Improving the rating of Indian Educational Institutes

Indians are  in top rated organisations like NASA, Microsoft, Google and many others. Indians have a significant presence in Slicon Valley and Indian Software industry has made its mark in developed economies. But our educational institutes does not figure anywhere in the top rated ones in the world. The numbers of research papers apart from patent applications are small in comparison to developed countries and even china. One of the main reasons is the cold shoulder by Indian Corporate Houses for sponsored Research. Even the Govt. Institutions like Railways, Steel Plants, Defence prefer to buy the imported technology instead of getting them developed locally. Though, we agree that we need to fast upgrade, but must remember that imported technology comes with time lag and we cannot be at level with outdated stuff.

To begin with, Indian Railways can set a target of reducing the travel time among major cities. This task should be assigned to various technical institutes like IIT, NIT etc. These institutions should be free to interact with their counterparts in the world. Similarly, Defence establishments should engage Indian Institutes for upgrading their production facilities. Meaningful commercial exploitation of Research work will attract best of the talents at these Institutes and save precious foreign exchange apart from building Centers of Excellence.

Maoist influence

Providing educational and communication facilities in remote tribal areas are required to involve the tribal population in mainstream. There is no other way to wean them away from the Maoist influence.

Various developmental schemes of the Govt. like MGNREGA, Bharat Nirmaan, Backward Area Grants can be combined to improve the livelihood of the people apart from building assets like Roads, Schools, Rest Houses, Public Toilets etc. Improved infrastructure like well maintained rest houses, eateries, toilets in villages near heritage sites like Shantiniketan, Tarapeeth, Nabadweep, Bishnupur etc. can help to develop countryside tourism for people, who like to take a break from busy urban life. Water bodies surrounded by fruit trees can be added attraction.  

Packaged Indian tours for foreign travellers can change the course of Indian economy. Apart from earning precious foreign exchange, it can create employment to large number of unskilled and semi-skilled youths by way of eateries, cabs, hotels, transport etc. If our tour operators network the hospital chains, airlines and cab operators, we can offer most affordable tour packages to foreigners. We can offer large number of packages in form of leisure tourism, heritage tourism, beach tourism, festival tourism and so on.  

India today is facing a huge demographic divide.  Agriculture provides employment to around 60% of the population, but its contribution to GDP is less than 20%. In contrast,  the Services contribute around 60% of the GDP with dependent population around 20%. It is thus obvious that the rural population is economically much poorer in comparison to their counterparts in Services sector.

Since land is limited, it is nearly impossible to raise the total agriculture GDP.  However, if the population depending on agriculture is reduced, we can improve their lot. But the rural folks must acquire necessary skills to migrate from agriculture. But, the poverty and poor infrastructure in rural hinterland make this difficult.  This has made them more isolated and feeling of insecurity. Their isolation has also caused strong resistance to improved techniques and methods to raise agricultural production. They even oppose industrialization in fear of losing agricultural jobs as they do not see jobs coming their way in absence of required skillsets.  It is thus a vicious circle of underdevelopment for rural folks.

Migration of untrained rural folks to metros in search of household jobs like maids, day labourers is now order of the day. Since they cannot afford the decent living in urban areas, the problems of slum crop up.

On the other hand, people with specialized skill-sets like Welders, Fitters, Plumbers, Carpenters, Fork-lifters etc. are in short supply. Not to speak of highly qualified professionals. Thus, providing skill-sets to rural population is the key. But it is easier said than done. Quality Education need quality teachers, which has to be provided by urban population. But there is strong resistance from urban population for taking rural or semi-rural postings. Some of their grievances are real. There is no proper school for children, no entertainment zones for family, no proper healthcare facilities in case of illness.

Who will be willing to switch to such locations?

We need reorientation of our policy framework. Instead of trying to provide urban facilities in rural areas, we should attempt rural folks to move out of the villages. This will reduce the population depending on agriculture and increase their percapita.

 But how?

We should attempt to upgrade the existing urban centres, specially the District Headquarters into modern day town. We must have all the modern day facilities for Primary as well as higher education, health Care, industrial training, commercial activities, entertainment, and good connectivity by rail, road and even air. Instead of creating such facilities at different locations, we should combine the facilities at one place. We must ensure that people working from these centres feel homely and donot curse their luck for being posted there. We must aim to create cities with facilities comparable to Metros.   

These District towns can attract rural population from villages for job, education and health care and even entertainment. These towns being within the reach of rural population, their migration to opportunities other than agriculture improve. These can easily create low skill jobs like rickshaw pulling, roadside eateries, tea and coffee shops. Improved income levels will make them spend more on education, healthcare and clothing.  With alternative sources of employment, the dependence on agriculture is reduced. Industrial Training Institutes will provide the rural youths to acquire necessary skills for industrial employment. Modern Educational facilities will provide the rural youths the opportunity of migrating to Services sector. Synergy of rural population with urban ones will facilitate adoption of modern agricultural techniques too. 

It is high time that the Govt. and Corporate Sector sit together for building the necessary infrastructure.   

Apart from opportunity for rural population in industry and other sectors, the exposure of rural population to modern world will help in improving the agro-processing industry. It will also provide market for rural artisans and many other opportunities. Industry will benefit from labour force cheaper to Metro cities. With rural population benefitting from the modern facilities within their reach, opposition to industrialization will also subside.   

We must admit that industry is needed not just for job creation, but also improving the supply of goods and services to meet the rising demand.

As the Govt. is fund-starved, it should concentrate on one district town every year. While choosing the district town, care should be taken for spreading the benefit to a larger population. In West Bengal, We may start with Bankura or Birbhum. These districts are grossly underdeveloped mainly due to low fertility of land. We need to create right infrastructure for making Doctors, Engineers, Teachers to stay there. Low fertile land can be useful for setting up the industry. Both of these districts are close to new Airport being built at Andal. This can be added attraction for Private sector.

 State Govt. can tap Central Govt. Funds through various schemes like Backward Area Grant Fund, JNURM etc. State can also offer any of the location in these districts to set up Central University.  While Choosing  location, care should be taken for creating all facilities at one place, so as to make it attractive to outsiders.

Once the rural economy improves, the revenue of Govt. will automatically rise by way of VAT, Excise etc. 

We are talking of integrated township.  Bankura in West Bengal can be considered as a model. The reasons for selecting Bankura is:

It is a district town.

It has its own heritage in the form of terracotta temples.

It is connected by Road to Kolkata, Durgapur and Kharagpur.

It is connected by Railways.

It is not too far from upcoming Andal Airport.

It has a Degree College as well as Engineering College.

Land in the District is less fertile to its counterparts in Burdwan or East Midnapore.

Surrounding areas are grossly underdeveloped leading to Maoist influence.

 It falls under Backward Districts with Maoist Influence making it easy for accessing the central funds for building infrastructure.

High-level Development in Bankura will lead to improved economic activity in neighboring districts of Purulia and West Midnapore.

 

After selecting Bankura, our action plan should be:

Improving connectivity:

Roads:

Bankura town should be connected to new Airport in Andal by a four lane Highway.

Roads connecting to Kharagpur and Kolkata via Arambagh should be widened, preferably four lane. If we go by a two lane expressway, we should reserve land for expansion  in the middle of the Road as Boulevard, instead of sides.

Road connecting Chandrakona Road and Panskura should be widened.  A long viaduct at Ghatal for passage of rainwater through Shilawati river should be build for all weather passthrough. This will provide connectivity to Kolkata, both via Delhi Road and Bombay Road.

Local Bus Services be introduced.

A Central Bus terminus linking Bankura with Kharagpur, Durgapur, Purulia, Asansol, Burdwan, Panskura and Kolkata should be set up.

Central funds for Backward Area Grants and JNURM can be utilized for these purposes.

Railway:

Bankura is connected via Rail to Kolkata via Kharagpur.

A new railway line between Bishnupur and Tarakeshwar, which is under progress will provide another connectivity. Work in this section should be expedited.

To make Bankura a major hub, we must have a much upgraded railway station with adequate of number of Platforms and a goods shed to cater the needs of Industries in the district. 

There should be direct trains for Delhi, Mumbai and Chennai with Bankura as originating station.

Local trains originating from Bankura to Asansol, Kharagpur and Durgapur should be introduced.   

      Education: 

After Improved connectivity, we must provide good schools for attracting the workforce from major towns.

Branches of well known Schools like Kendriya Vidyalaya, Ramkrishna Mission, Delhi Public School, DAV schools should be set up.  State Govt. will not need much funds for these.

A Central University should be set up in the District.

All the educational institutions should be within a radius of 20 Kms from main centre point and well connected by local bus services.  

   

Health Care:

Centre should be requested to set up an AIIMS type of institution for providing good health care for inhabitants. Setting of Medical Colleges will help attract medical students, as well as improve the healthcare infrastructure in the district. Providing good connectivity to cities like Durgapur, Asansol, Kharagpur will attract the visiting teachers for medical education. Private Sector, especially hospital chains may also be tapped to build up modern hospitals around the Bankura town.

Entertainment:

There are already some areas of interest like Bishnupur for its terracotta temples, ManiMukutPur for camouflage of rivers, Ayodhya Hills in Purulia etc. There are already some infrastructure in form of tourist lodges there. These should be upgraded.  Private Sector should be asked to build up Entertainment Zones for locals as well as visitors.

Industrial Park and Industrial Training Institute:

To provide adequate job opportunities, Govt. should build up an industrial Park large enough to accommodate at least some medium size industries apart from small scale units. The Park should contain some common facilities like convention centre, Food Plaza, internal roads, Electric sub-station, Waste disposal and recycling facilities, Logistic Hub, Fuel station, Parking Zone . The Park must contain an industrial training institute.  Ideal Size of the Industrial Park should be around 2000 acres. The Park should be around 25 Kms away from the city.                            

Commercial Centres:

The nodal town must have state of art commercial centre. The commercial centre should be well connected with rest of the township. Private Sector can be easily tapped, if other infrastructural facilities as discussed above is taken care of.

Developing one centre at a time is important as its completion will provide confidence among prospective investors for other townships.

There is a need to develop debt market at retail level. There are number of NCDs listed in BSE and NSE, but information about the date of maturity, interest rate etc. are not available with dealers of Stock Brokers.
It is therefore required that SEBI mandates dedicated staffs to be appointed by Stock Brokers for developing secondary market for these NCDs.

Finance Ministry has asked banks to constitute high level team for recovery of NPAs. Present prudential norms for identifying and recognizing NPAs enumerated by RBI has created hidden reserves in Bank Books by way of provisions along with unrecognized interest and charges. If Banks marshal their resources in recovery of old loss assets, they can free large funds and write back provisions and incomes making their bottomline strong. This can help them to go slow on restructuring of existing loans with significant compromises. Most of the old loss assets has underlying securities by way of landed property locked in factory premises, godowns, administrative offices apart from some free land too. The market value of land has most likely gone up many times since the day of sanction and disbursement. with underlying securities, specially landed properties in the form of factory premises, godowns apart from free land. 

PSU Banks in India are facing low Capital Adequacy Ratio under Basel-II. Most of these woos have come from high lending exposures to large corporates, mostly at base rate. Even the basic norms for filing regular accounts are waived in some cases. We don't find logic in over-exposure at base rate, as these advances require higher priority sector exposure too besides hitting the Capital Adequacy Ratio. It is high time, Banks do cost-benefit analysis for these advances, considering the CRAR and priority sector exposure requirement. Once, these advances are done away with, Both CRAR and credit-deposit ratio will improve. Moreover, with lesser options, the borrowers are more likely to fall in line to abide by normal banking norms. 

Credit Deposit Ratio of Indian Banks have gone upto 78%. This is alarming and needs for recapitalisation. Moreover, Banks are facing NPAs in large corporate accounts despite CDR (Corporate Debt Restructuring). It is high time, Banks tighten the norms for new financing to large corporates based on Corporate and Personal Guarantee. It is observed that most of the Corporate Projects have little stake of the promoters. Instead of advancing loans, Banks should concentrate on sharing of information among themselves about large advances alongwith monitoring the service of these loans in concerted manner.

They should all steps to recover old dues, some of them already identified as loss assets. Active participation of Bank in releasing funds from dead stock has the potential of substantially adding to their profitability. This will help their Credit Deposit Ratio and Capital Adequacy Ratio.

In the meantime, Banks should encourage the small and medium enterprises with advances fully backed by security. The well-spread advances portfolio will also help Banks for independence from large business advances. 

Some Indian Banks have reduced rates on retail loans after RBI reduced the MSF rate to 9%. This is a welcome move. This will improve the consumption levels benefitting industry as a whole. Banks can also promote their scheme for loan against property, which will help small business to finance their ventures. Small businesses not just produce goods, they also provide support services to larger business enterprises. This will also help the growth of economy. Retail and small business loans can provide a big boost to the growth of Business of Banks. Stake of business owner will reduce the chances of becoming NPA. 

Banks join hands to recover dues from large borrowers | Business Line

Banks join hands to recover dues from large borrowers | Business Line

Over-leveraged Indian Industries

We have a old saying in Marwari for business failure "Punji Thodi. Vyapar Ghana." This signifies that if Business size is more than the capacity of the capital to serve it, you may be in for business failure. The woes of present Indian Business is over-leveraging. Continuous inflation over the years have made them more confident. Biggest and untold for finance source of Indian Business is suppliers' credit. Instead of considering it as last resort, it is considered as means of finance. Accidentally, the cost of this credit cannot be calculated easily, as this is included in the suppliers' price. Based on the experience of the payment schedule of the buyer, the supplier jacks up the price. Moreover, the number of suppliers drop for habitual defaulters and the remaining suppliers jack up the price disproportionate to interest on borrowings. This adjustment is built over a period and its immediate impact cannot be calculated, but it will be definitely higher than the bank interest, as why one will block his capital in debtors.

While, the payments retained for performance is understood, but it is not the only reason for late payments.

It is high time, Indian Banks insist on considering the suppliers credit as a debt in the books of the business to arrive at debt-equity ratio. 

Rural Reforms-II

Continuing with need to consolidate farm lands, I like to suggest the consolidation of small villages. 

It is very difficult to provide basic facilities like health, education in small villages with habitations below 1000. Though we can provide some facilities through Govt. subsidy, we must think of sustainable model, which is economically feasible. It is very difficult for people to leave their parental place, but we have seen migration for the purpose of job. I think, we can give a thought on the subject.

We can select some villages with population above 2000 near the National or State Highway. These villages be provided with at least a school, a primary health centre, a bus stop (frequency of buses should not be more than a hour, as they already have highway connectivity). Residential appartments should be built under Indira Awaas Yojana, which should be offered free for those migrating permanently from nearby small villages. When the need for residential accomodation not much away from their cultivable land is fulfilled, migration may be acceptable. This will help them in visiting their workplace in towns and cities. Good road connectivity will also help attract teachers and healthcare professional to visit the village. The land freed from homes in small villages should be utilised for rain-water harvesting by digging ponds and planting neem and peepal trees. Apart from rain-water harvesting, Neem trees will reduce the need for pesticides in farming and Peepal trees will provide extra oxygen needed in the atmosphere. 

This is a big call for our planners, but deserves a look. 

Rural Reforms-I

One of the major success of  Indian land reforms in late 1950s and early 1960s was consolidation of land holdings.

Benefits to the farmer - It was observed that a farmer is holding land in different places. This led to low productivity as much of the energy of the farmer was lost in protecting the boundaries than doing real farm work. Even if his boundaries are protected, he had to devote considerable time for supervising scattered farms. Moreover he cannot use irrigation facilities efficiently due to non-contiguous nature of his land holdings.

Benefits to the Society - Improved farm production is always better for the society. Further, the consolidation of land holdings released some surplus land locked in boundaries of small farm units.

Inspite of the success achieved by Uttar Pradesh, Punjab and Haryana, other states did not fared well. However, the Western India was somewhat saved from scattered land holdings due to co-operative movement and land-renting. The situation in Eastern India is really grim. Though the co-operatives were also tried there, but it failed because their main objective was to get the incentives from Govt. than providing benefit to its members. The small and scattered land holdings in these states make the acquisition of land for industries by direct purchase method nearly impossible.

We need another attempt for consolidation to begin. This is applicable for earlier successful states as well as long time has passed since last consolidation and land holding pattern changes over the years due to various reasons. Excess land realised should be used to develop social assets like water reservoirs, forest cover, solar farms etc.

Other suggestions on rural reforms will follow.

Privatisation of Govt. educational institutions

Primary and secondary education (till Madhyamik) in India is classified into two parts. At one end, we have Private institutions with very high fee structure making them unaffordable to large part of the society. On the other hand, there are Govt. run institutions with little or no fee at all. These institutions also provide free mid-day meal among other freebies. The freebies are offered to attract the poor population to schools. But at times, these freebies are important to some students than the learning itself. Even the teachers in these schools enjoy the lack of interest in studies among the students as this reduce the pressure on them for updating their knowledge. Ignoring the occasional blushes, the percentage of students from these institutes opting for higher study reflect a very sorry state of affairs. The economic reasons are often blamed for this, but their performance in competitive exams tell the true storey. 

While complete overhaul is not possible at one go. We can take steps to offer the management of some selected institutions to private sector (referred as managing body) for a limited period, say three years on following terms:

1. The amount spent by the Govt. on salaries of teachers, mid-day meal or other running expenses be paid to the managing body. 

2. The managing body will be free to engage teachers of their choice. 

3. The managing body will not enhance the fee payable by the students within this period.

4. The managing body will continue the mid-day meal, books, uniforms etc. as the students were receiving earlier. 

5. The managing body will file the action plan to improve the academic standards of students for three years as a whole with time limits broken into a period of six months. 

6. The managing body will file the performance report alongwith comparison with previous period and their action plan every six months.

7. The managing body will file their action plan for next six months at the end of every six month interval. 

8. The managing body will also file the report on extra-curricular activities of their institutions at the end of every six month. 

9. The managing body will have to keep the record of students passing out of the institute, specially their future course of action.  

Export of Medical and Education services.

India should explore the export of education and medical services. There are large number of  IITians   and IIMites world over working in respectable positions in global organisations. Further, our Medical Professionals form a major chunk of healthcare providers in developed world.

Medical Services 
We have already some good upscale hospital chains, which need to be properly marketed abroad. With Rupee depreciating significantly, the cost of  Indian Medical treatment has gone down substantially in dollar terms. Moreover, the patients are often accompanied by their relatives or friends. Indian tour operators and medical establishments should develop packages to promote medical services and health tourism. The rating of the medical establishments can only improve by offering services to international clients from developed world.

Education Services
Countries like Canada, Australia hold sessions in India to offer education services to Indian students. This forms a significant part of their foreign exchange earnings. Indian Institutions like IITs and IIMs, though producing outstanding graduates holding respectable positions in global organisations are ranked high among International educational institutions. This is largely because, they are inward bound and does not cater much to international students. If India starts marketing these institutions on global scale with limited number of seats(just 5% of total strength), it can herald a new chapter in export of education services. Moreover, this can help them meet higher expenditure, which need not be passed on average Indian student.

May be, this can lead to another chapter to our services exports after IT and IT-enabled services.  

Considering the present state of affairs in education and healthcare, we need public-private participation. Instead of expecting private sector to invest and run the institutions, we should ask the private sector to manage the existing institutions under Govt. control. Existing subsidies and expenditure incurred by the Govt. be paid to the Private management, who should be asked to continue to provide services at existing subsidised rates.