforum.org/2011/09/28/can-india-really-surpass-china/

Leader of the batch
EPS in association with Backwaters hosted an event “Leader of the Batch” in the intrasection festival of IIMK, ‘Roobaroo’. ‘Roobaroo’ is the welcome event arranged by the senior PGP batch for the junior PGP batch. “Leader of the Batch” event was targeted at those individuals who thought they had the confidence enough to become the voice of their batch. The event witnessed quality participation with every section sending their crème- de la crème from their sections. Various topics ranging from economics to politics to social sciences were discussed.      Can China be the next USA? Should Mumbai be the capital of India? How will you make India safe for women? Rahul Gandhi, Narendra Modi: Next PM or not? What is India's biggest problem and how would you solve it?

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The National Food Security Bill
Anshul Garg | Arun Kumar | Pooja Sunder | Reetika Singh | Sharan U R | Shreya Anil Batch 2012-2014, PGP, IIM Kozhikode

Food Security: Rationale
Food security implies physical, social and economic access to adequate quantity of food to all people at all times so that they can meet their minimum dietary needs. The National Food Security Bill 2011 aims to achieve the same. Currently the Indian scenario has been dismal. Poverty in India has been rising over the years and almost 70% of the population still living in rural areas. Estimates show that a majority of the population was earning $2.5 or less per day and over the years there has been no substantial improvement in the poverty estimates. The major growth of employment during the past 2 decades has been primarily in the informal framework. Also the quality of employment in terms of wage, working conditions and job security has been extremely poor. Food security and affordability is directly linked to the wages and job insecurity therefore loss of job can have disastrous consequences. In India the estimates regarding the number of women and children suffering from under-nutrition and deficiency diseases are comparable to those of countries in SubSaharan Africa and even worse in some cases. Over the years there has been an improvement in nutrition among children but the rate of decline of undernourishment amongst children has been sluggish (as can be observed from figure 1) and therefore it Figure 1; Source: EPW; Democracy and right to food; Jean Dreze; has been predicted that it might take another 2004) 40 years for India to attain desirable levels. Even “Trickledown effect” is absent in most cases. This is owing to acute inequality in the endowments of resources and income. The assets and income inequalities have been worsening even more post the liberalization reforms. The government and the policy makers are of the view that the NFSB bill will help the country attain a complete transition towards a functional and inclusive PDS and eliminate food insecurity completely. The NFSB bill 2011 includes several provisions ranging from cheaper and entitled quantity of grains to assistance in cases of malnutrition assistance in case of malnutrition and undernourishment. Some of the provisions include subsidized food grains for priority and general households under the targeted PDS. In budget 2013, Rs.80, 000 crores have been allotted to food subsidy.

National Advisory Council (NAC) v/s The Rangarajan Committee (RC):
Both the NAC and the Rangarajan Committee differ on several grounds. On one hand when the NAC recommends a near universal PDS, even though not 100% universal, the Rangarajan Committee recommends a targeted PDS on the other hand. The estimated food grains and the subsidy

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requirements according to RC are also much higher as compared to NAC recommendations which are based on faulty calculations (Refer to figure 2) The NAC has also suggested provisions for child welfare and maternity benefit which have been ignored by RC. The Rangarajan Committee on the other hand is stressing on the importance of reforms in PDS in order to ensure better monitoring, greater transparency and accountability of the system. RC feels that India is not endowed with the necessary financial resources at the moment to go for a universal PDS. According to many experts and policy makers, the draft bill which the government came up with has been seen Figure 2; Source: Rangarajan Committee Report on NFSB as one which is further weakening the PDS. The major problem is that the entitlements are based on faulty poverty estimates and the BPL census which are not updated regularly. Critiques feel that the bill is not aimed at increasing food access but aimed only at minimizing the obligations of the government. Also, instead of providing safeguards against a weakening PDS, the bill provides a back door entry for cash transfers owing to the provision of special allowances.

Justice Wadhwa Committee Recommendations:
The Wadhwa committee believes that there is a lot of pilferage in the system at every level and there is no foolproof monitoring mechanism. Therefore the committee has come up with several recommendations like computerized PDS, use of smart cards, automation and uniform standards. All these would help in better monitoring the PDS systems as well as increasing the efficiency of the entire system. Some of the other recommendations of the Wadhwa Committee also include use of Radio Frequency Identification (RFID) for tracking the PDS stock from the godown to the fair price shops, use of Global Positioning Systems (GPS) to track the movement of trucks carrying specific food articles, food stamps given to intended beneficiaries, and a system of food coupons till end to end automation is implanted.

The NFSB: Pros & Cons
On the positive side, the food basket now includes coarse grains as well apart from the basic food grains like wheat and rice, hence catering to a wholesome diet. Increased demand will lead to greater procurement of food grains by the government and will therefore help farmers to channelize their production through the government. There is a three-tier grievance redressal system. Comprehensive measures like entitlement to free meals, mid meals, etc. to children would tackle the prevailing problem of malnutrition and undernourishment. However, currently it would be a bad timing to implement the bill as there is a slowdown in the Indian economy. Government has underestimated the food grains and subsidy requirements needed to fulfil the NFSB mandate based on faulty calculations. The identification methods of the priority sector households are extremely unclear and there have been several cases of identification
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errors. Per capital availability of food grains has been falling every year also owing to the fact that population has been growing exponentially. This again points at the serious shortfalls in food security due to low production and insufficient procurement. Also, the procurement, storage and distribution need to be integrated to reduce wastage. The bill is yet to identify this issue.

Recommendation:
 Eliminate Identification Errors: The present classification is based on faulty data.  Cash Transfers: People would be better off with a fixed quantity of food grains. This is because during times of high inflation, the MSPs would go up and the purchasing power would reduce with cash transfers.  Linkage with UID: The system of PDS could be linked with the Adhaar cards in order to ensure greater accountability and better monitoring.  Enhancing food grain production: With the consumption demand increasing day by day, what India needs probably is a 2nd green revolution at the moment. The food subsidy burden in bound to increase in the future. So the government can tackle this problem by reducing subsidy on other items like diesel, petrol etc.  Tackling Employment linked food insecurity: There should be a provision of some sort of an allowance or severance pay for all workers so that they sustain themselves in cases of job loss etc.  Reconsidering child welfare: The current scheme has reduced the investment in the Integrated Child Development Scheme by a large amount. The government needs to reconsider this step as malnutrition and undernourishment in children are some of the major issues which need to be handled.  Inclusion of Microfinance and other institutions: Microfinance institutions are present in almost all villages and rural areas in the country. These institutions can help better provision by providing funds for better back end infrastructure to farmers and other needy people.  Interstate Transfers: While some of the states have functioning really well with efficient provisioning under the scheme, some of the states are surrounded by leakages and therefore face shortage and other constraints at various stages. There the Central government could provide a channel for interstate transfers where it can procure from the surplus states and transfer it to the states facing shortages. At present, a universalized PDS can only be a long term goal and solution. Currently India does not possess the adequate amount of resources to facilitate a universalized provisioning. Therefore currently we should focus on a targeted PDS for ensuring that the priority sector needs are met. Universalization could be long term solution which should take place in a phased manner like the MNREG Act and should be facilitated by reforms in the Public Distribution System.

References:
      The National Food Security Bill, Draft 2011 Report of the Rangarajan Committee on the National Food Security Bill Justice Wadhwa Committe Report on Public Distribution System National Advisory Council Report on the NFSB Mending the Food Security Act, Jean Dreze, May 24, 2011 Chattisgarh shows the way; Jean Dreze & Reetika Khera, Nov 14th, 2010

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Indian Economy: Rise of the Indian Entrepreneur
Ankit Mahendru, Arpita Agarwal, Chaitanya Krishna Sai K, Divya Gandhi, Karthi Vignes S E Batch 2012-14, PGP, IIM Kozhikode

Importance of Entrepreneurs to Economy WHAT IS ENTREPRENEURSHIP?
The National Knowledge Commission defines entrepreneurship as “the professional application of knowledge, skills and competencies and/or of monetizing a new idea, by an individual or a set of people by launching an enterprise de novo or diversifying from an existing one thus to pursue growth while generating wealth, employment and social good”. [1] Increasing levels of entrepreneurship have visible impacts on the wealth generation and employment building process of the economy.   It is widely understood that the biggest benefit entrepreneurship can bring to any economy is through the creation of new business opportunities that simultaneously provide employment opportunities as well as improve technology and sophistication of the economy. The intensified level of competition on account of increase participation from entrepreneurs also leads to an overall accelerated economic growth.

But this logic does not follow for all kinds of entrepreneurship. If by entrepreneurship, we only mean any kind of self-employment, in that case high levels of entrepreneurship could actually mean one of the following: Presence of substantial bureaucratic barriers to creating a new business The economy is creating conventional few wage earning employment opportunities

Types of Entrepreneurship
Two types of entrepreneurship might be prevalent in an economy -Necessity entrepreneurship and Opportunity entrepreneurship. Necessity entrepreneurship arises when there is lack of availability of better options or the options for work are unsatisfactory and as a consequence, one chooses to become an entrepreneur. This will not have any effect on the development of the economy. Opportunity entrepreneurship, on the other hand, is when there exists an unutilized or underutilized business opportunity and an active choice are made to start a new enterprise. This has a significant and positive impact on the economic growth and development of the economy. Three major stages of economic development have been identified by the development economists:  In the first stage, the economy specializes in the agricultural production and small
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scale manufacturing. This stage witnesses necessary entrepreneurship.  In the second stage, there occurs a shift to manufacturing from small scale production. This stage is marked by decreasing rates of self-employment and consolidation leads to an increase in the average firm size.  In the third stage, as the wealth of the economy grows, it shifts from manufacturing to services. There is a scope for high value adding opportunity entrepreneurship Factors Motivating Entrepreneurship Influencing Factors [1] In the NKC report on Entrepreneurship in India, one of the key findings was that a successful entrepreneurship ecosystem is the result of a number of factors, and the key triggers were identified as: 1. Individual Motivations While there is no single motivator that seems to drive entrepreneurial spirit, some

of the common identified motivators are as shown:

which are more knowledge oriented than labor/capital oriented. The number of entrants in this Level was close to 30000 in the year 2005-06. [1] However, a serious problem being faced is that currently the incubators in the country are few and marginalized. For instance, while IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE), IIT Bombay’s Society for Innovation and Entrepreneurship (SINE) and IIM Bangalore’s Nadathur S Raghavan Centre for Entrepreneurial Learning and the Kerala based Startup Village, together house around 300 startups, this does not compare in any way with incubators such as Plug and Play, Y Combinator and 500 Startups in the US which together house around 1500 startups. It is evident that India has a long way to go in encouraging the entrepreneurial spirit. [5] Good news can be found in surveys undertaken separately by Goldman Sachs, Price-Waterhouse Coopers and Deloitte which affirm India’s potential to be one of the world’s leading economies by 2050, with the help of the countries characteristic features – a democratic open society, a strong technology base, unparalleled diversity, vibrant capital markets, and increasingly youthful population, a sizeable market of a large number of customers with vast unmet needs. [3]

2. Socio-cultural Factors In India, the society and culture play a very influencing role in nurturing the entrepreneurial ecosystem, specifically the “constellation of socio-cultural forces”

3. Access to Early-Stage Finance For any entrepreneurial venture to take off, capital is of prime importance. And hence if the early stage finance is readily accessible then it becomes a critical factor in favor of entrepreneurial ecosystem. While Equity can be raised from VCs, angel investors, and PE funds, Debt is raised through banks and other financial institutions. 4. Education and Business Environment The success or failure of an enterprise is hugely dependent on the general macroeconomic conditions of the time and on whether there is access to adequately skilled labor.

Key Learning from Successful Entrepreneurs
Strong Team: A strong team can transform a mediocre product into a success whereas a weak team can produce a dud even if the underlying idea is great. Build Products: One of the first hurdles faced entrepreneurs is acquiring clients and a prototype helps in reaching out to them. Choose the Right Investor: Chemistry and Interest Alignment between the entrepreneur and investor are necessary. A right name as an investor helps attract future investors

Entrepreneurship in India
As of the 2008 report, The National Knowledge Commission defines Level 4 Entrepreneurs as those who enter the Emerging sectors which includes sectors
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Use Referral: Leveraging your contacts to ensure that investors give your business plan a serious thought, referrals add credibility to the project. Major Reasons for Failure: i) Giving up ii) Weak team iii) Limited financing sources iv) Launching late v) Lack of Mentorship vi) Scaling up too early vii) Unhelpful government policies vii) Ignoring frugality

Recommendations to promote entrepreneurship
Six critical success factors have been identified for entrepreneurship to thrive. These are Finance:  Entrepreneurship will be greatly benefitted if banks consider instruments such as venture debt and soft loans.  Crowdsourcing of funds should be encouraged. Mentorship:  Incubation centers need to be made core business propositions.  Associations like Chambers of Commerce or NASSCOM can use their abundance of expertise accumulated from members and

partners to offer mentorship by linking start-ups with information sources. Government Policy:  Explore crucial incentive structures in Incubation such as land schemes (given the level of infrastructure problems that start-ups face), tax breaks, banking policies, micro funds, and innovative financial schemes.  Focus on infrastructure development.  Seriously exploit the potential of Private Public Partnerships (PPP) in developing new enterprises. Developing Culture:  Organizations can promote internal entrepreneurs or ‘intrapreneurs’.  Launch Entrepreneurship Outreach events to improve general perception about entrepreneurship at the school and college level. Networking:  Databases need to be created housing information about the various entrepreneurial activities Education:  Introduce entrepreneurship related subjects at institutes of higher education as has been done in Stanford and Harvard. [10]  Invest in vocational skills training by strengthening the National Skills Development Corporation and the VETs

References
[1] –“Entrepreneurship in India”, A study by National Knowledge Commission, Amlanjyoti Goswami, Dr. Ashok Kolaskar, Mr. Sunil Bahri,2008 [2] - “How is Entrepreneurship good for economic growth”, Zoltan Acs, 2006 [3] – From Rejection to Open arms, The entrepreneur in India, Nandan Nilekani, Imagining India, Ideas for a new century. [4] – Indian startups Druva, ITTAM, Serial Innovation, Mistral, Inttelix Security bagging global customers, Peerzada Abrar & Biswarup Gooptu et Bureau, 8 June 2012. [5] – Power of Ideas 2012: What Silicon Valley incubators offer start-ups & why India needs plenty of them, Rituparna Chatterjee et Bureau, 7 Jun 2012. [6] – The Buck Stops Here, Ashutosh Garg, Penguin India, 2010. [7]-The High Performance Entrepreneur, Subroto Bagchi, Penguin India, 2006. [8]- Harshal J Shah, “For India’s next entrepreneurial wave”, Economic Times, 31-08-2010 [9] - N.S. Ramnath, “He’s on a search and fund mission”, Forbes India, 02-09-2011 [10] - Aparajita Bhattacharya, “Now learn – Entrepreneurship at Harvard”, 20-08-2011
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Street Protests: An “Economic, Political & Social” perspective
Mohul Roy Batch 2012-14, PGP, IIM Kozhikode Civilian protest movements across the world are the outcome of long-standing grievances on various dimensions. Analyzing them through a myopic lens only aggravates the problem.

Introduction
Cairo, Rio de Janeiro, Istanbul, Athens, New Delhi- what is common among these cities except that they are major urban centers & centers of economic activity. A common thread linking these places is that they have all been the epicenter of popular protests sweeping their respective countries. Apparently, the reasons have been different- in Delhi, it was outrage over the gang-rape of a young girl, while civilians thronged the streets of Istanbul to protest against the urban development plan of a park. In Brazil, they are protesting over increased bus fares, while in Athens, economic austerity is the culprit. But look deeper down, and the reasons seem very familiar everywhere. What makes them difficult to analyze is that they are entangled with each other and differ in relative importance. To understand the genesis of these protests, it’s necessary to take a holistic view of these protests. This article seeks to delve deep into the causes of these protests as well as makes an attempt to uncover a solution for them.

Economic Factors (E)
 Growth- Economic growth has often been hailed as the way to greater prosperity & a way out of poverty for millions. But growth has remained subdued after the 2008 financial crisis. The IMF expects global growth to come in at 3% in 2013 and 3.75% in 2014, far off from the 7-8% levels seen in 2004-07. Greece contracted 5.6% in Q1 FY13, Brazil grew 0.6% and the Eurozone contracted 0.3%. Emerging markets have also cooled off, down from 8-9% growth rates to 5-6%. Thus, the economic growth that was supposed to be the panacea of all our problems is not there. Inflation- While growth has cooled off, inflation has often not. A tight supply-demand scenario, population growth, persistent dollar weakness and an accommodative monetary policy regime has meant stubborn prices. While inflation has not been much of a concern in the developed world, with OECD CPI inflation at its lowest levels in 3 years in April, emerging markets have faced the problem with Brazil, India and many other countries seeing inflation rates well above comfort levels of respective central banks. Inflation erodes purchasing power and without a rise in income, leaves people worse-off which fuels discontent Unemployment Rates- A vicious combination of depressed investment and sluggish consumption has meant that companies are often not employing, or worse, downsizing. While many countries have been able to reduce their unemployment rate artificially through social spending outlays like India’s 100-day work program, countries like Greece and Spain had unemployment rates at above 26% in March 2013. The youth unemployment figures are more shocking, at 57.9% for Greece and 55.2% for Spain (Q4’12). These statistics, along with depleted social security net due to austerity measures and ageing of the population, are also fueling discontent

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Political Factors (P)
 Governance- There has been widespread resentment over the lack of transparency and accountability in many countries. While in places like Egypt, people have identified the dictatorial structure as the main culprit, in democracies voters have had the perception that politicians see elections as only a means to power and once the stamp of the “silent majority” has been obtained, they systematically abuse democracy. Concerns have also been raised over the priorities list of various governments, so while in India, 3 policemen guard one VIP, there is one cop for every 761 ordinary citizens. In Brazil, the government undertakes huge infrastructure development for the upcoming Football World Cup and the Olympics while ordinary citizens have to face huge traffic jams (on top of that, fare rise was being contemplated) for their daily commute. Corruption has also played a part with charges of tax evasion, politicians colluding with corporates to corner resources (“crony capitalism”) and a perceived political unwillingness to formulate and implement strong anti-corruption laws leading to an animosity towards the political class Political structures and level of political freedom- While the protests have affected democracies (India, Brazil and Turkey) and autocracies (Egypt, Tunisia and the broader “Arab Spring” movement), the intent and expectations of the protesters regarding possible future political systems differ greatly. While those in autocracies want the “one leader” system itself to go away, those in democracies do not dislike democracy per se, but only want to strengthen the system by bringing in accountability and transparency. This difference between democracies and autocracies can be mostly attributed to the yearning for political freedom and other rights like those of speech and expression that democracies often provide but autocracies do not.

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Social Factors (S)
 Social media- Like many other spheres its redefining, social media has played an integral role in these protests also. It has played a role in allowing news of protests in one part of the world to spread in a jiffy to other parts and has facilitated quicker assembly of a significant number of people at a chosen point. Social media has also allowed like-minded people in one part of the world to express solidarity with their counterparts in another part. The fact that the protests are happening mainly at urban centers and a disproportionate chunk of the protesters constitute techsavvy urban youth also underlines the importance of social media. Inequality- As the importance of services and technology grows in the global economy and the distribution of profit becomes skewed more towards capital vis-à-vis labour, those with skills useful in agriculture or low-end manufacturing are getting sidelined, leading to inequality. Another factor has been the strong performance of capital markets in many countries even with depressed growth. This has allowed those with access to them increased wealth. Inequality has often been an issue with data like India having 122 billionaires (5th highest in the world) coexisting with around 70% of the population living on less than $2/day and stories like Warren Buffett’s secretary paying higher taxes than him or Eric Schmidt’s house tax bill in Britain being more than what Google pays as taxes in the country causing anger, frustration and most importantly, a sense of injustice to creep in. State of social infrastructure- Beset by low growth, high debt and chronic fiscal deficits, governments have cut back on spending in many important social indicators like education and healthcare. Privatization in these spheres has often led to the price of education or healthcare becoming unaffordable for many. This has also led to discontent as people feel disadvantaged, are

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paralyzed for life due to a lack of quality education and often have to pay outrageous amounts for accessing even the most basic forms of healthcare at clinics and pharmacies. Simmering Discontent- A look at 3 nations Country Egypt Period 25 Jan-11 Feb, 2011; 22 Nov, 1203 Jul, 13 Economic Indicators GDP growth: 5.1% (2010), 1.8% (2011), 1.5% (2012), Youth unemployment (2012)~30% Political Factors Discontent against the autocratic rule of Hosni Mubarak and then the overtly Islamic nature of Mohamed Morsi regime Social Factors Lack of freedom of speech, police brutality, aspirations of youth not being met Bus fare hike, Rising aspirations of the middle class, increased exposure to social media Discontent against tax evasion by the rich, influence of social media

Brazil

Greece

June 2013- GDP growth: 7.5% present (2010), 2.7 (2011), 0.9% (2012), Youth unemployment (2012)15.6%, excessive govt. funding of major sports events like Olympics & Football World Cup 5 May, GDP growth: -4.9% 2010(2010), -7.1% (2011), present Youth unemployment (2012)- 51.2%

Alleged abuse of special benefits conceded to Brazilian politicians, law to curb the powers of the public ministry to investigate criminal activities Lack of bipartisan consensus, coalitions not working, resentment against the diktats of Germany & IMF

Solutions and Implications
 Growth, not austerity- Ever since the financial crisis started, there have been two theories floating about- one favours stimulating growth through greater government spending rather than over-focusing on frailties of government finances. Another states that without government debt reduction, no sustainable recovery can happen and markets are always going to put pressure on government bonds. The first theory seems to be preferable from both a theoretical and practical point of view. At a time when households are deleveraging and the private sector is not investing, governments have to step in and keep the economy rolling. This is exactly what the United States did and Abenomics also seem to be doing in Japan, often leading to increasing growth. On the other hand, the Eurozone in trying to follow the second path suffers from a vicious cycle of low growth, reduced investments, high unemployment, sluggish consumption which in turn further reduces growth Invest in infrastructure, not subsidies- Continuous under-investment in infrastructure is hurting societies now. Politicians in many countries around the world thought that subsidies like India’s fuel subsidies or Brazil’s Bolsa Familia will keep the masses happy. While these programs had some utility, what hurt was that focusing on these short-term consumption subsidies led to neglect of investments in roads, education, healthcare and agriculture. All these mistakes are starting to haunt us in the form of inflation, high youth unemployment, high healthcare costs pushing people into poverty etc. Governments should take the cue and invest more in building these physical and social infrastructure rather than giving out handouts

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Clean up politics- In many surveys, politicians have been identified as the most corrupt class. Even in democracies like India, people tend to think of politicians as public representatives only on paper, abusing their power to give away spectrum or coal for kickbacks, indulging in nepotism and looking at politics as a route to personal wealth. Politicians must learn to hear these signals of change. In this age of aware citizens and omnipresent media, they must focus on maintaining transparency and accountability of the highest standards and seek to meet the highest aspirations of the citizenry Autocracies, beware!- While many authoritarian regimes like China or Saudi Arabia have so far remain unscathed, they must not be complacent. While high economic growth in China and oil sponsored government spending in Saudi Arabia may be containing protests, tensions remain. The way to address this situation is to engage with other stakeholders- the political dissenters, students, disillusioned sections of the society like the Uighurs or Tibetans in China. The authority must also give greater freedom and respect certain fundamental rights to its citizens if it wants their loyalties Street protests and their spread are a cause of concern, but these protests also provide an opportunity for identifying the simmering discontent among various constituencies. If we can address them promptly, these protests will be hailed by future generations as building blocks towards a more sustainable society.

Talk and Tease
A new year, a new batch and with it EPS brings to Kampus with renewed vigor our in-house debate, playfully called “Talk and Tease”. The topic for the debate was “The Tension between Democracy and Capitalism” – chosen by our very own respected and very much loved, Prof. K.K. Ladha from the Economics Department who acted as a moderator for the debate. The event witnessed enthusiastic participation from the both the batches of students. Prof. Ladha made it a point to lead the discussion into a productive conclusion and everyone present felt that he had done a great job with the debate, having made sure that each participant got a turn to air his/her views. Even the rebuttals were made sure to be uniformly distributed throughout the whole group rather than being concentrated on a single person or at a single point. Every one present in the room felt they took back something from the debate which provoked their erstwhile established views.

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LIBOR Scandal
Ritwik Ray, Sourabh Bhaumik MBA Students, NMIMS

LIBOR rate:
Libor Rate also called as London Inter-Bank Offered Rate is the benchmark rate at which a bank can borrow short term loans from other banks in London interbank market. The Libor rate regulates other short term lending like business loans, auto loans, student loan, credit card interest rates, mortgage loans etc. It sets the benchmark for the interest rates worldwide. To give an overview, Libor rate is decided and published daily at 11:30am (London Time) by BBA (British Bankers’ Association) after the data is collected by Thompson Reuters. The eighteen major banks in London submit the rates they are borrowing or would borrow from other banks and it is used to calculate the Libor rate on daily basis. According to the rates submitted, the average of those in the middle half are taken excluding the highest and the lowest quarters when the rates are arranged in an order. It sets the benchmark for other short term lending rates. A lower Libor rate would lower the interest rates on the loans borrowed, which would be favorable for the corporate and personal borrowers for short term. It can also be derived that the credit quality of the bank which would be lending at a lower rate is good. Conversely a higher Libor rate would increase the interest payable on the loans borrowed, also it would tell about the credit quality being a little weak.

LIBOR scandal:
The total value of transactions that are influenced by the Libor is huge. It affects about $800trillion of total amount of loans and transactions worldwide. Of this, around $350 trillion of derivatives and other financial products are linked with the Libor. Thus a very minute percentage change can translate to change in the order of millions in the market. For example, a rate change by one basis point would affect more than $2million. Such number of manipulations of rates over the years and the contracts settled would result in manipulation of huge sums for their profits. The Libor scandal that will be explained here tells about how these rates were manipulated for the benefit of a few traders and banks and also to give false impression to the market about its credit worthiness.

2005 – 2007 (Prior US Financial Crisis)
This was the period in which the world economy was going through an upswing growing at a healthy rate of near 5% annually. Markets were running smoothly at that point without any stress those lied ahead in the years to come. It is still not very clear when the Libor rate manipulation actually started. It came into notice with Barclays Bank manipulating its Libor rate while submitting them to Thompson Reuters. The aim was to influence the final benchmark Libor. The bank had increased its Libor rate to benefit the traders inside the company and to boost their profits, instead of submitting the rates it would pay to borrow money. By doing so, the actual calculated rate announced by BBA was higher than it actually should have been. This resulted in higher rates in the derivatives in the U.S. market which were linked to Libor thus benefiting the traders. Manipulating the U.S. market for some personal benefit fell under the jurisdiction of US government which called for investigation. Evidence found were email conversations between the traders and the rate submitters. Barclays Bank was the first member bank of BBA to admit to have manipulated the Libor rate for their own benefit.

2008 (During US Financial Crisis)
During the US financial crisis, the major banks in London tried to show that their credit worthiness is healthy. So they made an understanding among themselves and submitted lower than the actual borrowing rates to be calculated, thus reducing the Libor rate published by BBA. It was done so as to
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put a false impression of the financial condition of the banks. It was a time when credit was hard to find as no-one had the financial capability to lend at lower interest rates. it was like telling the world that the banks are not facing any liquidity problems when the major economies of the world were going through huge liquidity crisis. In actual, the banks were borrowing at much higher rates than that they mentioned. Reducing the Libor also resulted in lower returns on financial instruments and lower interest rates, thus affecting the whole system. It resulted to huge loss and undue gains to many organizations including reserve banks of countries like Cleveland. Rate submitters also yielded to the requests for submitting false rates forgetting all the Ethics of the business. The lenders and investment baskets (Pension, Mutual Funds, Derivatives and Currencies etc.) suffered as they did not get their share of lending profits which they would have got if the market had not been rigged as the banks are lending out money at low interest rate and getting less profit. It is same like a person shows up at a casino and rig the game to his advantage before playing. According to law he will be jailed. It is same like banks rigging the game so that their investments win based upon their own bank's changing (artificially) of the interest rates. How it affected common people: If a common man saves money in bank just looking for a decent return on his/her savings, he/she is being deprived over to reward profligate and irresponsible borrowers who manipulate the market to benefit their personal motives. In essence, what used to be his/her interest income is now being stolen from him/her so that it can be transferred to borrowers to spend. It's going to the same banks that caused the problem to begin with. Common man was robbed of his due by the banks working under unethical business models. The current scenario is Barclays Bank has agreed to pay $455 million as fine after agreeing to have manipulated the rates at which they would borrow. Other banks those were caught for this scam has agreed to pay hefty fines. Many executives who were caught for in involving this malpractice were suspended or terminated from jobs and some could even face criminal charges.

Future:
Strict actions like temporary suspension of the operating license, should be taken against the banks who will be involved in this king of malpractice. Strict laws should be there to punish the people who involve themselves in this kind of manipulative activities. An independent regulatory body called the Tender Committee has been formed to regulate the Libor rates in future keeping accountability and transparency in the process. The responsibilities of BBA have been handed over to this committee. Giving such big decision making rights to the private banks which will affect the economy of the world without any regulation called for such kind of manipulation of rates. Such distortions in the market demonstrate a fundamental flaw in the system by which much of the world's lending is organized. Thomas Cooley of New York University stated that “It distorts trust in the marketplace if you can't trust the rates at which banks are lending to one another".

References:
1. http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/9364994/What-doesthe-Libor-scandal-mean-for-us.html
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2. 3. 4. 5. 6.

http://www.ft.com/intl/cms/s/0/5b8c7f2c-cccb-11e1-b78b-00144feabdc0.html#axzz2YIZKEhtb http://www.bankrate.com/rates/interest-rates/libor.aspx http://search.worldbank.org/data?qterm=world%20development%20growth&language=EN http://www.businessinsider.com/how-barclays-made-money-on-libor-manipulation-2012-7 http://www.bbc.co.uk/news/business-18671255

IIMK Model United Nations 2013
(Hosted by Tulika Lall, Student, Batch 2012-14, PGP, IIMK) IIM Kozhikode hosted its first ever Model United Nations on the agenda: “The Un-Ending Threat of Terrorism and its Reach around the World with special emphasis on Pak-Afghan-Iran triangle; an Economic, Political and Global Perspective”. A one hour session of the General Assembly was simulated where 20 member nations battled their nation’s stand on terrorism. The ‘triangle‖ of terrorism’, namely terrorist activities occurring in, or allegedly sponsored by, Pakistan, Afghanistan and Iran has always had a destabilizing effect on not only this Asian region, but on the world in general. The 9/11 attacks on the World Trade Centre in the US, the Mumbai Attacks in India and other attacks carried by terrorist outfits on a global scale are all thought to have originated from within this triangle. During the past 35 years, the world has witnessed nearly 20,000 terrorist incidents, ranging from the hostage takeover during the 1972 Munich Olympics to the 2002 and 2005 tourist bombings in Bali. With regards to Iran, Afghanistan and Pakistan, terrorism from these regions is a force of destabilization to the global economy. The cost of the 9/11 attacks, for example, has been estimated at $28 billion in the loss of pure physical assets plus the initial clean-up and rescue efforts. There were also insured losses of about $32 billion for business interruption, workers compensation, loss of life and other liabilities. During the so-called second intifada in Israel beginning in 2000 caused tourism to collapse, triggered a long stock market slump and contributed to a painful economic recession from which the country emerged only in late 2006. Politically, terrorism has led to straining relations between the three of these states, and the rest of the global world. The purpose of this MUN was to bring to the forefront the nuances of the strained ties of this ‘terror triangle’ with the rest of the world and to seek innovative solutions to mitigate the growing threat of terrorism. The delegates in the council debated ardently and a clear divide was witnessed between the developed and the developing world which led to the division of the Assembly into two factions with each country trying to be party to either one of them. The so called terror triangle played their sympathy card in order to shift the blame on to the developed Nations. After a moderated caucus followed by an un-moderated caucus the council was able to come up with a working paper to deal with the agenda at hand. The working paper was summarized in the council by the delegates of Israel and United States. Post this, the committee reached consensus and a Resolution was passed suggesting ways to mitigate Terrorism with active participation of all the member nations marking a successful end to the IIMKMUN-2013. You can watch the video at the following link: http://www.youtube.com/watch?v=7enI4fMFJgM

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Economic impact and investing opportunities of the two upcoming mega events in Brazil – 2014 FIFA World Cup and 2016 Olympic Games
Umakanta Sahu Batch 2012-14, PGP, IIM Kozhikode What are Mega-Events?
A mega-event can be broadly defined in terms of Volume, e.g. a certain minimum number of visitors attracted over a period of time; Value, e.g. a certain minimum amount of revenue generated in a locality over a period of time or minimum capital cost of constructing facilities and in terms of psychological effect, e.g. the worldwide reputation of the event generates ‘must see’ feelings in potential tourists. It is a proven fact that successfully organizing major megasports events will bring tremendous tangible and intangible value for the host city and the state.

The Brazilian government has introduced a program that accentuates myriad of infrastructure projects in transportation, ports, electricity, sewage-treatment plants and other facilities, because for decades the deficiency in infrastructure has haltered Brazil’s economy. Low levels of investment continue to be a key explanatory variable hindering medium-term growth in Brazil, which is evident from low investment to GDP (below 20%), compared to peer sovereigns (BRICS) in spite of increased investment in last decade. (Shown in Table-1)
Average 2012E Average (2007 to 2011) (2013 to 2014)F 18.1 19.6 20.7 Brazil 23.8 24.6 24.6 Peru 23.7 26.0 26.5 Colombia 31.3 29.3 29.1 India 21.2 22.0 22.3 Mexico 21.6 21.1 22.1 Russia 20.7 19.6 20.5 South Africa 3 Table-1 Gross Domestic Investment to GDP (%) E-Estimated F-Forecast Country

The words of the world-renowned Brazilian architect Oscar Niemeyer show very impressively that Brazil and especially the residents of Rio de Janeiro are in a fever of impatience ahead of the sports mega-events and foster high expectations with regard to the hosting of the 2014 FIFA World Cup and the 2016 Olympic Games. These expectations do not only pertain to sports. Besides goals and gold medals the people are hoping for new employment and incomegenerating opportunities, real improvements to urban infrastructure and the public transport system, as well as reduced environmental degradation and the sustainable reduction of urban crime.

Can sports mega events help Brazil finally reach its economic goals?

Brazil’s continuing limited fiscal flexibility needs to recognize comprehensive strategy to include private investment to boost the economy as a whole. Brazil won the right to host FIFA World Cup event on 30 October 2007 as the only country to enter the bidding process. The host city of the Games will be Rio de Janeiro, Brazil, announced at the 121st IOC Session held in Copenhagen, Denmark, on October 2, 2009. Keeping the current macroeconomic position of Brazil in context, the 2014 FIFA World Cup & the 2016 Olympic games together have brought major challenges and opportunities, further enhancing Brazil’s exposure to the global economic arena. There has been an unwanted disbelief that whether Brazil can handle these mega-events and hence investors are skeptical about their
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investments related to these events in future. As has been witnessed during mega events in history they are associated with inflection points in the host country’s foreign relations strategy, e.g. the Tokyo games coincided with the IMF and the OECD’s partnership with Japan, China joining WTO the same year it won the nomination for the Olympics 2001and Spain entering ECE (European Economic Community) after it won the right to host Barcelona games in 1986 etc.2 The effect of the sport events is probably more significant for Brazil’s domestic dynamics as they help in bringing investments in infrastructure as a key item in government’s policies, which is already seen by proposals for transportation for the plans developed for World Cup and Olympics.3

Opportunities: 2014 FIFA World Cup & 2016 Olympic games
Apart from infrastructure there are other sectors like media and telecommunication companies that can create investment opportunities. Bulk of the investment in the telecom sector will come from private players though small part will come from government to assure quality of services. Telecom carriers will also have to invest in new technologies and expand their network capacity to increase or sustain their market shares. The media companies, they need to invest for the transmission rights and allocate resources to follow the games. Globo, one of the major media company, won the transmission rights to 2014 World Cup at US$ 340 million4. In transportation sector, projects related to the World Cup will require about R$12 billion (Brazilian reals) in investments, and another R$11 billion will go towards improving Rio’s public transportation system for the Olympics5. Much of the financing needed for most of the investments discusses above will come from one source, i.e. BNDES, the Brazilian development bank.

Obstacles ahead & Brazil’s way forward
The London games satisfied very high standards in many areas, and that will certainly pose a challenge to any future Olympic Games. But the same dynamics have played out before and so Rio, in particular, can of course improve not only on London, but on other recent Olympic games. Brazil will host the 2014 FIFA Soccer World Cup, and in 2016, the 31st Olympic games. In addition to all this, the host city Rio de Janeiro just became the first city to receive the title of World Heritage Site by UNESCO in the natural landscape category, which is quite an honor6. These changes have led to important economic gains over the past fifteen years that have improved the well-being of large segments of the Brazilian population. But, there are currently some problems that have emerged and which might hinder in terms of reaping the benefits from these mega-events. First, in Brazil’s developing economy, the size of capital required for these events, risks both inflation and low-quality construction. Economic stimulus spending might prove a boon to an economy with high unemployment and excess capacity. In such circumstances, expansionary fiscal policy can

2

http://www.res.org.uk/details/mediabrief/1452941/The-Olympic-Effect-How-Hosting-Or-BiddingFor-A-Mega-Event-Boosts-National-Expor.html 3 http://www.edc.ca/EN/Country-Info/Documents/brazil-infrastructure-environment.pdf 3 Table Source: www.imf.org
4

http://www.standardandpoors.com/ratings/articles/en/us/?articleType=HTML&assetID=124533687 3070 5 http://www.greenenergycouncil.com/brazil/2010_pdf/The%20State%20of%20Brazil%20and%20the %20role%20of%20the%20International%20Green%20Energy%20Council.pdf 6 http://www.democraticunderground.com/11083898
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indeed create jobs, lift demand for goods and services, and promote economic growth. Brazil’s economy, however, is witnessing strong economic growth (7.5 percent in 2010) and record low unemployment (around 6 percent in April 2011). This appears to be what Brazil is experiencing with rising inflation, currently at over 6 percent per year (despite tight monetary policy). Second, planners should not count their tourism earnings before they realize. While these sports mega-event will attract many tourists, there will be others who would normally travel but are frightened away by the anticipated crowds and higher prices. It is extremely difficult to determine how much “crowding out” actually takes place when an area hosts the Olympic Games. However, a 1999 study by Philip Porter, “Mega-Sports Investments: A Critique of Impact Analysis,” found that gate arrivals at the Atlanta airport during the 1996 Summer Games were identical to gate arrivals in the same months in 1995 and 1997, implying that quite a few tourists to Atlanta were crowded out by the 1996 Games.7 Third, with the problem of scarcity of land and with each sports facility taking up 15 to 20 acres of urban real estate, that land will not be available for other, perhaps more productive, use for several decades. An live example would be of Beijing’s Bird’s Nest, Water Cube or Velodrome - all beautiful monuments to the sporting events they hosted, but now largely unused and with hefty maintenance costs. Keeping all these issues in view for future Brazil can go for some pre-emptive actions to minimize these risks. Enriching skills and secure the investing scenarios: The country faces a shortage of skilled labor with the gap being more pronounced in case of firms willing to hire managers, technicians and engineers. Amid this strong demand for skilled professionals, development of Brazil’s education system is an imperative step. Investing in major infrastructure and urban projects was cited by 28.5% of respondents as a key focus area to enhance Brazil’s prospects, and the Government has been undertaking several measures to improve the country’s infrastructure. Add innovation capability and look into sectors with opportunity: Brazil needs to focus on improving education and training in new technologies. The country’s spending on R&D needs to ramp up. In terms of R&D as a percentage of GDP, Brazil ranked 30th, below other RGMs such as the Czech Republic (23rd) and China (24th) in the 2011 Innovation Index.8 The Government should take steps to improve this situation like providing tax incentives to companies aiming to stimulate an environment of innovation across the country and enhance its competitiveness in domestic as well as foreign markets. Promote Brazil as a destination for investment: The Brazilian Government has been undertaking significant infrastructure spending as part of its multi-year PAC program, aiming to promote growth by creating an efficient and extensive infrastructure network across all regions of the country. This is expected to result in further economic growth and greater influx of foreign investment into Brazil. The hosting of the forthcoming FIFA World Cup and Olympic Games, cited by 27.4% of the investors, will also enhance Brazilian cities’ prospects. As usual, in the case of Brazil in particular, some challenges remain, and certain structural impediments to growth still need to be addressed, including a large infrastructural deficit. So in this sense, hosting two major world-sporting events of this sort, in particular the Olympics in 2016 will be a great opportunity for the country to boost investment and growth into the future.

8

http://www.rdmag.com/articles/2009/12/global-perspective-emerging-nations-gain-r-d-ground

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Conclusion
At the 1912 Stockholm Olympics, Pierre de Coubertin, the French founder of the International Olympic Committee, won a gold medal for literature for what is perhaps the most famous of all sports poems, “Ode to Sport”. One of the verses in that poem starts with the following lines: “O sport, you are progress. To serve you, a man must improve himself, both physically and spiritually.” 9 But studies show that in fact the reverse can also be true. Progress and improvement in economic growth have historically often equaled progress in a sport. By hosting a succession of high-profile global events, Brazil will enhance its standing in the international arena. Brazil may never recoup directly its massive investments for hosting the 2014 World Cup and the 2016 Olympics. By avoiding the temptations of gigantism in its construction projects, focusing on infrastructure improvements that will serve the country’s economic development, making full use of existing sports facilities, and involving local communities in the planning process, however, Brazil can maximize the likelihood that these mega-events will not create a financial and political burden going forward. After all, it is unthinkable that the country of Carnival would let the world down by throwing a bad party, not just for the world, but most importantly for its own people.

References
1. An economic analysis of the Barcelona' 92 Olympic Games: financing and impact, from http://olympicstudies.uab.es/pdf/wp030_eng.pdf 2. The economic importance of major sports events: a case-study of six events. Managing Leisure, 5(1), 17-28 3. 6Philip Porter, “Mega-Sports Events as Municipal Investments: A Critique of Impact Analysis.” In Sports Economics: Current Research, ed. J. Fizel, E. Gustafson, and L. Hadley 4. http://wenku.baidu.com/view/783ad8671ed9ad51f01df20b.html 5. Impact of Beijing Olympic-related investments on regional economic growth of China: interregional input –output approach. Asian Economic Journal, 21(3), 261-282 6. Christopher Rhoads, “Post Olympics, Facilities Left to Rot in Athens,” Wall Street Journal, June 19, 2010 7. http://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/@publ/documents/publicatipu/w cms_171571.pdf

9

http://www.nytimes.com/2012/07/01/books/review/poetrys-relationship-with-theolympics.html?pagewanted=all&_r=0
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6th All India Conference of China Studies (AICCS)

Date: 12-14 December 2013 Venue: Indian Institute of Management, Kozhikode (IIM-K), Kerala Organized by: The Institute of Chinese Studies (ICS), Delhi The Indian Institute of Management, Kozhikode (IIM-K), Kerala Associated Student Body: Economics, Politics & Social Sciences Interest Group, IIM Kozhikode The annual All India Conference of China Studies (AICCS) is a flagship event of the Institute of Chinese Studies (ICS), Delhi. Its principal objective is to spread interest and strengthen research in China and East Asian Studies in India. The AICCS is held once every year, in an Indian academic institution where research and teaching in China Studies are conducted. Five conferences have been held so far - in Delhi, December 2006 and December 2009, in Kolkata, December 2010, in Hyderabad, November 2011 and in Santiniketan, December 2012. The ICS is an inter-disciplinary research institution covering China and East Asia as well as India's borders with its eastern neighbours. It seeks to support teaching programmes on the region in Indian universities, to train young social scientists and East Asia scholars, and to build a national network of scholars working on the East Asian region. Suggested topics to be included in this conference, but are not restricted to, the following:        Sino-Indian economic relations Comparative India-China studies across disciplines Party/state-society relations in China Privatization, liberalization, globalization and the Chinese state Chinese SOEs reforms Financial reforms in China Chinese management practices

EPS will act as the nodal student body mobilizing and hosting all the student activities at IIMK during the conference. For more details about the event go to IIMK website http://www.iimk.ac.in/Conference/aiccsconference.php Watch out EPS official Facebook page for student activities notifications: https://www.facebook.com/eps.iimk
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Financial Inclusion - Will the mission be accomplished?
Soumya Chattopadhyay Batch 2012-14, PGP, IIM Kozhikode Over the past decade inclusive growth has been the buzz word from Government policy makers. Inclusion policy implementation pays high dividends in elections in an impoverished democracy like ours. Any democracy is as good in meeting its promises to the people as its institutions are. Policymaking and regulating institutions like RBI, PFRDA, IRDA, NABARD have gone through serious considerations in developing regulations and guidelines for strengthening financial inclusion. But that hardly means the outcome is anywhere close to what we set out for. While significant effort has been made to develop a facilitating framework, it is still not effective enough to overcome the substantial cost implications there are to reach out to large numbers of people, often in dispersed locations, with small value accounts. As a consequence, financial services providing institutions do not yet perceive the financial inclusion business to be sustainable. Banking system in our country had an audacious target of covering close to 55.8 million excluded households and all villages with greater than 2,000 populations by 2012. It is already 2013 and we have missed the target by miles. More appalling is the fact that there was a tacit acceptance among the authorities well before the deadline about the infeasibility of the target. It is high time Government takes a hard look at its own financial inclusion initiatives. With the change in PDS system and direct cash transfer proposition, it is high time we approach financial inclusion with adequate urgency. It is a necessity rather than being a choice for us. Let’s have a look at major reasons for financial inclusion to be easier said than done.  Servicing the financially weaker section means dealing with very small accounts and transaction amount also will be small. It means high operations expenditure for banks and little, if any, incentive to serve them.  The lack of understanding of financial services meeting the needs of poor families results in static approaches like the no frills account where it is fairly evident that mere availability is not the issue.  Another important point to discuss would be how sustainable or feasible is Financial inclusion sans social inclusion. Financial inclusion can be achieved only if it is preceded by Social Inclusion. The downtrodden are not only deprived because of poor resource endowments in terms of low natural, human, physical and social capital, they also are more often than not, people from regions with very low level of social organization . Their participation in the social institutions is
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rare. It makes them even more distant and unwilling to contribute to any common cause. Consequently, collective action institutions such as cooperatives, social help groups etc. generally thrive in the western and southern states, where social engagement of communities is better, but it is hardly the case for other regions. People are not only reluctant for coming together for savings and credit, they also do not participate in collective input purchase, marketing of outputs, sharing a common production facility or managing collective resources such as irrigation facilities. Such a situation mitigates the positive effects that could have been achieved by financial inclusion of individual entities. Social inclusion is a must for making sure the desired end result of financial inclusion is met. Now, we need to understand the issue of financial inclusion from the banks’ perspective. The banks had to submit their financial inclusion plans for reaching out to 72,825 financially excluded villages by 2012 to RBI. The plan was to increase number of rural branches of nationalized banks and integrating this priority sector dealing initiatives with banks’ normal business plans. Well, it does mean that Banks are bound to meet certain guidelines and specifications underlined by RBI but question remains elsewhere. Is it just because of the regulatory burden or is there anything for the Banks to get self-incentivized for championing the cause of financial inclusion? Can they see any bottom of the pyramid paradigm in finance as well? If we look back and analyze their stand towards inclusion cause, it has always been merely geared towards meeting the bare minimum threshold set out by the regulators with a rather grudging acceptance or regulatory forbearance. There has been no move whatsoever which is not driven by meeting the bare minimum. Over the decades since the initial phase of bank nationalization in 1969, the regulations have demanded the financial institutions to have a wider reach into the rural, semi-urban and other financially excluded areas. It is no wonder that only significant locations of the rural areas of major states came under adequate banking services coverage as it was only about meeting guidelines. But huge part of population living in interior villages is excluded and accumulative figure of exclusion is shocking. Quoting NSSO data, 45.9 million farmer households (51.4%), out of a total of 89.3 million households have no access to credit, neither institutional nor non institutional sources. Moreover, despite the continuously improving network of nationalized banks’ rural branches, not even one third of total farm households are indebted to formal sources .Farm households lacking access to credit from formal sources as a proportion to total farm households is shockingly high at 95.91%, 81.26% and 77.59% in the North Eastern, Eastern and Central Regions respectively. Thus apart from financial exclusion being large, there is noteworthy variation across regions, groups and communities. The poorer the group, the greater is the exclusion. It is true everywhere irrespective or region, religion, ethnicity or any other identity. Asset holding or lack of it is primary key to understanding financial exclusion pattern. Now let us turn our attention to another important player other than big nationalized banks. Micro Finance Institutions could also play a crucial role in improving inclusion. They are uniquely positioned in reaching out to the rural poor. Most of them operate in a limited geographical area; have a greater understanding of the issues specific to the rural poor. They also enjoy greater acceptability amongst the rural poor and their familiar way of working provides a level of comfort to their customers. But micro financing alone will fall short without another vital instrument for financial inclusion, Micro-insurance for people at the bottom of the pyramid. The risk in a poor man’s life is more than the well off. It is important for the policy makers to understand that lending micro credit without micro-insurance is self-defeating. For impoverished agricultural workers micro credit must be
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followed by special micro insurance products, specifically designed for poor people. It can play an immense role in stopping farmer suicides in different parts of the country who are still badly dependent on a good monsoon for their livelihood in the absence of proper irrigation system more often than not.

Savings

Bank Accounting

Insurance

Financial Inclusion
Financial Advice Payment & Remittance

Affordable Credit

Government spending through several social sector schemes lends a helping hand to the inclusion goal as well. Contribution wise most noteworthy in the scope of financial inclusion is NREGA project. Close to 80% of farmer households in the country are small, marginal farmers. It is highly unlikely that they can have employment opportunity in their own firms for more than 100 days in a year keeping in mind that agriculture is vastly seasonal in India despite phases of green revolution taking place. Hence the NREGA project that ensures the bare minimum, 100 working days’ worth of assured employability is a critical cog in the wheel of inclusion agenda. In certain States, such as Andhra Pradesh, all payments under the NREGA project will be made to the beneficiaries through their bank accounts, majority of which are likely to be opened specially for this purpose. The beneficiaries or depositors under the scheme will be given smart cards to enable transactions at any location of their convenience besides the bank branch. This recent drive for direct cash transfer to the beneficiaries for NREGA and other government social development schemes to plug the existing loopholes of the public distribution system helps in augmenting the financial inclusion as well. The issue of including more and more people into the institutionalized financial system is relevant for other countries as well including first world, developed countries. An interesting feature which emerges from the international practice is that the more developed a society is, the more is the emphasis on empowerment of the common person and low-income groups. Though the experiences in financial inclusion are unique to each country, we can look into some of the learning.

Financial Products:
• Post Office Card Account (POCA) – (United Kingdom - UK; USA), • Piloting of concept of Savings Gateway - (UK), • Free encashment of Government cheques– (Canada),
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• “MZANSI” – a low cost card-based savings account with easy availability at outlets like shops, post offices, etc. -(South Africa), • Demand driven sustainable microfinance scheme called PATMIR (Mexico), • Micro Credit scheme based on small social group -(Bangladesh – Grameen Bank) On a concluding note, I would touch upon the fact that financial inclusion is not an easy task to accomplish in a country as diverse as India where standard deviation of income of citizens is extreme and add to it the highly geographically dispersed nature of the excluded population. What we need is a comprehensive policy formulation where all the financial institutions need to be stakeholder and continue to work on a sustained basis. Issue of financial exclusion cannot be resolved in isolation as it comes as a holistic package along with social exclusion and deprivation. Unless the citizen has all other kind of inclusion, merely enabling somebody to open an account or providing micro financial debt won’t help.

References:
   http://www.in.undp.org/content/dam/india/docs/promoting_financial_inclusion_can_the_cons traints_of_political_economy_be_overcome.pdf http://www.nabard.org/pdf/report_financial/full%20Report.pdf http://indiagovernance.gov.in/files/NRLM.pdf

Pictures:
1. www.arthapedia.in 2. www.thehindu.com

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Arnab Das (Batch 2011-13)

Photography Credits

Economics Politics & Social Sciences (EPS) Interest Group Indian Institute of Management Kozhikode IIM Kozhikode Campus P.O., Calicut - 673570