MICRO FINANCE AND FINANCIAL INCLUSION

Common knowledge suggests that these are bad days to be a Micro Finance Institution in India. What common knowledge does not suggest is that yet again these bad days have been set in through bad planning and regulation. From interest rates to costs of operation, from multiple lending to multiple borrowing, from JLG to BC/BF model, everything seems to be under scanner. Figures from NABARD suggest that total lending in the last 4 years through the SHG-Bank Linkage model has been more than twice of what has been disbursed by the MFIs. And hence it is bewildering to notice how the whole blame has been shifted on to the MFIs just because a MFI went public and listed itself on a stock market. In the period of 2007-2010 the no. of SHGs linked with credit increased at the rate of 18%, while per SHG loan outstanding increased at the rate of 32%, raising serious doubts over the financing of the repayment. The whole financial inclusion drive with micro finance as the engine has taken a beating due to proliferation of funds as consumption loans rather than production or livelihood loans.

Broadly, the problems may be categorized as demand side and supply side problems. And both these problems arise because the whole cycle of credit delivery and repayment is not completed. Looking at demand side problems, when the credit is not utilized for creating assets and increasing productivity, and is rather used for consumption, the repayment becomes a problem. So it becomes important for all the credit delivery institutions to propagate capacity building and ensure better marketability of their produce. Also the poor need saving facilities and a better way of managing money. Restriction on the MFIs to open savings accounts for their customers only exacerbates the problem in hand. Farmers need loans on which repayment can be made every 6 months. So a system that requires weekly payments will fail.

Supply side problems cover issues such as technology, financial literacy, product innovation and policy revamp. Technology can be a big enabler in filling the gaps where banking cannot reach through the traditional brick and mortar branches. The poor, generally illiterate, need to be made aware of the financial products available to them and how best to utilize them. Also since the amount of money transacted is less, the same financial products, the ones for the rich, will not work. Insurance policies that allow for weekly payments in smaller amounts will attract more customers than the traditional schemes.

Policy can act as an umbrella for all these changes. A major shift would come with the realization that the area of financial inclusion need not be restricted for not-for-profit organizations. A recent change in regulations that allowed for-profit institutions as Business Correspondents saw two giants of Telecom Industry and Banking Industry, Airtel and State Bank of India, come together for a joint venture. More such changes are required and the market needs to be opened up. Also the government needs to consider the cost of opening bank accounts, cost of transactions and in totality the cost of financial inclusion well in knowledge of the fact that certain accounts will remain inoperative owing to the poverty levels and unless such costs are provided for, or business opportunities to cover these costs are created, financial inclusion will remain a government priority sans private players.

Mani Shankar Aiyar on India's Energy Crisis

There can be no Energy Security for the Aam Admi without first securing Energy Security for the Nation. Therefore, this article falls in two parts: the first, and longer, section deals with Energy Security for the Nation; and the second, briefer because it is more to the point, with Energy Security for the Aam Admi, for whom there must be equitable distribution of whatever energy is available, especially in an economy whose accelerating growth is widening income and wealth inequalities as we have not seen since Independence.

Energy Security for the Nation

In 1996, Dr Vijay Kelkar, said, “What petroleum was to the 20^th century, natural gas will be to the 21^st.” We are today more energy insecure than we were when Dr. Kelkar made this profound observation. This article is, therefore, a kind of red alert being sounded because the Integrated Energy Policy, first circulated as a draft in 2004, is yet,  gathering dust as a mere academic exercise, with little or no action. It is essential that we shrewdly take forward the Oil Diplomacy, for the Integrated Energy Policy displays a woeful sidelining of the external dimension of Energy Security which is the key to opening the door to assured National Energy Security.

The fact is that domestic energy sources will have to be heavily complemented by the external sourcing of energy, considering that the same Integrated Energy Policy projects in Table I an external requirement of over 90 per cent crude oil; the external sourcing of up to 57 per cent of our natural gas needs; and another similar import requirement of up to 57 per cent coal, amounting, on average, to some 58-67 per cent of our energy requirements in 2031-32 if we are to sustain 9 per cent annual rates of GDP growth. It requires dedicated energy diplomacy, aimed at making National Energy Security at least as important as National Security per se. 

Happily, the international and domestic scenario is so rapidly changing in our favour that if we seize this moment, we might still overcome; if we miss the moment, it may not come again.

If we get over the 20^th century syndrome of seeing oil as the driver of all hydrocarbon prices and focus instead on the current behaviour of LNG prices, we may discern the beginnings of a break in the nexus between oil prices and gas prices. For, of late, even as crude oil rises, gas prices fall. So, while domestic oil prices in the US have doubled, domestic gas prices in the US have been slashed by half!

How has this divorce between oil and gas prices happened? I would suggest three principal reasons.

First, where, during the Greenspan boom, the US LNG entry point of Henry Hub was snapping up every available LNG shipment and driving prices skywards, today LNG ships are roaming the oceans begging for buyers. In consequence, even as the growth in North American energy demand has fallen following the most severe recession since the Great Depression, the world’s principal LNG suppliers and the world leaders in piped natural gas – Qatar and the Russian Federation respectively - are now stranded in a buyers’ market.

Second, Europe and China are emerging as major producers of shale gas. Over the next decade, shale gas from Europe’s oldest gas play, North-West Europe, running from eastern Denmark through Sweden and thickening to north and east Poland, is likely to emerge as a major shale gas producer. While significant European shale gas supplies may take the better part of this decade to come on the energy scene, the prospect itself is changing expectations in global energy markets.

Third, with the United Kingdom leading the European move to shift transport away within the next ten years from fossil fuels to electricity, hybrids and bio-fuels through tough new legislation recommended by their Parliamentary Committee on Climate Change, Asian oil and gas suppliers will have to find replacement markets from among Asian consumers, principally Japan, China and India.

The move in the West away from traditional hydrocarbon sources abroad to new unconventional domestic sources is principally because the New York Metal Exchange has elbowed out OPEC as the principal determinant of international oil prices. Western technology has started turning inwards in search of domestic energy resources rendered suddenly viable, stable and reliable by the rise in prices of imported alternatives. Inevitably, this means Western buyers are exploring domestic shale gas reserves in North America and the European Union as the preferred incremental alternative to sourcing from Russia and West Asia.

In these changed circumstances, for Asian suppliers of oil and natural gas the Asian Resurgence emerges as the only Ray of Hope. Therefore, I hold that the hour for the Asian Oil and Gas Community has struck. Are we ready to take the lead in oil diplomacy, as we once were?

The domestic scenario in India, though, does not induce much confidence. Dabhol, which Government took over from Enron, languishes, while the two completed LNG terminals we have, and the associated pipelines to take the gas inland, are dedicated to owners Petronet at Dahej and Shell at Hazira, so no other Indian importer, present or potential, has access to these terminals or the pipelines.

This depressing picture is complicated by the drying up of investor interest in domestic gas exploration. Reliance’s then recent find, at the Bay of Bengal, the largest gas find of the year the world over, had suddenly brought the offshore east coast of India into focus as a region with hydrocarbons potential, especially as the hydrocarbons potential of the eastern littoral of the Bay of Bengal in Myanmar, the Sea of Andaman further south and the northern littoral of the Bay in Bangladesh also found international attention to rival the Reliance boost to India’s image. Also, at about the same time, Cairn had made significant oil finds onshore in western Rajasthan. Therefore, the image of India, as a hydro-carbons deficient nation, began to be reassessed.

But foreign and even domestic private sector interest in exploration has plummeted due to the number of Blocks offered rising from 20 in NELP V (2005) to 55 in NELP VI (2006) to 57 in NELP VII (200) and soaring to 70 in NELP VIII (2010) but the Blocks awarded sharply declining from 52 in NELP VI to 41 in NELP VII and down to 31 in NELP VIII, with ONGC picking up almost all blocks while private bidders, Indian and foreign, are simply shying  away. Alas, NELP has lost its momentum, and the sooner we shift to an Open Acreage Policy, especially for shale gas, the better for our Energy Security. Indeed, unless we do what the west is so vividly doing, shift from coal to oil to natural gas and shale gas, there is no way we can meet Jairam Ramesh's offer of a 20 per cent reduction in our carbon footprint by 2020.

Which brings me to the international dimension of our quest for energy security.

The civil nuclear deal effectively derailed the momentum of the Iran-Pakistan-India gas pipeline. The proposal is still on the table but its snail’s pace is in stark contrast to the deliberate speed with which the agreement on the Iran-Pakistan segment of the pipeline has been concluded. To think that on a matter so vital to India’s immediate energy security needs, we are still stuck at the starting line five years after the Cabinet authorised negotiations between India and Pakistan and India and Iran. Indeed, why only IPI, Iran-Pakistan-India; why not IPIC: Iran-Pakistan-India-China? It will also give such a boost to the economies of North-East India that once the North East Region’s growth rate doubles from the present rate to the present all-India average, we will overtake China’s GDP growth rate. Alongside we need to factor in the transit fees payable to India by China if the pipeline is extended to China.

The bottom line of our Energy Security Policy must be the nation-wide and Government-wide realisation that whether or not we ourselves are hydro-carbons rich, our immediate and proximate neighbourhood is the richest hydrocarbons repository in the world. What we need to do is bind these giant Asian suppliers and consumers into a continent-wide Grid of Peace, Friendship and Cooperation.

Five years ago, understanding the imperative but groping for the answer, all – I stress every one – of the major oil and gas producing and consuming countries of Asia came to New Delhi in January and November of 2005 to launch a forum for the exchange of views and information among themselves. In the meanwhile, the International Energy Forum in Riyadh was inaugurated – the first forum of producers and consumers designed to work towards a New World Order in Hydrocarbons. Of course, it was no more than a beginning, a tentative reaching out of Asians to each other, but a historic beginning nevertheless.  Opportunities are enormous when taken into consideration the prospective pipeline projects with Myanmar, Bangladesh, China, and the Turkmenistan-Afghanistan- Pakistan-India pipeline (TAPI). 

Polluting hydrocarbons would not matter if we had ample alternative sources of fuel. Other non-conventional and renewable sources have their great attraction, be it solar, wind or tidal energy, or even geo-thermal energy, underground coal gasification, gas hydrates, bio-fuels, hybrid fuels and electrical transport. But until technical innovation makes them much cheaper and storable and transportable, fossil fuels will continue to dominate the energy scene.

Nothing, absolutely nothing, counts more than the mindset in determining the pace of technological innovation. The Integrated Energy Policy stresses this. I suggest, the entire Dehra Dun establishment of ONGC be de-linked from the Corporation and placed under a separate management that could spearhead technological innovation and knowledge networking. Linking the Dehra Dun establishment to the Petroleum University and the Indian Institute of Petroleum in the same city, and the new Rajiv Gandhi Petroleum Institute in Sultanpur as well as the renowned Indian School of Mines at Dhanbad, we need to foster petroleum degrees and research in all our IITs or better still establish a series of Indian Petroleum Technology Institutes to rival our IITs.

Moreover, knowledge networking across the globe should be a critical national goal to be pursued with vigour and verve. We need an Energy Revolution as much as we needed the Green Revolution, and like the Green Revolution, technology and more technology, both domestic and imported, would be the spark that lights the Revolution.  

Energy Security for the Aam Admi

Fact no.1 is that the most recent National Sample Survey shows that 39.8 per cent of rural and 6 per cent of urban citizens of this great country of ours have no access to electricity at all, that makes 350-400 million Indians plus many hundreds of millions more who are subjected to arbitrary power cuts and frequent load-shedding. Another 400 million at least – probably nearer 600 million - have some access to energy but will lose it if we let the market alone determine the prices of essential petroleum products. And our current administered price regime disproportionately benefits those remaining 200 million Indians who can and should pay market prices. The stability of our democracy demands differential pricing of essential articles of daily consumption, including essential petroleum products such as kerosene and LPG.

The basic argument against subsidies is leakages. All leakages in our subsidy system are systemically the consequence of our relying on the same administrative system that has failed in all departments to deliver development to the people because 85 paise in the rupee goes into administrative costs.

Not until kerosene is taken out of Civil Supplies departments – which have long proved their corruption and inefficiency  - and entrusted instead to elected community-run institutions, such as local women’s self-help groups under the overall supervision of village panchayats  responsible to the intended beneficiaries in community-wide meetings of the Gram Sabha, as has been experimented so successfully in Chhatisgarh, can we even begin ensuring the availability of a little light to drive away the darkness of the village night for hundreds of millions of our poor villagers and slum dwellers.

LPG should be charged at full rates from all urban consumers not living in slum areas and provided virtually free to tribals and other forest-dwellers, and all those living in remote and difficult locations such as desert and mountain habitations, so that the environment is protected from poverty-driven degradation and these totally energy-deprived fellow-citizens of ours are given a modicum of what we, the urban middle classes, take for granted. Smart cards might help in determining both inclusion and exclusion.  

Diesel should be subsidised only for transport trucks and buses – and paid for from whinging cesses imposed on buyers of diesel cars as part of the initial purchase price at a rate equivalent to the estimated cost of diesel subsidies over the lifetime of the car.

Petrol should be totally de-regulated.

When international crude prices rise, equitable burden sharing between upstream companies, central and state governments, and the consumer should provide the guiding principle. We can move to the Integrated Energy Policy principle of market-determined prices for petroleum products as soon as we reach US levels of prosperity or Norwegian levels of equity, whichever is earlier.

I want to conclude on a note of warning which I hope does not sound too alarmist. We have entered the sixth decade of our Industrial Revolution. History teaches us that the giddy success of a few contrasted with the trailing behind of most that any Industrial Revolution augurs, shakes the foundations of the political system, democratic or autocratic, which has engendered the Industrial Revolution about six to eight decades into the Industrial Revolution. Therefore, this decade, and the coming decade or two are, without doubt, the most dangerous decades in which the dilemmas of development and democracy will be played out in our country.

We are now entering those decades. That is why Energy Security for the Aam Admi must be integral to Energy Security for the country. An economic order in which India prospers but Indians do not, cannot long endure. Unless we rise to the occasion, our successes in democracy and development may prove ephemeral, our future imperilled.

    

    

Issues in higher education : The Hindu Article

S. Viswanathan

Two recent judgments, one by the Delhi High Court, the other by the Madras High Court, have paved the way for the Union Ministry for Human Resource Development to go ahead with its much-delayed scheme to revamp the country's higher education system.

All that the Ministry could do, during the first few months of the second United Progressive Alliance government, was to take a policy decision that a pass in the National Eligibility Test (NET) or State Level Eligibility Test (SLET) would be the sole, mandatory qualification for being appointed as Lecturer/Assistant Professor in colleges, irrespective of possessing any additional academic certification, other than a post-graduate degree in the relevant subject. The All India Researchers' Coordination Committee challenged the Ministry's decision in the Delhi High Court. Groups of petitioners and appellants, who hold research degrees such as M.Phil. and Ph.D., approached the Madras High Court to get the decision reversed.

Upholding the Ministry's decision, which had been made in consultation with academic experts, a Division Bench of the Delhi High Court comprising Justice Dipak Misra and Justice Manmohan observed: “The courts should not venture into the academic arena, which is best suited for academicians and experts.”

In the Madras High Court, the First Bench consisting of Chief Justice M.Y. Eqbal and Justice T.S. Sivagnanam dismissed the petitions as well as the appeals. The Judges said that the regulation and the decision of the Union Government that a pass in the National Eligibility Test or the State Level Eligibility Test would be the sole route to appointment as teachers in colleges, could not, by any stretch of the imagination, be held to be illegal, arbitrary, or whimsical. They held that the decision was rational and based on the public interest, and that it was also a national policy inasmuch as it aimed at upgrading the standard of higher education in the country.

In both the courts, the University Grants Commission figures properly as a respondent. When the NET/SLET selection was in operation, many aspirants with higher academic qualifications and a research background, were interested in opting for a teaching career. The recruitment rules were then relaxed to accommodate the researchers as teachers. Those with M.Phil. and Ph.D. qualifications were exempted from writing the NET/SLET. The UGC was involved in this exercise by framing the regulations for the recruitment scheme. The exemption was continued by the UGC for several years.

Now that the HRD Ministry was keen on raising the bar in institutions of higher learning, the UGC had to fall in line. The petitioners/appellants in the two cases challenged the new rule of recruitment on the grounds that the UGC had framed it on a direction from the Union, which is in violation of the UGC Act, 1956. Another contention of the petitioners was that the UGC and the government had been consistently granting exemption, as a matter of policy, to those with M.Phil. and Ph.D. qualification, who prefer teaching in colleges. These contentions were, however, rejected by both high courts. The argument that the grant of exemptions to those with Ph.D. and M.Phil. qualifications had given rise to “legitimate expectations” that they could succeed in getting jobs without undergoing tests did not cut much ice.

The HRD Ministry deserves praise for its firm stand on a strict recruitment policy with a view to improving the standards of higher education. However, it needs to do much more for those who sweat and toil to acquire research qualifications; they can't be left to languish without any hope of stable employment. It is clear that the recruitment of talented teachers does not automatically raise the quality of education. Unlike teachers in primary and secondary schools, who undergo a two-year or one-year course before they take to teaching, those who become college teachers generally lack training. Filling this gap must be made a high priority.

The news media can certainly play a major role in raising awareness within the teaching community of the need for instituting consistent pedagogic standards in colleges and universities across the country. There is plenty of coverage in Indian newspapers of trends and opportunities in the professional streams of higher education. There is even some discussion of quality issues and of the need for academic benchmarking. But teacher education and training, what goes into the making of a good teacher, remains a neglected area. It would certainly be worthwhile for the UGC to conduct workshops — basic as well as advanced — on this subject for journalists who wish to specialise in the field of higher education. Journalism schools can also play their part in turning the sights of their students towards the subject and the issues at stake for rising India.

There's no magical formula to win a Nobel Prize: ‘Venky' Ramakrishnan

Do not work on anything you are not interested in. This is an absolute minimum to succeed, says the Nobel Laureate

What does it take to become a Nobel laureate?

Venkataraman ‘Venky' Ramakrishnan, who won the coveted award for chemistry last year, is of the view that no special attributes are needed to achieve the feat.

“There is no magical formula for winning a Nobel Prize,” Professor Ramakrishnan said at a public lecture here on Monday.

Replying to a question from the audience, he also stressed that there was no need for India to win a Nobel Prize to become a scientific power. “I also don't think that if India wins a Nobel Prize, it would mean suddenly that Indian science is okay.”

Interacting for nearly half an hour with students and researchers, Professor Ramakrishnan said: “Do not work on anything you are not interested in. This is an absolute minimum [to succeed].”

He advocated the ‘Crick test' for the students. “It is a classic test that you can use. It was first proposed by Francis Crick. He said if you do not gossip about your problem, that means you are not really interested in it.”

Professor Ramakrishnan added: “If you are a science student…everyday science is a tedious [affair] and you have to have the patience to see a problem through. This depends on how much you care for the problem.”

He urged young researchers to set a five-year horizon for their work. “This is more applicable to young investigators — where do you want to be in the next five years, not in terms of status but in terms of work.”

Professor Ramakrishnan said researchers should choose the right place to pursue their area of interest. “It does not necessarily mean the most prestigious place, but it has to be one with a very good intellectual environment for your work.”

Elaborating on this, he said: “If you go to a second-rate place and you are first-rate, it is very difficult to do first-rate work because you do not get that critical feedback you need for first-rate work on a daily basis.”

‘BOOMING FIELD'

Replying to another query, Professor Ramakrishnan said he chose biology as his field of work after graduating in theoretical physics because the new field was booming and there were fresh breakthroughs every now and then.

“Physics is in a difficult situation in the sense that fundamental problems in physics have become extremely difficult, and [it is] really going to require amazingly smart and original thinkers to lead the way out of it.”

The public lecture was organised by the Federation of Indian Chambers of Commerce and Industry in collaboration with the Science and Technology Ministry's Department of Biotechnology.

News-brief- Hindustan Times

News-brief- Hindustan Times

And So We Started! :)

When Bhanu first mentioned the organisation on chat to me, he made it sound like a multi national corporation. Well he has the knack of propagating, sometimes a bit too much, but for me it was actually the idea of having youth as a part of the policy making and policy implementation procedure that got me excited, for I had never before heard of youth taking decisions or even being a part of them. It was a small dream, a little idea that grew and kept on growing as we kept on seeing each other meeting after meeting and on numerous occasions we had to hold ourselves back, hold each other back just a little bit, for a moment, because just for a moment we would end up getting a little too ahead of ourselves and collectively start dreaming of what this could be. So what exactly could this be? A youth organisation enabling dialogue? Yes. A youth organisation researching new avenues? Yes. A youth organisation taking up policies in a different light, bringing a futuristic ideology for change? Yes. A youth organisation bringing the grassroots closer to the policy makers? Yes. A youth organisation initiating the the first think tank of the country? Yes. A youth organisation building the nation? Yes. And a lot of yeses more.

So there we went, taking our first steps to what will hopefully be a fruitful and a long, long journey. But since taking up too many things at a time was obviously not feasible for a small organisation like ours, we decided to take up three highly important issues - International Relations, Skill Development and Climate Change.

International Relations because we are of the view that as we, as a country, progress further towards 2020 and beyond and with our continuously growing economic might and the intelligentsia and the ever shrinking world, India needs to take a stance on various issues with various countries. There was never going to be a bigger platform than the G-8/G-20 Youth Summits and with the youth world over ready to let the bygones be bygones and look ahead at the future in a new light, YPD recognised that this would be an opportunity missed if India was to go unrepresented and for this very reason we became the first and till date the only Organising Committee of G-8/G-20 Youth Summits in the country. It is the time to develop new ties and new strategies and take up issues and policies left ignored and carve a niche for diplomacy. Youth has an advantage of not carrying any baggage and the clarity of looking at new ideas without the failures of past blurring the vision. But in the same breath I would like to add that YPD recognises that experience can be replaced by nothing and hence we made efforts for mentoring from one of the greatest scientists in the world and the former President of India, Dr. APJ Abdul Kalam.

Skill Development was an issue close to all of our hearts. Despite it being one of the priorities of the 11th plan, we saw precious little being done in this regard. India produces the largest number of IT experts in the world each year and it is the same country that has one of the largest number of illiterate people in the world. No matter the number of literacy programs that run across the country, simple literacy in today's world is no answer for the unemployment problems. Schooling and education can do wonders, but for the simple reason of the huge physical infrastructure required to reach all parts of the country, we might miss the bus in imparting employable skills to the citizens. It was decided that our skill development program will not only concentrate on the policy issues, but will be an enabler in imparting skills to the underprivileged. In the process we will also be studying the requirements of the people in the hitherto unreached areas in our effort to make the real picture clearer to the policy makers.

Climate Change happened because of the unflappable spirit of Devanik. We all knew that it was all messed up when it came to environment and little was being done. Delegates from Maldives have been crying in vain, as they fear their country being drowned. But it was Devanik who actually opened our eyes in how we can contribute in our own little ways-from turning vegetarians to avoiding flights-he just set the fire burning. And there ensued an immensely long discussion after which we were actually on the road. Devanik continues to work from Vellore and with our Green Fellowship we aim at involving the youth and creating awareness for the environment. Also there are a lot of people working at places rendered vulnerable due to rapid climate change. Unfortunately these dedicated workers do not have a say when policies for the environment are designed. With our huge network of youth based organisations and our research teams, we intend to make their voices heard at the highest levels.

This is just the beginning and we intend to incorporate a lot of issues calling for attention. But as I said before it is the idea, the prospect of getting the young from not only all across the country but in fact the whole world, work for a cause that is so enthralling. I can not wait for the next morning to dawn upon me so that I can start working for a better world, a better future.

The IR Initiative of the Youth for Policy & Dialogue aims at gathering decision-makers and young researchers to develop non-partisan and thorough research and debate on current international issues.

The Initiative’s current events are:

• Recruitment & representation of an Indian Youth delegation at the G8/G20 Youth Summits.
• Establishment of a G20 Study Group.
• Monthly Dialogue/Lecture series on issues of International Relations

The Programme is being run in partnership with the G8/G20 Youth Network (http://www.g8-g20-youth-networks.org/