Wednesday, September 7, 2016

Thursday, September 1, 2016

Inspiring lives - Dr. Raghuram Rajan

In some ways, discussions surrounding Raghuram Rajan’s tenure as Reserve Bank of India governor are a product of our time. Never has there been a RBI governor whose ‘sex appeal’ was a topic for discussion, whose reappointment controversy was addressed as an Amul cartoon, and whose public image may have even veered towards becoming that of a ‘people’s’ governor.
But putting that aside, what did Rajan set out to do when he was appointed in 2013 and what does he leave behind?  The Wire breaks it down, examining the RBI governor’s stated and unstated achievements, the legitimate criticisms that he faced along the way, and what work remains to be done.
Three key decisions and achievements
In his farewell letter to RBI staffers, the central banker lists three key objectives that he set when he first assumed office: bringing down inflation through a new monetary framework, bolstering foreign exchange reserves and the transparent licensing of new universal and niche banks.
Inflation (Wholesale to Consumer Targeting)
Shortly before Rajan was appointed, the US Federal Reserve had hinted at the prospect of a tighter monetary policy, resulting in an outflow of money from emerging markets such as India. Not only was the rupee falling, causing inflation to rise, but Indians were also importing more gold as a result of rising inflation, putting even greater pressure on the exchange rate.
As Rajan puts it, India was deemed in the eyes of the global investor community as one of the “Fragile Five”. For the RBI governor, the way of achieving monetary stability was through “low and stable expectations of inflation”. The primary way he achieved this was by hiking interest rates, setting a medium inflation-term target, and changing the metric by which inflation should be viewed by the central bank. A committee that he set up early in his tenure recommended that the RBI move away from using the wholesale price index as an indicator of inflation (which was the norm) and instead adopt the consumer price index (CPI) as a metric through which the central bank should tackle inflation.
Unlike the wholesale price index, the CPI measures in the changes in prices of goods and services used by households; a more wholesome indicator. Over the course of Rajan’s inflation-targeting tenure, the CPI dropped from 9.52% in August, 2013 to 5.24% in April, 2016 – helped in no small measure also by a welcome drop in global commodity prices during the same period.
Foreign Exchange Reserves and Rupee
In September 2013, when Rajan assumed charge, he had two related issues. One, the rupee had weakened sharply against the dollar, hitting almost Rs. 69 to the dollar. Secondly, India’s currency reserves had hit a three-year low.
What the central banker essentially did at the time was offer discounted currency swaps to banks in order to spur inflows: specifically, a scheme was announced for FCNR (B) deposits raised by commercial banks that incentivised them to sell those deposits aggressively. These banks ended up raising a total of $34 billion in the three month swap window opened by the RBI in 2013, which helped shore up reserves as well helped protect the-then vulnerable rupee.
While the redemption of most of these deposits will happen in September, which has sparked some amount of concern, Rajan believes that the RBI has enough firepower to manage the deposit outflows.
In his three year tenure, foreign exchange reserves have risen from $249 billion in September 2013 to $359.76 billion as of April 1, 2016.
Bank licences
During Rajan’s tenure, two new banks (Bandhan Bank and IDFC Bank) became licensed. The more important issue, as the RBI governor notes in his departing letter, is not that new licenses were handed out (the process for which had actually started under his predecessor D. Subbaro’s tenure), but that the groundwork for an “on-tap bank licensing” mechanism was laid and licensing of “differentiated banking entities” was also allowed.
On-tap bank licensing, which excludes large conglomerates from applying, is important as India has always had a more ad-hoc, “start-and-stop” means of licensing new banks; as evidenced by the fact that while Rajan handed out 23 new licenses in his tenure, only 12 licenses had been issued in the previous 20 years.
The concept of differentiated banks, while not new, is equally important. While Rajan has referenced “wholesale” and “custodian” banks, the most popular form of differentiated bank for which licenses were handed out were payment banks which potentially could increase financial inclusion. Eleven licenses have been handed out so far, and while a few entities have returned their licenses, at least five of them will launch operations by mid-2017.
What he left unstated: Rich men, poor companies
Curiously enough, Rajan doesn’t highlight in his farewell letter what was perhaps the issue he came out very strongly on during interviews and public discussions: how large, corporate defaulters have been causing damage to the system without paying a price for it.
In interviews shortly after taking charge, he’s stated that “promoters do not have a divine right to stay in charge regardless of how badly they mismanaged their companies” and as many have noted, he strongly believes that there is need to bridge the trust deficit between India’s public sector banks and India Inc.
Over the last six months, the RBI conducted a first-of-its-kind asset quality review (AQR) that forced banks to classify poorly performing and visibly stressed assets as NPAs (non-performing assets). This exercise resulted in a GNPA (gross NPAs) jump of nearly Rs. 2,00,000 crore in just one quarter. At the end of the December 2015, quarter, total GNPAs stood at Rs. 4,00,000 crore and at the end of the AQR, total GNPAs stood just shy of Rs. 6,00,000 crore.
A key part of this AQR was the creation of a new class of “non-cooperative borrowers” besides the existing “wilful defaulters” which has gone a long way in stemming the rise of bad loans and plugging the loopholes exploited by corporates in the loan recovery process.
Much of the clean-up work, which also doesn’t fall solely on the RBI’s shoulders, still remains. Last week the RBI announced provisions that would allow public sector banks to convert at least half of these bad loans into “long-dated equity instruments”; these new “strategic debt restructuring rules” also allow banks to turn over the management of a company should the lenders need to.
Criticisms, and where he fell short
Rajan’s early focus and battle with inflation earned him nicknames ranging from ‘inflation warrior’ to inflation hawk. There are a number of points to consider here when viewing the criticisms against Rajan’s stance on inflation and interest rates. The most important one is that Rajan’s stance is not new; if anything, as a number of analysts have pointed out, he has more aggressively expanded on his predecessor’s attempt at using interest rates to curb inflation.
The arguments in favour of Rajan having erred, when it comes to interest rates and inflation, are three-fold.
First, the central idea that the high inflation in the Indian economy was due to excess domestic demand is flawed. As a handful of commentators have pointed out, this inflation can be more attributed to global excess demand and thus raising interest rates was flawed. If this is true, Rajan’s restrictive monetary policy has been completely off the mark.
Second, even if Rajan’s initial stance of keeping inflation as the RBI’s number one goal was correct, he may have been too late in recognising when this goal was achieved and therefore late in eventually cutting interest rates. In September 2015, Rajan and chief economic adviser Arvind Subramanian (who were both colleagues once at the IMF) issued apparently contradictory public statements. Rajan at the time was still hesitant to cut interest rates even though retail inflation had fallen to 3.8%. Subramanian, on the other, worried that “in terms of the prices measured by national income accounts, we are closer to deflation territory.”
The problem of different perspectives here – whether India was undergoing disinflation or deflation – stemmed from the RBI’s decision to look at retail inflation (CPI) while deciding its monetary policy. So while the the wholesale price index sat at negative 4% at that point of time, CPI was still at 3.8%.
The last argument for Rajan having tripped up was that even after he started his rate cut cycle, he didn’t do enough to help the money markets that were gasping for liquidity; a crucial side-effect of this was that a free transmission of rate cuts did not happen. It was only in his last year, and more specifically in the last five months, that the RBI governor set out to make more cash available in the banking system. Some measures included assuring sufficient liquidity as well as reductions in the daily cash reserve ratio maintenance.
Out of these three arguments, there is greater evidence and support for the last two. In some ways it’s a pity that criticism levied against Rajan comes from parties that had a vested interest in his policies: politicians, India Inc lobby groups, debt-laden promoters and wilful defaulters.
Speaking out
Moving aside from economic and monetary policy issues, one perhaps unfair criticism levied against Rajan is that many of his speeches addressed issues that have traditionally been outside the remit or jurisdiction of what a central bank governor is supposed to speak on publicly. In late 2015, for instance, the RBI governor gave a speech at IIT Delhi on how tolerance and “the tradition of debate and openness” had helped India form a foundation for its current and future success; this was a more than apparent reference to the intolerance debate in the mainstream media at the time.
On other occasions, Rajan also criticised some of the government’s flagship economic programmes such as Make-in-India by stating that an “incentive-driven, export-led growth or import substitution strategy” would not work and that ‘Make-for-India” seemed like a more viable course of action.
More recently, the RBI governor’s “one-eyed man” comment on how India shouldn’t be satisfied with its position in the current, depressed global economic order, seemed directly aimed at the self-congratulatory statements of Modi’s ministers.
India’s bureaucrats and institutional leaders have had a tradition of sticking firmly within their occupational ambits and if one adopts this perspective, Rajan may seem an outlier. But to put this forward as a valid form of criticism, and even suggest that this is why Rajan should have not been granted an extension, is to shun openness, self-criticism and a willingness to look within.
What next?
In his farewell letter, Rajan express a tinge of disappointment that he will not be able to see through two important developments: the formation of a monetary policy committee that may eventually reduce the role of the RBI governor, and the asset quality review of public-sector banks.
Apart from these two issues, however, what has received less media attention was Rajan’s aim of overhauling the RBI’s administrative structure, including hiring talented external employees as well as improving the quality of institutional research. Multiple reports have detailed how some of his efforts have met with resistance, including cross-central bank research stints. By February 2016, the RBI governor had succeeding in hiring only one permanent external employee.
The next RBI governor’s job will be to see these tasks through. Who will be a likely candidate? Media speculation has identified a number of names, with potential candidates being everybody from from Subramanian (the current CEA) to State Bank of India head Arundhati Bhattacharya, National Stock Exchange Chairman Ashok Chawla. What can’t be ruled out is the government choosing an internal candidate with Urjit Patel (current deputy governor at the RBI) and Rakesh Mohan, Subir Gokarn and Usha Thorat – all past deputy RBI governors – also currently in the mix. If Thorat or Bhattacharya is chosen, Modi would have given India it’s first woman RBI governor.
In the run up to Rajan’s departure  announcement, there had been two camps of thought as to what would happen if Rajan were to leave under less-than-appealing circumstances – ‘REXIT’ as it has been dubbed on Twitter.
The first, in which there were far fewer people, believed that if Rajan were asked to leave, there would be a mass exodus of foreign portfolio investment. The rationale here is that Rajan brought with him a sense of global credibility and a reputation of being a tough and independent RBI governor. Denying him a second term would be a blow to India’s credibility. “If he exits, so will tens of billions of dollars,” writes Swaminathan Aiyar, a popular economic analyst.
The second camp, however, believed that the impact of Rajan’s exit/ouster would likely be much less. An important argument here is that Rajan did his job as any other RBI governor would, much like the way his predecessors handled the post-Lehman crisis (Subbarao), the late 1990s Asian meltdown (Bimal Jalan), and even the domestic Harshad Mehta Scam (S. Venkitaramanan).  Furthermore, an important point here is that the RBI is staffed by excellent personnel and will continue to ably assist Rajan’s predecessor and carry on as they have before.
While there is no dearth of talent within and outside the central bank, the key question is how much freedom will the post-Raghuram Rajan RBI enjoy to function independently and take decisions that the government and the ruling Bharatiya Janata party may find unpalatable.
As the markets open on Monday, the next week will tell us which camp is right. Nevertheless, it is perhaps a little unsettling that India’s most publicly discussed RBI governor will be the first in a little over 20 years not to receive an extension.


Inspiring Lives - Razia Sulatan

A young girl from Meerut, Uttar Pradesh, who has been tackling the problem of child labour has been conferred with the first United Nations Malala Award for spreading education among child labourers.

On learning this news, there was excitement and ecstasy in and around the residence of Razia Sultan. Sultan, 15, will be felicitated as United Nations Special Envoy for Global Education's Youth Courage Award for Education.

July 12 has been heralded as Malala Day, to remember the contributions of Pakistan's Malala Yousafzai, who was shot at by the Taliban for voicing her opinions against the latter's ban on girls attending schools in the Swat Valley.

Razia is a resident of Nanglakhumba village in Meerut District. She used to stitch footballs in her village like several other girls, when she was four.

After being rescued by a non-governmental organisation, she joined a school and eventually became a youth leader in her native place. In her new role, she encouraged other children in her village to join schools.

Interacting with media, Razia said she has transformed the lives of 48 children trapped in child labour.

"Being a leader of the children in my village, I tried to solve the problems of the schools and the children. I admitted 48 students, who were earlier working as labourers, to schools," said Razia Sultan.

Though ignorant about the importance of the award, Razia's father, Ferman, was overwhelmed with the honour bestowed on his daughter.

"We didn't even know that this award (Malala award by UN) is of great importance. Now, we are feeling very proud of her. I cannot express my happiness in words," said Ferman, father of Razia Sultan.

More than 12 million children in India below the age of 14 are working as domestic servants or other jobs such as in stone quarries, embroidery units, mining, carpet-weaving, tea stalls, restaurants and hotels, according to government data.

Razia's struggle against child labour and illiteracy was not just confined to her own place.

She went to different regions as a youth leader of a NGO and carried out door-to-door campaigns on child education.

Commenting on this occasion, the district co-ordinator of the NGO, Sher Khan, recalled how she fought against illiteracy with great zeal.

"Razia went to Nepal and various other places as well. She conducted a door to door campaign to spread awareness about education among children and their parents and encouraged them to get admitted to schools," said Sher Khan.

Meanwhile, students of a school in Ajmer, Rajasthan observed Malala Day and hailed Razia Sultan's recognition.

They celebrated Malala's birth anniversary by cutting a birthday cake.

Rajesh Talwar, a student said that Malala was a source of inspiration for all.

"We celebrated Malala birthday today. We observed the birthday of Malala Yosufzai by cutting cake. We will remember her forever. We feel inspired by her life," said Talwar.

In the days following her being shot at, Malala Yousufzai became an international icon and world leaders pledged to support her campaign for girls'' education.

On her part, Malala Yousafzai celebrated her 16th birthday on Friday at the United Nations by making an appeal for compulsory free schooling for all children. 

Courtesy:  INDIA TODAY

Inspiring Lives - Malvika Joshi

The story of Mumbai’s Malvika Raj Joshi, who shown that “merit” has more weightage than “marks”, is about self-belief and a mother’s conviction to break stereotypes.
Seventeen-year-old Malvika doesn’t have a Class 10 or 12 certificate but has made it to the prestigious Massachusetts Institute of Technology (MIT), thanks to her computer programming talent.
She has got a scholarship from MIT and she is pursuing a bachelor of science degree after getting a seat for being a three-time medal winner (two silver and a bronze) at International Olympiad of Informatics or commonly known as Programming Olympiad.
The MIT accepts students who are medal winners at various Olympiads (maths, physics or computer) and it was Malvika’s medals that ensured that she could fulfil her aspirations of pursuing research work in her favourite subject - computer science.
“When I started unschooling, that was 4 years back, I explored many different subjects. Programming was one of them. I found programming interesting and I used to give more time to it than to other subjects, so, I started liking it at that time,” she says in an email interaction from Boston.
Malvika found it difficult to get admission in elite Indian institutes like the Indian Indian Institute of Technology (IIT), where one needs to clear the Class 12 board exams.
The only institute that allowed her to enroll was Chennai Mathematical Institute (CMI) where she got into an MSc level course as her knowledge was on par with BSc standard.
“There is absolutely no question that Malvika’s admission to MIT is based on her superlative achievements at IOI. It is a credit to MIT’s flexibility that they can offer admission to a student who demonstrates excellent intellectual potential despite having no formal high school credentials,” CMI’s Madhavan Mukund says.
Madhavan, who is also national coordinator of Indian Computing Olympiad, made it clear that Malvika is not a product of the system but despite it.
“This is possible only for a student whose academic achievements are outstanding, which is the case with Malvika’s performance at IOI,” he says.
Malvika’s fascinating story started four years ago when her mother Supriya took an unbelievably tough decision. She was in Class 7 at Dadar Parsee Youth Assembly School in Mumbai and doing exceedingly well in academics when her mother decided to pull her out of school. She has a younger daughter, Radha.
“We are a middle-class family. Malvika was doing well in school but somehow I felt that my children need to be happy. Happiness is more important than conventional knowledge,” Supriya told PTI.
“I was working with an NGO that takes care of cancer patients. I would see students who are in 8th or 9th standard being affected by cancer. It affected me deeply and I decided that my daughters need to be happy.”
The decision no way was an easy one. “In India, people are still not very aware of the term “homeschooled” or “unschooled” as it is commonly referred.”
It also took some time to convince Malvika’s father, an engineer who runs his own business.
“My husband Raj wasn’t convinced initially as it was a risky proposition. The kids won’t have a 10th or 12th standard certificate and there was bound to be fear. I quit my NGO job and designed an academic curriculum for Malvika. I created a simulation (classroom like situation) at home. The confidence I had as a mother was that I am capable of imparting knowledge to my daughter.”
But it worked.
“Suddenly I saw that my daughter was so happy. She was learning more than ever - from the time she woke up to the time she was off to sleep. Knowledge became a passion,” the proud mother recalls.
For three consecutive years, she was among the top four students who represented India at the Programming Olympiad. Madhavan, who prepared Malvika for all three Olympiads, spoke about her brilliance.
“During the past three years, she spent extensive periods at CMI acquiring the background in mathematics and algorithm that she needed to excel at Informatics Olympiad. As part of this training for IOI, she had to fill in unexpected gaps in her education arising from the fact that she had not been formally enrolled in school,” he said.
“For instance, she had never studied matrices. She was never intimidated even when faced with a mountain of things to learn and went about achieving her goals very methodically.”
When Supriya was asked if more parents want to know about her daughter, she says, “They are all interested in knowing how to get into MIT. I just tell them that we never aimed for her admission in MIT. I tell parents to understand what their children like.”


Sunday, August 21, 2016

Welcome speech at Sadbhavana divas celebration

Welcome speech at Sadbhavana diwas celebration 2016

Tuesday, August 9, 2016

Thursday, June 16, 2016

My Princesses and little Prince

AVNI    R.  GADHA                       DWITHI R.   KRISHNA                                BHARATH   R.  HARIHAR                             

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