Reorientation of subsidies

Not just ease of doing business, the operational cost of doing business is also one of the important factor in low GDP growth. Almost everyone complain that farmers get much lower price than paid by the consumer. Have we examined the high transportation cost due to high taxes on commercial vehicles apart from road taxes and above all the tolls paid by the transporters. We failto recognise that all go into the cost paid by consumer. Apart from toll charges, these toll plaza take too much time for reaching the destination. Consider the number of tolls between Mumbai and Kolkata. Can we calculate the total time consumed. If we add the cost of driver and attendant for stranded time to the toll charges collected, it will be considerable one. If we add the cost of interest for this stranded period, it will go up further. All this goes on the price of the final product.

Time to deliberate on this. If income of farmers go up, it will create market for more products leading to creation of more jobs.

Time to deliberate on reorientation of subsidies. Removal of toll plazas can reduce the need of subsidy elsewhere.

Crowd Funding to improve educational infrastructure

Crowd Funding to improve educational infrastructure

While no one will disagree that India badly needs to build & improve its educational infrastructure by leaps and bounds. We have shortage of Doctors, medical attendants, nurses, translators much needed for tourist industry, teachers, researchers etc. We need large number of institutes of higher learning to stop our children going abroad for higher studies. Apart from foreign exchange outgo, we loose precious jobs in tourism, transport, realty etc., if we build enough infrastructure for reversing the trend, i.e. creating an atmosphere, where students from abroad come to India for higher studies. This need huge investment. Neither the Govt. nor the Private Sector is unable to meet the demand.

There is huge shortage of seats in Govt. colleges and fee structure for private ones are beyond the reach of many Indian households.

Not long ago, we had schools, colleges funded by rich individuals as plain philanthropy and without any aim to earn profits from it. Even Banaras Hindu University, the famous BHU was built by donations from public.

Ironically, over the period, we left all this job to Government. When there is shortage of capacity, some people entered into commercial exploitation of this opportunity.

It is high time, we need to spread word in public for donating to build a school, college or hospital. Most people argue that it is impossible to organize a huge fund to start an educational institution. But don't we have community pujas running in crores. There is just need of change in mindset. 

We can even begin with organizing funds for library or visiting nearby educational institutions for need of the improvement in their infrastructure. Large number of medical seats are refused in Govt. Colleges for want of necessary infrastructure. We can chip in there too.

Where there is a will, there is a way. Just we need willingness on our part.

Lessons to be learnt from Kerala Floods

It is worst of the floods in the century. We all should provide whole-hearted support to people of Kerala at this juncture without wasting any time. But we also analyse the reasons of such disasters. We have a habit of forgetting easily and keep the problems to mound, once life is normal.

The situation has worsened after massive release of waters from the dam. It is high time, we start thinking about the efficacy of dams itself. We have learnt that dams are constructed to regulate the flow of river, keeping the excess water during rains in reservoirs and utilising the reserved water during lean season. If the recent history of floods across the country is analysed that dams generally release water during excessive rains. This only aggravates the crisis. Why does the dams have inadequate storing capacity? Do they really provide water during drought?

It is high time, a team of independent technical personnel drawn from various institutes like IISc, IIT, IIM is entrusted the task of efficacy of these dams.

Meanwhile, massive desilting operations be taken up increase the water holding capacity of these reservoirs. Following suggestions coming from several experts in this area may also be considered:

• Massive afforestation in hills and banks of river. Large trees can absorb significant part of rainfall and release it through roots improving the ground water.
• Building small ponds surrounded by trees in upstream of the river to conserve rainwater.
• Building small water-bodies in the hinterland. This will help in keeping temperatures cool in summer season apart from preserving the rainwater.
• Plantation of trees on roadside and banks of water-bodies will help prevent landslide.
• Maintenance of proper sewerage, specially in hilly regions to help easy pass through for water to flow down instead of breaking the road.

These are only suggestions and experts should provide the opinion. We must be open to all the ideas coming various quarters instead of following just the time-tested one. We must realise that silt of stagnant water in reservoirs built near dams tend to settle down, which reduces the depth of the reservoirs. Further, the dust in the wind also settle down on the wet bed of the river downstream as there is little flow during the lean season. The effect on the carrying capacity of rivers and reservoirs due to dams must be considered by the experts. Hence the suggestion for independent experts away from the administration.

Why NGO for education?

There is a general talk from various quarters is the need of NGO for education purposes, when basic education is free after enactment of Right to Education Act and provision of mid-day meals in schools. The answer can be derived from a single question, Why middle class and upper class is not sending their children to schools, where education is free and mid-day meals provided?

Plain-speak, they are not doing any charity or doing favor to anybody, but are wary of quality of education provided in these free schools. Even those responsible for running these schools do not send their children to these schools. 

This dual education system is biggest hindrance to take benefit of the great demographic advantage, we are enjoying now. We are nowhere near the growth rates of China for more than a decade, when they are best placed in way of demographic advantage. Demographic advantage is higher population in the bracket of 18-60 compared to those who are dependent on them like senior citizens and children.

Due to dual education system, majority of children of better placed middle class and upper class qualify for higher education. This is due to different quality of education imparted to separate sets of children.

This has prompted Govt. to withdraw or reduce subsidies to premier institutes like IITs and IIMs as children from mainly elite society (or those who can afford) quality for these institutions. Though there is loan facilities available, but it will be difficult for anybody from low income group to get it.

One of the arguments moving around in social circles is that the IITians  contribute little for India as good number of them settle abroad and strengthen the economy of those countries after getting subsidy from common tax payer.

The answer to these arguments is large software exports, which would not have been possible, if Indians had not proven their worth on foreign soil. These software not only bring major foreign exchange to the country, but provide employment to large number of youths with good remuneration.

Some figures collected from RBI Report on balance of payments for consumption of readers:

Period:                                      Oct-Dec 2017

Current Account Deficit:         $ 13b

Merchandise Deficit:               $ 44b

Services Surplus:                     $ 30b

Services Surplus is made up of $18b software exports and $16b remittances from private sources. There is deficit of $3b from investment income. This is more due to building up of reserves from capital flows.

This is tip of the iceberg. We can repeat the story of software in medical and education sectors. Our healthcare sector has shortage of qualified doctors, qualified medical attendants, qualified nurses. It is real irony that when there is battery of large unemployed youth ready for agitation on any issue, we have to hire nurses from countries like Thailand. This is due to lack of nursing institutes and high tuition fee in most of such colleges.

NGO for education is needed to provide children studying in Govt. Schools the right atmosphere to qualify themselves for higher studies.

NGO for education can impart information on various courses available for career enhancements apart educating them of need to use technology and digital platforms to enhance their capabilities. It can also help in building entrepreneurship.

NGO for education can also build necessary infrastructure in higher education institutes, which provide low cost education to improve their intake.

NGO for education can help the country in various ways to earn more foreign exchange. Above all, we need better neighborhood.

Demographic Advantage-Dividend or Curse?-Part3

Rising restlessness among youths and large scale demonstrations, at times violent is the result of pent-up anger among the masses, specially jobless youths.

Continuing with my earlier posts, we can build on our youths by providing them with adequate skill sets. We as a country have huge tourism potential in our beaches, valleys, coastal beauty and not to speak of wildlife sanctuaries. But a small country like Thailand or Malaysia attracts larger tourists than us. Recently, Malaysia has complained of non-promotion of in-bound tourism. There are more visitors from India to Malaysia than Malaysia to India. 

This is a real shame on us. Once again, the education comes into focus. Low educational levels of our citizens force them to concentrate on few areas and not explore newer ventures. Hospitality sector is simply need a dramatic change. Other than few upper range hotel chains, it is sorry state of affairs. Most of the budget hotels, that too in tier-II cities are set up by moneyed people just as a real estate. They have little knowledge of hospitality needs of visitors.  There are hardly any tourist guides available in these hotels. Even the train and air ticket booking facility is a luxury.

The situation in tier-III towns is still worst, where a proper staying and food of your choice is difficult to get.

We must educate our people about the needs of tourism industry apart from marketing it. This has huge potential for providing employment to both skilled and unskilled youths.

Demographic Advantage-Dividend or Curse?-Part-2

Though a large number of Engineering Colleges and Management Institutes have come up all over India, there are dearth of institutions for medical profession, both at professional level and support staff like nursing and hospital attendants. This is apart from very high fee for some private medical colleges, which make them out of bounds of common middle class. Moreover, there is not enough post-graduate seats available for general stream science students leading to shortage of teachers in colleges.

We often complain of inadequate health services infrastructure in the country. Can we improve it in absence of adequate number of healthcare professionals? We need to immediately address it. Investment in building quality health services infrastructure with the help of adequate number of healthcare professional will strengthen our position in research and earn precious foreign exchange by treating large number of foreign nationals. If our engineers can earn foreign exchange by exporting software services, our medical professionals can also earn equal amount of foreign exchange by way of providing services to foreign nationals at affordable rates.

Similarly, the increased post-graduate seats in general stream science courses will lead to strengthen our education system allowing our colleges to admit foreign students apart from curbing our students going abroad. We can become foreign exchange earner for providing educational services too.

The collateral benefit of health services and educational services exports is increase in incoming tourism flow, which again will give boost to hotels, airlines, transport services etc.

Thus spending on education in the fields of healthcare and general science stream can improve our foreign exchange inflows apart from giving employment to large number of Indian youths, which in turn increase the consumption levels leading to higher requirement of goods and services leading to further growth in jobs for youth.

Higher job creation  and higher income levels combined with higher consumption levels will lead to increased tax collections and need of lower subsidy requirements. This will automatically improve the fiscal position of Governments both at Centre and State level.

It is high time that Governments both at Centre and State level along-with responsible citizens awaken to make our country much better than what we are today by treating the expenditure on promoting healthcare and general stream educational infrastructure as a capital one instead of a revenue one, for its enduring nature of long-term benefits.

Contd.

Demographic dividend or curse?

India is facing a huge demographic advantage, which is likely to continue for another 10-15 years.

Demographic advantage means that percentage of working/workable hands is highest in the world. China too enjoyed this and utilised to grow in double digits for more than a decade making itself a big economic powerhouse. India can repeat the same, but we are happy to have a growth well below double digits.

Apart from this, our vast percentage of children is uneducated or undereducated. Even a large number of youths are unemployable. If we have large youth population remaining unproductive and unemployed, this will put immense pressure on existing resources, leading to chaos and deterioration in law and order.

Despite this, we have one of lowest per-capita expenditure on education in the world. Higher education is being increasingly left in private hands and slowly moving out of reach for major part of the population. Higher education is important to produce Doctors, Engineers, Scientists and even Teachers. Besides this, it improves the earning capability of individuals. Increased incomes help in increased spending, increased demand and further increased jobs. Doctors, Engineers, Scientists, Researchers and Teachers have capacity to earn foreign exchange. This fact is corroborated by the large foreign exchange contribution by repatriates and software exports. It can be easily examined by the Forex inflows and outflows every year. Most of our trade deficit is being met by surplus in services. This is the case, when we have low percentage of population qualifying as Doctors and Engineers. If the base is increased, we will see further increase in this surplus from services, which is likely to meet entire deficit and may even lead us to current account surplus.

As most of the engineers produced are absorbed by the outsourcing industry, we are not getting good number of researchers leading to large amount spent on technology imports, which also lead to economic disadvantage for local industry, who are unable to compete worldwide. Technology imports, mostly done by the Indian industrialists, who are mainly financiers than actual entrepreneurs have disadvantages. They come at a cost raising the project cost and procuring second-rate technology, as no commercial enterprise will provide technology to create its competitor. Despite huge income tax break on R&D (this should again be linked with Intellectual property rights to avoid misuse), there is very small expenditure on it by Indian Corporates. If IP Assets are taken into account, our big corporates including Reliance and Tata will fall apart. This is the reason for huge trade deficit faced by the country.

Continued……..