Saturday, May 27, 2006

Three cheers to the flatter world

Not long ago, I had a huge debate with one of my friends about the advantages and disadvantages of our country increasingly being dependant on one sector - IT/ITES. Almost all of the good Engineering college passout land up in IT, and other conventional fields such as mechanical engineering, civil engineering are left with very little people.

Our main point of contention was whether this phenomenon would stay for long term - beyond 2015 and 2020. We had different views but one point we both agreed was that most of the growth that we seeing now has been fueled directly or indirectly by the IT sector. Of course, some of the other sectors - auto parts etc are doing equally good, but a lot of other sectors like retail, auto etc get directly benefited out of the boom in IT sector. The numero-uno factor for so many multinational and other companies flooding India is the cost advantage. These days, nobody is surprised when Infosys or Wipro or TCS or even IBM says they are going to recruit thousands and thousands of people in the coming years. But with the salaries rising year after year, how long would this cost advantage last?

If Thomas Friedman is to be believed, the world is completely flat, and work – he means, any type of work - can be done anywhere and sent anywhere. [Which is the essence of his famous book 'World is flat'] If that were the case, what would happen say after 2020 when Indian salaries are almost on par with Western scales? [Salaries would increase because of two reasons - Wage inflation that we are seeing year after year, and people becoming more and more experienced, which means cost of employing them would be more] Would we have acquired enough knowledge so as to force the world to be dependant on us? Or would the ‘flatness’ of the world mean that jobs would go elsewhere? Would some other country produce a good number of talented people at low cost forcing further movement?

Nobody really has answers to these questions, but the off-shoring trend looks very real for the next 10-15 years. Companies are investing millions and millions of dollars, which indirectly forms an insulation layer that would prevent them from moving out easily. But, of course, this type of insulation wouldn't last in the long term. Simply coz the world is flat.

On a similar note - very, very interestingly, a Silicon services article says that India's offshore advantage is to last for 30 years.

India will maintain its low-cost IT skills advantage in the offshore outsourcing market for at least another 30 years, according to a new study.

The labour arbitrage advantage India has over the UK will last for at least another 30 years, while India will also retain its low-cost wage advantage over the US for at least another 18 years, according to the report.

A separate study out this week also found that more than three-quarters of research and development facilities opened by western companies over the next three years will be located in China and India.

That's like a lifetime. Does that mean we could party now? I'm not sure, but three-cheers to the flat world in the mean time.

Friday, May 26, 2006

The futile fight...

There's been a whole lot of debate on reservations, but everything seems absolutely pointless. I wonder if we are still living in a democracy. I mean, politicians don't really do anything worthwhile and once in a while come down to wreak havoc on innumerable souls. I couldn't skip the letter sent by the member of Knowledge Commission who resigned recently over the Government's move.

Here are some really insightful excerpts that speak a thousand words:
But the government's recent decision to extend quotas for OBCs in central institutions, the palliative measures the government is contemplating to defuse the resulting agitation, and the process employed to arrive at these measures are steps in the wrong direction. They violate four cardinal principles that institutions in a knowledge based society will have to follow: they are not based on assessment of effectiveness, they are incompatible with the freedom and diversity of institutions, they more thoroughly politicise the education process, and they inject an insidious poison that will harm the nation's long-term interest.
How very true.
For one thing, the historical claims of the Scheduled Castes and Scheduled Tribes and the nature of the deprivations they face are qualitatively of a different order than those faced by Other Backward Castes, at least in North India. It is plainly disingenuous to lump them together in the same narrative of social injustice and assume that the same instruments should apply to both.
If only those politicians realize this!
As an academic I find it to be an appalling spectacle when a group of ministers is empowered to come up with admissions policies, seat formulas for institutions across the country. While institutions have responsibilities and are accountable to society, how will they ever achieve excellence and autonomy if basic decisions like who they should teach, what they should teach, how much they should charge are uniformly mandated by government diktat?
Nail on the head!
It is often said that caste is a reality in India. I could not agree more. But your government is in the process of making caste the only reality in India.

What more?

1) Once implemented, reservations would be a bane for eternity.
2) Looking deeper and deeper, I think its more of systematically alienating the upper caste communities than of empowering lower caste people.

I guess its one of those times when you really believe in something and you just have to witness something else unravel. Patriotism, in India, is not something people feel everyday, except may be during cricket matches. Decisions like these certainly don't help the cause.

Monday, May 22, 2006

Mumbai, migration and population

One issue that’s getting continuous attention in Mumbai – apart from reservations – is its crumbling infrastructure and the need to build better and better systems to cope up with it. One of the main causes for all the infrastructure and population problems in Mumbai, and for that matter Delhi, is migration. It’s not only migration from smaller places in Maharashtra but since the states around Maharashtra are poor, lots of people find livelihood in Mumbai. Of course, most of them end-up staying in shanties alongside roads and under bridges, but looking at the population growth in Mumbai, one could safely conclude the conditions here in Mumbai, which is bad, is better than the states from which they migrate from. After reading the news clip yesterday that commented on how major roads can be widened, I was immediately reminded of another news clip about the population growth rate that I read some 3 days back. From "Population grows North"

At 0.96 per cent and 0.91 per cent Tamil Nadu and Kerala, for instance, have recorded population growth well below the national average of 1.6 per cent. In sharp contrast for the northern States such as Bihar, Rajasthan and Uttar Pradesh the rate was 2.2 per cent with Madhya Pradesh a shade better at 2.06 per cent.

This forebodes are far reaching problem. Even with the booming economy, the growth has been out of reach for a whole lot of people in the BIMARU states and hence hordes of them opt to migrate into richer cities. And the upper half of the country has few options – such as Delhi and Mumbai. With population growing in these states, the migration doesn’t seem to be stopping anywhere in the near future. Unless the conditions in these states improve, migration would continue. Net-net, I don’t think we’d be very better off with new flyovers and widened roads since there is always a good bunch of people who are waiting to get in.

The other front running cities in the country – Bangalore, Chennai, Hyderabad etc – are heavily insulated against this migration due to two reasons – distance from these states, and more importantly, language problems. With population saturating in these states and the limited problems of migration, I think the quality of the living would certainly get better and better in these cities – and we do see some glimpses right away. On the other hand, cities like Mumbai and Delhi have to accommodate the migrating population from neighboring states.

The only real long-term solution to Mumbai seems to be the overall, not regional, betterment of the country – including the states like Bihar, MP and UP. Before I close, I too realize how this post has become a 'economic analysis' kind of one. I certainly didn't plan to write it this way, but then, I guess that's what you end up doing if you really let your thoughts fly. Long live blogdom!

Friday, May 19, 2006

To Government: Please don't punish meritocracy

Pardon me for yet another post on reservations, but I felt this is one topic that deserves one more post. There have been a lot of discussions supporting reservations - some involving senior politicians - and the overwhelming point that seems to be brought up is that we need to given “them” a chance. It almost carries a sympathetic tone under it. But as I see it, the only thing reservations could possibly achieve is punishing meritocracy.

Of all things I read against reservations, this is the most shocking: the total number of forward caste students who get into medical colleges in TamilNadu is just around 20 every year (you read that damn right!) due to the presence of a 70% reserved quota and a 30% general quota which is open to all candidates. Most of the 30% ‘open category’ is again consumed by ‘reserved’ bunch of people leaving just around 20 seats. In effect, it means that you need to be among the top-20 students in the whole state to get a medical seat. Unless, of course, you come under the reserved category.

Let’s take other examples from TamilNadu (TN), the state that has traditionally had the maximum reservations in the country.

1. With all the loopholes and bribery in the system, the cost for getting a lower-caste certificate is around Rs. 2000 to Rs. 3000 bucks. As cheap and simple as that. I know because I’ve heard of people (remotely related to me) pay that much to get a “backward caste” certificate. This is possible in communities whose sub-sects are divided into forward and backward castes. So, how difficult is it going to be for a huge chunk of people to get ‘converted’? Can our inefficient system stop these conversions from continuing? I think the Government is getting into a huge mess (like these) by trying to bring in so-called equality in the form of reservations.

2. In typical engineering colleges, the cutoff marks for getting into good institutes differs between OCs (typically forward caste students), BCs, MBCs and SC/STs. And the cutoff difference between OC students and the rest is, approximately, in the range of 5 to 40 marks out of 300 (depending on whether you belong to BC or ST). What this means is that if you belong to BC category and get 250, it is equivalent to 255 marks. In other words, the quotas don’t provide a life that is otherwise absent, as being painted by the pro-reservation segment. It just enables the students to get a set in an institution that is ranked one step higher than what he would get without reservations. In simple terms, reservations don’t provide a chance-in-a-lifetime but just a small elevation. But the cost is big: You punish meritocracy.

3. Everybody knows institutes such as IITs and IIMs operate under the law of ‘input control’ – they take the best by tough processes and hence are regarded as the best. Nobody ever claims that these institutes “produce” best people. They just try to take in the best people. In such a case, is the Government then trying to make room for people who otherwise aren’t eligible to getting into institutes such as IITs and IIMs by hiding them along with other meritorious students? If no, would the Government be ok to disclose the ‘caste’ details of the candidates passing out of these institutions to the future employers? Are the reserved category people ok with it? What would be Government’s answer to a society that’s increasingly trying to identify itself based on caste? Isn’t it disastrous for the overall health of the country, at a time when every other country in the world is someway admiring India for grabbing the tech-wave with both the hands?

I don’t have answers to the questions I’ve raised, but I just can’t stop wondering how our so-called senior leaders are adept in plugging in short-term ill-planned solutions to long-term problems. It’s as classic as covering the potholes of all those innumerable broken Indian roads instead of making a one long-time investment and concretizing them.

Thursday, May 04, 2006

Stop caste-based reservations!

What's starting in the form of student revolts at some locations in the country is a clear indication of the things that are going to come - that of caste per se coming to the foreground of our society. Which is why I say: Stop reservations based on caste.

It's always been a mixed feeling for me until now. Being a guy who doesn't come under any reservation category, I've suffered. And seen people getting far less marks getting into a medical college even as I was refused entry despite being one of the district toppers et al in the medical entrance examination. It was painful. Totally. But then, life has probably been like this for years for people who are under-privileged, the ones who've been barred by 'us', and they certainly deserve to enjoy the fruits of democracy as much as we do.

Govt. certainly has to do something about those people. But not reservations based on caste. It just doesn't surve the purpose. As far as my experience goes, most of these reservations are used by city-bred students who have education similar to that of the other non-reservation class students. Not only that, they most likely have at least one of their parents working in Govt. institutions, and more often than not, their parents would've enjoyed reservations when they grew up. Providing reservations to these people is nothing but punishing meritocracy. And why on earth would someone be given reservations in PG courses after enjoying the same from schools to undergraduate courses? It beats me alright.

I don't really have a solution to this problem, but I know caste based reservations are not the way to go. And I think it is totally dumb to reserve seats in post graduation institutions and the ones like the IITs and IIMs. These institutions operate on the basis of input-control - they are regarded the best because they choose the best and not because they mold students into the best. Allowing non-merit based entry into these institutions is tantamount to cheating people who place trust on these institutions.

The other problem with caste-based reservations is there is a mighty good chance that students of people who got benifited decades back again get the same benefit, which is unacceptable by any stretch of imagination.

However, the biggest problem is the division it would cause in the society. It's not uncommon to see students forming groups based on caste inside colleges. It's sad but it happens even in RECs, IITs and the IIMs. The last thing we need is such segregations happening more explicitly and in large scale everywhere. It would be a precursor to a society that identifies itself primarily by caste. I'm not sure if anybody wants it.

To sum up:

1) Stop caste-based reservations in post graduation courses and IITs/IIMs.
2) Govt. should not provide reservations to students whose parents got benefited through an earlier generation of reservations.
3) I don't think reservations based on economic status is impossible. It may not be feasible in the near future, but it is something that can truly be aspired for in the long term (10-20 years?), instead of plugging in an ill-planned so-called solution in the name of reservtions based on caste.