Jobs vs Wages

Three faultlines in wages sabotage private formal job creation. Demonetisation will undo some damage.

Two events that trigger the most predictable, irrelevant and frenzied media circus around jobs are the application numbers for a government recruitment advertisement and small moves in the official unemployment rate. Both are irrelevant; India doesn’t have a jobs problem but a wages problem. Our official unemployment rate of 5 per cent is not a fudge and anybody who wants a job has one; they just don’t get the wages they want or need. The creation of high-paying private sector jobs is being murdered by three faultlines in wages: Government vs private, nominal vs real, and gross vs net.

Why? Because we estimate that almost 85 per cent of the 30 lakh applicants with PhDs, degrees, etc for government peon posts in Uttarakhand recently already had a job (they were chasing above market wages with the additional upside of an employment contract that is marriage without divorce). Because we know that a child equates a salary of Rs 4,000 per month in Gwalior with Rs 18,000 in Mumbai (the difference in not salary but cost of living reimbursement for rehna, khaana and office jaana). Because we know that applicants in job fairs make decisions on haath waali salary rather than chitthi waali salary (there is a 45 per cent difference between gross and net wages for poor-value-for-money statutory deductions). Let’s look at each faultline in a little more detail.

One, government vs private wages. People at the top of the government get paid too little but people at the bottom of the government get paid too much. Unfortunately people at the bottom are 85 per cent of the numbers and greatly distort the labour market because Class 3 and 4 employees get paid more than 200 per cent of their private sector counterparts for the same job not including low performance accountability and high job security. The huge number of government job applications is not people running away from insecure low-paying private sector jobs but people running towards overly secure high-paying government jobs. Government employment should be public service with reasonable wages; not a rigged rate like LIBOR that distorts the market.

Two, nominal vs real wages. Since we cannot take jobs to people in the short run, we need to take people to jobs. But the migration to cities is being retarded by the huge mispricing of land that directly affects living, eating and commuting costs in India’s few job magnets (we only have 50 cities with more than a million people versus China’s 375). The economic wastelands of Mumbai, Delhi, Chandigarh can’t compete with job magnets like Gachibowli, Mohali, Gurgaon and Bangalore because the new clusters combine an infinite supply of mixed use commercial and residential real estate (happiness economists suggest that commute time is a key component of happiness).

Three, gross vs net wages. A monthly salary of Rs 15,000 per month in a cost-to-company salary world only ends up as a Rs 8,000 bank credit because employers are required to make mandatory deductions of 45 per cent of salary for poor value programmes like provident fund, ESI, LWF, EPS, and much else. Government data suggests that workers with annual incomes of Rs 1.8 lakh do not have any saving and cannot live on less than half their salary; consequently they prefer working for the informal sector where haath waali salary is equal to chitthi waali salary.

These faultlines murder high-paying formal private jobs and we need three regulatory interventions: Faster urbanisation, lower regulatory cholesterol, and broader human capital. Faster urbanisation means an increase to the number of Indian cities with more than a million people from 50 to 200; bad urbanisation is better than no urbanisation but high quality urbanisation like having real mayors, robust city finances, etc could create the virtuous cycle of higher formalisation, higher productivity and higher wages.

Making bribing a core capability for builders has been bad for formal job creation and labour migration and demonetisation will bring down land prices, accelerate construction, and raise labour mobility. Land was the most inefficient and unfair of the three factor markets of land, labour and capital and demonetisation is a wonderful intervention. Lower regulatory cholesterol for job creation is important because most of our workers work in low-productivity enterprises that are not productive enough to pay the wage premium; our 6.3 crore enterprises only translate to 18,000 companies with a paid-up capital of more than Rs 10 crore. Human capital is key; neglecting primary school education for decades after Independence is a mistake being amplified by the new world of work that disproportionately values reading, writing, arithmetic and soft skills.

As the long-term plans for formalisation, urbanisation and human capital yield results, it’s time for a time-bound monitoring on three overdue and impactful interventions in regulatory cholesterol by the ministry of labour. First, we must overrule its self-serving case for an Establishment Number and replace the 27 different numbers issued to every employer with a single Universal Enterprise Number. Second, we must set a date for 100 per cent paperless, presenceless, and cashless compliance for all state and Central labour laws. Second, we must end the shameful stonewalling of the ministry of labour of the provident fund and ESI reforms announced in the budget by making employee contribution to the provident fund voluntary and creating competition for ESI and EPFO by allowing employees to choose alternatives like NPS and health insurance.

Recent youth unrest — the idealisation of Burhan Wani by Kashmiris and the reservation agitations by Patels, Jats, Gujjars — have roots not in a job emergency but a formal job emergency. Gandhiji said the difference between what we do and what we are capable of doing would suffice to solve our problems. Time to remind the ministry of labour.

The writer is chairman, Teamlease Services

Source: Indian Express, 21-11-2016

America beckons

Want to study in the U.S? Choose your options well. Here’s where to start, writes the U.S Consul General in Chennai.

Many dream of studying in the United States, but some are discouraged from doing so because the path seems complicated. Let me explain how you can make your dream a reality, while also highlighting some of the advantages in the land of opportunities — the United States of America.

In today’s global work environment, a degree from a foreign university not only offers knowledge, but also provides critical skills to create and adapt to jobs of the future. The United States is one such place where experiential learning and research are the norm. Over 1,40,000 Indian students are currently studying in the U.S. and are making their mark in American classrooms with their talent and hard work. They know that an American degree is recognised across the world and will open up a wide range of opportunities.

Students are usually admitted into U.S. universities in the fall or spring semesters, starting in August or January, respectively. Start preparing a year or a year-and-a-half prior to your desired programme’s start date since application deadlines usually fall about 10 months before the start of your programme. However, some universities role out admissions and accept applications throughout the year.

There are over 4,500 accredited universities and colleges in the United States. First, ensure that a programme’s academic content and research opportunities match your interests. Also make sure that you meet the eligibility requirements listed on the university website. Beyond that, you may wish to consider factors like school size, location, weather and tuition to help narrow down your choices.

For high school students who are not yet sure what career path you wish to take, you can apply for an “undecided major” in a U.S. university or apply to a liberal arts college where you will study different subjects in the first two years and declare a major at the end of your second year. Another option is a two-year Associate Degree from a community college, which is often more affordable than a four-year university. With an Associate Degree, you can transfer to a university for your third and fourth years of undergraduate studies.

While researching universities, it is also important to start preparing for required standardised tests. Those who wish to pursue a bachelor’s programme should take the SAT or ACT and an English language proficiency test (TOEFL, IELTS or PTE). Those looking to complete their master’s or PhD are required to take the GRE or GMAT and an English language proficiency test. Standardised tests and academic credentials are important.

However, your extra-curricular activities, leadership skills, and demonstrable interest in your chosen field of study are equally important. Some universities have made the standardised tests optional, but if you wish to widen your choice of universities or pursue a scholarship or assistantship, you must submit test scores.

As you start on this path toward fulfilling your dreams, remember, you are not alone. You and your parents can seek guidance from EducationUSA, funded by the U.S. Government to guide international students who wish to study in the United States.

To arrange an appointment with the EducationUSA Center at the United States-India Educational Foundation, Chennai, please contact 044-28574134 or send a mail to usiefchennai@usief.org.in

Student mobility

According to The Open Doors Report on International Educational Exchange, released on November 14, 2016, the number of international students at U.S. colleges and universities surpassed one million for the first time during the 2015-16 academic year— an increase of seven per cent from the previous year to a new high of nearly 1,044,000, representing five per cent of the total student population at U.S. institutions.

This strong growth confirms that the United States remains the destination of choice in higher education.

The Open Doors report is published annually by the Institute of International Education in partnership with the U.S. Department of State's Bureau of Educational and Cultural Affairs.

The new report indicates there were a record 1,65,918 students from India, a 25 per cent increase from the year before, making it the second leading country of origin among international students in the United States. This was the highest absolute increase of students ever and followed the previous year’s record growth.

India accounts for one out of every six international students in the United States. Approximately three-fifths of Indian students are at the graduate level and three-fourths are in the STEM fields (science, technology, engineering, and mathematics).

Keywords: Study abroad, U.S., U.S. Consul General, Chennai, Philip Min

Source: The Hindu, 19-11-2016

Hitting the refresh button

The framework regarding fiscal responsibility and discipline as outlined by the previous version of the FRBM Act needs to get urgently revived and fine-tuned

One of the most distinguishing features of India’s emergence as a preferred investment destination in recent years has been the strength of its policy and institutional frameworks. Decisions such as e-auctioning of natural resources, a rule-based framework for Indian monetary policy, insolvency and bankruptcy code, the goods and services tax, amongst others, have all aimed at enhancing the credibility of policy and institutional frameworks.

On similar lines, gradual changes in the conduct of fiscal policy, although less spoken about, have been a crucial contributor towards improving India’s growth and investment potential. Restraint on unproductive spending amid plugging of subsidy leakage through comprehensive implementation of the DBT (direct benefits transfer) platform, higher devolution of revenue to States and local self-governments, greater autonomy to States for spending on developmental plans have indeed improved the quality and credibility of fiscal policy of late.

Accounting for a changed order

While these measures are encouraging, going forward it will become increasingly critical to codify fiscal rules so as to make it insulated from populist manoeuvres. In this context, the framework regarding fiscal responsibility and discipline as outlined by the previous version of the Fiscal Responsibility and Budget Management (FRBM) Act needs to get urgently revived and fine-tuned taking into account the ongoing changes in the global and domestic economic and financial order. While there is little doubt that in a developing economy such as India the government needs to spearhead a prominent role in funding growth, an institutional mechanism that imposes rule-based parameters on government’s spending and deficit significantly enhances its credibility.

The FRBM Act was first introduced in India in December 2000 to rein in burgeoning government deficits both at the Centre and in the States. Enacted in 2003, the FRBM Act institutionalised fiscal discipline, by seeking to eliminate revenue deficit and to bring down fiscal deficit to a manageable 3 per cent of GDP by FY08 from 5.7 per cent of GDP in FY03. However, during the international financial crisis of 2008, as government spending became critical to revive growth amid sharp decline in private investments, the deadline for attainment of the target was pushed forward and later suspended.

However, in the 2016 Budget speech, in a bid to reinforce the commitment to fiscal consolidation, the Hon’ble Finance Minister instituted a committee to review the contours of the FRBM Act in the light of current domestic and global dynamics. With the committee expected to submit its report by the end of the current month, I believe the following issues need to be reflected upon.

First, what’s the ‘Point’ in ‘Range’? Amid government’s increased role in reviving growth, debate has emanated on whether it would be appropriate to impart flexibility to the government by adopting a range-based target as opposed to a point-based target for fiscal deficit. In my opinion, a point target that infuses fiscal discipline, limits the room for government manoeuvres and provides an unambiguous signal to the bond markets is superior to a range target. A focused policy communication, complementing the objectives of monetary policy, is likely to result in a ratings upgrade for the Indian sovereign, which will eventually percolate down to lower cost of borrowing for the private sector, which is important for new capital and investment formation.

Second, determining the ‘appropriate fiscal deficit target’. Macro underpinning of sustainable fiscal deficit comes from the supply of funds in the economy. The fiscal space for the government is expected to be created after meeting the demand for excess funds from the corporate sector in order to ensure there is adequate crowding-in of private investments.

Given that the total supply of funds through household financial savings and sustainable capital flows are estimated at 10-12 per cent of GDP and demand for excess funds from the corporate sector is estimated at 4-6 per cent of GDP, a consolidated fiscal space of around 6 per cent of GDP exists for States and the Centre put together. This implies a 3 per cent headline fiscal deficit target for the Centre and States each.

Third, rules that serve as a guiding principle. A binding spending rule along with a medium-term debt range that takes into account the specific institutional setting in each country would help to enhance the policy credibility and facilitate effective monitoring that would ensure stability, fairness and efficiency. Moreover, effective rule-based policy would help the governments adopt a countercyclical approach and limit the scope for creative accounting. Regarding a debt sustainability rule, a ceiling on government debt at 60 per cent of GDP can get adopted over the next three years (67.2 per cent of GDP currently) with indicators of sustainable debt serving as guiding principles, in line with the Maastricht Treaty guidelines. And expenditure rules that focus on enhancing the quality of spending and improve accountability are preferred in many countries. In case of India, a preference for capital spending (in both agriculture and manufacturing) should receive budgetary enunciation.

Fourth, an independent constitutional body as a watchdog. The revised FRBM framework can consider setting up an independent reviewer, a Fiscal Council, to oversee the adoption of rule-based fiscal policy and also recommend future course of public policy advocacy. A well-designed fiscal council with strict operational independence will boost fiscal accountability and transparency and will further add to the sovereign’s credence and rating potential.

Twin-deficit vulnerability

In conclusion, the adoption of version 2.0 of the FRBM framework will enhance the efficacy of India’s fiscal policy and significantly reduce the twin-deficit vulnerability. At a juncture where most developed economies are struggling with their government’s balance sheet to support the economy, a rule-based system with room for independent advisory and oversight can transform India’s fiscal architecture and create enablers for germination of green field investment appetite.

Rana Kapoor is MD & CEO, YES BANK and Chairman, YES Institute.

Keywords: FRBM Act, direct benefits transfer, Fiscal Responsibility and Budget Management, India’s fiscal policy

Source: the Hindu, 21-11-2016

Getting real on climate

The UN conference on climate change held in Marrakech, with an emphasis on raising the commitment of all countries to reduce greenhouse gas (GHG) emissions, is particularly significant as it provided an opportunity to communicate concerns about the future climate policy of the U.S. It would be untenable for the U.S., with a quarter of all cumulative fossil fuel emissions, to renege on its promise to assist vulnerable and developing nations with climate funding, technology transfer and capacity-building under Donald Trump’s presidency. As the Marrakech Action Proclamation issued at the close of the conference emphasises, the world needs all countries to work together to close the gap between their intended reduction of carbon emissions and what needs to be done to keep the rise of the global average temperature well below 2°C in this century. The Paris Agreement on climate change was forged on the consensus that man-made climate change does have a scientific basis, that the developed countries are responsible for accumulated emissions, and that future action should focus on shifting all nations to a clean energy path. Not much progress was made at Marrakech on raising the $100 billion a year that is intended to help the poorer nations. Political commitment and resource mobilisation will be crucial to meet targets for mitigation of emissions and adaptation.

India is in a particularly difficult situation as it has the twin challenges of growing its economy to meet the development aspirations of a large population, and cutting emissions. National GHG levels are small per capita, but when added up they put India in the third place, going by data from the Carbon Dioxide Information Analysis Center in the U.S. As a signatory to the Paris Agreement, which has provisions to monitor emissions and raise targets based on a review, pressure on India to effect big cuts is bound to increase. The UN Framework Convention on Climate Change will hear from the Intergovernmental Panel on Climate Change in 2018 on what impact an additional warming of 1.5°C could have on the planet and what can be done to ensure it is pegged at this level. The pledges made so far are well short of this target, and even if they are all implemented, a minimum rise of 2.9°C is forecast by the UN Environment Programme. India has no historical responsibility for accumulated GHGs, but smaller, more vulnerable countries such as island states and Bangladesh are demanding action to cut emissions. A strategy that involves all State governments will strengthen the case for international funding, and spur domestic action.

Keywords: UN conference on climate change, climate change, greenhouse gas emissions, UN Environment Programme, Marrakech Action Proclamation

Source: The Hindu, 21-11-2016

The Ultimate Rendezvous

SHAMMI PARANJAPE





The power of satsanga or holy association is exalted by scriptures. For every step you take towards satsanga, your yajna account with the Divine wins more credits.Satsanga is a gathering of likeminded people trying to hone their spiritual instincts.Evolved souls are powerhouses of divine energy from which everybody can draw freely. Contact with them can raise your spiritual quotient and help you attain the life divine. The aim is not a life of asceticism, denial or mantrachanting; it is one which is lived in consonance with spirit, manifesting qualities like satya, dharma, shanti, prema and ahimsa.
Satsanga helps you to nourish and nurture higher aspirations. Sathya Sai Baba asks: “Does satsanga refer only to the company of persons performing bhajans or doing social service? No. Sath refers to that which is everlasting (Truth). It is Divinity .Satsanga means cultivating the company of the divine... or the company of one's own conscience. In that sense good company means simply the company of good thoughts and feelings“. Any activity which puts one into association with the divine in any form qualifies as satsanga.
Satsanga's primary motive is the awakening of God-consciousness. Ultimately , the purest and most distilled meaning of satsanga is company of Self or Sath. To be immersed in the knowledge of the Self as one goes about the duties of the world is the highest achievement.

Indian universities should aspire to be among top 100 globally: Modi

Prime Minister Narendra Modi has made an appeal to Indian universities to aspire to be among the top 100 global universities, as he ensured special economic assistance to them to reach this goal.

Addressing the public on the occasion of the centenary celebrations of Karnataka Lingayat Education Society (KLES) at Belagavi recently, Modi said he felt “ashamed” as there is no Indian university among the world’s top 100 universities.

“I invite 10 public and 10 private universities to come forward and take a pledge to make a place for themselves in the top 100 universities of the world. Those who will come forward will get special economic assistance. They will be given relaxation from seeking various approvals. There will be an open field for them,” he said.

“Research and innovation are vital for us. In the 21st century, the youth will take India to new heights. For this, we need skilled youth,” he tweeted later.

In order to help 10 public and 10 private institutions to emerge as world-class teaching institutions, the Central government had promised to enable regulatory architecture at the time of announcement of Union Budget earlier this year. Rs 1,000 crore was set aside for higher education financing in the budget.

Source: Digital Learning, 15-11-2016

Twinkle twinkle gargantuan star

Forget Donald Trump and what I’m calling that Rs500/1,000 thing. Let’s focus for a while on stars. You know, those little blinking dots in the night sky. Specifically, I want to tell you about something that happened with a star nearly 30 years ago. Well, actually it happened about 168,000 years ago, but we earthlings first found out about it on 24 February 1987. This happened: A star exploded. In fact, a truly massive star, one astronomers call a supergiant, exploded.

Such an explosion is known as a supernova, and they are not that unusual: a typical supergiant that has reached the end of its life will, typically, explode. Given that there are countless billions of stars out there, and many of them are supergiants, and at any given time, many of those arrive at the end of their lives—well, these starry explosions must be happening pretty regularly. And in fact, astronomers detected more than 230 in 2013, and nearly 60 in 2015 (the International Astronomical Union’s Central Bureau for Astronomical Telegrams, or CBAT, maintains an ongoing list here: www.cbat.eps.harvard.edu/ lists/Supernovae.html).

True, we don’t see most of these cosmic fireworks. That’s because most stars are so unimaginably far away that we cannot see them with telescopes, let alone with our naked eyes.

That is, even if you’re far from a city on a clear night and look up at a sky filled with stars, you’re seeing only a tiny fraction of all the stars in the universe. So even if stars are exploding all the time, the chance that one that’s visible to us will explode is correspondingly tiny (one estimate is that a given human will see—or like me, get news of—a supernova only once in their lifetime).

Which is why that February 1987 sighting made headlines around the world: it was actually visible to millions on Earth (though only in the southern hemisphere). That means this was a relatively close star. As it turns out, it was just 168,000 light years away.

In any sense you and I would comprehend, 168,000 light years is a vast, vast distance. But on the scale of the universe, that particular supergiant exploded practically in our pockets. Still, light from there does take that many years to reach us. So if we saw it in 1987, understand that this supergiant really exploded about when our primate ancestors first evolved into modern human beings. Puts it in some perspective. Supernova 1987A, as it was called, was the first one in nearly 400 years to be visible to the naked eye (astronomers have speculated that the Star of Bethlehem, which guided three wise men to where Jesus was born, was a supernova too). So it was the first one to be widely observed and studied using modern equipment.

Nearly 30 years later, we can still observe the residues of this cataclysmic event. In 2013, for example, a team of astronomers used a radio telescope in Chile to produce a spectacular image of 1987A, an orange core surrounded by a halo of shining blue and green spots, like a necklace. That halo is actually material from the star that the supernova flung into space, and it is still travelling outward at more than 7,000km per second.

Which number, by itself, should give you an idea of the titanic power a supernova packs (our most powerful rockets reach 11km per second). But don’t worry! Even at that speed, it will be more than 7 million years before 1987A’s flying detritus reaches us.

Astronomers classify supernovae by certain chemicals they contain. So 1987A was a Type II. Type Ia supernovae turn out to have a particularly useful characteristic: they all release about the same amount of energy when they explode, and thus are almost equally luminous. This means they are good “standard candles”—astronomer-speak for milestones in space. That is, how bright a Type Ia appears to us is a direct indication of how far it is—and thus other nearby objects are—from us.

In the late 1990s, astronomers used a database of Type Ia supernovae to reason that the expansion of the universe is accelerating, which was something of a surprise.

But with a much larger database of Ia supernovae available now, Professor Subir Sarkar of Oxford University and two colleagues have just challenged this idea of acceleration. “We find, rather surprisingly,” they wrote in Nature (October), “that the data are still quite consistent with a constant rate of expansion (of the universe).”

The arguments that drive astronomy and its practitioners.

Last year, some of them detected the most luminous supernova we’ve ever found, ASASSN-15lh. Since it is about 3.8 billion light years away, it’s far too faint to see. But the explosion was about 570 billion times brighter than our Sun. Try imagining that much light. And had it been in our Milky Way galaxy, one astronomer explained to the New Scientist that “it would shine brighter than the full moon, there would be no night and it would be easily seen during the day.”

And I’ll leave you with this to chew on. Astronomers think most of the atoms inside us humans were actually created by stars. How did they get here? When the stars exploded, the supernovae propelled the atoms into the void, and they spread across the universe.

Some became you. And me. And Katrina Kaif. And Donald Trump.

Once a computer scientist, Dilip D’Souza now lives in Mumbai and writes for his dinners. A Matter of Numbers explores the joy of mathematics, with occasional forays into other sciences.

Source: Mintepaper, 18-11-2016