This discussion on Facebook got me thinking - are the riots in UK a result of simply unemployment or immigration of unskilled labour? I think the answer is not so simple. Let's look at the facts: It isn't the immigrant labour force which is engaged in rioting. A lot of rioters are 15-18 year old natives of the UK - born and brought up in the UK. Born to parents who themselves were NOT immigrants but locals. A lot of those who claim they are unemployed and can't make ends meet are also those who often "refuse" to work.  I think what we are seeing in the UK is a combined result of bad educational set up and uncontrolled immigration of skilled as well as unskilled labour. The educational set up in UK has lost its synchronization with the demands that its local economy makes of it. Universities churn number of students who are qualified in subjects which have no practical use in the real world. This isn't very dissimilar with the set up in India in the 197

The global recession has brought the term 'stimulus' in vogue; however government aid is nothing new. Government financing of business is at least as old as the 19th century - the Pacific Railway Act passed by the US Congress in 1862 authorised the government to float Bonds to finance railway projects. Government aid is distinct than government spending; spending is the regular expense on civil and defense infrastructure development and upkeep - including spending on social welfare programs such as health care and education. However, aid is usually in form of special grants given usually to non-profit institutions to conduct activities which the government cannot conduct but requires to get conducted. Some examples of such requirements are: Outreach programs in remote areas where government machinery is not present One time exercises requiring large manpower such as Pulse Polio Campaigns   However, apart from such benevolent activities, government aid has been often used

Read Part I (book review) here . We often criticize our bureaucracy of being slow and stubborn - frankly after working with them I realize that they are not so bad. These institutions are manned by more people who share the 'common man' space than those who form bourgeois - hence even they feel the need to decentralize governance and carry out reforms. But the number of stakeholders in the governance system in India is so humongous that matching everyone's expectations and changing the system monolithically is not an option. And its not just bureaucratic mechanization which make the system unmalleable to change, but also the complexities and uncertainties of real systems. As an example, take the case of an earlier experiment to create planned cities - Chandigarh. The experiment failed for reasons partly known partly unknown and on the contrary Gurgaon - an unplanned city flourished but still lacks some basic amenities like public transport [Read full case study here].

On my recent visit to traditional outfit store fabindia, I spotted the book by its founder William Nanda Bissel for sale and I being me could not resist buying a copy for myself. Making India Work is an ambitious attempt to dream a new India - but may be its a little too ambitious. Nanda Bissel talks about a complete revamp of the way India is governed - from its administrative divisions (46 Regions instead of 28 states) to the way ministries are organized and managed. It is quite easy for us to write off his ideas giving reasons like our politicians would never bring about such changes or because the bureaucracy would block all attempts for these ideas to succeed. However, I have more fundamental differences with the proposals being made in the book (while I also concede that I like a lot of proposals made by him). Before we jump to them, let me outline a few of his proposals in brief: National Division: Lots of proposals have come through for decentralization of power or in f

A lot is being said in the Media about the recent crusade by Anna Hazare and team trying to subvert parliamentary process by becoming an extra-parliamentary body and "forcing" the government to agree to a "law" made by itself. The words in quotes in the previous sentence are of note as they are being used by the anti-Hazare brigade to bring what they call as extra-parliamentary processes to light.  The real question is - was the formation of a drafting committee comprising of the Group of Ministers and civil society activists an 'extra-parliamentary' step meant to side-step the parliament? Let's analyse the answer to this question by understanding how a normal law gets passed by the parliament. Typically, a the process to form a law usually starts with the government ministry planning to form a law - the trigger may be a new requirement, directive by the courts or suo motto recognition by the ministry (minister). The ministry in question then forms a

I have briefly described the concept of 'remittance economy' in a previous post . At its basic the concept of Remittance Economy means that remittances by workers abroad becoming a significant source of economic activity in the country; I am extending the definition to remittance money being spent creates growth in large cities, which in turn results in workers in large cities remitting money to their families smaller cities, towns and villages - thus creating a growth chain reaction. Consider this - Syam Sundar lives in San Francisco and remits money regularly to his family staying in Bangalore. Syam's family employs a maid, shops lavishly in the city's malls and employs a driver. The maid, the workers at the mall - from shop salesmen to cleaners all send money to their families in tier 2 cities, towns and villages in India. The family's driver Sreejeeth hails from a small nondescript town in Karnataka called Madhugiri. Sreejeeth sends money to his wife every mon

Another report claiming that "dominance of China and India [would] return to the historic norm prior to the Industrial Revolution of the late 18th and 19th centuries" came through today. Its become so boring to read that India and China will re-emerge as dominant economies unless they goof up on their fiscal policies, urban development, educational growth, demographics .. the list is long! I find most news reports and analyses engaged either in extrapolating the economic trends of the past decade or speculating by generalizing trends from certain sectors like manufacturing (China) and software services (India). The point is - has anyone been able to spot the root cause behind the rise of China and India? And is there any theory which can justify why China and India will rise to become economic super powers - without putting riders to the claim. The reasons for rise of India and China have been different sectors, but the source of both their strengths is the same - cheap

I have been busy off late and here's why - for Diwali we (me & my wife) went to Vadodara and drove to Bhopal with my parents and brother, the last 2 days of Diwali were spent at Indore; on my return to Mumbai I made a trip to Shirdi and office work made me travel to Bangalore - Chennai lined up next. Posted below are my thoughts from my sojourns: I have posted similar thoughts earlier under the same title. You can read them here . This time, I plan to restrict my post to a reality-check and not suggest any solutions. Gujarat Narendra Modi has been hailed for his development model across the country and rightly so - Gujarat boasts of fantastic infrastructure - urban or rural. From Expresshighways between major cities to BRT in Ahmedabad or roads in smallest of villages - Gujarat's prosperity is quite evident. This also manifests from the habits of Gujarat's rural folk who prefer commuting to cities on a daily basis than emigrating to them. What I am not sure is that i

This is the question in minds of gazillion Indians both in India and abroad - offices, homes, streets and cyberspace are full of muted discussions between the calm, quite and most importantly largely secular Indians about the fallout of the Babri Masjid court trial . The Supreme Court cleared the way for the High Court to announce verdict on 30th September 2010 - the date may be seen in future as a historical landmark. People, especially those who remember the 1993 riots which burned the nation for months (after the mosque was demolished by kar sevaks on Dec 16, 1992), are afraid that history may repeat itself - irrespective of the side the verdict takes. There are some optimists also among us - those who think that India has changed. More than 15 years of liberalization, globalization and capitalist mindset has changed the populace which no more cares about religious animosity but is more concerned with progress. Hence, irrespective of the verdict - people will be much more tolerant a

Continued from Part II Having said that India needs to extend the reach of urban amenities like roads, electricity, cooking gas, safe drinking water (and education and internet) to the countryside, there is one major cog missing in the wheel – the pull for the above amenities in rural India. The need for high quality infrastructure in cities gets created by higher productivity and resultant income levels, the same applies to villages as well. In most western nations where villages too have a much better standard of living are those where people in villages have earnings comparable to their city counterparts. In the west the low population density necessitated high productivity in rural activities such as farming or animal husbandry. Thus as an outcome farms were mechanized and villages developed. However, this is not true of a high population density country like India – even today employing 10 labourers in the farm is cheaper than buying a mere tractor. Farmland in India is e

Continued from Part I ' Mamata wants to turn Kolkata into London ' - screamed the headline on rediff.com some days ago. Turning Kolkata into London is definitely a worthy goal - London is one of the most livable cities in the world. However, while the creation of (present day) London was in itself challenging, doing the same in India is even more challenging. Let’s investigate Indian urbanization strategy in a more logical manner by identifying the challenges which India faces today. India’s urbanization effort is challenged by 3 obstacles: A unique combination of large population with high population density never before encountered (in the parts of the world which have been fully urbanized) An existing landscape formed during different periods of history Large sections of populations who have never been exposed to an urban landscape Lack of existing institutions Of these only the last one had been encountered in countries which have previously attempted urbanization, and the

I recently went on a religious tour to Tulzapur via Solapur and then to our ancestral temple in Narsinghpur, near Pune. On way I also visited our ancestral village Indapur 150 kms from Pune. While old Indapur still remains a village with roads just about wide to allow cycle rickshaws run through them, I was astounded to see the newly developed areas of Indapur which were no less than private colonies in Teir 2/3 cities in India. Having read Mckinsey’s India urbanization report just a day before my travel, Indapur’s development opened a new chain of thoughts in my mind. Most urbanization studies about the developing world relate to urbanization as development of new cities or improvement of urban infrastructure (like mass transit, arterial roads, flyovers etc) in existing cities. For example McKinsey’s recent research titled “India’s urban awakening: Building inclusive cities, sustaining economic growth” [ 1 ] highlights the need for India to develop 19 clusters of cities (Page 150); i

Reports go that the above song, Mehangai Dayan from Peepli Live has had offers from the political parties in opposition. No wonder with the so called 'strike' requiring the opposition to put all its goons to force, it is clearly evident that the UPA-II is difficult to defeat in spite of the current state of affairs. Is the UPA-II performing too well for a government to sit at peace cooling its heals. Hell no! UPA-II is definitely a different animal as compared to a typical Congress Govt. It is far more dynamic, its ministers have new ideas - yet, it is reaping benefits of a global wave towards investing in the developing world, not to mention the benefits from momentum of past governments, Vajpayee's NDA govt included. But what is making the UPA-II govt tick and lie in peace is a fragmented opposition which is busy infighting - whether its the NDA or the BJP within the NDA or the communists or the SP-vs-BSP feud. Politics in a democracy is hardly ever about performance - it

Mahesh Murthy argues here that the budget does not matter any more - especially not to entrepreneurs. He laments that the booty being promised for special focus areas is not meant for genuine entrepreneurs but for those who are politically connected. While I may not disagree with Mahesh on the fact that most funds outlay on Govt. schemes benefits the big co's and politically connected, I don't agree a wee bit with him that the budget does not matter to an entrepreneur. For example, here's how this year's budget announcements may help entrepreneurs: Now you can hire an individual for upto 1.6 lakhs and forget anything about paying taxes to the Govt on his behalf - that's substantial admin cost savings for a small firm If you are a bootstrapper, funding your business with your salary or of a spouse/friend - you have a little more cushion for your startup If you are selling a service to end consumer, you know know that they have a little more money in their hands to i

Here are quotes from Leo Tolstoy's " Letter to a Hindu " written to Mahatma Gandhi: If the English have enslaved the people of India it is just because the latter recognized, and still recognize, force as the fundamental principle of the social order. In accord with that principle they submitted to their little rajahs, and on their behalf struggled against one another, fought the Europeans, the English, and are now trying to fight with them again. A commercial company enslaved a nation comprising two hundred millions. Tell this to a man free from superstition and he will fail to grasp what these words mean. What does it mean that thirty thousand men, not athletes but rather weak and ordinary people, have subdued two hundred million vigorous, clever, capable, and freedom-loving people? Do not the figures make it clear that it is not the English who have enslaved the Indians, but the Indians who have enslaved themselves? When the Indians complain that the English have ensla

"Democracy is the worst form of government, except for all the others that have been tried from time to time" - Winston Churchill, 1947 This Op-ed in the Times by Paul Krugman could as well have been written for India. In the 17th and 18th centuries, the Polish legislature, the Sejm, operated on the unanimity principle: any member could nullify legislation by shouting “I do not allow!” This made the nation largely ungovernable, and neighboring regimes began hacking off pieces of its territory. By 1795 Poland had disappeared, not to re-emerge for more than a century. Today, the U.S. Senate seems determined to make the Sejm look good by comparison. Whether its a regional movie like Jhenda (also remember protests against Ashutosh Gowarikar's Jodha-Akbar) or a comment by SRK on IPL, any political party or son of a politician objects and brings half the nation's media to attention and sometimes even holds the Govt's policy decisions to ransom. Just explains that dem

As I picked up the newspaper today expecting more information on what more steps the outgoing RBI Governor Subbarao would take to curb inflation, I was greeted to my utter distaste by a synopsis of the verbal duel between MNS-Sena-Congress. For all the heat being generated in this Mumbai-for-Marathis and Mumbai-for-India debate, no one in particular is actually fighting for Mumbai's own cause. The MNS-Sena is fighting for rights of Marathis in Mumbai, Congress-RSS for rights of non-Marathis in Mumbai. But no one is addressing the problems of the average citizen in Mumbai - Marathi or non-Marathi! The BMC announced its annual budget yesterday - a news which got buried, thanks to the cacophony on Marathi Manoos issue [probably raised on purpose by the Sena to avoid attention to the budget]. The budget at best can be described as 'barely essential' if not insufficient. The budget of Rs 20,417 crore has shown an increase of merely 4 per cent in comparison to last year’s budge

Recently Sam Pitroda recently mentioned that - "too much focus on engineering and medical education has created a situation in India where liberal arts really did not get the kind of attention it deserved." He said: "A good liberal arts education is important to produce leaders. India has now begun to recognizse that we need not only world class engineering education, we also need world-class liberal arts education. And, we agree that the model we have in (University of) Chicago or Harvard is a model that we need to look at , but it needs to be Indianised - it has to be of a local context." Clearly, Pitroda is talking about the skewed model of having competitive exams for professional courses only which has created a void in liberal arts education in India. Unlike US system, Indian universities do not have a uniform SAT for admission across disciplines – so while for entry to professional courses like engineering and medicine we rely on AIEEE/SEEE and PMT/CPMT’s bu

Continuing the chain of thought from my previous post , I got thinking as to whether the changes in the Indian economy since 1990's have been top down and visionary or merely reactionary and ad-hoc. The conclusion which I have reached has been that they are a combination, but above all - they are based on a Groundswell from the masses. While multiple sectors - IT, Retail, Financial Services and even manufacturing - have contributed to rise of the Indian Tiger; to illustrate my point, I would concentrate on the Financial Sector [ related post ]. Pre-liberalization, there were many shackles, like license raj, on the Indian financial services sector. But more gruesome were the factors of immature or absent regulatory supervision and resulting power of large investors to manipulate the free markets. The Banking sector meanwhile was dominated by PSU banks which were slow, bureaucratic and customer unfriendly. Starting the 90s there were many top down reforms starting like Dematerializ

I have previously pointed a lot of links [ 1 ][ 2 ][ 3 ]to Atanu Dey's blog, also praising his RISC model for development of Indian rural/semi-urban areas. However, this comment on his blog (by someone with an alias Human Blasphemy ) sets out some very pertinent doubts on this model - reproducing it here: Dear Atanu, I heard you during your session on RISC at XIMB. One of the members asked you a question whether Rural Infrastructure can be developed through people’s participation and through microfinance. Which according to you is not possible, because large infrastructure projects have to be completed at one go. But the problem is that why will any private company invest in rural infrastructure? You only said that i dont know how it will be possible. I believe you will agree that in future Microfinance will not remain microfinance it will become SM-finance [Small and medium finance. We have already seen the examples of increased limits of credit in Andhra Pradesh, where Mf loans