Month: December 2003

The HRD Madness about Management Schools

For India to emerge from being an impoverished country, some degree of sanity in policy makers must be an absolute precondition. The situation is so bad that one cannot read a paper without being hit in the gut with yet another insane policy being proposed. Take the matter of the Indian Institutes of Management (IIM) and what the Ministry of Human Resource Development (HRD) is proposing.
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Fundamental Change

Francois Gautier is one of my favorite journalists. In rediff.com he asks why the Indian government considers foreigners as cows to be milked. Blatant discrimination against foreign visitors cannot go unnoticed and cannot but have an effect on the volume of foreign tourism.

Who are these bureaucrats that make such brain-dead decisions? How can we bring about a change in their thinking? How can we persuade these cretins about the need to be somewhat intelligent in their policy making? Is there any hope for India if we continue to make idiotic policy choices at every level of our economy?
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The CAT and Transaction Costs

It is important to remind ourselves from time to time what poverty is all about. Poverty has something to do with production. Not exactly the most esoteric bit of knowledge but often it gets forgotten in the shuffle. To produce you need to have what we call factors of production which are usually broadly classified into land, labor, and capital.
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The Rise of India

BusinessWeek online in its Dec 8th 2003 cover story The Rise of India says “Growth is only just starting, but the country’s brainpower is already reshaping Corporate America.” It is worth the read. Here is an excerpt:

If India can turn into a fast-growth economy, it will be the first developing nation that used its brainpower, not natural resources or the raw muscle of factory labor, as the catalyst. And this huge country desperately needs China-style growth. For all its R&D labs, India remains visibly Third World. IT service exports employ less than 1% of the workforce. Per-capita income is just $460, and 300 million Indians subsist on $1 a day or less. Lethargic courts can take 20 years to resolve contract disputes. And what pass for highways in Bombay are choked, crumbling roads lined with slums, garbage heaps, and homeless migrants sleeping on bare pavement. More than a third of India’s 1 billion citizens are illiterate, and just 60% of homes have electricity. Most bureaucracies are bloated, corrupt, and dysfunctional. The government’s 10% budget deficit is alarming. Tensions between Hindus and Muslims always seem poised to explode, and the risk of war with nuclear-armed Pakistan is ever-present.

I am glad that the article does not paper over the real problems. It goes on to report the confidence among some Indians.

Now, many talented Indians feel a sense of optimism India hasn’t experienced in decades. “IT is driving India’s boom, and we in the younger generation can really deliver the country from poverty,” says Rhythm Tyagi, 22, a master’s degree student at the new Indian Institute of Information Technology in Bangalore. The campus is completely wired for Wi-Fi and boasts classrooms with videoconferencing to beam sessions to 300 other colleges.

Boom, like beauty, evidently lies in the eye of the beholder. I like enthusiasm as much as the next guy. But let’s not get carried away by IT. It is not driving India’s boom because there is no boom to begin with. India’s economy is growing at a modest pace. Calling it a boom is silly. And it is worse than silly to believe that IT can deliver the country from poverty — it is dangerous.

Thinking that IT is the answer to India’s development is dangerous because it could divert limited resources into wasteful activities. Every now and then one hears of another large sum being allocated for e-this or e-that. Recently I was at a roundtable on e-governance. Speakers held forth on how e-governance would help. I could not for the life of me figure out what is the point in moving from bad-governance to e-bad-governance. I thought that the move should be from bad-governance to good-governance. But that was the minority view there because the consensus was that everything was as it should be and all that was needed to gild the lily was a bit of IT.