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Words alone not enough No laughing matter |
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Indications of industrial revival
A memorable visit indeed!
Varsities need reality check, not cheques
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Words alone not enough Question
your sons, not daughters”, said Prime Minister Narendra Modi from the ramparts of the Red Fort in his first Independence Day speech. It was more of a social speech. Words like “those who rape are someone’s sons” became most tweeted on the social media and had an instant connect with people, especially women. It is unusual for a PM to talk about gender ratio, lack of women’s security and sanitation facilities, especially in an Independence Day address. These days when politicians of all shades tend to make light of serious crimes like rape by saying ‘boys will be boys’ and target women for visiting pubs or the way they dress up, these words acquire more significance for shifting the blame on men for gender crimes. This new approach can be disturbing to the patriarchal set-up, but India cannot afford to trivialise women’s issues. In the early 19th century, when social reformer Raja Ram Mohan Roy decided to eliminate the practice of Sati, he requested the British administration to make a law to support the reform. In 1829, Sati was abolished. Statistics for the period 1815-1824 showed a total of 5,997 instances of Sati in the Bengal presidency alone. When eminent Indians approached the royal courts, pleading that their social customs be spared, they were told that the court respected their social customs but under the British law a man found guilty of killing a woman is hanged and his property confiscated. Words were followed by strict action to eliminate Sati from India. We have had nice laws on dowry, resulting in confusion between the victim and the accused. The law-enforcement agencies have failed the laws due to the inherent gender bias of the system. Women need to be given more space in decision-making to bring about real change. But PM Modi remained silent about the Women's Reservation Bill through his gender-sensitive speech. If the British could force social change, our own government certainly can, if only nice words are followed by firm action.
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No laughing matter Often
enough we have seen that politicians are above the law. Now they want to be beyond reproach too. They expect the barbs of humour to spare them. What else can explain Jaya Bachchan’s unwarranted outburst against radio jockeys? The film actor-turned-politician has demanded in the Rajya Sabha that action should be taken against RJs who mimic and lampoon MPs on air. Her indignation may have been dismissed as a cry of a petulant woman, only if it hadn’t found an instant echo among others. To begin with, she found support in Information and Broadcasting Minister Prakash
Javadekar. Later, he tweeted that it’s not mimicry but RJs’ double-meaning innuendoes and vulgar language that need to be looked into. Either way politicians’ reaction not only reflects their misguided approach and intolerance but is also antithetical to the very spirit of freedom of speech enshrined in the Constitution. Instead of asking the radio jockeys to mind their language, the political class should better learn to mind its
behaviour. Respect is commanded and not demanded. If as representatives of the country they don’t understand this basic truism, then God save those whom they represent. Besides, even if they are not willing to pay heed to Prime Minister Narendra Modi’s wish for a dash of humour in Parliament, they better take a cue from Oscar Wilde. He said: It is a curious fact that people are never so trivial as when they take themselves seriously. Dear MPs come down from your high horses and remember you are no less, no more vulnerable to sarcasm as ordinary mortals. While the jury is still out on whether Indians have a sense of
humour, don’t go all out to prove that our politicians don’t have any. Superciliousness is not a virtue but the ability to laugh at yourself certainly can endear you to many — unless you only believe in the art of intimidation and not winning hearts.
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Thought for the Day
Some cause happiness wherever they go; others whenever they go.
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Oscar Wilde
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Aug 16.—Press Bureau says Germans are experiencing great scarcity of horses, thousands being killed or captured by Belgians. French drove German from Cirey back on Saarburg after a hot engagement. Germans suffered serious losses. A state of siege has been officially proclaimed in Bulgaria. Aug 17.—Germans attacked the French at Dinant but were repulsed and fled in disorder. Several being drowned in the river Meuse. In the fighting at Vosges French captured 1500 German prisoners and several big guns. The French are advancing along Alsace-Lorraine towards Straasburg capturing many guns. The French attacked Austrian fleet off Budua on the 16th and sank 2 Austrian ironclads, the fight lasting an hour. An Austrian cruiser was sunk. Russians have entered Austria. A big battle is proceedings at Shabatz. Germans have occupied Taveta in East Africa. German Emperor has left for Mainz accompanied by headquarters staff. Japan has issued an ultimatum to Germany to disarm vessels in China Sea, and to deliver Kioachu to prevent disturbance in Far East. The Punjab Government and the Press Act.
WE understand that the Punjab Government has ordered the forfeiture of the security of Rs. 1,000 deposited in respect of the Press in which the Khalsa Akhbar was being printed. The order of forfeiture has been made under section 4 (1) in respect of an article published in its issue of the 24th July last under the heading “His Honour’s Tour and his concern to the Sikhs at Ludhiana and comments thereon,” and all copies of that issue have also been declared forfeited wherever found.
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Indications of industrial revival While expectations are still high regarding the Modi government on the economic front, no rabbits have been pulled out of the hat yet. Some favourable factors have emerged which may help in the revival of the economy from sub 5 per cent GDP growth to a higher growth trajectory. The best news so far has been that industrial growth picked up to 4.7 per cent in May 2014 but unfortunately went down to 3.4 per cent in June. In any case it is indicative of an industrial revival. Exports grew at 12.4 per cent in May but slowed to 7.3 per cent in July. Import growth first declined (after the rise of duty on gold) but has increased to 4.5 per cent in July. The trade deficit was at $12.22 billion in July. The rupee, however, has been stable and has helped exports. Car sales considered a driver of industrial growth has gone up by 5 per cent in July. The core sector growth index was up by 7.3 per cent in June. There is an increase in iron and steel production by 4.2 per cent and cement production went up by 13.6 per cent. Construction and infrastructure are picking up due to the incentives offered in the Budget and an easing of regulations. The corporate sector has also shown better results in the first quarter (April to June 2014). Over 1,204 companies have registered a substantial growth of 33.4 per cent in the first quarter and net profit margin rose by 11.3 per cent. Sectors like IT and pharmaceuticals have been good performers. The monsoon deficit is also slowly shrinking and there is hope for a normal agricultural production though agricultural growth will be much less at 1.3 per cent and lower than the targeted rate of 4 per cent. With America’s GDP growth picking up to 4 per cent in the last quarter, there is hope for global recovery and the demand for services looks rosier. Growth is back for the big five: Infosys Technologies, Wipro, Cognizant Technology Solutions, HCL Technologies and TCS. They are hiring more people and additional jobs of 160,000 to 180,000 will be created in the next one year. Yet the domestic investment scene does not look too promising and the RBI has left the repo rates unchanged in its latest monetary policy. It has cut the SLR (statutory liquidity ratio) by 50 basis points to 22 per cent. This is likely to pump in an additional liquidity of Rs 40,000 crore into the financial system. A cut in the repo rates would have lowered interest rates and could have encouraged new investments. But the RBI is not confident about the monsoon and its impact on food prices. Inflation control is the prime target of the RBI and till it is sure that inflation will come down to 6 per cent, no change in the repo rates may be expected. The Consumer Price Index was at 7.3 per cent in June and rose to 7.9 per cent in July. New investments in the manufacturing sector for the quarter ending 2014 have dropped sharply by 72 per cent on a year-on-year basis. Only 50 new projects have been announced with an estimated investment of Rs 180 billion. This has been due to the slowing of industrial demand and substantial amount of capacity addition since 2008-09 as well as the pipeline of additional capacity carried on from past projects that have not been completed. These have made industrialists cautious and diffident in making fresh investment. Another area of concern is the falling savings rate to 30 per cent of the GDP from 38 per cent in 2008, and the government has to look into it because unless the savings rate is higher, investments will also slow down further. On the basis of the positive signs many are predicting 6 to 7 per cent GDP growth rate. But 22 per cent of the people are still extremely poor and their children suffer from malnourishment. According to the recent Human Development Report (July 2014), 55.3 per cent Indians suffer from multi-dimensional poverty, which includes multiple deprivations in the same household in education, health, sanitation and living standards. India has not done well on the Human Development Index and ranks at 135, according to the latest report. HDI has remained the same at 0.586 in 2013 as in 2012. A new Gender Development Index, defined as a ratio of female to male HDI, has ranked India at the 132 position. The Gender Inequality Index shows only 28.8 per cent labour force participation by women. There is a shortage of 15 million houses for the low-income groups and lack of good infrastructure for solid waste disposal and sanitation in cities. Today's life in cities is hardly conducive to peaceful and healthy living and the common person may well wonder: “Has there really been a change in two months?” Since problems are so big, there is no possibility of change in the short term. The problems require a genius to undo the harm done over the years to India’s administrative machinery, judiciary and political set-up. If only one thing can be solved, namely corruption, it would be a big achievement for the Modi government. According to The Economist of London, $4-12 billion has been paid as bribes to politicians and officials in the past decade. On the job creation front, there is need for higher manufacturing growth and the creation of ‘decent’ jobs and not just menial jobs of security guards and peons as around 10 million people will be enter the job market each year over the next decade. Around 90 per cent people still work in the informal sector which is in need of
better conditions of work and a social safety net.
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A memorable visit indeed! I have stayed in Mumbai for several years during various appointments of my husband in the naval dockyard, ships and staff offices. During these years I had an interaction with naval families and film stars, among others, while visiting the Victoria Garden, museums, beaches, Haji Ali, Elephanta Caves, Malabar Hill Garden etc. It was during one of the ladies' get-togethers that I heard some of them talk about their visit to the government Mint located just opposite the Indian Navy office. The Mint has an old-style, low-key building with tight security arrangements. Visits to the Mint are not encouraged and are confined strictly to persons cleared for security. I decided to tell my husband to arrange a family visit to the Mint through one of his friends serving in the Reserve Bank of India, which was located opposite the Mint. We were advised that none of the visitors should wear any jewellery item during the visit. Our friend in the RBI made every effort to make our visit interesting and memorable. The visit was arranged on a Wednesday afternoon. Our car was handed over to the mint staff for parking. There was no printing of currency in the Mint. After watching photographs of international gold mines, we saw a variety of gold coins displayed in attractive mint boxes. One could see them from all sides but not touch them. Then we were taken to a room with photographs of minted gold as it becomes ready for dispatch. It looked beautiful. It was made clear to us that the movement takes place in a strictly restricted manner and a general mention of the same is avoided. Finally, we were made to remove our shoes and we entered a strong room where we could see about 100 ingots of pure gold in 25kg weight each, displayed in a splendid and attractive manner. I could not believe my eyes when I saw the displayed columns of solid gold ready for transportation to various places. Our friend remarked that this unique scene had not been seen even by many staff members of the Reserve Bank of India because visits to this place were not encouraged. Before we left, the manager gave the visitors only one advice: “During visits to such pure gold mints, please enjoy the splendour of the mountain of gold but don't bother to enquire about its likely movement or destination!”
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Varsities need reality check, not cheques UNIVERSITIES in India have an insatiable quest of asking for liberal funding from central — and state-government agencies in order to execute their plans. These include the creation and filling up of teaching and non-teaching positions, starting of new courses, funding of research projects, creating physical infrastructure, buying of expensive equipment and chemicals for laboratories, luxury cars for officials, air conditioners for teachers and officials, computers and laptops etc. Institutions of higher learning submit the proposals with sound justification to the funding agencies and, mostly, they succeed in getting the funds. Sensing the vital role which higher education can play in positioning India as one of the lead players in global trade through economic transformation, the Government of India took a giant step in this regard by substantially enhancing the budgetary allocation for higher education in 11th Five-Year Plan to Rs 84,843 crore. This is a nine-fold increase over the 10th Plan outlay of Rs 9,600 crore. The 12th Plan outlay is pegged at Rs 1,10,700 crore, despite the fact that the utilisation rate of the 11th Plan outlay on higher education was low at 45.6 per cent, amounting to Rs 39,647 crore. Strong control mechanism An in-depth analysis of any successful organisation will necessarily signify the existence of a strong control mechanism which orders individual human interactions in line with the goal(s) of the entity. Control as a concept has evolved over time, with the focus on power of human behaviour. Control plays a multidimensional role, leading to standardisation of performance and quality, safeguarding assets, and motivating people. A large-sized successful organisation has a well -crafted control system which enables it to drive its operations successfully in diverse geographic areas — with a portfolio of distinctly different products focused on the needs of its customers. A control system depends heavily on financial parameters. This write-up focuses on the need of the hour, that is, adoption of a strong financial control system in universities. To drive Indian universities at a pace which will enable them to compete globally, we will have to understand the perspective of world’s leading educational institutions of higher learning regarding finance in order to change our mindset. For this purpose, Harvard University and California Institute of Technology (Caltech), which figure at number one in the list of top-ranking universities of the world released by Shanghai Jiao Tong University and Times Higher Education, respectively, have been focused on for understanding their perspective on finance. Examples of Harvard & Caltech Harvard University is a 1636-born institution, with an annual budget of $4.2 billion and enrolment of 21,000 students. A deficit of $34 million reported by the Financial Report of the fiscal year 2013 created strong ripples in the world of higher education. Though the deficit turns out to be less than 1per cent of the Harvard University’s revenue, Daniel S. Shore, Vice-President of Finance and Chief Financial Officer, showed great concern for the deviation and harped that “The ability to stay in financial balance going forward depends in large part on an institutional commitment to cost management and an embrace of innovative revenue opportunities.” The President of Harvard University, Drew Gilpin Faust, said, “Every revenue stream upon which institutions of higher learning depend has come under pressure. Harvard has not been immune to these trends and we have to adapt.” Further, the financial review of the university concludes that the university could generate an investment return of 11.3 per cent. Caltech, established in 1891, despite its small size of 2,231 students, has to its credit the rare distinction of winning 33 Nobel Prizes and 70 United States National Medals of Science or Technology by its faculty and alumni. The Annual Report 2013 of Caltech shows a deficit of $3.8 million. Dearn Currie, Vice President for Business and Finance, says, “We continue to manage operating costs…. Although the long-term outlook for research funding from Federal agencies is uncertain, Caltech continues to receive a strong, steady flow of research funding”. What makes them tick * Harvard University is a 1636-born institution, with an annual budget of $4.2 billion and enrolment of 21,000 students. * Caltech, or the California Institute of Technology, was established in 1891. Despite its small size of 2,231 students, it has to its credit the rare distinction of winning 33 Nobel Prizes and 70 United States National Medal of Science or Technology by its faculty and alumni. * The budgetary control system of the universities needs a thorough revamping. The present budgeting system is past-oriented and employee-focused. *
The best-run universities are worried about the costs, revenue and return, which become the core of a good control system. Best-run companies & varsities The comments of the finance experts of the above-listed two leading higher education institutes occupying leadership role in research and teaching speak loudly about better management of costs, creating a dependable long-term strengths-based revenue stream, and generating adequate return on investment. If one scans the annual report of any globally competitive company, one will find similar concerns outlined by the top management. For example, A. G. Lafley, Chief Executive Officer of Procter&Gamble, states in the 2013 Annual Report, “We’ll measure our business performance through operating total shareholder return”; we are significantly strengthening productivity and cost-savings efforts”. This signifies that the best-run universities of the globe are handling their finance function in the same manner in which the best-run companies do. The best-run universities are worried about the costs, revenue and return which become the core of a good control system. However, the university system in India is yet to gear itself to that level of control. For instance, Panjab University which was established in 1882 in its 2013 Budget at a Glance shows a deficit of Rs 191.79 crore, against revenue receipts of Rs 138.82 crore, which is roughly equivalent to $34 million deficit of Harvard University (at Rs 60 $ Re rate). There are no measures listed or initiated by the finance function of the university to control or reduce the deficit, enhance the quality of its revenue stream and generate a desired rate of return on the invested funds. It seems that control of deficit is meaningless in a university system as it happens to be the difference between the amount which the university proposes to spend and the funds which it can generate, mostly from the students. This mindset leads to the demand for liberal funding from the governments. I am yet to come across any university in India which has conducted an audit with a perspective of determining usefulness of its activities and outcomes. Outdated data-generation system How can the finance control function of Indian universities be made more vibrant? The most important aspect of a good control mechanism is the quality of financial data generated by the system. The existing data-generation mechanisms of universities are outdated and obsolete as the same are based on the single-entry system of accounting, which is grossly inferior to the double-entry system, which is globally used by all well-run organisations, including universities. Based on a single-entry system of accounting, the generated financial reports do not equip the decision maker with important bases on which he could lean to take meaningful decisions. For example, a university will not be in a position to tell about the amount of money it has invested in creation of physical assets like building and laboratories. So, the present system of accounting is constrained to help the decision maker to take decisions related the usage of such assets. In the process, the resource utilisation takes a backseat in universities, despite the fact that huge amount of public money has been invested over a period of time. Student-centric
budgets Though optimal utilisation of scarce funds has paramount importance, no decision maker in a university system has applied mind on the issue of optimal utilisation, say, of an expensive equipment of a laboratory? This does not fit in the accounting environ of the single-entry system. In line with this, the budgetary control system of the universities needs a thorough revamping. The present budgeting system is past-oriented and employee-focused. A closer analysis of the 2013 Budget of Panjab University shows that of the total budget 76.66 per cent (Rs 183.74 crore) has been spent on salaries and arrears, 10.43 per cent (Rs 25 crore) has been earmarked to the pension corpus, 1.14 per cent (Rs 2.74 crore) on medical assistance/medicines. On the whole, more than 90 per cent of the budget has been spent on its employees! Same is the case of other universities in India. In the process, the most important stakeholder, that is, the students, are ignored which the universities can ill afford. We should make the entire budgeting exercise future-oriented and student-centric. Such a budget will attempt to focus on the need of funds to empower students with specific skills and attitudes and consequently make them ready for seeking gainful employment in a globally competitive environment. This change in mindset of firming up better budgets, focused on the needs of the students, will automatically build a different culture in universities. That way, even the teaching and research competency set of teachers will keep on magnifying to keep pace with the ever-changing expectations of the recruiters. And in the process, a strong human capital will also get built. The human capital which we are building in universities at the moment is primarily based on the singular perspective of developing teaching- and-research expertise in an area in which the faculty is comfortable. This comfort-zone discourages the universities from opening the doors to those who provide employment opportunities to our students. The above-said changes in accounting and budgetary control system of universities and hence designing of better control mechanisms will lend accountability to financial endeavours. A new culture which is likely to emerge will focus on the needs of the students and consequential need of changes in other support systems, including faculty training and research, curriculum development, industry interface, and administrative support. It is high time that the University Grants Commission makes it necessary for all universities to make suggested changes in their control mechanisms and develops a data base of financial productivity of Indian universities. If the attitude to seek liberal funds is discouraged, India is likely to emerge as a global power, ready to meet the upcoming needs of developed nations in terms of quality human resources. The writer teaches at University Business School, Panjab University, Chandigarh
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The FDI inflows declined by 45 per cent in the last quarter of FY 14 at $3.96 billion but FII inflows crossed $25 billion since January 2014. This indicates that foreign investors are bullish about India's growth potential but as is well known, FIIs are fickle and move around the world. 
I had also joined a ladies club, having members of Parsi origin. I was mainly attracted by the food they prepared during the Parsi Navroz days. I always remember social visits to Cusrow Baug in Colaba. During this period I used to visit the Indian Navy office located in the fort area opposite the Asiatic Library. 
