Reservation on lines of caste or economic status.

Our constitution formulated a reservation policy for backward sections of the society on caste lines, where certain castes, mainly untouchables were classified as Scheduled Castes(SC). Similarly underdeveloped tribes were also classified as Scheduled Tribes(ST). Later on, Some other castes, which were below the state average in social and education and economic terms were classified as Other Backward Castes(OBC).

This has caused large scale resentment among the society left out of this reservation. Moreover, with no creamy layer bar on SC/ST makes the well-off among them to corner sizeable benefits.

Even after 70 years of independence, we are not able to provide quality social life to the SC/ST. This is one of main reason for few among them getting unfair advantage. Still in large part of rural areas, the children of these castes are not allowed to attend school with children of upper caste. If there is no equal opportunity for skill development for all, job placements only on the basis of merit is unjustified.

But, it is also true that large section of upper caste is also deprived of quality education due to dual system of education in our country. There are special coaching classes for appearing in various scholarship exams, which is again grabbed by the rich. 

Society is now more divided into rich and poor than on caste lines.

At present, there is no system of verifying income of an individual unless he declares. Further, most of the maids, landless labourers and daily wage earners having no permanent residency are deprived of any of ID Proof including Adhaar Card. Thus, it is practically not possible to have reservation on economic lines.

A temporary measure of fixing higher cut-off for kins of elected representatives of State Assemblies and Parliament alongwith the bureaucrats from under-secretary level and upwards can be introduced.

They should also be barred from getting any scholarship like KVPY. This will also eliminate the benefits of reservation enjoyed by the kins  of well-placed SC/ST.

If the senior citizens, just not by age but by positions in society come out of their own self, start discussions, some concrete results may come out.

managing water resources

India is facing huge crisis of water with rivers drying up, even when there are floods during rains.

There are several reasons for this, but the most important reasons is massive deforestation in hills. Most of the rivers have their origins from  hills, where water seepage from roots of trees accumulate and form into stream becoming river downstream. Thick forests in hills obstruct the rainwater to flow downstream. Branches and stems of trees absorb a large part of rainfall, which continue to seep even after rains stop. This ensures water in rivers throughout the year. Good flow of water also does not allow the dust to settle in riverbed, thus keeping the depth intact.

Massive deforestation in hills has simply disturbed the ecology. Moreover, filling up of  ponds, which helps storage of surplus rainwater to be used later in lean season. Most of highrises today ensure that entire surface is covered by concrete and the garden is created by using artificial soil and grass. All these ensure that rainwater is not allowed to be stored or absorbed by the trees. 

This is the time, when elites both by way of money or education mostly living in cities think over it. They should force highrises to have proper rain-water harvesting system, so that groundwater level is maintained. They should ask the builder about the safeguards for this. They may also ask for fruit trees and kitchen garden within the complex to ensure greenery and absorption of rain water. Further, they should take a vow to plant a tree, whenever they are on a tour, specially to hills.

Small baby steps by citizens can do wonders.  

Creating employment is philanthropy

It seems strange that how employment generation can become philanthropy. Employment is generated by businesses, which make profits. But, we fail to understand that unless the people are employed and have earnings, they cannot spend and ultimately businesses will fail.

This is the fundamental rule of marginal propensity to consume that more the disposal income in hands of lower starta of the society more the propensity to consume or spend. This consumption create demand and hence jobs. Businesses make profits only when their products are sold and consumed. 

Though, nobody is accepting a recession, but negative interest rates in many countries is just the symptom of that. Moreover, investors like softbank are ready to burn their money just in the hope that they can make money, when competitors surrender. All this indicate that there is more money with investors than the entrepreneurs need. Is this not recession?

People are afraid that if they start small, they will be wiped out by the large corporates due to economy of scale. If scale is only important, then why the large corporates indulge in outsourcing. It is the right time, people come forward and start or support small businesses just with a view to create more employment. Just put a small money on it and help control law and order around you as jobless youths are more prone to be rowdies.

In India, there is huge crisis of health and education facilities, mainly for the poor. There is huge opportunity for business as well as philanthropy in this area. Whatever you do, society will benefit.

TAMSO MA JYOTIRGAMAY

The festival of Deepawali is celebrated by way of lighting diyas remembering the return of Ram in Ayodhya after completing 14 years of vanwaas and defeating Ravan. 

We have read Ramayana several times and there are many small stories in between. Some of them are:

1. When everybody was perplexed about crossing SAGAR to reach Lanka, Jambuwant came forward to inspire Hanuman and reminded him of his powers. The moral behind is that we donot realise our strengths and capacity. In present, corporates spend a substantial amount in inspirational programs undertaken by several personalities. Some of the people like Shiv Khera has taken this as a profession.

2. When Rishi Viswamitra visited Dashrath asking for the protection of his yagnashala from the evil powers of Ravan, he need not had to beg. Instead, Lord Dashrath honored him by offering his own chair and deputed his two sons for protecting the yagnashala of Rishi. Can we anticipate it today? 

There are many such stories in Ramayana, which is relevant today too. This is why, It is eternal epic.

We need to read and understand Ramayana to enlighten our hearts and remove the darkness from our life.

Tamso Ma Jyotirgamay.

Overpowering asuras in and around us

Bijoyadashami is celebrated as a victory of good over evil. On this pious day, we should find the asuras in and around us. One of the biggest evil inside us is Ahankar. The word Ahankar comes from the word "Aham", which means "I".

This sense of my achievement and the notion that I have done this and the ego is the biggest asura inside us. Once we are able to overpower the sense of my achievement and our ego, Lot of problems will go away. It is our ego, which does not allow us to rectify the mistakes, even when we realise them. To cover one mistake, we commit more mistakes and eventually fall into trap. We need to introspect into ourselves and try to rectify it from today. To start with, we can consult our parents, elders or even friends for process of rectifying our mistakes already identified by us. We may find amazing results and even more acceptability from a larger society.

Biggest asura around us is the ignorance and arrogance resulting from it. Ignorant public are more prune to fall prey to rumors and create disturbance in the society. We should ensure that our neighborhood is well aware of the happenings and opportunities available to society at large. Education is one of the ways to fight ignorance. Unless you can read or write, you cannot get the information available in books, newspapers, magazines etc. We must try that basic education of reading, writing and analyzing is available to all in our neighborhood.

Let us take the baby steps on this Bijoya to overpower our ego and spreading education in our society.

Bill Discounting vis-a-vis MSME Act

We have today a MSME Act, where they are entitled to several benefits. It is also required to disclose in company accounts about timely payment to MSMEs.

But in practice, they are the most suffered lot. Rate of interest charged by Banks to MSMEs is usually higher than other borrowers. Even that is hard to come by. In general, MSMEs are not professionally equipped to present the cohesive reports needed by Banks. Moreover, the large corporate sector pay a lip service to the clause of timely payment to this sector. Being dependent upon the business from large business houses, they have no options other than keeping mum.

This anomaly can be solved to a large extent, if the bill discounting is made popular. This requires large corporates honoring their commitments. The banks should consider the outstanding liabilities as debt, while calculating debt-equity ratio as this is also a finance raised by the entity through delayed payment to suppliers.

If MSMEs can get their bills discounted, their working capital needs will be met. This will also banks to better manage their advances as they have committed  receivables in their hand and will not have to depend upon the stock and book-debt statements submitted by the borrowers.

This will help better discipline in the business payments and improve the economy as whole.

Education must for benefiting from Demographic Dividend

India is now at crossroad. We are having number of youths in the world. This means we have large workforce. This is one of the reasons for growing GDP, though our political leaders claim otherwise. GDP growth would have been much higher, if we would have allowed our citizens free hand to choose the areas, they want to excel. 

We have created impediments by putting hurdles by way of differential form of education. We have two standards of education systems at primary level, one Govt.-aided schools with little or no fee and other Private Schools with high fee structure-often out of reach of larger section of the society. Thus it is compulsion for choosing the school. This forces the students mainly from poor background to opt for Govt. Schools. With majority of guardians ill-educated, the quality of education imparted by these institutions is not monitored. This system creates a majority of future citizens as second-class one. 

It is therefore necessary that there should be uniform education for children at primary level. This will provide a level playing field for all till a particular standard. With children of elites going to the same school, the education standards will be monitored, which will help the entire society. This will also help children from different society mingle with each other.

At the secondary level, we may introduce the scholarship to meritorious students, with condition that wards of ministers, Grade I officers in Govt. do not enjoy them. Better educational levels to general public, specially in the rural sector will help migration of skilled workforce out of villages. This will also help their percapita income as there will be smaller population to share the same booty.

Better primary level education will also help the higher education institutions to attract better talent and lead to more professionals.

One of the major reason for poor healthcare infrastructure is shortage of enough qualified medical professionals including support staff like nurses and attendants.

If we do not do it, we are in for serious law and order problem forced by uneducated, unskilled and jobless youth.

 (Class X standard should be considered as primary as this is minimum standard, one is educated).

Self-Education and Private Tutions

It is common in India to have private tutions for many specialised courses. Several institutions like Akaash, FIITJEE, Narayana etc are coming up and growing fast and spreading their wings all over India. Though, one should not undermine the efforts of these institutes in skill up-gradation of students. The worrying factor is the costs involved and making education unaffordable for masses. Students coming from poor background are unable to join these institutions and are deprived of qualifying for professional courses in higher education. Moreover, they have also exposed the inefficiency of our school education. 

Apart from this, the more disturbing trend is providing private tutions to small children studying in early primary levels. This makes them busy too much and allow little space for play. Further, the child gets so tired that he or she is not capable of mingle with  his/her family members and have little knowledge outside the books. His/her self-learning capabilities are killed. Self-learning capabilities are important in higher education and specially in real life. 

Recent studies have observed that private tutions have highest concentration in West Bengal. But, when it comes to competitive exams, their performances is falling. Killing of self-learning capabilities is one of the main reason. 

It is high time, the elders in society should allow our little children to self-learn and enjoy their life.  

Board Exam at primary and middle level

We are experimenting a lot about the education system by liberalising it from shackles of exam and stress among children.

After much thought, it was decided to implement the pass-fail system in every class. This is must for children coming from deprived society, where guardians are not capable of monitoring the progress of their children due to their own limited knowledge.

But annual assessment by the school authorities have pitfalls in a highly class-divided education system in India. Guardians of children in most of the Govt. schools in India have poor educational background and are unable to monitor the progress of their children. Since annual assessment is to be done by the very teachers, who take classes and sometimes private tutions too, there is risk of masking the teaching failures. 

To avoid this, we must introduce the Board exams be held at primary level i.e. Class IV and Middle level i.e. Class VIII. This will monitor the education imparted in the schools in more efficient manner. This will also put pressure on schools and teachers to put extra effort for improvement of educational standards as the assessment has to be done by independent examiners.

Listing of PSU subsidiaries

After the advice of Chief Economic advisor Mr. Arvind Subramaniam, It is high time Coal India unlock its assets by listing its subsidiaries separately on bourses. This will give them separate identity and create competition for efficiency.

Not only this, PSUs should list their several joint ventures to raise resources. Apart from unlocking values, new entities will stretch their wings independently and give the country much needed push for growth.

Recent steps to list BSE and CDSL is the right course in this direction. These independent entities will allow the system to remove the shackles of politicians and bureaucrats over the economy.

The holding companies like Coal India, SAIL, NTPC do not allow their efficient units to grow larger. This ultimately reduces the overall growth.

Distribution of profits to shareholders

Recently the Board of Infosys has decided to distribute 70% of profits to its shareholders by way of dividends or buy-back.

This is a welcome move in the society, where most of the corporates does not part with the profits earned by them to its shareholders. They just do not want to part with the assets under their control. Many argue that there is need of further infusion of capital for expansion. But in real practice, we see cash spending on acquisition and/or diversification. More often than not, this diversification becomes die-worsification.

Profits earned belong to shareholders and they have the first right on it. There is adequate provision of raising funds by way of Rights to shareholders or even from the public. If there is requirement of funds for expansion, there are no dearth of options.

Further, adequate dividend distribution will lead to better distribution of cash with larger society. This will lead to improve the demand for goods and services. This will also reduce the accumulation of wealth in few hands.

Better distribution of income and wealth will improve the harmony in the society.

Govt. on its part should amend the companies Act to fix a minimum percentage of profits to be distributed to shareholders.

Business must contribute to the society to ensure its profits

A quote from Mahatma Gandhi says:

"While Business must make profits, it must contribute a part of it for the society which makes profit happen."

Though the quote is simple enough and idealistic, but it makes more economic sense in the words"society which makes profit happen". Most of our present day politicians fed by capitalists (one should not confuse it with free market economy, as free market economy ensures perfect competition and not monopoly or oligopoly) controlling the large corporates fail to understand the basic rule of economics i.e. "the marginal propensity to consume." 

This rule suggest that when income of a person changes, there is marginal increase in his spending too.  But his percentage of consumption changes according to his pent-up demand. Pent-up demand is a demand, which remain suppressed due to inadequate income. More the income-level of an individual is low, his pent-up demand is more and hence higher propensity to consume. 

Moreover, if law and order is unstable, income is also unstable. This instability lead to reduced consumption and more propensity to save.

This increased consumption lead to more demand for goods and services, which further leads to more capacity generation and ultimately more job creation. Better job creation also lead to improved law and order.

This is the underlying assertion of the quote, which means business must ensure that adequate money is left with the customers, who will buy goods and services produced by these very businesses.

The Businesses must spend on education of children from poor society, which will increase the skilled workforce required by them and increased income of this section will create the demands for goods and services. One-off feeding will not be able to achieve this.

The Corporate houses should also distribute adequate amount of dividends to its shareholders, as many of them are small shareholders and more cash in their hand by way of dividends will flow back to the market, resulting in increased demand for goods and services.

Leveraging equity

Equity in most of the MSMEs in India are simply held by the promoters. Debt is the only leverage of these entities for capital requirements. This makes it difficult for them to expand as high debt-equity ratio is deterrent to the health of the organisation, especially in difficult business conditions. Apart from this, it becomes difficult to find suitable person to whom baton has to be passed on after ageing promoters

With leveraged equity, the management can offer better debt-equity ratio to the lenders. The equity forms a permanent capital, which provides comfort to the lenders to repay the debt. Most of the large organisations and capital intensive industries have been set up by raising equity instead of raising debts. Recent example being Reliance.

If more businesses grow by leveraging equity, they can give competition to very few large enterprises in India. This provide depth to the market and ultimately benefit the society as a whole by more number of business enterprises to serve.

Some business houses specially the infrastructure companies of late took the debt-leverage route to grow quickly instead of equity-leverage. This has resulted in large amount of NPAs. The lenders preferred to provide debt instead of equity. This prevented them from intervening in the management, when things were not moving well. If lenders would have equity exposure too, they could have easily roped in fresh management team to protect their debt.

Marketing Indian Tourism-1

Tourism can be a big potential for creating jobs especially for low skilled workers. It can be divided into several segments. Lot of efforts are made to boost it occasionally.

Though we have been able to achieve mild growth rate in tourism industry, but no effort is made to identify its true potential. We never knew about our potential of BPO-KPO, IT, ITes industry just 20-25 years ago.  This is just when significant majority of Indians are not part of it.

Same can happen for the tourism industry as well, if it marketed effectively in the scale of its potential.

So far, we focus mainly on leisure tourism. In this case too, we play with the psychology of foreign tourists by having dual, i.e. higher tariffs for outsiders.

Let us look a small effort to analyse the potential:

Tourism can be divided into several streams, e.g. Education tourism, Medical tourism, Business tourism, Entertainment tourism, leisure tourism.

Education Tourism:

World over, people from underdeveloped economies, even from India go to developed economies for higher studies. Students tend to stay for a period of minimum two-three years for studies. They spend and consume. Hence, create market for goods helping trade and industry, which in return create jobs. Since they are involved in higher studies, they are also involved in research work strengthening the technical edge of these countries.

After independence, we invested in creating institutes like IIT, IIM and most of the foreign exchange in India today is earned by the students from these institutions by way of remittance by NRIs or Service Exports like Software, BPO-KPO activities.

We should not consider the expenditure in building such institutes as dead cost. It is the investment for future. There is tough competition for admission in these institutes. We are unable to create the supply to meet the demand at all levels of education.

Our youth has to go to other countries for studying medical. Why we should not spend more on building more medical colleges.

Cannot we create enough institutes of higher learning, which just do not fill the demand for domestic students, but also attract students from other countries.

Cannot our society think of reversing the trend of exporting students to foreign countries, creating more educational institutions for attracting foreigners for study? These students will not bring foreign exchange by way of tuition fee, but also paying for accommodation, buying consumables and services. This will increase the demand of goods and services in country, which in itself will create more jobs.

More to follow.

Higher Dividends can help develop equity culture

It is common for Corporate Houses to retain a major part of the Profits for future use. In most of the cases, there are no clear programs for utilisation of this cash. Profits earned by the company belong to shareholders and their permission must be sought, if it has to retained for future use. A clear cut program for future use of retained profits must be made to the shareholders. This will improve Corporate Governance.

It is good that Tata Sons Ltd., the principal shareholder of Tata group companies and now Infosys founders making a case for higher payout to shareholders. The regulatory bodies like SEBI, Stock Exchanges should involve themselves into the discussion to protect the interests of minority shareholders. The Companies Act should also be amended to protect the interest of shareholders in this respect.

The Tax on Dividend Distribution should be done away with, which is nothing but a double taxation. This causes immense difficulty for small companies, where shareholders are unable to use the profits of the company. The shareholders, who are also directors in most of the cases in these companies resort to questionable means to utilise the same.

The loss of this revenue will set off by increased economic activity in case of higher dividend payout in the hands of retail investors.

Ironically, the retail investors, which are part of middle class have little say in the present democratic system.

Republic Day

India became republic on 26th January 1950. We celebrate it every year with great pride and our Nation showcases tits military strength and cultural diversity. 

There is nothing wrong in proud to be great. Our Country is indeed great. It has dominated the world through ages. When the passage to India was blocked by acquiring Suez Canal, People like Vasco da Gama went on a voyage to find the alternate routes. Places like America, Cape of Good Hope were discovered during those journeys. Even today, Our people can be seen in important positions at NASA, Microsoft, Google, Pepsico.

But we must understand, what is republic or gantantra? Gantantra means power and governance of masses. The wall between the gana (the public) and the administration is broken. The gana elects and decides the rulers. That is republic or democracy, which means rule of the public, by the pubic and for the public.

But again, we see a huge trust deficit among the public and administration. To become true republic, we must break this trust deficit. The administration must allow individuals freedom enough to explore the best. It should be just facilitate and  not run businesses. It must concentrate on health, education and physical infrastructure. Let private individuals run and manage the resources. Give universities liberty enough to decide on courses of their choice. 

We do not see much research in India, because the common middle class has to first ensure his financial security before moving into uncharted category. We must learn to honor our intellectuals like Lord Dashrath, who sent his children to protect the yagnashala of Rishi Vishwamitra. 

The administration should not consider common man as a wrong-doer and should not use harsh words by threatening to take action now and then. It should not protect its tax administration from prosecution, penalty, if they are found to be guilty. 

Believe in masses. Remove fear from them. The trust deficit will go away. We can grow like never before and show the world a new economic order.

Jai Hind. Jai Bharat.