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UPSC has announced changes in syllabus and pattern of the Preliminary Examination
from 2011.

The Preliminary Examination shall now comprise of two compulsory Papers of 200
marks each and of two hours duration each.

Paper I - (200 marks) Duration: Two hours

• Current events of national and international importance
• History of India and Indian National Movement
• Indian and World Geography - Physical, Social, Economic geography
of India and the World.
• Indian Polity and Governance – Constitution, Political System,
Panchayati Raj, Public Policy, Rights Issues, etc.
• Economic and Social Development – Sustainable Development,
Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.
• General issues on Environmental ecology, Bio-diversity and Climate
Change - that do not require subject specialization
• General Science.

Paper II- (200 marks) Duration: Two hours

• Comprehension
• Interpersonal skills including communication skills;
• Logical reasoning and analytical ability
• Decision making and problem solving
• General mental ability
• Basic numeracy (numbers and their relations, orders of magnitude
etc.) (Class X level), Data interpretation (charts, graphs, tables, data
sufficiency etc.—Class X level)
• English Language Comprehension skills (Class X level).
• Questions relating to English Language Comprehension skills of Class X level
(last item in the Syllabus of Paper-II) will be tested through passages from


AFNET: (The) Air Force Network.
SGAI: Students Global Aptitude Index.

Jnanpith Award, 2007 and 2008
Eminent Malayalam litterateur O.N.V. Kurup has been chosen for the 2007 Jnanpith
award. Noted Urdu poet Akhlaq Khan Shahryar has been chosen for the 2008 award.

Born in 1931 in Kerala’s Kollam district, Kurup is a leading voice among the
contemporary Malayalam poets. He has reinvented the narrative transition of
Malayalam poetry through his long poems like ‘Ujjayini’ and ‘Swayamvaram’.

Born in 1936 in a Muslim Rajput family in Uttar Pradesh’s Bareilly district, Shahryar
shaped himself as an “intellectual poet”, whose poetry strongly expresses an
“ideological non-commitment”. His roots lie in his desire for self-realisation and his
attempt to understand modern problems. Among his famous compositions is: “Seene
Mein Jalan, Akhon Mein Toofan Sa Kyon Hai”.

57th National Film Awards

Best feature film: Kutty Srank (Malayalam).
Best Director: Rituparno Ghosh for Abohoman (Bengali).
Best Actor: Amitabh Bachchan for Paa (Hindi).
Best Actress: Ananya Chatterjee for Lahore (Hindi).
Best supporting actor: Farooque Sheikh for Lahore (Hindi).
Best supporting actress: Arundhati Naag for Paa (Hindi).
Indira Gandhi award for best debut film of a director: Lahore (Hindi) by Sanjay Puran
Singh Chauhan.
Best popular film providing wholesome entertainment: 3 Idiots (Hindi).
Nargis Dutt award for best feature film on national integration: Delhi 6 (Hindi).
Best film on social issues: Well Done Abba (Hindi).
Best Music Director: Amit Trivedi for Anurag Kashyap's “Dev-D”.
Best Lyrics: ‘Behti hawa sa tha woh’ from “3 Idiots”, written by Swanand Kirkere.
Best playback singer (male): Rupam Islam, for his rendering of ‘Kolakata’ in the
Bengali film “Mahanagar”.
Best playback singer (female): Nilanjana Sarkar, for Bengali movie “Houseful”.
Best children’s film: Shared by “Putaani Party” in Kannada and “Keshu” in
Best child actor: Jeeva and Anba Karaus share the award.

Dada Saheb Phalke Award, 2009

Telugu film actor-producer D. Ramanaidu has been selected for the prestigious Dada
Saheb Phalke Award for 2009 for his outstanding contribution to Indian cinema.

The award comprises of a Swarn Kamal, a cash prize of Rs one million and a shawl.

The industry veteran, who entered the film world in 1963 with "Anuragam", is listed
as the most prolific producer with 110 films by the Guinness Book of Records. He has
the distinction of producing movies in Hindi, Bengali, Oriya, Assamese, Malayalam,
Tamil, Kannada, Gujarati, Marathi and Bhojpuri.

Some of his well-known films are “Premanagar”, “Dildar” and “Bandish” in Hindi,
“Srikrishna Tulabharam”, “Preminchu” and “Ramudu Bheemudu” in Telugu and
“Asukh” and “Sudhu Ekbar Bolo” in Bengali.

GE Engines for Tejas
GE Aviation of USA has bagged the contract for supplying engines for the Light
Combat Aircraft MK-2 (LCA MK-2 or Tejas MK-2). The aircraft is being developed by
the DRDO with the Hindustan Aeronautics Limited (HAL) being the implementing
agency for the project.

Installation of the new engine will pave the way for acquisition of the indigenous
multi-role fighter jet by the IAF.

The necessity for a new engine arose after the LCA’s present engine, also supplied by
GE (GE F404 IN20), failed to meet the IAF requirements.

Installation of the new engine will necessitate major modifications to the LCA,
especially the fuselage. The ADA expects the Tejas MK2 to fly in 2014.

IAF launches AFNET for better communications

The Indian Air Force, in a significant development, launched on September 14, 2010,
its state-of-the-art digital information system that will provide real time data, voice
and images to commanders on the ground, as well as to pilots in the air.

It will connect all IAF’s, fighters, choppers, transport planes, satellites and UAV’s
with ground and command stations which will in turn have the position of the
ground-based air defence guns deployed at airbases. The new system will make the
IAF network centric force.

The Air Force Network (AFNET) has replaced the IAF’s old communication network
set-up using the “tropo-scatter” technology that was first devised in the 1950s.

New series of horned dinosaurs found in Utah
Fossil hunters have uncovered the remains of an ancient beast that can lay claim to
the dubious title of the horniest animal ever to walk the Earth. The creature lived 76
million years ago in the warm, wet swamps of southern Utah and was remarkable in
bearing 15 full-sized horns on its head. The animal, named Kosmoceratops, had one
horn over its nose, one over each eye, one protruding from each cheek bone and a
row of ten across the frill at the back of its head. As opposed to earlier belief, many
palaeontologists now believe that dinosaurs’ horns were often more for sexual

This remote village in tribal-dominated Nandurbar district of Maharashtra is the first
place in India whose residents have been issues the Unique Identification Number
(UID) or Aadhaar.

Scientists develop ‘e-skin’
Biotech wizards have engineered electronic skin that can sense touch, in a major
step towards next-generation robotics and prosthetic limbs. The lab-tested material
responds to almost the same pressures as human skin and with the same speed.
Important hurdles remain but the exploit is an advance towards replacing today’s
clumsy robots and artificial arms with smarter, touch-sensitive upgrades.

The “e-skin” comprises a matrix of nano-wires made of germanium and silicon rolled
onto a sticky polyimide film. The researchers then laid nano-scale transistors on top,
followed by a flexible, pressure-sensitive rubber. The prototype, measuring 49
square centimetres, can detect pressure ranging from 0 to 15 kilopascals,
comparable to the force used for such daily activities as typing on a keyboard or
holding an object.

The achievements are “important milestones” in artificial intelligence. In the search

to substitute the human senses with electronics, good substitutes now exist for sight
and sound, but lag for smell and taste. Touch, though, is widely acknowledged to be
the biggest obstacle. Even routine daily actions, such as brushing one’s teeth,
turning the pages of a newspaper or dressing a small child would easily defeat
today’s robots.
Artificial kidney to be a reality soon
An artificial kidney implant that would work as well as a natural organ is in the
offing. The first prototype of the device unveiled by the US researchers could do
away with the need for dialysis or donor organs.

The device comprises thousands of microscopic filters to remove toxins from the
blood and a bio-reactor to mimic the metabolic and water-balancing roles of a real

The implant is being developed jointly by engineers, biologists and physicians led by
Shuvo Roy at the University of California, San Francisco.

The treatment has already been proven to work for the sickest patients, using a
room-sized external model.

The process relies on the body's blood pressure to perform filtration, without
needing pumps or an external electrical power supply.

Tissue engineering will be used to grow renal tubule cells to provide other biological
functions of a healthy kidney. This would remove the need for immune suppressant
medications after it was implanted, allowing the patient to live a more normal life.

Mind reading machine on its way

Scientists who claim to have discovered a way of translating people’s thoughts into
words are soon coming out with a mind reading machine. An international team, led
by Prof Bradley Greger of Utah University, has been able to translate, for the first
time, brain signals into speech using sensors attached to the brain.

The experimental breakthrough, which is up to 90 per cent accurate, offers a way to

communicate for paralysed patients who cannot speak and could eventually lead to
being able to read anyone thoughts.

The team achieved the experimental breakthrough when it attached two button sized
grids of 16 tiny electrodes to the speech centres of the brain of an epileptic patient
who had part of his skull removed for another operation.

Using the electrodes, the scientists recorded brain signals as the patient repeatedly
read each of 10 words that might be useful to a paralysed person: yes, no, hot, cold,
hungry, thirsty, hello, goodbye, more and less. Then they got him to repeat the
words to the computer and it was able to match the brain signals for each word 76
per cent to 90 per cent of the time.

CBSE to introduce aptitude test
In order to assess the ability of students, the CBSE will introduce a psychological
aptitude test for class X on the lines of similar exams held in other parts of the world.
The test will be known as Students Global Aptitude Index (SGAI). The main aim of
holding the exam is to know about the students' interest, their psychology and their
skill levels. This exam is based on a scientific index.

South Asian University becomes operational

With the visa issue concerning Pakistani students having been settled, the South
Asian University (SAU), a dream project of Prime Minister Manmohan Singh, has
finally taken off. The university launched its first academic session on August 26,
2010, starting two courses—MA in Development Economics and Masters of Computer

There are 25 students in each course. Of the total 50 students, 36 were from India
and 14 from five other SAARC countries—Pakistan, Bangladesh, Nepal, Bhutan and
Sri Lanka. As of now, there is no student from the rest of the two SAARC nations, the
war-affected Afghanistan and the Maldives.

The present faculty includes Bangladeshi nationals as well as Australian nationals of

Indian origin. The faculty would be gradually increased when courses in other
disciplines are launched from the next academic year beginning in July 2011.

Though the university, the first of its kind in the region, has been allotted land in the
capital for its campus, classes for the first session are being held at the Jawaharlal
Nehru University (JNU).

The concept of a world-class university in South Asia was initiated by the Indian
Prime Minister during the 13th SAARC Summit at Dhaka in 2005, while a formal
agreement for establishing the institute was signed in April 2007 during the 14th
Summit in New Delhi.


Arjun Munda: He has been elected as the Chief Minister of Jharkhand.
A.N. Tiwari: He has been appointed as the Chief Information Commissioner of India. He succeeds
Wajahat Habibullah.
Ansar Parvez: He has been name head of IAEA, the UN nuclear watchdog. Head of Pakistan Atomic
Energy Commission, Ansar Parvez, will remain Chairman for the next 12 months, taking over from
P.J. Thomas: He has been appointed as the Central Vigilance Commissioner of India.

Armando Guebuza: President of Mozambique
Donald Tusk: Prime Minister of Poland.

Arjun Sengupta: Eminent economist and Rajya Sabha MP. He leaves behind a policy footprint that
changed the way poverty alleviation programmes are discussed in India.
Homi N. Sethna: Former Chairman of Atomic Energy Commission of India and the guiding force
behind India’s first nuclear test. He was 86.

2—Palestinian and Israeli leaders meet after a 20-month hiatus under the US brokered peace talks.
9—The Union Cabinet gives its approval for a caste-based census, to be implemented through a
separate house-to-house enumeration from June to September 2011.
29—Prime Minister Manmohan Singh hands over the first set of Unique Identification Number (UID)
cards in Tembhail village of Maharshtra. The UIDAI scheme, announced in 2009, will provide a
unique identity to each Indian over the next five years.
30—Allahabad High Court’s please-all verdict on Babri-Masjid-Ram Temple dispute in Ayodhya
divides the disputed site among the three petitioners
Mazlan Othman: Malaysian astrophysicist, she has been appointed as the head of the UN’s
little-known Office for the Outer Space Affairs (UUNOOSA). She is officially the
world’s first contact for any aliens that may come visiting.
A. Divya: She is the first woman cadet in the history of the Officers Training
Academy, one of India’s premier defence training institutes, to be decorated with its
highest award, the ‘Sword of Honour’.
Sachin Tendulkar: Leading cricketer of India, he has been given honorary rank of
Group Captain by the Indian Air Force.


India wins gold in fourth leg of World Cup
The Indian men's recurve team of Jayanta Talukdar, Tarundeep Rai and Rahul
Banerjee won gold in the fourth leg of the World Cup archery in Shanghai. The trio
whipped Japan, who had beaten the formidable Koreans in the semi-final.

Talukdar won bronze in the individual event defeating Athens Olympic champion
Marco Galiazzo of Italy 7-3.

Deepika Kumari lost the women’s recurve final, but the silver medal ensured Deepika
her maiden place in the grand final in Edinburgh.

Mary Kom wins World Championship
India’s woman boxer MC Mary Kom claimed a historic fifth successive world
championship title on September 18, 2010, beating Steluta Duta of Romania 16-6.
This mother-of-two from Manipur remains the only boxer to have won a medal in
each edition of the world championship.

T20 Champions League, 2010
IPL champions Chennai Super Kings, led ably by Mahendra Singh Dhoni, defeated the
Warriors of South Africa by eight wickets to win the Airtel Champions League, played
in South Africa.

J.P. Atray Trophy

ONGC posted a six-wicket victory over Air India to win the 17th J.P. Atray Memorial
Cricket tournament.

England-Pakistan One-Day series

England defeated Pakistan by 121 runs in the fifth and final match to win the series3-

DLF Masters
Ashok Kumar won the DLF Masters. Gaganjeet Bhullar won the second spot.

Women’s World Cup
Argentina defeated reigning World and Olympic champions Netherlands 3-1 to win
their second field hockey world title. They had earlier won the title in 2002 in
Australia. The championship was held at Rosario, Argentina.

Ronjon shoots gold at ISSF World Cup
India’s Ronjon Sodhi clinched a gold at the double trap in the ISSF World Cup finals
in Izmir, Turkey with a stunning score of 195 out of 200.

US Open, 2010
Rafael Nadal of Spain defeated Novak Djokovic (Serbia) to win the men’s singles
title. The win gave him his first US open title and was his ninth Grand Slam win.

Kim Clijsters of Belgium defeated Vera Zvonareva (Russia) to take the women’s
singles title.

The men’s doubles title was won by Mike and Bob Bryan of USA who defeated Indo-
Pak team of Rohan Bopanna and Aisam-ul-Haq.

The women’s doubles title was won by Vania King (USA) and Yaroslava Shvedova
(Kazakhistan) while the mixed doubles title was won by Liezel Huber (USA) and Bob
Bryan (USA).

India enters Davis Cup World Group

In a stunning turnaround, Somdev Devvarman and Rohan Bopanna powered India to
the elite Davis Cup World Group by scripting a sensational 3-2 win over Brazil. The
matches were played in Chennai.

Sushil becomes first Indian to win World Championship gold
Wrestler Sushil Kumar has become the first Indian to win a gold medal in the World
Wrestling Championships, held in Moscow. He defeated Alan Gogaev in the 66-kg
freestyle category.



RBI’s mid-term review

The RBI, in its first mid-quarter review of its monetary policy, increased repo and reverse repo rates
leaving the cash reserve ratio (CRR) unchanged as it battles to contain inflation.

The central bank noted that food inflation has risen to 15.10 per cent for the week ending
September 4, thus making it necessary to rein in liquidity. As a result, RBI raised short-term
borrowing rate (reverse repo) by 0.50 percentage points to 5 per cent and lending rate (repo) by
0.25 percentage points to 6 per cent. The increased rates aim to make financing costly thus curbing

However, the RBI said that inflation rates have reached a plateau. The apex bank also signalled
banks to raise fixed deposit rates and also noted that the government was on target to contain the
fiscal deficit.

Unique Identification Authority of India

The Union Cabinet has cleared a new law providing for strict penal action and hefty fines going up to
Rs 1 crore to guard against misuse of data collected for allotment of a Unique Identity Card or
a Aadhar number to Indian citizens.
The proposed legislation, titled the National Identification Authority of India Act, seeks to give
statutory powers to the Unique Identification Authority of India (UDAI), created as an attached
office under the Planning Commission.

The decision to enact a legislation was taken after fears were expressed over the privacy and
security of data collected by the UDAI. In addition, several civil rights groups had also pointed out
that actions of the UDAI could well be questioned in the absence of a legal framework.

This scheme of providing unique identity number to the citizens of the country took off on
September 29 when Prime Minister Manmohan Singh presented the first such number at a function
in the tribal district of Nandurbar in Maharashtra.

Job scenario in India improves

According to the Ma Foi Randstad Employment Trends Survey, there is optimism in the economic
scenario across all sectors of India and most of the new jobs have been created are in services.
Conducted among 650 companies across 13 industry segments that included eight Indian cities, the
survey revealed 418,000 jobs were created between January and June, 2010, with the healthcare
sector creating 121,000 jobs, and another 63,000 in the hospitality sector. The top five sectors
leading the boom are healthcare, hospitality, real estate and construction, information technology
and IT-enabled services, and education, training and consulting.

Real estate and construction leads with the highest growth in number of people employed. It also
expects growth in average salary by about four per cent, followed by pharma (3.5 per cent) and
healthcare (3.4 per cent) during the third quarter.

The estimated proportion of experienced workforce is the highest in the pharma sector, 87 per cent.
Healthcare is estimated to have the highest percentage of freshers,at 38 per cent. Kolkata has the
highest estimated percentage of experienced workforce, at 82 per cent, and New Delhi the highest
estimated percentage of freshers (35 per cent).

Fund to boost innovation

The National Innovation Council (NIC), a body to promote new ideas for inclusive development, has
announced the setting up of a Rs 1,000 crore fund to encourage innovation.

“A major portion of the fund will come from the private sector and not the government,” the
chairman of the council, Sam Pitroda, said.

One of the council members and renowned film-maker, Shekhar Kapur, also mooted the idea of
starting a television reality show that would provide a platform for the young minds to showcase
their innovative ideas for solving the problems of the economy.

Set up by Prime Minister Manmohan Singh, the council is aimed at energising innovation initiatives
so as to make them part of the national effort aimed at reducing poverty, improving governance
and making development more inclusive.

The aim of NIC is to herald a mindset change and create a push at the grassroots level so that more
and more people are involved in shaping a national-level innovation strategy.

The council’s mandate also includes formulating a roadmap on innovation for the 2010 to 2020
period, focusing on inclusive growth.

Munda sworn in as Jharkhand Chief Minister

On September 11, 2010, BJP leader Arjun Munda became the eighth Chief Minister of the 10-year-
old Jharkhand State, as leader of a coalition with, among others, the Jharkhand Mukti Morcha.
Munda, who is having a go at the top job for the third time, will have two deputies — Sudesh
Mahato of the All Jharkhand Union and JMM patriarch Shibu Soren's son, Hemant Soren.

Although the function at the Governor's house showed the deep rift in the BJP over the tie-up with
the JMM—the BJP's partner last time in a government that lasted only for five months—Munda said
he would focus on strengthening the party's grass-root level.

Visit of President of Mozambique

On September 30, 2010, during a meeting between President of Mozambique Armando Guebuza
and Prime Minister Manmohan Singh, India and Mozambique inked three pacts and a credit line of
$500 million was extended to that country for infrastructure projects, agriculture and energy.

The two countries have also decided to create a partnership based on greater political engagement,
deepening of economic cooperation, strengthening of defence and security cooperation, specially to
secure sea lanes against piracy, and cooperation in capacity building and human resource

India would also support establishment of training and planning institutions in Mozambique to
support capacity building in the coal industry, besides supporting capacity building for the defence
and police forces of that country, the Prime Minister said.

Expressing concern over the safety and security of sea lanes in the Indian Ocean, Guebuza assured
to provide all possible assistance to protect them.

Dhaka okays crucial highway link to Kolkata

In major development, Bangladesh has finally agreed to start the construction of a highway that will
not only provide transit facilities, ensuring easy movement of goods, but also drastically shorten the
circuitous route—crucial from the military point of view—between north-eastern States and the port
city of Kolkata.

The project—to be primarily financed by India—is part of the larger Asian Highway network project
connecting the Asian nations. The highway project between India and Bangladesh had been hanging
fire for more than five years, with Dhaka stalling it for one reason or the other—primarily due to
pressure from Pakistan and China.

The change came after the Sheikh Hasina Government came to power and in July 2009 Indian
negotiators managed to push Bangladesh to ink the inter-governmental agreement.

The first route will enter from Bengal into Bangladesh at the existing Benapole land port on the
border and run across eastwards via Jessore and Dhaka; passing through Sylhet, located on the
north-eastern edge of Bangladesh, it will enter Assam/Meghalaya.

The second axis will start from North Bengal and enter Bangladesh at Panchgarh and run
southwards via Srirajganj to Dhaka and further southeast to Cox Bazar and Chittagong before
entering into Myanmar. India will be able to use both routes.

Once ready, the highway will solve India’s major problem of moving goods into north-eastern States
of Nagaland, Tripura, Mizoram and Manipur. At present, it can take up to five days for a truck from
Kolkata to reach these areas, adding up to the costs, besides the time delay.

Crucial military pact with South Korea

Signalling a dramatic change in its strategic positioning, especially vis-à-vis China, India, on
September 3, 2010, entered into a crucial joint research and manufacturing agreement with South
Korea to co-develop and co-produce military equipment.

Both countries are neighbours of China and have a rather testy and tense relationship with it.

On the military front the importance of the agreement can be gauged from the fact that India has
such agreements for co-developing and co-producing military equipment with its traditional “friend”
Russia and other ally, Israel. It also has product-based cooperation for joint production of key
military equipment with the French and Italians. Following the agreement, experts have placed
India-South Korea military relations at par with Indian relations with Russia and Israel.

Memorandums of Understanding were signed following a 90-minute discussion between high-level

delegations led by Defence Ministers, AK Antony and Kim Tae-young, respectively. This was the
first-ever visit of an Indian Defence Minister to South Korea.

Visit of Polish Prime Minister

Polish Prime Minister Donald Tusk visited India on September 7, 2010. The Indo-Polish defence
cooperation figured prominently during talks between the visiting dignitary and Prime Minister
Manmohan Singh.

Since most of the Indian military hardware was acquired in the 1970s from the then Soviet Union,
Poland, which was a key ally of former USSR, has the spares and the technology for upgrading the
equipment with the Indian forces.

Poland is keen to sell tank recovery vehicles to India. The proposal was made during Antony’s visit
to Warsaw in April for a meeting of the joint working group (JWG) on defence cooperation between
the two countries.

A tank recovery vehicle is a type of armoured fighting vehicle used to repair battle or mine
damaged as well as broken down vehicles during combat operations, or to tow them out of the
danger zone for more extensive repairs.

Apart from making these vehicles available to India, Poland has shown interest in providing to New
Delhi its sophisticated military hardware up-gradation and maintenance technology. It is also
interested in joint ventures with Indian companies.

Poland can also help India upgrade Indian T-72 tanks, BMP II infantry combat vehicles and a variety
of air defence systems purchased from the former Soviet Union.

But more than defence ties, it is the prospect of a quantum jump in economic ties with Poland that
excites New Delhi. Poland, a key member of the European Union (EU), is considered by India as a
gateway to Europe and Central Asia.

Allahabad High Court Verdict on Babri Masjid-Ram Janambhoomi dispute

On September 30, 2010, the much-awaited judgement of the Lucknow Bench of the Allahabad High
Court unanimously ruled that the idols of ‘Ram Lalla’ in the makeshift temple at the disputed site in
Ayodhya cannot be removed.

The three-judge Bench of Justices S.U. Khan, Sudhir Agarwal and Dharamveer Sharma separately
delivered the historic verdict. In a 2-1 majority verdict, Justices Khan and Agarwal decreed that the
2.7-acre land comprising the disputed site should be divided into three equal parts and be given to
Sunni Waqf Board, Nirmohi Akhara and the party representing ‘Ram Lala Virajman’ (Ram deity).

However, the third judge Justice D.V. Sharma ruled that that the disputed site is the birth place of
Lord Ram and that the disputed building constructed by Mughal emperor Babur was built against
the tenets of Islam and did not have the character of the mosque. The Bench directed maintenance
of status quo at the site for three months and invited suggestions from all the parties for
demarcation of the land.

The judges also dismissed the claims of the Sunni Central Waqf Board over the Babri Mosque due to
limitation or becoming time barred as well as the claim of the Nirmohi Akhara.

With a 2-1 majority, the Bench held that all the three parties, namely Muslims, Hindus and Nirmohi
Akhara were joint titleholders of the property in dispute. Both Justices Sudhir Aggarwal and SU
Khan made it clear that the share of the Muslim parties shall not be less than one third of the total
area of the premises. “...If while allotting exact portions some minor adjustment in the share is to
be made then the same will be made and the adversely affected party may be compensated by
allotting some portion of the adjoining land,” observed Justice Khan.

The area under the erstwhile central dome where the idols are placed in the makeshift temple has
been allotted to the Hindus. The inner courtyard has been given to both the communities “since it
was being used by both since decades and centuries”, noted Justice Aggarwal.

The ‘Ram Chabootra’, ‘Sita Rasoi’ and ‘Bhandar’ area in the outer courtyard will go to the Nirmohi
Akhara. The outer courtyard is once again to be shared by the Nirmohi Akhara and the Muslim

—2.7 acre disputed site to be divided in three equal parts.
—Two portions to be handed over to Hindus, Muslims will get one.
—All three parties—Muslims (Sunni Waqf Board), Nirmohi Akhara and the parties representing ‘Ram
Lalla Virajman’—declared joint title-holders.
—The portion below the central dome, where the idol of Lord Rama is presently kept in makeshift
temple, belongs to Hindus.
—All three parties may utilise the area to which they are entitled to by having separate entry for
egress and ingress of the people without disturbing each other’s rights. The parties may approach
Centre which shall act in accordance with the directions and also as contained in the SC verdict.

Historical Background
The ‘first title suit’ was filed on January 19, 1885. It was submitted by Mahant Raghubirdas in the
court of Faizabad sub-judge, seeking permission for “puja” (worship) rights over a “chabootra”
(platform) in front of the mosque which he claimed was Ram’s birthplace.
In his February 24, 1885, order, the judge said: “It (chabootra) was so close to the existing masjid
that it would be contrary to public policy to grant a decree authorising plaintiff to build a temple as
desired by him.”

Sub-Judge Hari Kishan said: “It is most unfortunate that a masjid should have been built on land
specially held sacred by the Hindus, but as the event occurred 356 years ago, it is too late now to
remedy the grievance. All that can be done is to maintain the status quo. In such a case as the
present one any innovation could cause more harm and derangement of order than benefit.”

Then Raghubirdas moved to the Faizabad district judge, Colonel J.E.A. Chambier, who, after a spot
inspection, dismissed the appeal on March 17, 1886, on the same grounds.

Raghubirdas then filed an appeal before the Oudh Judicial Commissioner, W. Young, who also
declined his plea in his judgment of November 1, 1886.

Young observed: “This spot is situated within the precincts of the grounds surrounding a mosque
erected some 350 years ago, owing to the bigotry and tyranny of the emperor who purposely chose
this holy spot, according to Hindu legend, as the site of his mosque.”


Gillard manages to retain power in Australia elections

On September 7, 2010, ending weeks of political uncertainty, Australia’s first woman Prime Minister
Julia Gillard staked claim to form a new government after two king-maker independent MPs
extended support to her Labour party, giving it a wafer-thin one-seat majority in the first hung
Parliament in nearly 70 years.

Labour now controls 76 seats in Parliament’s 150-member House of Representatives, with the
opposition Coalition of Liberal party leader Tony Abbott having 74 seats.

Gillard said her minority government would be held to higher standards of accountability as a result
of the deal struck with the independents. She added that her government will spend $9.9 billion on
development projects as part of the deal with the rural independents.

Political crisis in Nepal continues

On September 26, 2010, Nepal's Constituent Assembly failed for the eighth time, during the past
four months, to elect a new Prime Minister. The deadlock continues, partly because other
mainstream parties do not trust the single, largest party, Unified Communist Party of Nepal
(Maoist), because it continues to put its faith in one-party rule and continues to threaten it would
resume armed struggle.

The last 20 years have seen Nepal move from a Hindu kingdom to a democratic and secular
republic. The 239 year old monarchy was cast aside in 2006 and people voted for a Constituent
Assembly and an interim government in 2008. Maoists emerged as the largest single party but fell
short of a majority.

In the 601-member House, two seats are vacant and if the Speaker and the Deputy Speaker are
excluded, it has an effective strength of 597 members. The break-up is as follows : Unified CPN
(Maoists): 237, Nepali Congress: 114, UML: 108, four Madhes based parties: 82, smaller parties &
others: 56.
Unified CPN (Maoist) continues to say it has no faith in parliamentary democracy, believes in one-
party rule and insists on absorbing its underground militia into the Nepalese Army. It also tried to
take arbitrary decisions and sought the removal of the President and the Army Chief. Other parties
are not sure it would change its spots.

The Constituent Assembly has failed to finalise the Constitution as mandated. The Assembly
extended its own life by one year to complete the task. But differences persist. In the absence of a
consensus between parties, there is a caretaker government with few powers.

Having failed to sack the then Army Chief over the integration of the armed Maoist guerrillas,
Prachanda resigned as Prime Minoster and Maoists pulled out of the government in 2009; then they
forced the next government headed by Madhav Kumar Nepal of UML to also quit.

China-Japan spat
China suspended high-level exchanges with Japan on September 19, 2010, and promised tough
counter-measures after a Japanese court extended the detention of a Chinese captain whose trawler
collided with two Japanese coastguard ships.

The spat between Asia’s two largest economies has flared since Japan arrested the captain,
accusing him of deliberately striking a patrol ship and obstructing public officers near uninhabited
islets in the East China Sea.

Beijing viewed the detention as illegal and invalid.

UN convention on terrorism moves a step forward

Rocked by a wave of audacious terrorist attacks in the last two years, Pakistan has finally realised
the futility of opposing the proposed Comprehensive Convention on International Terrorism (CCIT)
just because India was in the forefront of initiating it at the United Nations in 1996.

Pakistan, along with some other Organisation of the Islamic Conference (OIC) countries, had led the
campaign against the proposed convention on various grounds. It had argued that self-
determination should be outside the purview of the convention. It had also insisted that
international humanitarian laws should be taken into account while finalising the text of the
convention. Both these objections were seen as aimed at embarrassing India on Jammu and
Kashmir since Islamabad has been demanding the right to self-determination for Kashmiris and
seeking international intervention on the issue.

The opposition to the convention had also come from the US and Israel with the latter insisting that
acting against terrorists indulging in killing innocent people be brought under its purview.

The global treaty seeks to criminalise all forms of international terrorism and deny terrorists, their
financers and supporters access of funds, arms and safe havens.

The situation has considerably changed with just a handful of countries still not convinced why they
should back it. “Most countries are now in favour of the early adoption of the convention but there is
a small number of holdouts, may be 10 to 15…efforts are on to convince them also to support it so
that a strong message goes out to all terrorist organisations that the international community is
united and determined to jointly fight the menace of terrorism.

A high-speed train in China has set a new world speed record during a trial run. The train hit a
maximum of 416.6 km per hour on its journey between Shanghai and Hangzhou. The train is
designed to run at a speed of 350 km per hour.

Amir Khan’s “Peepli Live”, a satire on media’s trivialisation of farmers’ suicide, has been selected
as India’s official entry at the 2011 Oscars, in the Best Film category.

The Union Cabinet has approved the National Identification Authority of India Bill, 2010, which
envisages making UIDAI a statutory body.
Finance Minister Pranab Mukherjee launched the Swavalamban Scheme of Life Insurance
Corporation (LIC) on September 25, 2010. The scheme seeks to provide pension scheme to the un-
organised sector. Under the scheme, the Central government will contribute Rs 1,000 per year to
each National Pension Scheme (NPS) account opened in year 2010-11 and for the next three years,
till 2013-14.

The World Tourism Day is observed on September 27.

The UN Summit on the Millennium Development Goals, or MDGs, was held in September 2010 at
UN Headquarters in New York, USA.

Chowmhalla Palace in Hyderabad, spectacular 18th century monument, has been selected for the
Heritage “Award of Merit” by the UNESCO, for cultural heritage conservation for 2010.

The Business Standard Best Business Schools Survey 2010 shows that India’s top business
schools are: Indian Institutes of Management in Ahmedabad and Kolkata, Indian Institute of Foreign
Trade in New Delhi, Institute of Management Technology at Ghaziabad, Management Development
Institute at Gurgaon, National Institute of Industrial Engineering in Mumbai and XLRI Jamshedpur.

A new wholesale price index series with an updated product portfolio was launched on
September 14, 2001. The series will have 2004-05 as the base year, as against 1993-94 in the
previous model. Some important items included in the new series basket are: flowers, lemon, crude
petroleum, scooter and motorcycle tyre, polymers, marble, silver and gold.

The Employee Provident Fund trustees have decided to raise the interest for 2010-11 to 9.5

The World Tiger Summit was held in September 2010 in St. Petersburg, Russia.

The six living species of Tigers are: Amur, Bengal, Indochinese, Malayan, South China and
Sumatran. The Bali, Caspian and Javan tigers have become extinct.

Navodaya Vidyalayas celebrated 25 years of existence in 2010. A befitting match to costly private
schools, the Navodayas have shown in last 25 years how gifted children with humble means can rise
to life.

India has replaced the US as the second most important Foreign Direct Investment (FDI)
destination for trans-national corporations, according to a survey conducted by UNCTAD. Global FDI
flows are expected to jump from $1.2 trillion in 2010 to $1.5 trillion in 2011 and $1.6-2.0 trillion in

As per the Quacquarelli Symonds (QS) World University rankings, Cambridge University, UK, is
the top university of the world, followed by Harvard University, USA, Yale University, US, University
College London (UCL), UK, and Massachusetts Institute of Technology, USA, in that order.

Rajkot People’s Cooperative Bank does not offer any job to people who smoke cigarette or eat
gutkha. Even the customers with the habits have to pay higher interest on loans.

Reliance Industries has been ranked second in the list of world’s 10 biggest ‘sustainable value
creators’—companies that have been successful in creating the most shareholder value over the last
decade—prepared by Boston Consulting Group. Brazil-based mining and materials giant Vale has
been ranked the top value creator.

India’s first agri-biotechnology institute, the National Agri Food Biotechnology Institute (NABI) is
being set up in Mohali, near Chandigarh.


Talleyrand, Foreign Minister of Napoleon and the Bourbons, is remembered as a shrewd foreign
policy maker. He advocated pragmatism and Western nations have always pursued pragmatic
foreign policies. He also advised eschewing excessive fervour while pronouncing foreign policy.

“The art of diplomacy, as that of water colours, has suffered much from the fascination which it
exercises on the amateur”, said Harold Nicholson. This observation aptly applies to India’s
diplomacy post-independence in 1947. Indians, somehow, have been extravagantly demonstrative,
persistently delusive and high sounding while pronouncing their foreign policy.

The cold war era provided a near-perfect setting for spewing idealism at an ideologically divided
world that was gracelessly recovering from the holocaust of a catastrophic world war. Those times
also saw the end of colonialism and dawn of freedom for India. It gave a larger than life world stage
to a Universalist Nehru who illumined it with the light of idealism and, like an angel, befittingly
fluttered his wings over it ineffectually, while the Victors of World War Two—USA, UK, France,
Russia and China—grabbed the world stage as leaders of peace!

According to Lord Carrington, “Foreign and defence policy essentially has to be about the obtaining
and management of influence.” Foreign Policy demands astute sense of timing and shrewdly worked
out strategies. Morality is certainly not a weakness of the major world powers. International
diplomacy and relations have always been and remain amoral. In the prevailing international
dispensation, bargaining, national interest and cool calculation determine relations among nations.
India has yet to master the art of diplomatic negotiations and striking accurate equation with
important world powers.

In 1947, India emerged as the largest democracy in the world. It, however, lacked the matching
military and economic power. Since then it has fully participated in international politics, adhering to
the letter and spirit of international treaties, conventions and protocols. India substituted word
power for effective power to vie with the world powers. The tactic worked, at times poorly, when
popular and maximum leaders like Jawaharlal Nehru and Indira Gandhi were the Prime Ministers.
Under their rule, India’s foreign policy was more for internal consumption than for impacting on the
international order. They could afford to make errors and yet have their way. But costs were heavy
for the nation. India had to bear dire consequences for some of their foreign policy errors of
judgement, because they placed trust not in India’s friends, but in its antagonists.

High-sounding principles of Panchsheel led to a shocking betrayal by China from which India has yet
to recover. “Jawaharlal, do you want Kashmir, or do you want to give it away?” Sardar Patel is
known to have asked Nehru. Patel warned him in 1949 that the Chinese Communists would annex
Tibet, the historical buffer between India and China. Nehru, however, cajoled China and went to the
UN on Kashmir against Patel’s wish. Nehru’s “Hindi-Chini Bhai Bhai” turned out to be a bitter
shibboleth and Kashmir became the source and fount of terrorism and remains an unhealed, self-
inflicted wound.

According to observers, Jawaharlal, the architect of India’s Non-alignment Policy, died of the
Chinese treachery. Atal Behari Vajpayee, a man of sterling qualities yet imitated Nehru, and his
diplomatic “bus to Lahore got hijacked to Kargil”. Earlier, in 1972, though a better strategist and
negotiator “Indira Gandhi slipped up at Simla by trusting Zulfikar Bhutto’s word on Kashmir”.

Currently, India is militarily and economically a stronger country, though it has weaker and
minimum leaders. But happily, and perhaps compulsively, our Foreign Policy under Dr Manmohan
Singh’s rule is more pragmatic and in tune with the times and practices of the so-called
international community.

The disintegration of the Warsaw Pact or Soviet Union in 1990 is regarded as the verge of a new era
in international polity. USA emerged as the sole, unrivalled super-power with global reach. By force
of its military presence in Central Asia, the Gulf region, the Afghan-Pak area, the Indian Ocean,
South-East Asia, the China Sea and North-east Asia, it also became a next-door neighbour to India,
China and Russia. Its interests and stakes in Asia are extensive and appear to be long-term, even
permanent. It has obviously become an “Asian power”.

The Yankee stranglehold can be felt from Egypt to Pakistan in West Asia and from Philippines to
Thailand in East Asia. Uncle Sam no longer attaches very great importance to its client States, such
as Japan and Australia. On the other hand, it is seriously engaged in developing new political
equations, and if need be, alliances with more and hitherto adversarial countries, including India.
The US security interests and concerns fall together with India’s security arc at this time.
China’s rise as the Super-Asian military and economic power and India’s own increasing military and
economic power are equally important developments of recent years. “The US, China and India,
along with Japan and Russia, constitute the pentagonal power complex of the 21st century; all of
them are acknowledged nuclear weapon powers.

Europe is no longer the focus of international power politics, as it was in the twentieth century. At
the very onset of the twenty-first century, it has shifted to Asia and promises to stay there in the
foreseeable future. Europe is comparatively free of conflict and threat to its peace. It is going
through a period of political transition and is occupied with the challenges of its political unification
and economic integration. The world’s peace and security now onwards depend on what kind of
conditions will prevail in Asia. The World and Asian powers, at this juncture, feel compelled to work
out new equations among themselves, to meet the challenge of emerging Asian realities.

The world has radically changed. Of necessity, the five World Powers and other nation-States are
recasting their foreign policies to encounter new developments. The shift in Washington’s India
policy is a part of this ongoing international process. It is a response to and recognition of the
reality of a changed world. India, too, is called upon to break out of its musty mould and redesign
it’s foreign, economic and security policies. It has to, like other big countries and nations, safeguard
its interests internationally.

The USA has recognized India as a responsible nuclear weapon power. It is in USA’s long-term
interests to see India as a strong and stabilizing power in its region. Therefore, it feels persuaded to
assist India in enlarging its global role. Can or should India shun Washington’s overtures? During
the last half-a-century of diplomatic experience, India is expected to have gained enough diplomatic
maturity to understand that there are no “free lunches” in international relations. Reciprocity has to
be on a “give-and-take” basis. It is no use saying that India abhors being a US-client State like
Japan, Australia or Pakistan. International exigency is compelling India to decide its course of action
and pay the price for the choice or choices it makes.

India’s changed stature does not permit it to blame others for its own diplomatic errors or justify
them on moral grounds. It has itself to decide how far, fast or slow, it wishes to develop its relations
with USA and other countries, and on what terms. China, only three decades ago, was a sworn
enemy of USA, but now it is USA’s most dynamic trade partner. China, in fact, has become a world
economic, and consequently a world military power, with the American support. Yet, China, by no
means, is a client State of USA. Contrarily, it is a pain in the US neck. On the currency issue and
revaluation of Yuan, it has not yielded to pressures and warnings from USA. India, too, is free and
independent and big enough to look after itself. If it chooses to abjure the present opportunity, its
inaction could prove too costly. Evading the foreign policy challenge will mean evading the future

India must know and practice the maxim that there are no “permanent friends or foes” for
reshaping its foreign policy competently. Ideological forces have disappeared from the international
scene. Pragmatism is in the ascendant. India must recognize and evaluate its national needs and
interests, because national interest alone is the all-encompassing coordinate that accurately
structures a country’s foreign policy.

No country is self-sufficient in all respects. Interdependence and exchange of goods and services
form the basis of abiding relationship among nation-States. India today is well placed to seek
diplomatic accords and agreements for mutual benefits. It has to assess its needs and the extent to
which foreign resources are required to satisfy them. For example, India needs enormous measure
of nuclear energy and state of the art technologies for its industry and agriculture. India also needs
speedier expansion of trade and investments, an infrastructure conforming to international
standards and to modernize its military. Can a vast underdeveloped democracy find or raise internal
resources to satisfy these needs?

If the answer is “No”, then, India has no alternative but to find friends and partners from amongst
other nations to provide the necessary resources. At the same time, it must calculate coolly what it
has to part with as a price. India has to remember that even the so-called international assistance
from the Soviet or Western bloc in the cold war days had price tags. Assistance and cooperation
were not free then and they will certainly not be free now. In fact, India today has sufficient
bargaining power and should go into the international “diplomatic market” as a confident diplomatic

India’s immediate goal in international power politics was to become an equal member of the
nuclear suppliers group. That has now been achieved with the Nuclear Suppliers Group (NSG)
accepting India as a responsible nuclear power, of course, with help of USA. As a reciprocal gesture,
it is absolutely in our national interest to oppose nuclear proliferation, especially within and near our
regional boundaries, as it affects our security. Whether it is Pakistan or Iran, possession of nuclear
weapons of mass destruction by them poses danger to us. Our opposition to Iran’s nuclear stand is
dictated by our own national interest. It is not surrender to USA.

India's voting for the IAEA resolution, critical of Iran, has been interpreted in some quarters as
kowtowing to USA. But former foreign secretary Shyam Saran’s forthright arguments favouring a
new global non-proliferation order show that the vote wasn’t a one-off, ad hoc reflex—rather, it was
backed by an articulated and coherent sense of India’s foreign policy priorities.

India’s proclivities are independent of both US and Iran. They put Indian interests first. India has
objected to American double standards in upbraiding Iran, but indulging Pakistan whose nuclear
advisor A.Q. Khan set up a nuclear Wal-Mart.
It must be noted here that western countries and major world powers, too, cannot escape the
charge of proliferation. China has been extending nuclear know-how to North Korea and Pakistan.
Israel’s nuclear capabilities have been gained with West’s connivance. Pakistan’s nuclear scientists
have smuggled sensitive data from western countries. Moreover, India cannot be expected to fight
for other countries’ interests at the cost of its own interests. Therefore, India has to continue to
oppose Iran in IAEA voting, irrespective the hue and cry by the Left parties.

Sentimentality, romantic attachment to the Non-alignment will only blur our foreign policy focus.
Has Iran done any extraordinary favour to India? Do other NAM countries consult India while
exercising their international options? Should we consult Cuba or Venezuela before voting at the
international forums? Do our actions at international meets need certification from any quarters to
prove that our voting is or is not pro-American? A section of the media and the Left political parties
appear to believe so. If this is their idea of India’s standing, role and place in global politics, then
they have only a squinted view of India’s heightening status in world politics.

Non-Alignment Movement got launched in mid-twentieth century when most of the Afro-Asian
countries were gaining their Independence and cold war was furiously raging. NAM’s assumed plank
of neutrality between the Soviet and Capitalist blocs in the context of decolonization, anti-apartheid
campaign and nuclear disarmament, placed the poor and week nations in positions of advantage.
The two blocs vied with each other to enlist their support and offered inducements for it. They
corrupted their leaders and weakened these Afro-Asian countries. NAM is now a relic and NAM-like
neutrality or non-alignment a passé. The buoyant movement of the cold war times is now a
conglomeration of diverse and in-cohesive nations with conflicting political and economic interests.
India is the only country among its founding members to have gained in stature. Indonesia, Ghana
and Egypt have declined; Yugoslavia has disintegrated and disappeared.

Yet, India has not abandoned NAM. It has been trying to revive the movement with a new agenda
of economic and development cooperation. India’s leadership at the WTO has been strident as it
successfully launched the G-22. NAM can adopt the G-22 agenda if it wishes to resurrect itself.

The foregoing observations on Indian Foreign Policy provide a perspective for understating India’s
relations with major world powers, immediate region, a large number of other countries and the UN.

India’s greatest foreign policy frustration has been its unwholesome relations with its immediate
neighbours. The major SAARC countries are culturally so close but politically so averse to
neighbourly feelings with India. A ramification of the US presence in Afghanistan and Iraq is its
closer watch on Bangladesh, Nepal and Pakistan. All these countries have terrorists of various hues
operating against India, with the State connivance and even State backing. Major western powers
that were callously indifferent, after 9/11 Terrorist Attack on USA have become alive to the terrorist
threat emanating from these countries. These countries are infested with Osama or Maoist (link
between the two is more than suspected) elements and bases. The entire western world is in a state
of scare of the terrorist threat, especially the Islamic terrorism. They also know that Pakistan and
Bangladesh are harbouring dangerous terrorists. Uncle Sam’s overseeing these countries is a minor
relief to India, as it is no longer alone while countering the nefarious terrorist designs.
India has been tolerant and accommodative toward its immediate neighbours, keeping them in
productive engagement.

Relations with ASEAN and Singapore are the cornerstones of our “Look East” policy. “India-ASEAN
Partnership for Peace, Progress, and Shared Prosperity” lays out a short to medium term road map
of India-ASEAN cooperation in various sectors, such as economic, science and technology,
information and communication technology, agriculture, health, pharmaceuticals and people to
people contacts. India-ASEAN Free Trade Agreements are a continuing process.

Russia remains India’s biggest supplier of defence equipment and has given assurance on the
supply of spares and made new offers on equipment. India, too, is supporting Russia in its accession
to the WTO and its being treated as a market economy in anti-dumping investigations.

Lastly, we must remember that “in the world beyond parliaments, the press and think tanks,
ideologies are being jettisoned to survive. Only the fittest will act internationally and manage
change”. Will India change and choose a foreign policy befitting the challenge of times? Nation
States are interdependent and foreign policy is now a central part of a nation’s political
programme. War and Terrorism are everybody’s nightmare.

“May the pens of the diplomats not ruin again what the people have attained with such exertions.”
Lord Palmerston’s this 19th century wish is today the 21st century India’s fear!


YOU had, you think, prepared very well for the crucial interview. You are likely to say it to yourself
and others, “I left no stone unturned.” Yet, the outcome was disappointing. You start cursing your
“luck” or you may, in a fit of bad temper, debunk those who decided against your selection. You
begin to nurse a grudge. This will eventually further damage your future prospects. It is better to be
rational, objective, look for soft spots and convert them into plus points. That’s the only way from
rejection to selection.

Lots of factors can prevent you from getting a job. Many of them you have control over, while
others you don’t. By controlling those you can and thinking reasonably
about those you can’t, your chances of taking a healthy perspective toward this whole job-research
issue are better.

Rejection is part of the process; however, by keeping your self-esteem and not rejecting yourself,
your opportunity for success in the next interview is that much greater.

Why do you (applicant) get only a stony silence from prospective employers after your interview?

Lack of proper preparation. This usually means misdirection or lopsided emphasis on non-
essentials. Many aspirants, for example, plunge into the re-digging of the academic subjects they
had studied in college or university. This is innocence (read ignorance)!

Those facing you at the interview have already formed a fair idea of your academic status and
calibre. They have the record sheets with them. They have the degree certificates, too. Ditto your
other achievements and their record.

They have probably conducted their own entrance, too. All in all, it means that they have a full
picture of what you have achieved in the academic and theoretical sphere of your study.

Then, why this interview? You may ask. It is simple. They want to “see” the “man” behind the
academic facade!

I illustrate this point from the life of a great literary figure—Dr Samuel Johnson. It was said of him
that he made a “sad spectacle” in society. The reference was to his ugly physical appearance.

But anybody who “met” him and had a few minutes of conversation with him found that he was the
most brilliant, wittiest conversationalist of his time. Those who came to scoff remained to listen to
him. Such is the magic and power of personality. And this comes out in interview.

A girl candidate who had a string of degrees was asked the meaning of the phrase “literary
coxcomb”. She flustered and fired offensive replies thinking that it was a hit at her academic status.
Nothing of the sort. It was a question rather aimed at her area of interest and she could have
cashed in on the opportunity.

The conclusion drawn was that the thick layer of academic had not permitted refinement of culture
to seep into her mind. It was all on the surface. It also revealed that the candidate was highly
conceited and the poise and confidence she exuded was shallow.

Thirdly, she unwittingly revealed that a little knowledge is a dangerous thing. Her approach was
raw, unpolished. Because a girl who has several degrees in her bag is supposed to have rubbed into
her personality some of what she has studied. It is like perfume. It naturally gets on to your skin or

Many aspirants “show” scholarly pose, concealing their real personality. They wrongly think that
the more learned you are, the more unkempt your personality. This is negative attribute and no
amount of “scholarly sophistication” can compensate for it.

So, if you have been rejected, tell yourself that there are reasons for it, emanating mostly from
your own self. Take stock of yourself. Groom yourself well. There is always another chance—

The chance will be lost again if the candidate fumbles and fails on some vital points. The candidate
should bear in mind that the prospective employer is a professional who neither gives nor takes
concessions. He is somewhat of a perfectionist
with exacting standards. He looks upon his future employee in long-range as he is going to work
with him for years.

Be sure you are communicating your positive, marketable points to him or her through the
interview. We all have marketable characteristics or experiences, and before the interview ends the
interviewer should hear about them.

Insurance is a financial agreement between two people or parties—the ‘insurer’ and the
‘insured’, namely to protect the ‘insured’ against certain risks. Before the onset of
liberalisation in 1990s, life and general insurance were the exclusive domain of Life
Insurance Corporation (LIC) and General Insurance Company (GIC) with it
subsidiaries called Oriental Insurance, United India Insurance, New India Assurance
and National Insurance. Thus, career options were limited to these organisations

The opening up of the insurance sector and the entry of private companies like Bajaj
Allianz, Prudential ICICI, ICICI Lombard, Birla Sun Life, Max New York, Tata AIG etc.
has led to an ever increasing demand for well-qualified, trained and skilled
professionals in the insurance industry.

The industry requires professionals in diverse disciplines, such as marketing,

distribution, operations, financial experts specialising in investment, banking and
mutual funds, accountancy, HR, software programming, technical and medical
experts, agents, actuaries, underwriters, risk managers and surveyors to name a
few. While some of these, like programming, marketing, etc, are common to other
industries, the rest are exclusive to the insurance sector.

Insurance Agent: Insurance is never bought, it is always sold. Insurance Agents sell
insurance policies for insurance companies. A person with the minimum qualification
of 12th standard pass (in urban areas) or class 10th pass (in rural areas) and 18
years of age can become an insurance agent, provided he/she clears the pre-
recruitment test conducted by the Insurance Institute of India.

While the Insurance Institute of India has been recognised by the IRDA as the only
institute to conduct the exam, a number of institutes have start offering training for
this course. While some of these are exclusively for training would-be agents, others
are companies (e.g. HDFC), those want to provide in-house training on company
specific products.

Though the regulator has provided a minimal qualification that stops at high school
and secondary school level, the private insurance players are looking beyond, at
graduates and post-graduates too. A graduation in science or commerce with a good
command over the language and a well-knit social circuit will help one get recruited
as trainee insurance agent by a private company. The person may need to clear a
pre-training interview/test before being considered for the training programme.

Sky is the limit to the earnings of an agent since he/she works on commission. An
agent in LIC is required to insure at least 12 lives per year. Thereafter his/her
earnings depend upon the types of plans he/she sells and the number of policies. The
agent gets to earn substantial amounts on these too, especially if the life insurance
runs into five figures. And, what with each individual allowed representing one life
and one non-life insurance company the opportunities are immense.

There are certain specialised functions in the insurance industry. Actuaries are
specialists in the mathematics of insurance and investment finance. They advise the
insurance companies regarding their risk portfolio and match their financial assets
and liabilities.

The long and exacting study and the paucity of a real market for these skills, till
recently, was responsible for restricting the number of qualified Actuaries in the
country to a mere handful. However, IRDA’s new regulation stipulating that all
insurance companies (Life as well as Non-life) must have an Appointed Actuary has
fuelled the demand for these specialists in the country.

How do you become one? A degree in mathematics, statistics, economics, business or

finance is a good starting point for a career in actuarial science. You could even do
your B.A. in actuarial science or a postgraduate certificate/diploma in insurance.

However, to become an actuary you need to become a Fellow member of Actuarial

Society of India, which is an organisation that is something like the Institute of
Chartered Accountants. The Fellow membership is achieved by passing examinations
at various stages and fulfilling other conditions as required from time-to-time.

A person is eligible to be considered for admission as student member if he/she

satisfies one of the following four conditions:
1. Passed 10+2 (H.S.C) or equivalent with at least 85% in Mathe-matics/Statistics
(with recommendations from two Fellow members of the Society) and the medium of
instruction is English in +2 or equivalent level.

2. Graduate or Post Graduate with subjects like Mathematics, Statistics,

Econometrics, Computer Science, Engineering, MBA (Finance) and alike besides
Actuarial Science would be eligible provided:
i) The total marks secured in the subjects coming under the classification of
Mathematical Sciences taken together in all the years of the degree course are not
less than 55%.
ii) The content of Mathematical sciences subjects’ content in all the years of the
course taken together is not less than 50% of the total content.
iii) The medium of instruction at the Graduate/Post Graduate level has been English.
3. Fully qualified members of Professional bodies such as the Institute of Chartered
Accountants of India, the Institute of Cost and Works Accountants of India and
Certified Institute of Financial Analysts of India, as also other qualified persons like
MBAs, are considered on a case-to-case basis. While considering the application, one
of the aspects to look for is the extent and level of mathematical/statistical
knowledge acquired by the applicant.

4. All continuing students of Institute or Faculty of Actuaries, UK, Society of

Actuaries, USA, Casualty Actuarial Society, USA, and Institute of Actuaries of
Australia are admitted on application.

While Actuarial Science can be pursued at various universities, the ASI alone confers
the Fellowship.

Address: The Actuarial Society of India, 9, Jeevan Udyog, 3rd Floor, 278, D. N. Road,
Fort, Mumbai- 400001. website: www.actuariesindia.org

Both life and non-life segments require professional underwriters, who assess the
risk in the business. In the life insurance business, an underwriter is expected to
filter the “bad or substandard lives”, whereas he takes care of risk management in
the general insurance segment. An underwriter reviews insurance applications and
decides whether they should be accepted or rejected. His or her judgement is based
on the degree of risks that would be involved in insuring people or objects of
concern. The underwriter explains policies and quotes rates to medical personnel,
other insurance companies or field representatives.

People with medical or life science background are preferred. One must also take up
the fellowship offered by the Insurance Institute of India or the courses offered by
Institute of Risk Management.

Address: Insurance Institutes of India, Universal Insurance Bldg, 6th Floor, Sir P. M.
Road, Fort, Mumbai - 400 001.

The institute runs courses and conducts examinations in insurance theory and
practice and in related subjects for awarding certificates, diploma and degree in
insurance. III conducts qualifying exams at three basic levels—licentiate, associate-
ship and fellowship in both general and life insurance sectors. Courtesy the winds of
reform sweeping across the Indian insurance scene, the Insurance Institute of India
(III) is in talks with international insurance institutes and management schools to
help build definite “specialised insurance” courses in India.

Insurance Surveyors
Insurance surveyors are qualified ‘investigators’ deputed for the assessment of
losses, according to their qualification and experience. Insurance Surveyors assess
the losses and claims when a client claims compensation for loss of property etc.,
due to accident, damage, fire, arson, theft, etc.
A licensed surveyor needs to have a Fellowship/ Associateship of the Institute of
Insurance Surveyors and Adjusters (IISA), D.N. Road, Fort, Mumbai - 400 001 or a
degree/diploma in architecture or a Fellowship/Associateship of the Institute of
Chartered Accountants or Cost and Works Accountants or a degree/diploma in
engineering. An engineer or a diploma holder can straight-away apply to the
Insurance Regulatory and Development Authority (IRDA) for a licence.

Alternatively, a graduate could clear the exams conducted by the IISA and become a

Assistant Administrative Officer (AAO)

The big brother of the Insurance industry in India is LIC (Life Insurance
Corporation), which employs over 100,000 people. Administrative Officer (AO)/Class
I Officer in LIC/GIC deals with the registry of claims within certain permissible
financial limits. He also deals with policy making, checking of various clauses and

The eligibility criterion for recruitment into both the LIC and GIC is the same.
You can join LIC (Life Insurance Corporation) as Assistant Administrative Officers
(class 1), through a highly competitive all-India examination, conducted by LIC,
involving written test and personality assessment through an interview.

The Development AAO (Class II Officer) in LIC deals with marketing and
procurement of business, meeting prospective clients, promoting the policies and
getting contracted. He recruits and train insurance agents. It is mainly a field job.
Graduates in the age group of 21 years-26 years are eligible.

University and other Institutes offering courses in insurance

BA in Actuarial Science/Insurance: Kurukshetra University, Kurukshetra - 136119,
Haryana; University of Mumbai, M.G. Road, Fort, Mumbai - 400003; University of
Delhi, Delhi - 110007; Utkal University, Bhubaneshwar - 751004; Manipur University,
Canchipur, Imphal - 795003.

BSc in Actuarial Science: Goa University, Sub PO Goa University, Taleigao Plateau,
Goa - 403203.

Masters in Insurance Management (2-yr FT), PG Diploma in Insurance

Management(1-yr FT/2-yr PT) Certificate in Life & Non-Life Insurance Management
(for agents interme-diaries): Amity School of Insurance and Actuarial. Science, M
Block, Saket, N. Delhi - 110017.

MSc in Actuarial Science: University of Chennai, Centenary Buildings Chepauk,

Triplicane PO, Chennai - 600005.

PG in Actuarial Science: Kalyani University, PO Kalyani - 741235, Distt. Nadia (WB).

Conducted in collaboration with LIC, this course, the first of its kind in the country,
comprises transactions in finance, insurance and banking operations. Eligibility:
Graduation with maths as one of the subjects.

PG Diploma in Actuarial Science: Bharathidasan University, Palkalaiperur,

Tiruchirapalli - 620024, T.N.; Bishop Heber College (affiliated to Bharathidasan
University), Tiruchirapalli - 620017.

PG Diploma in Insurance & Financial Service: University of Pune, Ganeshkhind, Pune

- 411007.

Diploma in Insurance: University of Chennai, Centenary Buildings, Chepauk,

Triplicane PO, Chennai - 600005.

Diploma in Insurance (PT): Annamalai University, PO Annamalai Nagar - 608002,


Diploma in Banking & Insurance: Aligarh Muslim University, Aligarh - 202002, U.P.

PG Diploma in Insurance Management (correspondence): Alagappa University,

Directorate of Distance Education, Alagappa Nagar, Karaikudi - 623003.

PG Diploma in Insurance & Risk Management: Birla Institute of Management &

Technology, Sector 4, Pushpa Vihar, New Delhi - 110017.


A Curriculum Vitae (CV) is quite simply an advertisement to sell yourself to an employer. The
main purpose of your CV is to make you attractive, interesting, worth considering to the company
and so receive a job interview. An employer may have several hundred enquiries about a single job.
Therefore, your CV must be as good as you can make it.

The terms 'Curriculum Vitae' and 'Resume' are generally interchangeable. But, they do differ in
many ways. While both are lists of the most relevant information of a person seeking a job, there
are a few basic differences. While the CV represents in-depth and structured information about the
professional experience and qualification of a person, the resume usually is the same thing in a
short form.

CV is the most accepted form for job applications all over the world. The resume, on the
other hand, is the most accepted form for job applications in USA. The CV is used in USA
exclusively for jobs in academics.

A CV should be well laid-out and printed on a good quality printer. You should use bold and/or
underline print for headlines. Do not use lots of different fonts and sizes.

Before submitting your CV do not forget to spell-check/proof-read. This is important.

Also, make sure you include all the information about yourself that will help the recruiter to consider
you as a potential candidate. Remember the principle: “If they did not hear it, you did not
say it”.

Picture yourself to be a busy manager in the employer's office who has to read through hundred of
CVs in half an hour and select the best from them. Thus, your CV must be precise, easy to read and

After you have written your CV get someone else to look at it. What you have written may seem
simple and obvious to you, but not to other person (and ultimately an employer). Go through it
again and again and refine it to make it short, easy to read, attractive and error-free.

Preparing to write your CV

Sit down with a piece of paper. Look at the job that you are applying for. Consider how your skills,
education and experience compare with the skills that the job requires. How much information do
you have about the job description?

Sometimes employers do not give enough information. Ask for more detail if needed. Spend time
researching detail about the job that interests you and information about the employer—their
structure, products, successes, and approach from their own publicity, reports and publications, as
well as newspapers and internet.

Information to include in your CV

Personal details: Name, home address, college address, phone number, email address. Do you
have your own web homepage? Include it if it's good!).
Education: Give places of education where you have studied. Most recent education should be listed
first. Include subject options taken in each year of your course. Include any special project, thesis,
or work.

Pre-college courses should then be included, with grades. Subjects taken and passed just before
college or during college will be of most interest. Earlier courses, taken at say age 15-16, may not
need much detail.

Work experience: List your most recent experience first. Give the name of your employer, job
title, and very important, what you actually did and achieved in that job. Part-time work should also
be included in your CV.

Interests: Employers will be particularly interested in activities where you have undertook
leadership role or a responsibility, or which involved you in relating to others in a team. A hobby
such as coin-collecting may be of less interest to them, unless it connects with the work you wish to

Give only enough detail to explain. (If you were captain of a sports team, they do not want to know
the exact date you started, how many games you played, and how many wins you had! They will
ask this in the interview, if they are interested.) If you have published any articles, jointly or by
yourself, give details.

If you have been involved in any type of volunteer work, do include the details.

Skills: Ability in other languages, computing experience, or possession of a driving licence should
be included in your CV.

References: Usually give two names—one from your place of study, and one from any work place.
Or, if this does not apply, then an older family friend who has known you for some time should be
given as a reference. Make sure that referees are willing to give you a reference. Give their day and
evening phone numbers if possible.

Length: Maybe all you need to say will fit onto one sheet of A4. But do not crowd it and layout your
CV with reasonable line-spacing and white spaces around. No harm if your CV takes two A4 sheets.
Do not normally go longer than this. Put page numbers at the bottom of the pages—a little detail
that may impress.

Style: There are two main styles of CV, with variations within them.

Chronological: Information is included under general headings— education, work experience, etc.,
with the most recent events first.

Skills based: You think through the necessary skills needed for the job you are applying for. Then
you list all your personal details under these skill headings. This is called 'targeting your CV', and is
becoming more common. Do take advice on how to do it best.

Covering letter: When sending in a CV or job application form, you must include a covering letter.
The purpose of the letter is:

To make sure that the CV arrives on the desk of the correct person. Take the trouble to telephone,
and find the name of the person who will be dealing with applications or CVs, and address your
letter, and envelope, to that person by name. (In a small company, it may be the managing
director. In a medium size company, it may be the head of section/department. Only in a large
company will there be a Personnel or Human Resource Department.)

Clearly say what job you are interested in. If you are sending in a 'speculative' CV hoping that they
may have work for you, explain what sort of work you are interested in. Do not say, 'I would be
interested in working for ABC Ltd', but say 'I believe my skills equip me to work in the product
development department/accounts office/etc'.

Start your letter with an underline heading giving the job title you are interested in. (If you saw the
job advertised, say where you saw it.)

Application forms
To apply for some jobs, the employer will send you an application form. You should still use a
covering letter, and send your CV also unless told not to. Application forms need as much care to
write as CVs.

Other points
Keep copies of all letters, applications forms, and CVs sent, and records of telephone calls and
names of those you spoke to.

The main features of the CV, in brief, are:

• CV is a list of all your achievements until the date you are submitting it, presented in
reverse chronological order (i.e. the latest achievements first).
• A CV is ideally two pages in length, though it can sometimes go up to three to five pages.
• CV should include everything that you have done and can be classified as work outside the
home—whether paid or unpaid; hence, it is okay if the Curriculum Vitae contains voluntary
and honorary positions and work done in such positions.
• The CV structure should be very systematic and is generally drawn in a specific order.
• A CV is normally accompanied by a cover letter, which summarizes what it contains and
points out the match of the applicant with the job.

The Resume

• A resume is a precise and very brief document representing at-a-glance your key skills and
main achievements.
• A resume should not be longer than one page, unless in rare exceptions.
• A resume would contain of only what is strictly relevant to the job applied and nothing else
—it is more important to have all the information contained within one page.
• A resume should highlight your skills and achievements above all other things.
• A resume is usually presented without a cover letter because the main reason you are
submitting the resume is fast processing; a cover letter would defeat the purpose.

A resume usually can be written in three very different styles - (i) Chronological
resume—whereby your skills and main achievements are listed by date starting with
the most recent ones first, (ii) Functional resume—whereby your skills and
experience are more highlighted than anything else and (iii) a combination of both—
whereby both skill and achievements are presented hand-in-hand.

Do not ever falsify information, or give any misleading information to an employer
under any circumstances whatever. It's illegal, it's self destructive, and it's just plain
stupid. Do not put yourself in a position where your statements can't be trusted. Only
give verifiable information, and do not exaggerate. Quality of information is what
really matters on any CV. Keep it real, at all times.


You have to keep busy by finding worthwhile projects and aims in which you use your
physical, mental, and intellectual faculties. They challenge you to improve your
competitive skill, managerial proficiency, and ingenuity.

If you want to subscribe to this practical way of life, you have to discard the
prevalent notion that to be successful you have to be well connected. Such an
approach atrophies your faculties. You will, in the long run, come a cropper in career

If you want to get a thing done, give it to a busy man! The implication is that he is
busy because he is doing things, hence, he will do your work, too.

Give it to a man who has plenty of leisure time at his disposal, and he will not budge
from his groove. He has plenty of spare time because he is not doing anything.

Such a person is happier than the “mentally lazy” one. He is constantly planning. This
is the path to a satisfying life. This is especially true when you do things you like

Your present way of living does make heavy demands upon us but there are
compensations galore. One is that it fetches vast stretches of leisure time. This is
precious time you call your own.
The sad aspect of this is that you fritter away this time on fancies and frivolities.

A youngster, in quest of a career, spends two hours in gossip and chat session in
coffee house or a beer bar. At the end of the year, he finds himself trailing those
whom he dubs mediocrities! It’s important that part of this time should be used for
doing things which are going to stand in you in good stead in the long run.

Cell phone calls prove the point. You get a call. You respond, “I am in Shimla on a
holiday. Call after two days.”

This is anti-growth. Actually, it makes you bored and banal because we are active
when working. When you are inactive and sluggish, you are disgruntled. Being busy
does not destroy your inner tranquillity—it helps in its growth.

Boredom, on the other hand, breeds trouble. It gives you time to brood over ugly
aspects of your life, focus on failures, and add to negatives. The negative skeleton
becomes bigger and bigger. The positive one shrinks in that measure. Your career
sags in that proportion.

Ennui is your greatest enemy. It gives you time to smart under real and imaginary
grudges, complaints, and regrets. You begin to wallow in self-pity. You love
depression (dark mood) and ready yourself to give up your life-aim. This is the sign
of a wait. Wait is defined: washed away by the sea but unclaimed: stolen goods
thrown and by the thief; a stray person.

There is a way out: you must have at hand something going which keeps you
physically and mentally involved. You want to compete with others in this harsh
world, you must have something harsher-going in your hands.

As you plan your future, you find the feelings of well-being growing in you. This
brings about a change in your attitude. There is a spring in your step, a rainbow in
your heart. You have galvanised yourself.

Emotion is linked with success. You will soon be enjoying emotionally induced
success. The complex human physical system works better when you are emotionally
up-beat. All successful people have an inner glow.

Your mind becomes a beehive of activity. It cannot become sluggish when it is

engaged in a activity of its liking and stimulating kind. Look for something to
overcome; rather than criticise. It does not matter what is it, how small it is. Look for
an opportunity to “achieve”.

Michael Korda puts it like this: most of us fail in (career) because we do not control
our laziness. We are held back by laziness which produces a permanent inertia. The
trick is to transform a negative quality into a positive reinforcement. In simple words
There is no royal road to learning.
—English proverb

For effective learning and remembering, the adoption of psychologically sound

techniques is essential. In this chapter we outline such techniques.

Cut out rituals

A ritual is a preliminary to something else. There are many rituals indulged in as

preliminaries to studying. There are personal rituals. Some students must go through
the ritual of dressing for the ordeal of study. Some pre-study rituals take the form of
special eating. These are gastronomical rituals. Then there are social rituals like
talking to some one, making telephone calls.

Such ritualistic activities are apparently legitimate reason for postponing studying
that is anticipated as both being difficult and disagreeable. Indulgence in them
means frittering away of time and energy. They are attempts to put off what you are
not at all eager to do. Cut out the rituals. Get on with the work.

Spaced v. Continuous method of study

In the spaced method of learning, learning periods are distributed in time separated
by periods of rest or the periods of very different activity. It is also called the
distributed or the study—rest—study—rest method. It is contrasted with the method
of continuous study.

Psychological research has repeatedly shown that the spaced method is superior to
the continuous method. The spaced method encourages you to spend more time on
studying. You experience less fatigue. The rest pause following a period of learning
gives you an opportunity to integrate what is learned. The rest pause not only makes
integration possible, it also makes the forgetting of wrong things possible, thus
making retention of the right things possible. Adopt the spaced method.

The SQ3R system of study

The SQ3R system of study has proved of undoubted value in American colleges and
universities for effective study. The SQ3R stands for: Survey Question Read Recite

(1) Survey: Briefly this means that instead of picking up a textbook and reading one
of its chapters over and over, you should first ‘survey’: i.e., find out all you can about
the aims and purposes of the book, read the author’s preface, study the table of
contents and the index, read the chapter summaries (if there are summaries) and
skim rapidly through the book. Keep in mind your own object in study, the syllabus
you are trying to cover, and the relevance of the book to your own areas of interest.
If the book does not suit your purpose, if it is not well-written, and at the right level
of standard, look for a better one that makes the grade. In brief make a
reconnaissance before you start your main work, and get an over-all perspective of
what lies before you. It is akin to military, naval, etc reconnaissance and its
importance can hardly be over-stressed.

(2) Question: This step involves asking questions. It entails going rapidly through
the chapters of the book which you are tackling and jotting down such questions as
occur to you. This is useful as it motivates you and gives you a purpose. It compels
you to think and to marshal such knowledge as you already possess. By maintaining
a questioning attitude you will, in due course, come to study books critically: “No
intelligent person merely reads a book. He cannot help dwelling on particular points
as he reads, and contrasting or uniting them with other points that he has just
grasped.” Bacon wrote, “Read not to contradict and confute, not to believe and take
for granted, nor to find talk and discourse, but to weigh and consider.”

(3) Reading: The next step—reading proper—is of vital importance. The first reading
of a textbook chapter should be slow and thorough. Most good textbook chapters
have a pattern of headings and subheadings which you should keep at the back of
your mind as you read. If the subject is illustrated by graphs or diagrams take the
trouble to master them. They are much more easily remembered than long verbal

This type of reading is analytical reading, the aim of which is to discover the details,
the specific results, the facts out of which the general ideas and broader view of the
subject developed. It requires you to read more slowly, to re-read sentences and
paragraphs that are not clearly understood. It is the reading in which your major
study work is done.

(1) Automatic reading, which fails to command conscious attention. Avoid it, for
establishing the habit of reading ideas rather than words.
(2) Reading as a ritual like reading an assignment three times with the blind faith
that somehow three readings of an assignment will lead to success.
(3) Recitation: Recitation is defined as an attempt to reproduce in any way that
which is being (or has been) learned.

Recitation is a very potent and effective factor in remembering (memorizing) for the
following reasons:
(a) It keeps motivation strong.
(b) It facilitates the use of immediate goals.
(c) It tells you how well you are progressing in learning.
(d) It gives rise to reward when you are successful or punishment when you are less
successful in what you are learning.
(e) Finally recitation gives you patience in doing what you ultimately want to do.

Bacon wrote, “If you read anything over twenty times, you will not learn it by heart
so easily as if you were to read it only ten times trying to read it between lines and
when memory failed looking at the book.”

How to recite

Following are ways in which you can recite a given material.

(1) Write it.
(2) Draw things which lend themselves to drawing, e.g., data represented
(3) Picture it, e.g., visualize the characteristics of each of the several types of
architecture you are studying.
(4) Hear it—hear that musical selection you are trying to master. Use other senses
(5) Tell it to someone.
(6) Explain it to someone—e.g., a complex theory you are trying to learn.
(7) Talk it over—discussion in a group of two or three.
(8) Outline the substance.
(9) After reading each major section of a chapter, lay the book on one side and try to
recall what you have been reading. Periodic recall is an undoubted aid to learning.
(10) Write out abstracts. Studies have shown that time spent in active recitation
leads to more effective learning. Its value is further enhanced when there is some
device by which you are kept informed as to whether the ideas you are recalling are
correct or incorrect.


The final step of SQ3R system is Revision. Revision should not be considered
something to be undertaken just before exams. Memory experiments show that
material that has to be retained over long periods should be studied and restudied.
Memories become stronger and stronger with each re-learning and forgetting
proceeds more slowly.

The first revision should take place as soon as possible after the original learning.
Further revisions are often necessary before the final revision which precedes
exams. Underlining the importance of review Prof W.W. Ruch says that it is
important to review as soon as possible after learning and then to review again and
again from time to time. “Review should be selective, with the most emphasis given
to those parts which are most important or most difficult.”

In revision before exams, pay particular attention to the earlier material you have
learnt, as more of it will have been forgotten. Leave yourself time to go over all the
material you have covered. Research studies have shown that subjective estimates
of strengths and weaknesses are often faulty. Active revision, and a few attempts at
answering old exam questions should give you a better idea of where your true
strengths and weaknesses lie.

It needs emphasis that revision should be an active rather than a passive process.
‘Revise by writing down from memory what you know about each topic, then check
with your books and notes’, is sound advice.

Technique of over-learning

Over-learning is an important technique in learning and remembering. Over-learning

is learning in which repetition or practice has proceeded beyond the point necessary
for the retention or recall required. Such over-learning may, however, be necessary
in view of the factors likely to affect recall, which are bound to enter subsequently
from the circumstances of the case.

It is that added time and effort beyond what is required now that you have put into
learning what you intend to recall at sometime in the future. It also means that you
spend added time and energy learning something which you already know.

As Maddox observes, material is underlearned when it has not been studied long
enough for you to be able to recall it 100 per cent correctly. It is over-learned when
you continue to practise it after you can recall it 100 per cent correctly. For example,
it might take you 10 minutes to learn a vocabulary of 20 foreign words. If you then
carry on learning and reciting with the same close attention as before, you are over-
learning the material. Another 5 minutes would represent 50 per cent over-learning,
another 10 minutes 100 per cent.

It pays to over-learn because of the distinct gain in retention: it increases the

strength of your memory traces. “If you want to remember something for a long
time, you should over-learn it.”
Over-learning to be effective, must be active learning. Your attention must be riveted
upon what is being learnt. Therefore, over-learn actively and with conscious
attention by using various methods of recitation. As Dudley puts it, “Do not repeat
what you wish to remember until you barely know it, but until you know it really

Whole v. part technique of learning

In the whole method of learning, that which is learned is always dealt with as a
whole. When you memorize a poem by reading the entire poem through again and
again you are using the whole method.

The part method is a case of breaking the whole up into parts and learning the parts
part by part. Learning a poem by the part method means that you learn it line by line
or stanza by stanza, not going on to the next line or stanza until the previous one has
been learned. As each part is learned in turn, the whole poem is finally mastered.

There is a third method called the progressive part method. By this method the
poem is learned line by line or stanza by stanza, as in the part method, but after the
first and second parts are learned, the two are repeated together thus making them
into a unit. Then the third part is learned and subsequently added to the first two and
now the three are repeated. This process is continued until the whole poem is
mastered. This is a combination of the whole and part learning.


Each of the two methods, the part learning and the whole learning has its
advantages and disadvantages.

Advantages of part learning

In rote learning short tasks are proportionately easier to learn than long tasks.
Therefore it is easier and quicker to do rote learning in a series of short sections than
to try to learn a long task all at once.

In part method the learner gets knowledge of progress sooner and is thus
encouraged. Another advantage is that each part is learned to mastery and then
dropped for the moment. This eliminates spending more time than is needed in going
over easy parts.

Advantages of the whole method

Since meaningful material is easier to learn than non-meaningful material, anything
that enhances meaning helps learning. Here the whole method has the advantage.
When the whole task is broken up into parts the parts frequently become less
meaningful because the continuity or relationship between them are lost.

When material is learned by the part method, the parts must eventually be put
together. This makes necessary the additional task of learning the transition
between parts. The whole method has the advantage of eliminating this step.

Logic favours the whole method. Says Martin Rhodes, “It is better to learn in wholes
than in parts. Thus you tackle the whole poem every time, not a verse every time.”
Another expert holds that it is better to repeat the material as a whole than to break
it up into parts and repeat each part separately. Sir John Adams also recommends
that every unit in learning should be learnt as a whole. When you learn a poem by
stanzas, he points out, “each is inclined to stand out as a unity by itself, and there is
a difficulty at the end of each in getting switched on to the proper one to follow.”

Flexibility of method

As the above considerations make clear, there is no general rule concerning the
relative effectiveness of the two methods. Experimental methods do not favour any
of these methods—the whole method, the part method and the progressive method—
over the others. In fact in the light of the experimental results, use whichever
method you prefer. By preference the progressive method is favoured by most
learners. Prof W.W. Ruch recommends a combination of part learning and whole
learning: “In practical learning situations the best results will probably be attained
when part and whole methods are combined. Go over the whole task a few times to
get the advantage of meaning and continuity and to detect the difficult parts. Give
these parts extra effort, and then practise the whole task again.”


A man who does not think and plan ahead will find trouble at his door.

The Importance of planning

Planned or unplanned activity makes a difference. Carrying out an activity by fits and
starts, spasmodic and desultory dabbling never produces the same result as work
carried on with a definite purpose and clear-cut lines.

If G.B. Shaw had not made it a strict rule to do first things first, he would probably
have failed as a writer and might have remained a bank cashier all his life. His plan
called for writing five pages each day. That plan and his dogged determination to
carry it through saved him. That plan inspired him to go right on writing five pages a
day for nine heart-breaking years, even though he made a total of only ... about a
penny a day.

He snapped his fingers at circumstances and said, “People are always blaming their
circumstances for what they are. I don’t believe in circumstances. The people who
get on in this world are the people who get up and look for the circumstances they
want, and if they can’t find them, make them.”

No magician ever pulled a rabbit out of a hat without carefully putting one there in
the first place. No man can hope to arrive if he does not know whither he is going. He
will be like a ship without a rudder, adrift at the mercy of wind and tide or of

The difference between planned activity and unplanned activity is brought out crisply
by Victor Hugo: “He who every morning plans the transactions of the day, and
follows that plan carries a thread that will guide him through the labyrinth of the
most busy life. The orderly arrangement of his time is like a ray of light which darts
itself through all his occupations. But where no plan is laid, where the disposal of
time is surrendered merely to the chance of incidents, all things lie huddled together
in one chaos, which admits of neither distribution nor review.”

The secret of success in any field of endeavour, including study lies in six magic

How to plan your study-work?

In coping with any course of study make yourself (1) a long-term plan embracing the
total time you have at your disposal; and (2) short-term plans, monthly, fortnightly,
or weekly as may be convenient.

For making the long-term plan find out all about the syllabuses you have to cover,
the text books and other material you must read and learn, the practical work you
have to cover and other requirements which you have to satisfy. This long-term plan
may have to be revised from time to time, but you should have an over-all picture of
your study-work and the time-range of your plan.
The long-term plan may be split up into periodical short-term plans in which you can
set yourself targets for important pieces of work.

Keep a record of the progress of your plans-in-action.

How to work your plans?

Your plans will work only if you work them. Give top priority to their implementation.
Put your whole heart into them. Strive with both your body and mind towards hitting
your targets.

Give each stage in your plans your undivided attention. Don’t look farther than each
stage, thereby following the example of the mountaineer who cuts steps in the ice,
refusing to look up at the heights or down into the depths because the sight of either
would terrify him.

A French sage remarks pertinently, “The fool thinks every thing is easy and comes in
for many rude awakenings; the sluggard believes that all is impossible, and
undertakes nothing; the good workman knows that great things are possible, and
prudently, little by little, he accomplishes them.”

The homely saying “Little by little and bit by bit” teaches patience and perseverance.
Don’t be discouraged by the size of the task you have to do. Stick to it and you will
achieve success. The well-known fable of the hare and the tortoise teaches us that
slow but sure, wins the race. The race was won by the slow tortoise, which plodded
steadily on while the hare, over-confident of victory, took things too easily.

To persist you need the ability to turn a deaf ear to the remarks of other people.
Some will tell you that you cannot succeed because you lack brains, brawn, skill,
time and so on. Others will tempt you to leave work for more pleasurable
occupations. Do what you have planned inspite of discouragement and temptations
of others. Then the day will come quickly when you will have the satisfaction of
reaching your goals and free time for pleasure while others are still dabbling,
wobbling and struggling.

You never hear of quitters. They never attain success or happiness. They go through
life leaving a trail of unfinished jobs—what can they possibly lead to but frustration
and failure? A winner never quits; a quitter never wins. I

Frame a time-table: Indispensable need

For successful study a time-table is an indispensable need. As the old saying has it,
what may be done at any time is done at no time. When you don’t work to a time-
table but work only when the fit is on you, your study will become spasmodic.

Advantages of a time-table
The advantages of a time-table are many: (i) The first advantage is the saving in time
and effort. Without it you are likely to spend much time in decision—in making up
your mind when and what to study. A lot of energy is uselessly consumed in trying to
choose between alternatives and in screwing up your resolution to work. As William
James has it, “There is no more miserable human being than one in whom nothing is
habitual but indecision.”

(ii) The second advantage is the proper use of time. It is ‘fatally easy’ to fritter time
away. If you do not impose set hours on yourself, you are more likely to spend the
time when you should be studying, in watching TV, reading a magazine, conversing
idly over cups of tea or in doing any of those hundred and one things which weak and
irresolute persons are ready to do rather than buckle to work. If you have a time-
table and mean to stick to it, “it has all the force of a law which must be obeyed, and
in time adherence to it becomes effortless, and you begin to regard it as a natural
part of your life.”

(iii) The third advantage lies in the saving that comes from intelligent dovetailing of
your various activities; in ensuring that you do each work at the best possible time;
and eventually in the self-confidence and sense of competence which comes from
regular daily work.

(iv) The fourth advantage is that a time-table is an antidote against procrastination.

Procrastination—deferring things from day to day—wastes a lot of time and usually
ends in nothing being done at all. Edward Young who coined the famous proverb
‘Procrastination is the thief of time’, also exhorts, “Be wise today; ’tis madness to

(v) A time-table makes for efficiency. “A sense of the value of time”, says Arnold
Bennett, “that is, of the best way to divide one’s time into one’s various activities—is
an essential preliminary to efficient work; it is the only method of avoiding hurry.”

(vi) Finally, a carefully worked out time-table will help you to keep up to date, to
form good study habits and to persevere.

How to frame a time-table?

In the light of psychological research, the following guidelines are suggested for
making a time-table:

(1) A time-table is a guide. It is an aid, not a task-master. It must be flexible. It can

be changed from time to time to meet present needs and exigencies.

(2) As much as possible use your day time hours for study. During the day our
attitude towards work is more positive, and as a rule, we have more energy and are
less fatigued.

(3) Do not be too heroic: In order that you may live up to your time-table base it on a
careful estimate of your capacity for work. A time-table that falls through has its
disastrous aftermath. Fix a number of hours that you know to be within your powers.

(4) Having estimated the total amount of time to be given to study, settle in what
order these subjects should occur in your time-table bearing the following principles
in mind:

(a) The more difficult subjects should come first and the easiest last.

(b) While the hardest subjects should generally come first and the easiest last, there
is room for a certain alteration of the easy and the difficult. After a very hard subject
a very easy one may be used as a kind of rest after the strain. But the alteration
should be according to the different kinds of subject. For example, international law
should be followed by sociology and mathematics by history.

(5) Introduce a variety of different kinds of tasks: spend some time reading, some
writing, some on revision and so on. Follow a period of sociology with a period of
geography. As Martin Rhodes observes, “Your mind responds to variety which
prevents it from becoming stale and helps to keep it alert and lively.”

(6) Have a target for each period of study, a fixed quota of work to get through, such
as a chapter to read, an essay to write.
(7) Don’t be overly rigid in the use of your time-table. If you cannot finish your
target work at the exact moment when a new subject is due, don’t stop when a few
more moments might produce all the difference between complete and incomplete

(8) The length of the study periods to be devoted to each subject will depend upon
the nature of the subject and your stage of advancement. Experts have suggested
various periods (i) 40 minutes; (ii)45 to 90 minutes and more. As a general rule 60
minutes forms a suitable average period of study for a subject.

(9) It is necessary to give equal time to your subjects. If you find a particular subject
difficult allot more time to it than to others.

Rest Periods
Rest means abstinence of exertion or activity. There are optimum periods of work
and rest for every task and for every individual. “The art of resting”, says Andre
Maurois, “is a part of the art of working.” An individual who is tired and greatly in
need of rest cannot do any good work. The human organism cannot survive without
alternating work and rest. Work produces fatigue; rest or recreation removes fatigue.
Goethe said, “Repose is work’s greatest achievement.”

In the course of study, rest periods or breaks are essential and invaluable. Boredom,
distractability, and dissatisfaction with work tend to set in after about two hours
without a break.
The following guidelines on rest periods given by an eminent psychologist are

During a session of continuous work on the same task, rest periods should be short
in relation to the work period—of the order of 5 minutes or so. If longer breaks are
taken momentum will be lost and considerable effort needed before you become
warmed up to the task again. A rest should be taken whenever you feel that you are
slowing down and making errors.

A change in activity or posture during the rest are desirable, such as walking around
the room, stretching your arms, etc.

Rest intervals between different tasks may well be longer—about 10 or 15 minutes.

Then a short, brisk walk outside or some light refreshment, often serves to restore
energies to their former level.
In general, it is sensible to take 15-minute breaks between tasks and smaller breaks
in the course of a task.

Adhere to your time-table

Having drawn up your time-table, adhere to it. You must be ruthless and self-
disciplined and permit only special circumstances to interfere with it:

“See first that the design is wise and just,

That ascertained, pursue it resolutely,
Do not for one repulse forego the purpose
That you resolved to effect.”

George Stephenson, when addressing young men, was accustomed to sum up his
best advice to them in the words, “Do as I have done—persevere.”
If you want to reach your goal, you will have to give up your giving up and replace it
with dogged perseverance. Sir Thomas Fowell Buxton once wrote: I hold to a
doctrine, to which I owe not much, but all the little I ever had, namely, that with
ordinary talent, and extraordinary perseverance, all things are attainable.

Planning your work and working your plan will ensure your success. Make it a habit
to work to your time-table. “Habit is a second nature! Habit is ten times nature”, the
Duke of Wellington is said to have exclaimed. Keep to this habit till you reach your
goal. And don’t ever be discouraged if every shot is not a bull’s-eye.

Whatever the economic circumstances and business environment—recession or growth;
confident or uncertain—organisations are increasingly calling for better information
handling and more informed decision taking. Operational Research (OR) is an
essential management tool for understanding and solving the many complex
problems that face organisations nowadays.

Operational Researchers work to help manage information effectively, cope with

uncertainty and provide long and short term strategies for their organisations.
Opportunities for OR professionals have never been better. The demand for OR
specialists and the variety of work on offer are expanding rapidly.

One of the attractions of OR work is its variety. As an Operational Researcher you

could have the opportunity of moving around and experiencing many different
business environments.

Operations Research is concerned with optimal decision-making in, and modeling of,
deterministic and probabilistic systems that originate from real life. These
applications, which occur in government, business, engineering, economics, and the
natural and social sciences, are characterized largely by the need to allocate limited
resources. The contribution from the operations research approach stems primarily
—Structuring the real-life situation into a mathematical model, abstracting the
essential elements so that a solution relevant to the decision- maker’s objectives can
be sought. This involves looking at the problem in the context of the entire system.
—Exploring the structure of such solutions and developing systematic procedures for
obtaining —Developing a solution, including the mathematical theory, if necessary,
that yields an optimal value of the system measure of desirability (or possibly
comparing alternative courses of action by evaluating their measure of desirability).

OR is a profession where initiative, creativity and enthusiasm are every bit as

important as technical ability. If you are thinking of a general management career,
there are few better ways of getting an early overview and understanding of how
organisations operate. Typically, OR teams are involved in projects which draw on a
wide range of business skills and have dealings with anyone from shop-floor to
boardroom. Whatever your career aspirations, OR will give you a flying start!

OR is an evolving discipline—because the world is ever changing. Over the years, OR

has firmly embedded itself in a wide range of sectors, including manufacturing,
transport, retailing, marketing, the financial and service sectors as well as local and
Central government.
Because the skills of good OR—an analytical mind with an action orientation and
sound people skills—are precisely what are needed in all successful managers, OR is
a significant recruiting ground for senior management talent.

Some of the varied career opportunities that are available to Operational Research
people are:

Transport and travel: Growth in the transport sector is often constrained by financial
and environmental pressures, government restrictions and the need to maintain
safety standards. The result of this is that demands often exceed the capacity of the
system and there is always a need to squeeze the maximum possible out of the
existing infrastructure, and formulate and debate plans for future improvements.

This drive for optimising the use of existing systems, and for forward planning, can
be helped by OR. For example, OR developed techniques are used widely by airlines
and other transport operating companies to offer varying fares and make higher
revenues by filling more seats at different prices—an OR technique known as Yield

Retailing : The analysis of market and consumer information is a major and rapidly
growing role for OR in the retail sector. In supermarkets, for example, OR has been
used to determine which shelf layouts best suit the shopping habits of customers
and, so, maximise the outlet’s sales. Data from store loyalty card schemes is also
analysed by OR groups in a variety of ways—for example, to advise on stock holding
policies and overall profitability improvement.

Health: Efficiency enhancements and better patient care are perennial challenges for
those providing health services. OR techniques are widely used in the health service.
For example, by using OR, appointment systems have been designed that
substantially reduce outpatients’ waiting times whilst keeping highly qualified
medical staff fully occupied.

Financial services: OR is very active within the major banks and other financial
institutions. Operational Researchers address a very wide range of issues from the
planning and analysis of high-street customer services to organisation strategy and
international finance. They are widely employed in Credit Risk Management—a vital
area for lenders needing to ensure that they find the optimum balance of risk and

The project variety offered to Operational Researchers enables them to develop a

wide range of experience at an early stage in their careers. This means that, in
banking as in other sectors, OR groups are treated as a source of talent for general
management positions.

Government: There is a demand from the very top of government for the increased
use of analysis and modelling to underpin the ‘Modernising Government’ initiative.
OR is seen as a key contributor assisting in the development of policies that are
based on evidence and will work in practice.

Universities and research institutions: OR people teach on a variety of university

courses: undergraduate and postgraduate management degrees and diplomas, as
well as the more specialist OR and mathematics degrees.
Staff of universities also specialise in the development of techniques and universities
encourage people to pursue consultancy work for outside organisations. In addition
to providing a source of income, more importantly, this work helps to strengthen the
links between the academic and practical OR environments.

Specialist Research institutions, such as those in agriculture and forestry, often

employ OR trained people. Depending on the institution’s needs, these people could
be part of a small OR team or attached to a specialist research team.

Defence: As a consequence of the development of very fast, computer controlled,

defence systems, computer modelling of attack-defence scenarios has become of
paramount importance. This has led to an increased presence of Operational
Researchers and there is a strong presence both within the Ministry of Defence and
the Defence Research Agency.

Consultancy: Consultancy is a strong growth area and many business consulting

organisations increasingly have sections that specialise in business modelling,
statistics and OR. Consultancies tend to have a very broad client list and, therefore,
their consultants tend to be involved in a wide variety of project work.

Consultancy projects are often fairly short and intensive with a particular emphasis
being put on achieving an agreed timescale. There is also a requirement to deliver
results which clients will consider to be value for money.

Database marketing: OR techniques have been used to develop programmes which

can identify and cluster various customer types. Given the need for companies to
target their marketing activities ever more finely, database marketing has become a
very important element in many companies’ marketing strategies.

Having data capture systems in place, that can identify customer behaviour patterns,
helps companies to understand which types of customers buy what kind of products
or services. The task of matching customer needs to stock holding or product
development strategy then becomes very well informed.

Clearly, in an operation such as food retailing, millions of transactions can be

completed each day. As the point of sale bar-code scanning technology has
developed, retailers are now able to capture immense volumes of sales data which,
by virtue of loyalty card schemes, they are able to attribute to individual customers.
Until recently, it was impossible to analyse such large databases, but new OR
techniques have made this achievable.

By applying OR methods to such an immense volume of data, it is now possible to

use the information to devise precisely targetted communications about products
and services which are most likely to appeal to the targetted customer group.

Business Process Re-engineering (BPR): The ever greater need for companies to
increase profitability has resulted in many BPR initiatives. Since improving business
processes is a core OR function, Operational Researchers have become heavily
involved in helping companies to re-engineer.

Many management consultants have Operational Research Groups that are highly
skilled in the techniques and application of business modelling and have the essential
expertise in analysis and interpretation to deliver a positive impact on their clients’
business processes.
Manufacturing Industry: OR has traditionally played a significant role in helping
companies to improve efficiency, reduce costs and make the most effective use of
capital invest-

OR is commonly used to assist with plant logistics, forecasting, planning and

scheduling. It also contributes to marketing, personnel and strategic planning work.
The types of industry currently using OR are numerous and include brewing,
computers, motor manufacture, aerospace, steel production, etc.

Water, power, telecommunications and mining: In these business sectors, the

cultural changes brought about by privatisation have tended to emphasise the
contribution of OR.

The scale of operations in such large organisations means that even a small
percentage gain in performance can result in very great benefits. Whilst this may
always have been important, such benefits are now crucial in the more profit
conscious and service enhancement orientated environment.

Operational Researchers take a lead role in working with staff at all levels to
negotiate and implement working methods. Many projects involve modelling the
complex operating logistics of these large operations, striving for continuous

OR projects in this sector can also focus on marketing, finance, personnel and
strategic planning matters.

Where to Study
Graduate and postgraduate courses in Operations Research are offered by almost all
leading Universities in India, as also by IIT Bombay and some Management and
Engineering Colleges.


Choosing a career is a difficult matter, in the best of times. Add to this opinions of friends and parents,
and the young person is caught up in a confusing situation where making a decision is almost impossible.
We give here a model which can help young people to choose a career, gain competencies required for it,
make decisions, set goals and take action. The decision for each individual is different, since everyone is a
distinct individual. This model is helpful not only for freshers but also throughout one's life.

Self Assessment

This step involves gathering information about yourself to make a decision about a career. By developing
an understanding of self (values, interests, aptitudes, abilities, personal traits, and desired life style) you
should become aware of the inter-relationship between self and occupational choice.

One can start by (a) Learning interests, abilities, skills, and work values, (b) Listing accomplishments, (c)
Understanding physical and psychological needs, (d) Assessing aspirations and motivation level, and (e)
Deciphering personal traits and characteristics.

As you begin to develop a better understanding of yourself, you will gain self-awareness, improve self-
confidence, understand the importance of time management and also develop personal as well as
professional management skills.

Some ways in which self-assessment can be done are described here. For example, one can take
exploratory classes or attend workshops for study skills, or join activity clubs or professional clubs. One
must be careful that one should allow regular time for leisure, hobbies and friends and not get involved in
work all the time.

One should identify one's personality style and see what one is best suited to. Also identify work values
and gain a positive attitude. For instance, one should develop interpersonal skills in expressing feelings
and ideas and interact with people. Self-defeating behaviour should be got over with.

Academic and Career Options

After you have completed your self-assessment, you must identify academic and career options available.
This step allows you to investigate the world of work, narrow a general occupational direction into a
specific one through an informed decision-making process. You will begin to identify potential careers,
gather information about those careers, and match the career information with the results from your self-

Once this is done, one should learn about academic and career entrance requirements. Explore how and
where you can get the education and training required. Identify institutes where you want to apply. Also
assess job market trends and have a second plan ready, consisting of academic and career alternatives.

Competency Areas

It is important to improve competency all the times. One must gain research and investigative skills,
practice decision-making, develop problem-solving skills and take up critical thinking exercises.

One must also increase understanding of how abilities, interests, and values match career/academic

To gain competency, one should interact with professionals, meet academic advisors and career
counsellors, discuss with professors, or attend courses and workshops in areas where one can learn skills.
Skills that can be thus acquired are: communications,computer knowledge, foreign languages and
international studies. A youngster must make it a point to attend job and career fairs, participate in the
Study Abroad programme, or take up a part-time job. Students abroad are known to start small
businesses in order to enhance their skills.

The next step helps you to evaluate occupational choices and gain practical experience through
internships, co-operative education, summer jobs, volunteer work and campus activities. You will begin to
make more specific decisions about occupational choices. Here too, increase your competency levels by
learning communication and interpersonal skills. Confidence-building is very important at this stage. Time
management techniques should also be picked up.

At this stage too, one should participate in the Alumni programmes of your college, work part-time or
during summer to acquire new skills and practice public-speaking in classes or in organisations, tutor
students in various subjects, or join a professional organisation.

Ideal Life Style Inventory

Mark each item that best describes how important these things are to you. This inventory is designed to
help you identify values. It is not scored.
Live in a House: Very Important Moderately Important Not Important
Live in a Rural Area: Very Important Moderately Important Not Important
Entertain at Home: Very Important Moderately Important Not Important
Spend Money: Very Important Moderately Important Not Important
Frequent Travel: Very Important Moderately Important Not Important
Have Many Possessions: Very Important Moderately Important Not Important
Have Lots of Money: Very Important Moderately Important Not Important
Live Close to Recreation: Very Important Moderately Important Not Important
Live Near Cultural Centres: Very Important Moderately Important Not Important
Access to Movies, Restaurants: Very Important Moderately Important Not Important
Time Alone: Very Important Moderately Important Not Important
Active Member in Community: Very Important Moderately Important Not Important
Access to Education: Very Important Moderately Important Not Important
Live Near Place of Work: Very Important Moderately Important Not Important
Work Only for Money: Very Important Moderately Important Not Important

Once you have answered the questions above, you will be in a good position to select the job you want. Of
course, it is not always possible to get a job that perfectly matches what you have in mind.

Allow yourself to dream, fantasies, and have fun. Project yourself into the future, five to seven years from
now. Imagine in a two-day time span what you would ideally be doing. Talk about where you would be
living and who else might be there. Use as much detail as possible in your fantasy; the weather, lifestyle,
co-workers, leisure activities, responsibilities, etc.

Meet professionals

Now start finding out about your occupational prospects. Find out about the major duties and
responsibilities involved, products made or services provided by this occupation, specialisation within the
occupation and the tools used in the occupation. Findout also about the education, training or experience
needed for the occupation. Match personal qualifications, skills, and abilities required for the occupation
and fill in the gaps where you do not have such skills, such as typing or computer knowledge.

Assess whether you like the working conditions: some jobs may require odd hours of duty or frequent
travel. Are you up to facing these? Find out about future prospects and outlook for the occupation. The
normal methods of entry into the occupation will be found in newspapers and magazines. Observe the
people in the occupation and see the personality characteristics of typical people working in it. Sales jobs,
for example, require extroverts and you should be able to match your personality with what you observe.

Make an informational interview questionnaire and talk to people in the occupation. The following
questions could act as a guide:

a) How did you get into this occupation/organisation?

b) How did you become interested in this occupation/organisation?

c) What entry-level jobs might qualify a person for this field?

d) What is the progression of jobs from the beginning to the top?

e) What responsibilities and duties do you have in your work?

f) Who are your customers? Who are your competitors?

g) What essential abilities are needed to do your job well?

h) What preparation, education, training, or background is required entrance into this field of work?

i) What is the guiding philosophy of the organisation?

j) What personal traits, values, and interests are necessary or to succeed and advance in this

k) What are the major frustrations, annoyances, or sources of in the occupation/organisation?

l) How much time do you spend at work?

Meeting professionals helps a lot and clarifies many doubts in one's mind. However, it is necessary to
know someone for honest answes. If you do not know a person, chances are that you will not be able to
get honest answers.

Matching skills with requirements

The basic idea of the above model is to match one's skills with what is required for the job. Once an
assessment is made, one will be better able to know one's personality and choose a career accordingly.
Very often, this is not done. Thus, people find themselves in jobs in which they have no interest in. A
person who has been involved in books all his life, is suddenly asked to deal with customers or a person
who has been an extrovert may find himself in a banking job where all he has to do is keep ledgers. It is
to avoid this kind of a thing that building inventory helps.

At the same time, the model helps you assess the skills needed to work in certain careers. If you want to
do management, for example, it is advisable to take up jobs so that one acquires confidence and also
knowledge about the industry. This will also help in selecting the kind of industry that you want to work

The model is not perfect, but gives invaluable pointers about one's personality and indicates how to
choose a career.


Who said that being a young person was an easy task? We know it isn't. The canvas of a student's life
is filled with daily risks and uncertainties. Each brings us to the end of the world, well, almost. But the
tragedy is that nobody understands that. What we need is a survival kit, something that tells us the kind
of persons we should be and what we should be doing to succeed in life. No, we should not end up on a
rope attached to a ceiling fan just because we can't cope up. We have to be made of sterner stuff.

Here it is, then, the Survival Kit, containing essential tools designed to make you a better person. It takes
you through a maze of common problems and suggests solutions that will help you become a winner.

Cracking tests

Usually, the foremost problem faced by youngsters is related to studies. For the top students it is the fear
of losing one's position by a few marks, while for those lower down, it is not being able to get enough no
matter how much effort is put in. The uncertainties of the examination system seem to make it so
impossible to excel. What matters is the quality of our concentration. Here are some ways by which our
efforts can be better rewarded:

Always attend classes. Bunking classes may be a fashion, but it is always better to have somebody explain
things rather than reading a book later on. Take notes. Revise the topic at home on the same day and
mark your book with simple explanations which you will otherwise forget.

How to stay awake. Feeling sleepy in class is a common feeling. Asking questions or taking notes is a way
to keep awake. Do not accept what the teacher is saying, but keep debating in your mind. Try to make
points which need explanation.

Studying at home. It is an accepted fact that the human mind cannot concentrate for long periods. It is
better to break up your study plan into 45 minute intervals. Take a break after each. Studying for five
hours continuously would yield less result than putting in 5 intervals of 45 minutes each.
Wake up early. Many students study into the night, but it is more efficient to put the same effort in the
morning. That's because one can concentrate better in the morning. Just two hours in the morning will be
better than four hours at night.

Work to a schedule. Always have a time plan for working. Divide the chapters you want to cover and allot
dates for each. This way, you can cover more than working without a plan.

Overcoming shyness

Studies are just one aspect to succeed in life. Becoming confident and speaking in public is often the
insurmountable part, especially because these skills are not taught in schools or colleges. There are some
students who take part in college debates and declamations, while the majority of students either do not
get an opportunity or are unable to get over their shyness.

In most careers, team work is required. The inability to speak coherently or being shy will thus be a major
drawback. Shy people often have a negative self-image and may feel that other people may make fun of
them, even though nobody has enough time to think about others. The self-inflicted thoughts prevent
people from being normal and the impression they project is one of being snooty and arrogant. Shy
people may, thus, end up being looked down upon, turning their fears into reality.

Very often we create our own limitations. "I live in a small town and people living in cities are better than
me", says one. Another person will say, "I live in a city but I was not educated in a convent school, so
others are better." This goes on, almost as if people are trying to justify their weaknesses. Needless to
say, the walls are imaginary. People from small towns or government schools often do quite well for
themselves, cometimes even better than those who consider themselves better off. Take the example of
the President of India Mr K.R. Naraynan. He was neither educated in convents nor did he live in big cities.
When we analyse the backgrounds of successful people, we will discover that only a few of them were
from large cities or educated in convents.

The way to overcome this niggardly feeling is startlingly simple: take control and volunteer for everything.
Take part in outdoor activities. Play games. Volunteer for any group activity taking place in the
neighbourhood. In college, seek opportunities to make presentations and speeches. That is how
confidence is acquired.

The tensions of life

The pressures of studies and inter-personal interaction usually results in tension. One is beset by self-
doubts and every small failure appears magnified. This leads to a feeling of being let down. Most people
are able to bounce back and recover after a little while. In some cases, it may lead to depression. Affluent
young people, of course, use the term to describe boredom or restlessness.

Real or clinical depression is a more serious thing. It may be marked by incapacity of work, thoughts of
failure and death, fatigue and suicidal leanings. It results from disturbances in the brain's neuro-chemistry
and is a crippling disease. With an estimated 6.5 per cent of adult Indians suffering from depression, it
may not be as rare as we might expect.

Self-doubts are natural to a great extent and parents, while being supportive, should ensure that they are
not overbearing. If you have negative feelings, or know of someone who is thus inclined, confide in
someone you know. Contrary to popular feeling, friends and teachers will go out of the way to help you.

A hobby can drive away depression, keep you sane and give hours of pleasure. Yet, even though the
number of activities have increased over the years, youngsters seem to have fewer hobbies.

Youngsters can develop hobbies for pleasure and profit. Collecting stamps, interior decoration, reading,
gardening, fashion designing and writing are some of the common hobbies. Some of the more exotic
hobbies could be to fly gliders, enrol at the local radio or television station for becoming a presenter,
operating a ham radio. Of course, these depend on the kind of facilities available in your town. Remember
that watching television for long hours is not a hobby. You will lose out on many friends and experiences if
you are stuck on television.

A hobby will add to your knowledge as also the kind of person you are. For example, if you are taking part
in some activities as a hobby, your self-confidence will undoubtedly improve.

Dealing with the opposite sex

As one grows, one begins to become aware of the opposite sex. One wants to be noticed and make
friends. For its part, the media is relentless in projecting images of young people going around with
someone of the opposite sex: the staple diet of films is a boy-girl relationship, while in advertisements, it
seems that everything must be used to attract the opposite sex. Soap, toothpaste or talcum powder is not
to be used for personal hygiene, but for the attention they may help in getting.

Can you blame a young person from getting confused? It is common to come across complaints from
youngsters that they do not have a steady girlfriend or boyfriend and are considered backward by their
peers. In every college, there is always a small group of Westernised students who seem to have no
inhibitions or parental restriction, giving an inferiority complex to the others.

Let us pause and think whether this complex is justified and how it can be tackled. A school or a college
are preparatory stages, providing opportunities to interact with many people. If there are sixty people in
your class, it is an opportunity to have sixty friends. Being part of a group is enjoyable. Why do you want
to reject all those wonderful people and get limited to the friendship of just one person? Often, it would
mean moulding oneself to the whims and fancies of that one person. Is it advisable to give up your
freedom? Needless to say, an involvement at a young stage would also mean saying goodbye to your
dreams of making a professional career. A romantic involvement is never without its costs.

Moreover, intimacy with one person may also result in something more serious as a sexual relationship.
Statistics show an increase of teenage pregnancies all over the country, pointing to the mess that young
people are making of their lives. Are you up to handling a pregnancy during college?

The smart person, on the other hand, does not get involved. Friends of the opposite sex are all right and
one enjoys their company in a group. This is a healthy relationship which will add to your confidence. At
the same time, it is important to have your head firmly on your shoulders and not get carried away by
peer pressure or media images. One must develop the ability to say no politely. If you do feel strongly
about a person, wait till you start earning. There will be plenty of time to romance and to find out whether
the feelings are mutual.

The next time you see a commercial on television where young couples are close to each other, remember
it is a con-game: an entire industry of gifts and cards rests on making you fall in love. The manufacturers
will no doubt succeed in selling their products, but what happens to your life is none of their business. If
you want to fall in love, ask yourself the question whether you want to be conned by images designed by
marketing experts. Make sure that you have evaluated all the consequences before committing yourself.

Surviving as a girl

Whatever one may say about advancement of women in all spheres of life, it is becoming increasingly
difficult to survive as a girl in modern India. Blame it on the media which projects the image that every
girl wants fun, or on anything else you wish. The dangers are many, from being teased by unknown
people to being touched in crowded places. In extreme cases, this has taken serious turns: rejected males
have thrown acid at girls or tried to harm them in other ways. Every once in a while, a scandal erupts
which makes one wonder whether girls are really equal at all. Cases of rape and sexual exploitation are
common. The latest scandal was exposed in Kerala where girls going to an ice cream parlour were
drugged and their photographs taken, which were used to exploit them. Such scandals have been
reported in the most unlikely of places.

Outdated laws in India encourage males to take liberties; girls do not press charges because of shame and
the culprits are usually acquitted. The atmosphere in the country has been vitiated to a very great extent
that most girls face a tough time just doing simple tasks. The more beautiful you are, the more difficulties
you are likely to face.

Girls, thus, need a special survial kit which includes the confidence of dealing with unwanted attention. Of
course, it is not advisable to fight with everyone. But the following tips will help:

Move around in a group. If you have to take the public transport, try to be with friends. Ask your friends
to accompany you on errands. A girl in a group is less vulnerable to advances than being alone.

Avoid unknown places. Do not go to unknown beauty parlours or restaurants, even with friends. Stick only
to places most frequented by students.

Beware of confidence tricksters. People will try to win your confidence by many ways, like getting you
tickets for a movie. Refuse politely and go home.

Dress in a traditional manner. Yes, we all want to appear modern. The sad fact is that roadside males
think that every modern girl is fair game. They will make comments and try to come close. What is the
harm of appearing backward if only to avoid unwanted attention? Of course, you can dress as exotically
you want when you are with known people.

Confide in parents, friends or teachers. Crimes against girls continue because they are too ashamed to
speak out. Take control of the situation and confide, even if it is harmless eve-teasing you are confronted


Your appearance speaks the world about you. That, however, does not mean that you have to stand for
hours before a mirror trying to perfect your hairstyle. People usually do not pay attention to such things.
What matters is whether you are presentable or not.

That effect is usually obtained by looking clean. Boys are well advised to shave everyday: a beard or a
three-day old stubble gives an unclean impression. Regular haircuts give a well-groomed look. Sporting a
ponytail or wearing earrings are best left to television presenters, since these are not signs of smartness.
Long hair is unnecessary baggage which turns off the people dealing with you. Wear clean clothes. For
formal occasions, make sure you have some ties. For everyday wear, pick up some jeans and smart T-
shirts, but do avoid garish prints. It is good to use a de-odorant in summers. Avoid all other cosmetics.

Girls too need some dresses to be worn on special occasions. For everyday wear, suits and jeans are
advisable. Colours can be used to advantage. Forget all those bold clothes made by fashion designers
unless you want to make a fool of yourself. A girl can usually obtain a decent effect in clothes on her own.
The hair must be trimmed to give a well groomed look. As for make-up, a light lipstick is all you need.
Have your eyebrows shaped and get rid of facial hair. There is no point spending more time and money in
trying to look good. Leave the fancy things to those who want to enter beauty contests. The formal look,
required for jobs and interviews, is achieved by wearing a plain suit.

The idea is not to spend too much time on one's appearance because there are more important things to
life. Moreover, it is doubtful that you have friends because of the way you look. People appreciate you for
your nature and the kind of person you are. This does not mean that one can be sloppy, of course, but the
fact is that you can have as many friends as you want with your manners and attitude than by spending a
fortune on looking good. Of course if you want to be a model or beauty queen, your appearance will be

Today's young person

This brings us to the kind of persons we should strive to be. There are a number of wrong notions that are
being circulated, including the need to be pushing, aggressive and competitive, of getting rich no matter
what the methods, of getting an attitude, whatever that means and doing one's own thing. Modern sales
institutes teach the importance of "selling a comb to a bald man" without realising that it will erode the
credibility of the salesman. One can, after all, sell something useless only once. In the real world, bluffing
works for but a short while.

Being confident is one thing, showing needless aggression is quite another. On the contrary, well-
mannered youngsters will be appreciated and are likely to go far. It is important to maintain composure
even if things go wrong.

Instead of being aggressive, young people will do well to acquire grace, manners and politeness. This is
essential baggage to succeed in the long run.

One way of getting ready for life is to take up part-time jobs. Use summer vacations to help out in an
office. This will help you gain confidence in dealing with people and learn manners so essentially required
in the modern world. It will also help you decide which career to take up later. The spin-off is that one can
afford a number of things with one's earnings, without depending on others.

Today's smart person is a team player, confident about oneself. Yes, they are ambitious. As compared to
youngsters of the past, they probably have more confidence and are much more aware. The idea is to use
these advantages constructively. We have to stop feeling sorry for ourselves, since there is nobody who
has everything. We can be achievers too, if we give ourselves a chance. If less fortunate people have
made it big, what really stops us, who are young and educated, who have our lives in front of us?

Everyone wants to become a "professional" these days or to work in a professionally managed
organisation. While being professional may be a virtue, what exactly is implied by being a professional is
often found lacking in individuals and companies. In fact, some family owned companies have higher
professional standards than our so-called professionally managed companies. Many people still think that
one can become a professional simply by acquiring a degree and many companies have the mistaken
belief that they can claim to be professional by hiring a certain number of MBAs and CAs.

Among the meanings of the word 'professional' in the dictionary, there are two which are connected with
the way we work. One is something that is related to a job or profession. The other means well-trained, or
a person who is good at one's work. To be a professional, therefore, implies that a person is good in his
job and can be depended upon. Clearly, it is easy to be a professional in the first sense. If we do anything
over and over again in our lives, we become professionals of some sort. The second implication, however,
is more difficult. It is easy to do a job, but to do it well as if our heart was in it ah, there lies the catch.
Most of us are content in 'making do', or finishing the task at hand with the least amount of effort. We are
not interested in putting our best effort because we think that the job is too small or too meaningless or
that nobody is going to appreciate it.

Yet, it is easy to make out a job that is done with love than one which is done without it. If you are typing
a letter and make a mistake, do you scratch out the word and type another one on it or do you make an
effort to retype the letter? In a hotel, if you ask a receptionist some directions, does she ask you to wait
or does she get up and solve your problem with a smiling face? In a company, is your complaint attended
to without delay or are you asked to write an application after which nothing happens?

These are simple instances of professional and non-professional behaviour.

Simply doing a job over and over again does not make us a professional. In the public sector or in the
government we find people who have been working at a job for years without contributing a thing to the
nation. They certainly cannot be called professionals, no matter what their qualifications are. Take the
example of Sachin Tendulkar. There are so many cricketers but when we think of a professional cricketer,
this is the name that comes to our mind. Can we become a Sachin Tendulkar in our chosen field? Or are
we content in just finishing what is at hand?

Pitfalls in professionalism

Being a professional means more than simply acquiring a degree. It means being true to your chosen
profession and trying to excel in any job assigned to you. Sometimes it means simply doing what is right.
Take the example of hiring someone for a job. The principles of efficient working require that we choose a
person who is qualified for the job and not go by other considerations. Yet, how many meritorious
candidates get selected? Going by the number of cases that are filed regarding selections for jobs it seems
that people are hired for belonging to certain castes or communities, or those who know someone in
management, or those who may have bribed their way through. That certainly is neither right nor is it

The other common mistake that we make is to follow the national malaise called the chalta hai attitude.
Almost everything can be reduced by taking the easy way out. Look at the electricity wires that are
hanging from poles: someone left them because he thought that hanging wires are not a problem. Often,
we have to pay for this unprofessional behaviour in terms of short circuits and fires. If only we put our
foot down and say that this behaviour will not go on, people will be forced to do their job as they should
be doing. After all, tying up the wires takes a little more effort but can make the difference between life
and death.
How to be professional

How does one become professional? If we break up our tasks no matter what our area of work,
we can probably come to the following sub-tasks:

Planning: Whether it is an operation conducted by a doctor or a project executed by an

engineer, professional behaviour demands a certain amount of planning so that overruns
are avoided and the work proceeds smoothly. How many of us make plans in our everyday
lives? How many companies take planning seriously? Does our government take the
Planning Commission seriously? If we answer these questions, we may discover that many
of us are not professional at all, even while claiming to be so.

Decision making: The way we make our decisions also shows how professional we are.
Usually, we go by our whims and intuition and fail to analyse the situation. When we look
around ourselves, we find the consequences of such decisions. Companies which had
diversified without taking into account ground realities have come to grief: a
pharmaceutical company which entered the cosmetics industry, an engineering company
which diversified into shipping, and so on. Multinational companies too made this mistake
and entered the country thinking that they could sell overpriced products to our huge
middle class, but only to come to grief. There were few buyers for their products showing
that their decisions had been made out of wishful thinking rather than scientific

Communication: How we communicate also shows how professional we are. Do we take

care to explain something to our customers, subordinates or superiors? A doctor who
explains a point to a worried patient is much better than one who simply writes out a
prescription. The end result of both doctors is the same, but one reduces worry while the
other causes unnecessary tension. To a sick person, that makes a lot of difference.

Doing our job: Finally, our attitude gets reflected in the job that we do. Does it reflect our
care and ability? Or are we content in doing a half-baked job hoping that someone else
will correct our mistakes? A journalist can give a story full of mistakes and these will no
doubt be corrected at the proofing stage. But professionalism demands that all mistakes
are removed by the person himself, without depending on anyone else. It also means
keeping an eye for details, however minute they may be.

Doing what is right: A company which does not treat its workers well can hardly be called
professional, no matter how many professionally qualified people it employs. Similarly,
companies which do not pay taxes or fail to take note of their social responsibility are
unprofessional. Unfortunately, most of us want to be 'yes-men', accepting orders from
above which may or may not be right. The moment we do something which we believe is
wrong, we are not professional, no matter how many degrees we may have.

These are some of the things that we can follow for achieving the elusive professionalism
in our life. It is usually believed that family owned businesses are not professional enough
but, ironically, some family owned businesses are more professional when compared to
those which are managed by qualified people. Professionalism is an attitude towards our
work rather than anything else and it has to be acquired over a period of time. It is also
the only way to survive in today's world.


Interview, according to Collins Concise English Dictionary, is a formal discussion, especially one in which
an employer assesses a job applicant. 'A formal consultation usually to evaluate qualifications (as of a
prospective student or employee)', defines Webster's Dictionary. It can be meeting with a candidate to
ascertain, by questioning and discussion, letters suitability for a post.

The art of interviewing forms the very basis of the utmost input requirement, in the form of humans, of
organisations. The process constitutes an important part of the recruitment procedure.

The interview Board, in the allotted time, has to bring out the best and the worst in the candidates and
then arrive at conclusions, most subjectively, on a common-sense basis, since assessing a candidate on
each and every attribute infallibly is neither possible nor feasible for the interviewers; rather there are
chances of faltering.

To find the ideal candidate for any post is not possible, nor it is easy to define the concept completely in
the context of the metamorphosing managerial and administrative values. The best course left to the
Board is, therefore, to pick the best of the available candidates; to obviate repetition of the entire gamut
of the selection procedure. This holds good, more often than not, in the case of selections for senior

Often for the purpose, the Board evolves a check-list, an exhaustive but practical one, whereunder ratings
are accorded for different personality traits. Experience has shown that this strategy works quite
satisfactorily in all types of interviews.

The undermentioned can be the tentative parameters for the Board to look for its picks; not necessarily in
the same order or weightage, for they may vary from post to post and from organisation to organisation,
depending upon their needs.

The candidate, prima facie, ought to have the needed potential and keenness for the purpose of being
developed into a better one, in the near future, and on, to impart benefits to the organisation, for it
spends its resources on the new incumbent with an eye for good returns.

Self-acceptance of the past failures, if any, by the candidate will prove an asset, a qualification. It will
speak of his frankness and will inculcate value ethics in managementa compelling need of the hour the
world over.

The candidate should be able to 'look within' as Christ has said, in the face of taking decisions, especially
when confronting with hard situations. He must have a clear vision of himself and of the assignments
required to be accomplished. As a matter-of-fact, his performance itself is a perennial source of inspiration
to him; a source of fulfilment and pleasure; and a robust antidote to (counter) the stress, both in his
personal and official life.

To be receptive and considerate to the aspirations and expectation of colleagues is the need of the time.
The Selection Board therefore, looks for such a possibility and potential in the prospective candidate. Not
only that, the ability to inspire confidence among the staff, while inter-acting with them, is also a pre-
requisite to be searched and found out by the interviewers.

Another sought-after trait is candidate's ability to communicatenot only his ability to express, as is
generally mixed up. For this purpose, the interviewers have to try for all the essential parameters of a
good communicator viz; logical flow of thoughts, directiveness in the needed side for the needed purpose,
maturity in expression and communication, ability to listen and the art of a rational persuasiveness in
arriving at the right decisions and passing on the instructions germane thereto to achieve the results. The
art of communication is the hub of successful and result-oriented human relations.
The candidate should evince an abiding interest in updating his knowledge to qualify for being selected by
the Board. Especially, such a policy plank is more needed when the interview is for the selection of a
specialist. Both depth and breadth of the candidate's knowledge are indicators to his intellectual

The candidate is expected, rather is required, to exercise self-check in all situations that he will face in his
would- be organisation. He is to be assessed on his ability to shoulder both, praise and criticism, success
and failure, authority and responsibility, with equanimity. Self-control, self-management, shedding of false
egos are the time-tested recipes for successful managers, together with courage and conviction, backed-
up, nevertheless, by firmness of action. A stiff and artificial stance will never be appreciated by the Board.

And overzealousness in conduct may also jeopardise the chances of being selected. If not checked,
temperament can always sway away one's decisions to an un-wanted level of human relations, which may
turn out to be a point of no-return. On part of the candidate, the deepest mental posture, even if
provoked during the course of interview by the Board members, is sure to carry the day. This will help him
give balanced answers to the satisfaction of the interviewers.

The interviewers end up, with the best available of the lot: the near-ideal; but not the ideal.

Some Frequently asked Questions in Selection Interviews

Tell us about yourself.

Why do you want to do this course/job?
Where do you see yourself five years from now?
Who is your role model and why?]
What do you think about the current economic/political situation?
What are your hobbies?
What are your strengths and weaknesses?
If you are not taken, what will you do?
Questions about your background and academic record.
Questions about your habits, likes and dislikes.

First Impressions

Prepare for the interview: Do not leave preparation for the interview for the last stage, or hope to say
anything that comes to your mind at the moment. Developing confidence is a long-term process. Make it a
point to discuss issues with family and friends. Carry your certificates in a file. Make it a habit to read
extensively. This will prepare you for the interview.

Dress formally: Be neat. Boys should make sure they are shaved while girls can apply a light make-up.
Well groomed hair, cleanliness, polished shoes are some essentials. Avoid jewellery, trendy clothes and
casuals such as jeans. Formal dress should be worn: keep a suit away for special occasions and do not
wear your everyday clothes for the interview.

Be on time: Err on the side or caution. Take a bus to the destination a few days before the final day. If
that is not possible, allow yourself adequate time to find the place or unforeseen circumstances such as
traffic jams. If you are early, do not go directly to the office but to a nearby restaurant and have
something to eat.
When you enter: Greet the interviewer by saying, "Good morning, sir". Do not be over-friendly. Do not
sit down until asked. Sit straight and do not fold your arms. Look in the interviewer's eye while answering

Avoid controversy: Always stick to the subject, without giving opinions. Do not be critical of your
insitute or past employer. If you do not know a particular question, say, "I don't know, sir."

Listen carefully: Pause before answering a question to gather your thoughts. Listening will help you
realise what the interviewer wants. Do not ramble or use long-winded examples.

Be pleasant: Keep a cheerful disposition, do not contradict the interviewer even if he is wrong, keep a
pleasant outlook. Do not be funny, though one can be witty.

Tricky situations: If you are nervous, admit it. Stay calm, even if provoked. Of course, one cannot
anticipate all questions so be ready for some surprises, too.

MOCK Interview

Candidate : Good afternoon, sirs.

Member1 : Good afternoon. Please sit down.

C: Thank you sir.

M1: You seem nervous. Would you like to have a drink?

C: No thank you sir. I'll be comfortable.

M1: Tell us something about yourself.

C: Yes, sir. My name is Varun. I have done my B.Com and I am waiting for the results of the final year.
My schooling was in Shimla. My father is in the IAS and I have an elder sister who is a doctor.

M1: Your second year marks are less than first year. Will they go down further in the final year?

M2: Didn't you want to try for IAS? Since your father is a bureaucrat, you could have followed in his

C: Let me answer one question at a time. I will take up the second question first. I am not interested in
IAS, sir. I was always interested in a career in management. That is why I did my B.Com and fortunately I
could get good marks. My father has never pressed us to do IAS but has given us the freedom to choose
our career. My sister became a doctor because she wanted to be one. Regarding my marks, during the
second year I had to miss classes because I was unwell for a while. However, this year I have put in a lot
of effort and I am confident of covering up.

M3: Why are you not interested in IAS?

C: I did not want to be a bureaucrat where you have the authority no doubt, but you are still stuck in a
groove. I feel that a career in management will offer higher growth which depends on individual
performance. I do not want a comfortable job but one in which I can prove myself.
M1: Why only MBA? After B.Com you can become a Chartered Accountant and prove yourself.

C: I feel that Chartered Accountant is limited to finance and accounts. I would like to do something more
than that. My background of B.Com has given me an understanding of accounts but I would not like to
make it into a career. Management, I feel, is more exciting and one can do much more compared to CA
which is limited to one area.

M3: What do you understand by management?

C: There are many definitions, sir. But the simplest one is that it is the art of getting work done from
other people.

M3: What do you think are the qualities that a manager should possess?

C: I think that a manager should have planning and organising skills. He should be hard working and
honest. Above all, he should have leadership qualities too since he has to manage people and lead by

M2: Where did you learn all this?

C: I have not learnt this, sir. Some of it I have studied in B.Com and then I have just gathered my
thoughts. I have also read about the examples of successful managers who are featured in business
magazines and formed my opinion.

M3: Which of these qualities do you have?

C: I have good organising capabilities. I used to organise many events in school and college. I am also
good at planning and since my friends used to like working with me, I can say that I have leadership
qualities too.

M2: So you have all the qualities of being a good manager. Tell us, what will you do if we do not take

C: I am quite confident that you will take me, sir. But to cover my risks I have applied to a few other
institutes too and fortunately have got interview calls from them. As I am keen to do MBA. I am sure to
get admission in one at least.

M3: Why, were you not confident that you will get through here?

C: I am confident, sir. But I applied to other institutes just to cover my risks. I did not want to waste an
year just in case I missed one institute.

M1: What are the problems that India faces?

C: India is a large country and has many problems. At present the main problem faced by the country is
that of instability. The elections gave no majority to any single party so each party is looking for
coalitions. We have seen coalition governments in the past and they never seem to work. Secondly, there
is the problem about the economy. The previous government kept inflation down by artificial methods
which is bound to increase now. Debt has also reached huge proportions which has to be brought down.

M3: Don't you think the country has social problems?

C: Yes, sir. In fact, there are many social problems we face. There is the problem of dowry, which leads to
torture and harassment and even to bride-burning. There is also the problem of female infanticide as
people want to have male children only. This is going to skew the sex ratio in the country. Illiteracy,
poverty and population growth are some of the other problems.

M2: Can these problems be removed through stability and economic methods?

C: They may not be removed totally, but a stable government will certainly have the time to address
these issues. An unstable government will be more concerned about its own survival. There is also a very
real danger that an unstable government may take the country backwards, as V.P. Singh had done during
his time. He had played the caste card merely to survive, with disastrous consequences. Secondly
economic growth can certainly solve our problems of poverty and unemployment. People will have more
opportunities and can increase their incomes. In fact, poverty has already come down since the country
took up the economic reforms programme, as was claimed by the previous government. If that is true,
certainly our problems can be solved to a great extent by economic growth.

M3: But don't you think that economic growth brings in its own problems? There are many problems in
the West which has seen some of the highest growth rates.

C: There are indeed problems which affluence brings. There are social problems there too, besides those
of environment degradation.

M3: So what you are saying is that we should get rid of our problems through economic growth and
import a new set of problems.

C: No, sir. Fortunately we have the example of the West before us. It is not necessary that we should
commit the same mistakes. We can have economic growth combined with traditional knowledge so that
we do not get the problems of the West.

M2: What are your hobbies?

C: I like to play games and read books. Another hobby I have is DX-ing, which is tracking radio stations of
distant countries.

M2: That's an unusual hobby. Tell us more about it.

C: Almost all countries broadcast on shortwave. They want to know whether people are actually receiving
the broadcast or not. Whenever I have spare time I try to catch unknown stations and send them
reception reports. They send an acknowledgement card, called a QSL card. It is a good way of knowing
the world and increase one's knowledge, besides participating in discussions and even learning a foreign
language. They often send gifts to regular listeners.

M2: Have you ever got gifts from them?

C: Several times, sir. They send T-shirts, cassettes and books. But the best is if your views are aired by
an international radio station.

M3: Which games do you play?

C: I play cricket, sir. These days I get less time but I play whenever I have time.
M2: What was your favourite subject in school?

C: I liked practically all the subjects that we had, but my favourite was English. I loved to read the books
prescribed and also borrow from the library.

M3: Who wrote Gone With the Wind?

C: Margaret Mitchell.

M3: Why did the book become very famous?

C: It was made into a highly successful film which is still regarded as a classic. The book was a bestseller
and thus became very famous.

M2: You must have had Shakespeare in school.

C: We studied Julius Caesar and Twelfth Night. I liked Julius Caesar very much, especially since it had
those moving speeches. It is also a study in human character. I think these books help you to understand
human nature.

M2: Did you not think of doing something which would help you retain touch with reading, since you like it
so much?

C: In whatever profession one is in, one can keep up the habit of reading. Even successful managers read
a lot. I will keep up this habit even when I graduate.

M1: Has any of your friends also applied here?

C: Yes, sir. One of my best friends has also got a call.

M1: Supposing we had only one seat. Should we take you or your best friend?

C: Ideally, I think you should take both of us. But if there is only one seat, you are the best judge to

M1: But if we left the choice to you, what would you decide?

C: That is really a tough choice, sir. But if you left it to me, I would ask you to take my friend.

M1: Even if it means that you do not get admission?

C: Yes, sir. Friendship means rising above selfishness. If I took the seat that would make me selfish. I am
sure to get admission this year. It would be ideal if my friend also got it.

M1: Do you have any weaknesses?

C: Yes, sir. I think everyone has certain weaknesses. I think I am a perfectionist, which sometimes
creates problems. But I really cannot help it. I believe that whatever is done should be done well.

M1: Well thank you, Varun.

C: Thank you, sir.


Varun was able to defend the questions relating to IAS and Chartered Accountancy well. The
answers show that he has thought about them and made up his mind. He also can define
management in a concise way, which shows that he has studied his textbooks well. In
fact, the student should be well versed with his subjects. Varun also declined politely the
drink offered to him. There are no hard and fast rules about this, but if you ask for the
drink, chances are that you will not get the time to drink it.

Note how Varun handled the situation when two questions were asked simultaneously. Be
careful when you say you have good planning or organising capabilities. The board can
well ask why you think so. Do you have the answer? Similarly, the questions related to
applying to other institutes are tricky but Varun answered them well. Note that he was
well-prepared about the problems faced by the country. But he should not have made
statements about coalition government. Avoid getting into controversial areas and playing
the caste factor certainly is. But if you feel strongly about it and can defend it forcefully,
you can take a chance and mention it.

Fortunately the board moved on to hobbies. Note that Varun had a hobby which was
entirely different and he could speak on it. He could also speak on his reading habit. The
question on whether his friend should be taken is another tricky one. If you say you
should be taken, can you defend it without sounding selfish? The answer to weaknesses
was also a satisfactory one.

On the whole, the candidate comes across as mature. He seems to have thought about his
answers. He is well prepared and was not trapped in the cross-questioning. If you can't do
so, simply back out and say you are not sure rather than saying something which you
cannot defend.


Holidays are welcome but after some time they begin to look very boring. Bored students often ask,
What should we do? Enjoying or going out can be done for a shosrt while only. The answer is to do
something useful. It would be worthwhile to take up a summer job which will help you earn money and
acquire confidence. This feature answer some commonly asked questions about such jobs and describes
how to apply for them, as well as what to avoid them. We hope that our readers will benefit from this
feature and use their summer vacations in a useful manner.

Many young people are confused about which careers to follow. One way of knowing oneself is to do a
short-term job in your holidays, which will help you earn some pocket money, give you some experience
to add on your bio-data, and above all, help you realise what kind of career appeals best to you. The
summer jobs is an ideal way to get to know yourself. It will result in a much needed confidence and an
exposure to different kinds of work.

While many students waste their holidays doing nothing, or follow a useless activity or a computer course,
others use the time to take up jobs and are able to earn some money. The trend always existed in
developed nations, where young people become independent at an early age, but it is slowly but surely
catching up in India as well. Students abroad can earn enough to buy a second-hand car or a ticket to
travel around the world. In India, salaries for summer jobs are not as great, but the job should be looked
at more for experience than for money. Perhaps, one can earn enough to buy a music system that one
always dreamed of.

Since summer jobs are short-term assignments, basic qualifications are not important. Companies are
willing to hire those who have finished school as well as college and university students. The only
requirement is that the individual fits into the requirements of the job. Such jobs are typically test
marketing of a particular product, market research, sales and telemarketing, ushers and guides in trade
fairs and public relations activities. While some companies may advertise for such jobs, it is advisable to
make contact with such agencies and leave your bio-data so that they can call you later.

How to get summer jobs

Contrary to common belief, getting a two-month summer job is not difficult. That is because there are
many activities that companies want to get a feedback on. These could be short-term projects in the fields
of sales promotion or search. Sometimes, companies do not get involved themselves but farm out the
work to specialised agencies. If you look around, you will be able to locate many agencies which habitually
take up jobs on behalf of companies. Approach them and leave your bio-data with them, before your

Certain restaurants require people for short durations to meet the summer rush. Identify these in your
town and approach them as well. If you want to take part in trade fairs, meet the organisers of such
events in your city. Summer is the time that many exhibitions and fairs are held, and the opportunities
are great. Jobs related to getting opinions about certain products or telemarketingselling things over the
telephoneare gaining popularity as well. Usually, the agencies that do this work have a database of
students and call them once they get the job from a company. So it is important to get on the active list of
these agencies.

Another way to get summer jobs is through relatives or parents of friends who may be employed in banks
and companies. Make your intentions known and give them your biio-data. It is common that a clerk or
receptionist of an office may have left or taken leave and the office wants someone to fill in for a short
time. In such a situation, your bio-data will come in handy.

Advantage of summer jobs

Apart from the obvious advantages of earning pocket money and being busy during holidays, summer
jobs help in giving a much neededd confidence to a youngster. Once you have done a job or two, you will
realise what kind of personality you have and what you want to do later in life. For example, after having
done a market research assignment, you may discover a love for it. This will help you choose the course
that you want to do and also decide on your future career. Moreover, the fact that you have done summer
jobs will definitely give you an advantage later if you want to go in for an MBA or a professional course.

But this is not all. If you are particularly talented or show promise in the job, the company will like to offer
you a full time job once you finish college. This is no small advantage, considering the fact that many
college graduates have a tough time finding a worthwhile job. So the summer job should be taken
seriously and should be done well. It should not be seen merely as a time-pass.

The summer job also helps to build personality; you are bound to learn the art of dressing up and
presenting yourself when you work with professionals. Often, a person who has done part-time jobs can
be spotted easily from among fellow students belonging to the same age group. There is the difference in
personality that a summer job can make.

What to avoid while doing summer jobs

Often, students take up summer jobs but get disillusioned when they have to go out making sales calls or
even when they have to be in an office for eight hours. Some of the jobs are quite tedious, whether it is
standing at the counter of a fast food restaurant or to go around collecting the opinions of people. One
should be well prepared for such things and not give up when the going gets tough.

The second thing to avoid is giving your friends the address of your work place. Once you do that, they
will come and hang around your office or restaurant, which your employer will certainly not appreciate.
They will also hinder in your work. Should this happen, you can not only bid farewell to a happy
experience at your job, but may well be thrown out as well.

We used to take youngsters for counter jobs, says the owner of a fast food restaurant. The world over
such restaurants are manned by young people. Here, we found that the students were misusing facilities
and getting their friends in. Ultimately, we decided not to give them jobs anymore. This is an unfortunate
outcome of irresponsible behaviour. Do not use the phones any more than is absolutely essential. Even if
there are no customers and you have nothing to, avoid reading magazines. Instead, do a little cleaning or
organising to make the working place a better one. Never be frivolous at work.

It must be remembered that a work-place is not your home. Many jobs may be simply boring. Your
performance is continuoulsy assessed. If you are looking for excitement, perhaps you should not take up
summer jobs at all. But if you are looking at it as a stepping stone to make a successful career, a summer
job is an invaluable experience.

Who to expect

Summer jobs may not be very lucrative, but for freshers it is an ideal way to earn a good amount of
money. Most agencies pay about Rs 150 per day. Holidays and Sundays are not paid for. Bigger
companies may pay a fixed stipend of Rs 5,000 per month. That is a lot of money for a student without
any experience.

How to select jobs

Which kind of a job should you look for? The first step is to assess what work you enjoy doing.
If you like to meet people, then sales and public relations jobs are for you. In market
research too, you will meet a lot of people. There will be a certain amount of hard work
involved in taking appointments from people and tracking them down. Often, you will have
to go around the city in scorching heat. Add to this the fact that the respondent may not
be willing to speak at all, making your trip a waste. If you are the impatient type or are
not an extrovert, such jobs are best avoided.

Many girls want desk jobs. For them, jobs of receptionists and of telemarketing are suited
well. Of course, one needs to have a pleasing personality and like talking to people in
order to make a success of it. Fluency is language is helpful. The field of computers have
opened many opportunities: firms employ data entry operators for short durations. You
can also help make software if you have the capability and are able to get on a project.
The idea is to assess yourself first and then go about applying for jobs. Employers will
appreciate the fact that you have thought about the job you want to do, instead of going
to them and saying you are willing to do anything.

Whichever job you take up, it is good to remember that almost all jobs are tedious and
boring to some extent. They are also frustrating sometimes. A young person must not
carried away and become over-confident. Remember that the company hires youngsters
as they have the advantage of not being permanent employees. Summer jobs are not
given because of any intrinsic quality that you possess. Also, remember that being a
summer employee means that you will probably get a job that no one else in the company
wants to do. Clearly, you cannot dictate terms to the company.

Disadvantages apart, it cannot be denied that summer jobs add a lot to personality. It
gives an edge over others, who may just be wasting time during the holidays. It helps you
assess actual work environments and get attuned to what you will be expected to do later
in life. It is a process of growing up. It shoule not be seen just a means to earn money but
to collect experience. The hidden advantage is that the company may well take a liking to
you and offer you a full time job later on.

The summer job should, thus, be done with care and devotion. It is a great opportunity
which will help build your future career. Do not take it lightly, and go beyoung what is
required of you. So, if you are not preparing for an examination and want to just sit
around during your summer vacations, consider a summer job seriously. What you get out
of it will be great value to you later in life. LAUGHTER IS LAPSE FROM
A melancholy young man (or woman) is a contradiction in terms because youth is the
period of spring and spring is the time of joy and high spirits. The young aspiring to
go ahead, trying to climb the fallen ladder of life, need a sense of humour more than
anything else for the purpose. John Dryden says, “It is a good thing to laugh, at any
rate; and if a straw can tickle a man, it is an instrument of happiness.”

Laughter, which bursts from a smile or a sense of humour, is related to personality.

It is not only a healthful “exertion” but also a badge of a bright personality. A person
with a “long face” becomes a sad spectacle of society.

This is not a mere assumption, nor an abstract philosophy. It is now an established

scientific fact. Research has put valid foundation under the promise popularly known
as “laugh and last”. “Laughter is a therapy better than any physician can prescribe.”

According to a study conducted by the University of Maryland Medical Centre,

watching a funny movie has a healthy effect on blood vessel function, while watching
a mentally stressful one can cause the lining of the blood vessels to narrow and
restrict blood flow.

“Laughing is important to maintain a healthy heart and reduce the risk of

cardiovascular disease”, says Dr Michael Miller of the university.

Laughter offsets the impact of mental stress, which is harmful to the heart. Humour
is an essential part of psychotherapy treatment given to heart patients. Five minutes
of laughter is good enough to rejuvenate the body for 12 hours.

Humour therapy is used extensively in yoga and other alternative therapies. Joggers
having a hearty laugh early morning in parks is a common sight. Contrarily, people
with heart disease are less likely to recognize humour or use it to get out of
uncomfortable situations. They generally laugh less, even in positive situations, and
display more anger and hostility.

When Norman Cousins, Literary Editor of New York Times, found out he had only a
slim chance of recovering from a sudden mysterious disease, he had very little to
laugh about!
Within days his body had degenerated to the point that the had difficulty moving

In his article in New England Journal of Medicine, Cousins tells of his recovery,
inspired by the discovery that 10 minutes of genuine belly-laughter had a telling
effect and would give him at least two hours of pain-free sleep.

His laughter therapy included screening motion pictures and sometimes the nurses
would read to him out of humour books. Especially useful were treasury of American
Humour and The Enjoyment of Laughter.

His work in humour therapy, mind/body medicine, and the role of positive emotions
won him name as it added to his life span. A research paper Effects of Laughter and
Relaxation describes how laughter is a therapy.

There is a similarity between laughter and crying. Crying, like laughing, is basically,
an act of respiratory muscles. It may be called “sorrowful tittering”; and laughter
“glad sob”.

Crying is sorrowful because it is vain and laughter is joyful as it is relaxing. It is an

expression of relief. Dr Johnson counts it as one of the pleasures of the mind. It does
something by doing nothing!

A burst of belly-laughter releases body’s natural pain-suppressing agents. William

Fry has described laughter as a “total body experience” in which muscles, nerves,
heart, brain and digestion participate.

The body is exercised. In mirth, the body relaxes and is soothed. Such is the effect
that it is called internal massage.

Laughter is a diversion, a pleasant expenditure of energy released from other

activities. It is a momentary lapse from gloom!

A good exercise ventilates the lungs and leaves muscles, nerves and heart warm and
relaxed. It exercises not only the upper torso, but also muscle groups in shoulders,
arms, abdomen, diaphragm and legs. Hundred laughs a day is equivalent of 10
minutes of jogging.

A healthful “exertion”, it is a help to digestion and the practice of exciting it at dinner

table is founded on medical principles. Victor Hugo says, “I like the laughter that
opens the lips and the heart.”

Herbert Spencer was one of the first to stress the massaging effect of laughter. He
believed that laughter serves as a wonderful safety-valve for coping with an
“overflow of nerve force” and for discharging “disagreeable muscular motion.”
Laughter is essential for restoring physical comfort, biological harmony and internal

To study the balming effect of laughter, eighty-seven students were asked to solve a
difficult mathematics paper. Immediately afterwards, the students were made
to listen to relaxation cassettes and to watch selected camera clips. Both relaxation
and laughter helped to enhance circulation, relax muscle tension, soothe the
sympathetic nervous system and regulate heart rate. Their performance bettered.
It is not only laughter that can help a person to relax, release and generally let go of
tension. Smiling, amusement, hopefulness and joyful feelings, acceptance of one’s
worth also inspire and enhance relaxation and recreation. A happy, relaxed mind is
an ideal environment for biological balance, harmony and order of the human

One important reason why laughter affects such relaxation for the whole body has to
do with the effect of laughter on respiration. Laughter commences with a long,
drawn-out-exhalation, is well known.

In a burst of laughter our exhalations are longer than inhalations. After laughter, we
are forced to take in and to exhale long, slow, deep breaths. The action of this
breathing, a combination of deep inhalation and full exhalation, often inspires
ventilation, rest and release.

There is laughter of a child—innocent and captivating. There is naughty laugh of a

teenage girl who is tickled. But the sweetest laughter is that of a woman you love.
There is loud laughter, which signifies a vacant mind and is also branded as bad
manners. You are advised not to laugh loudly in genteel company.

There is a phrase in English language “to laugh like hyena”. As the name suggests, it
is animal laugh marked by beastly intentions. German poet and philosopher Goethe
has aptly observed, “Men show their character in nothing more clearly than by what
they think laughable.”

Then you have the “horse laugh” which is equally revealing. It indicates coarseness
or brutality of character. The hint is obvious—refrain from it.

Laughing at others means making fun of them. It is bad manners. Hence, it is

discouraged. We should laugh with people, not at them. But laughing at our own self
is a good quality. It should be practiced. Some famous and
honourable men had this quality, which lent halo to their personality.

A finalist at a beauty contest was asked to name the most important man in the
world. She named American humourist Bob Hope. Reason? “He makes the world
laugh by laughing at himself.”

Bob Hope himself is on record on the issue. When complimented on his having a sixth
sense, that of humour, he quipped, ”it’s because I do not have the other five.” This
ability to laugh at his own self not only brought him love, appreciation and fame but
also a fabulous fortune. He made millions out of it.


A thin line divides a mature person from an immature person. It is said of the former, “He
is mature for his years.” Of the latter “He is too immature for his years.” The former
is complimentary, the latter condemnatory. Dictionary meaning helps illustrate it
further. Mature is fully developed, perfected, ripe. Thus, the mature person is fully
developed in arts of human relationships; has acquired some semblance of perfection
and is ripe in the ways of the world.
Although these qualities should come naturally with calendar years, in many cases
they do not. People become “ripe” in years, not in the arts and graces of living. The
angularities of personality remain sharp and pointed. They are not rounded off.
A young man, say of twenty, intervenes in a fight between two men in their forties,
and saves them from stabbing each other is praised. He is a person of mature
judgement. Immaturity is common. Ranbir is in middle life. He expects his wife to
mother him as his own mother had in earlier years. He is dependent and wants to
pampering or throws tantrums.

The mature one is ripe in thinking. He is not goaded or guided by prejudice, which
means preconceived notions about persons and things.

Prejudice means judgement before all the facts are known. The immature are prone
to jump to hasty conclusions, especially young people. The mature person is
prepared to wait, to suspend judgement until he knows all the facts.

The mature person has no leaning to superstitions. In fact, he revels in knocking

them for six. He will walk where the black cat does with a grin. Thirteen leaves him
unperturbed. Little by little he roots out superstitions connected with his religion,
daily life and makes the necessary adjustments as far as he, himself, is concerned.

He recognizes that superstitions are a legacy of the past, when ignorance and
illogical thinking were the order of the day. Knowledge and sane thinking free him
from the foolish fears and restrictions that superstitions lay upon him. Superstition is
the religion of the feeble minds.

The mature person is ignorant of many things, but he knows it. The immature person
is ignorant of many things, and doesn’t know it. The former is ever seeking to extend
the bounds of his knowledge. He detests the blind mind and the parochial outlook.
His actions and thinking reveal his wide interests and his attempts to scatter his own

He adheres to basic principle: the wise man knows he is a fool. The fool thinks he is a
wise man.
He who has acquired maturity seeks to eradicate fear from his life. He has found that
“perfect love casts out fear”. Rather than fear his fellows, he interests himself in
them. He tries to understand why they behave as they do, and the whole bent of his
life is towards helping them.

To?keep himself on logic-path, he ever reminds himself of Socrates’ words: “I don’t
know.” These three words, believes Socrates, are the beginning of all knowledge. An
ignorant man thinks he knows all.

But maturity is something more than the mere absence of prejudice, ignorance and
The mature person has no fears for his health. His temperate life, his good
relationships with others, plus his refusal to worry, have brought to him a state of
good health in which he is confident he will remain.

He does not fear for the future; he has taken what steps he can to provide for it. For
the rest, he has sufficient confidence in himself, and in Life to know there is no cause
for anxiety. Jesus was a mature person par excellence, and his sane counsel comes
down to us through the ages—“Take no anxious thought for the morrow.”

More positively, the mature person is generally found to possess the following
qualities: The mature person remembers that there is more than one way of looking
at every question. The other fellow may be right; he, himself, does not necessarily
possess a monopoly of the truth. In any case, the particular allegiance of both parties
was largely caused by circumstances over which they had no control.

Maturity says, “Live and let live!” It realizes that there are few evils that do not
contain some good, and when man does attain to some truth, it quickly becomes
contaminated with error. Maturity, then, keeps a man from being cocksure, dogmatic,
conceited, proud. Instead it makes him gentle, meek and tolerant.

Where a man has reached maturity of mind, he is not so preoccupied with himself as
to be regardless of the comfort and feelings of others. He puts himself imaginatively
in the place of others and reacts accordingly. He is big enough to do this. Scriptures
call mankind to maturity when he laid down Golden Rules.

He is objective. He looks upon people and tricky situations in a detached manner. He

is like a painter who steps back two feet from his canvas so that he may critically
view his own work. Not merely to flatter himself but to improve his work.

The mature person is reliable as he is master of his moods. He possesses
”stickability” and is not easily upset by irritations. He is prepared to work for
objective—something that may not materialize for years.

He is cheerful because he does not take himself too seriously. He can be reprimanded
without sulking, and lose with good grace. He has no place for self-pity. He takes full
responsibility for his actions and does not look for scapegoats.

He seldom ridicules others. But he has a sense of humour. He knows that the
funniest person in the world can be seen when he looks in his own mirror!

No one could call himself mature if he bears grudges or allows hatreds to fester in his
mind. Neither is he mature if he indulges in envy or petty stabbings and mean

Is it possible for the average person to take steps to hasten the advent of this
desirable state of maturity? The answer is definitely in the affirmative. It is more
blessed to give than get. This is possible if you turn outwards others than inwards to
your own self. Alfred Adler says, “Every human being strives for significance but
people always make mistakes if they do not see that their whole significance must
consist in their contribution to the lives of others.”

We have all encountered the artful dodger in our life. He is an expert in going to the
toilet for a smoke, and a drink on the sly and a dozen other tricks to hoodwink
others. Does anybody applaud him??He is laughed at for his mental immaturity.

Man has an incredible capacity for self-deception. Human beings love to live in a
world of make-believe, and they are reluctant to come out of it. It is because they
find life easier in a world of fantasy. Life is harsh and hard. Hence, facts are seen as
unpleasant. The need for self-deception and to cling to misconception, prejudice and
wishful thinking—all are marks of

Facing facts is painful, even disturbing, but it has one advantage—we come out
stronger, and maturer. There is no point in remaining in mental cocoon. You must
have a dialogue with your own soul. Find out funk-holes. Prod them out. This is one
sure way to mental maturity.

In the first place, read widely, especially history and biography. If possible, master
another language sufficiently to get acquainted with some of its great literature.

Secondly, think deeply. Meditate on what you read, the trend of events in the world
today, man’s past and probable future. Ponder the great, sublime topics which have
engaged the human mind for centuries—the mysteries of birth and death, the
possibility of survival after death.

Thirdly, travel. Do this as much as you can. Vary your experience as much as
possible. Mix with all types of people. Listen and watch carefully. Travel is a liberal
education. “Look wide” is the motto you can well adopt if seeking maturity.

Lastly, study psychology. More, perhaps, than any other subject, psychology fosters
the mature outlook. This is because it enables us to understand ourselves and others.
The young and the immature cannot do this. They find bubbling up within themselves
all kinds of emotions and they are at a loss to recognize or explain them.

Psychologists have analysed the human mind and labelled its ingredients. They also
offer advice on how those ingredients can best be used and controlled.

In a nutshell, maturity is:
1. Mental, intellectual growth. It is not related to years.
2. It means freedom from dependence of all sorts.
3. Freedom from prejudice.
4. Freedom from superstition.
5. Freedom from fear, ignorance.
6. Thinking of others.
7. Reliable
8. Master of his moods.
9. Has a sense of humour.
10. Knowledgeable.

It is paradoxical but true that the ties that bind are the ties that loosen the bonds of
human relationship. It happens in so many relationships that we try our utmost to
hold to the object of our affections and succeed in losing it. It is most often seen in
parents ‘imprisoning’ the children.

I know of a young lecturer who seldom goes to his parents. He says, “I love my
parents all right but I am really afraid of visiting them as they are very possessive
and treat me not as a being but as a piece of their property.”

Another common manifestation of it is seen in the over-possessive wife. She

becomes a virtual jailer and would not allow her husband to move out alone even if
his business and prestige suffer.

This occurs in intimate friendships too. I know of one such friendship where one
friend crippled the other’s independence of action by laying excessive claims on his
time and attention.

Its acutest form is seen in two people in love. The in-securer of the two gets fits of
jealousy, the purpose of which is to ‘imprison’ the beloved one to retain a monopoly
of his/her affections.

In our desperate attempts to hold we grip too tightly or pull the strings too tightly,
thus damaging the delicate relationship.

Take the metaphor of a child trying to hold a pet bird in his hand. If he keeps his
palm open, the bird stays. The moment he tries to close his fingers, the bird feels
uneasy, flutters and flies away.

This is the case with human relationships. The more we try to clutch too tightly, the
object of our love tries to move away from us as his sense of security and
independence are threatened.

In other words, the object resents our imposition of emotional and mental
slavery. No one likes to be a pale and ineffectual copy of another’s will. In our desire
to hold another’s affection we tend to overlook the lesson that the closest
relationship is sustained and nurtured by loose bonds.

A Chinese proverb says, “He who knows how to bind uses no cords, yet you cannot

The head of one of the closest and happiest families I know told me, “I never
believed in holding my children by tying them too closely to me. I let them feel free.”
“I have watched them making mistakes knowing a difficult experience was the best
for them. Had I protected them, it would have pained me all the more to see them
blundering in adult life.”

How different from another situation where the son is neither allowed a free hand in
the money he earns nor in the time he has. His parents look upon him as a son
par excellence, a model of filial duty obedience. But the son laments along with his
wife, “We have no life of our own. We are mere extensions of father and mother.”

They do not have the courage to overthrow the ‘imperialists’ as years of emotional
and mental slavery have drained of all independence from them.

The stronger we want our relationships to be the greater the necessity of allowing
blank spaces which can act as shock absorbers. We forget that mighty oaks cannot
grow in tiny flower pots.

‘Opening our palms’ requires some mental readjustments. We have to put aside our
rights, our inflated ego, our easily hurt feelings. Life would become easier and free
from emotional stabs if we were not to expect much from others. Then, when
something pleasant happens, we are agreeably surprised.

This attitude brings relief, reassurance, and serenity. By loosening our bonds, we
never lose a relationship. The loosening allows more room enabling the ‘roots’ to go
deeper. It strengthens our relationship.
Can you programme your destiny? Some think that it is beyond human endeavour. Others
are convinced that it is not only possible but also feasible and desirable. To the
former category belong fatalists who are sure that present life is the result of deeds
done in the previous one. Hence, there is no escape from the present. It is a deed
accomplished by the president of the Immortals!

To the latter class fall those who nurse the thought that birth is a matter of chance.
To this extent, it is destiny which is beyond human control. But the dynamics of
personality open immense possibilities of development. To this extent, destiny can
be programmed.

“I do not mean to expose my ideas to ingenious ridicule by maintaining that

everything happens to every man for the best; but I will contend that he who makes
the best use of it, fulfils the part of a wise and good man”, says Cumberland.

He is right on the dot. The wheels of mature are not meant to role backwards.
Fatalism is the doctrine of fools! The fatalist always looks for the easy way out. He
finds shelter in readymade quotes without examining their real implications. For
example, one often hears from a fatalist: Man proposes but god disposes. The failure
is easily passed on to god. Such as man is escaping his own responsibility and his
own role in what he calls “god disposes.”

Balfour Tersely comments, Destiny is the scapegoat which we make responsible for
our failures.” Whenever we face the might of adversity, we cower and go under,
blaming destiny.

“There is no fate,” that cannot be surmounted with scorn,” is a masterpiece of a

statement for those who have been reeling under the shattering blows of destiny.
It is signal mark for those down-and-outs who have chosen to go down the gutter
rather than stand up to adversity in their life. The weaklings go to the seed. The
strong sprout and blossom.

“Well: I made the wave; didn’t I”? said Rutherford when he was told that he was
riding the crest of a wave. He had energy, enthusiasm and capacity for hard work.
Beethoven became deaf at the age of twenty-eight. In a letter to a friend, he said: “I
will take fate by the throat: it will not wholly overcome me.”

With courage and confidence and vitality, he mastered his fate, culminating into a
musical genius. Beethoven is an example of what a human being can achieve by his

Helen Keller, defeated and blinded, learned to read, write and to speak. In her life
she became an inspiration to disabled persons. Her life was a triumph of human spirit
over affliction, desolation and despair.

Allport observes: the healthy person, with rich experience and maturity of outlook is
able to programme his own identity.

Our future is not shaped by heredity or environment, though they play their role.
Surely, man has instincts (drives) but these do not have him. He could reject them.
There was freedom to choose.
Inheritance? Twins may build different lives, on the basis of identifical dispositions.
Of a pair of identical twins one became a criminal while his brother became a

“If we take people as they are, we make them worse. We treat them as if they were,
what they ought to be; we help them to become what they are capable of becoming,”
says Goethe.

Destiny means a man’s appointed or ultimate lot or fate. It is not fore-ordained or

pre-determined. Man is the architect of his own destiny.

I am the master of my fate;

I am the captain of my soul.

In time good or ill he cannot but inspire and fortify all those who attend to him...
What one individual has done another can aspire; the destiny one man has
challenged and finally mastered, another has it in his power to confront.

As for environment, we know that it does not make man, but everything depends on
what man makes of it on his attitude towards it.

Man is by no means merely the product of heredity and environment. As Dr V.C.

Frankl stresses, there is a third element: decision. “Man ultimately decides for
himself; and, in the end, education must be education towards the ability to decide”.

You are the master of your fate, the captain of your soul, because you have the
power to control your thoughts. Your brains become magnetized with the dominant
thoughts you hold in your mind, and by some means, these magnets attract to us the
forces, the people, the circumstances of life, which harmonize with the nature of
your dominating thoughts.

Before you achieve success and realize the top of your ambition, you must magnetize
your minds with intense desire for success in the achievement of your goal, and
become achievement-conscious until the desires for achievement drive to map out
and define plans for acquiring it.

If you make dynamic designs in your mind, of how you wish to behave, you will, like
an invincible current, pour into the patterns you have created and give yourself a
magnetic vigour for the fulfillment of your desires. The will obeys and thought
patterns or mental pictures in your mind, and operates as they command.
Motives are the forces of your personality. If your dominant motive is the
achievement of success, you will programme your destiny accordingly and attract
success as a magnet attracts iron filings.

Let the master thought “I will succeed” dominate your thinking process.
Nothing succeeds like success-thinking and nothing fails like failure-thinking. This is
the magic of master thought.

Raj Kapoor once said on his success as a film-maker, “I think films. I eat films. I
drink films. I dream films.” This is the magic mantra of strong motivation.

You are responsible for your own destiny. The responsibility is your job, and the
sooner you learn his stark fact, the sooner you will start thinking and acting like a
successful human being.

It is up to you to control and shape the forces that make your life. None outside you
has the duty to shape them for you. It is you, yourself, who is at the helm and if you
do not reach your destination, it is because you did not take full control of resources.
The fault lies in you, not in your stars!

If you do not shoulder full responsibility, the world will shape your destiny, not
according to your needs, potentialities and ideas, but according to its own whims.
It has a way of letting those flounder about aimlessly who wait for other men and
forces outside themselves to chart the course of their lives for them.

If you do not pull your own strings, someone else will!

Don’t drift or let anyone else take charge. Do not rely on others to do your part and
act for you.

Those who float with the stream depending on others to clear the path of whatever is
obstructing their passage, or threatening to wreck their life, cannot arrive at their

You have to explore channels for yourself and sail your own way through them, in
order to bring your ship home.

Your destiny is an individual thing and that it is upto your personally to take charge
and shape it according to your capacity, need, aspiration and ideals.

It cannot be handed over to an assembly-line and come out tailor-made to fit you. It
must be designed and hammered out by you alone.

If things do not turn out as you wish, you will have no one to blame but yourself. You
are your own hope.

You must make your own destiny. Never place total reliance to anyone other than
yourself when it comes to shaping your own destiny or guiding your own life.
“Nothing can bring you success but yourself.”

Don’t ever let your strings go.

Refuse to be manipulated by others.
Don’t be content to be regulated.
Take charge of your own life.
Be your own helmsman. Paddle your own canoe.
Pull your own strings.


Tact is a delicate quality. It is difficult to define and hard to cultivate, but it is
indispensable to one who wishes to get on in the world soon and smoothly. Talent is
no match for tact. We see its failure everywhere. In the race of life, commonsense
has the right of way.

The day has gone when a man could boast of his superiority. These are days of
cooperation and interdependence. We have fellow-workers. We are all in groups. We
are held up or pulled down by public opinion. We stand by what other people think of

When we use the word “tact” we do not mean strategy. Do not mean trickiness or
deceit. We know that it is bad policy to fool people. As Abraham Lincoln once said,
“you can fool all the people some of the time, and some of people all of the time.”

Every man is found out sooner or later for what he is. There are sharp eyes watching
every man. Hardly ever does a tricky unreliable man make permanent success.

By tact we mean commonsense and courtesy as applied to pleasing or influencing of

other people. In the upper layer of business life we do not fool people nor lay traps
for them. We win them by our manner and by methods which they approve. When
sympathy is added to tact, tact is not a mere matter of manner. It is appreciated as
mark of sincerity.

We have learned much in the pool of hard knocks. Strikes and lockouts and bank and
lawsuits and loss of trade have taught us much. Why are we now interested in the art
of handling people? For centuries we mishandled them. That is the reason.

We are now trying to prevent clashes and conflicts. We are trying to secure goodwill
from employees as well as all sections of society. We are trying to reduce friction. We
have to appreciate tact as a business-building force, as also as a lubricant of social,
personal relationships.
We have learned that it is foolish and costly to thrust our dislikes down other
people’s throats. We are sure now that our plans are more likely to be carried out if
we make people to believe in them. We are learning that a man can win more friends
if he does not wear armour and carry a club in his hand.

This is to take a kindly interest in the man whom we are going to deal with. This has
a magical effect. Just to consider his point of view makes all the difference between
failure and success. A tactful man, when he is talking to an employee or a friend,
notices the effect of his words. He tries to secure attention. He observes the effect of
his words to the man. He realises that his purpose is to influence the man in his
favour, not to antagonise him.

It is not easy for a busy man, overwhelmed with the burden of his own affairs, to
give a cordial greeting to visitors who come to his office. In his heart, he regards
them as intruders, trespassing upon his time. But he must take himself in hand and
be polite. At least, he must be friendly.

It was said of one politician: “The trouble with him is that he does not know how to
shake hands.”
This is a serious handicap to any one as well as to a politician. Many men spoil an
interview by appearing bored or by giving a clumsy, non-cordial greeting to a visitor.

To offer a limp hand indifferently to a man is like throwing a splash of cold water on
him. The first five seconds of greeting make or mar any meeting.

Tact is necessary for every man is interested in himself. There are few exceptions to
this rule.Naturally, a man is more interested in himself than in anyone else. To
interest him, you must talk first about his affairs, not about your own. No one is ever
bored or hostile if you talk to him about himself.
Talk to a competent man about what he is trying to do. An inventor is interested in
what he is trying to invent, and very likely he has lost interest in his earlier
inventions. It is wise to talk to a man about his problem, whatever it is. That is what
he is thinking about.

Questions are always effective. Almost any man will come out of his shell if you ask
him his opinion on a subject that concerns him. Make him a listener and he thinks
you are a bore. Ask him questions until he begins to ask you questions. Then you
may be sure he is interested.
T.E. Lawrence became the “uncrowned King of Arabia” by learning the Arabic
language, by dressing and living like an Arab, by listening to the Arab chiefs, by
being intensely interested in their affairs and by helping them to overcome their
enemies, the Turks. He became for a time an Arab and won the loyalty of the Arab
chiefs to himself.

A tactful managing director gives a complainant a chance to get it off his chest. He
lets the man tell him about the grievance. He listens.

A grievance is like poison and hearing is like a cure. Then, if the man has been
wronged, he can be given justice. And if he has been mistaken, he will be willing to
be shown his error.

A memory for names and faces is great help to any man. It prevents us from treating
as a stranger a man whom we have been before. It is tactless to ask a busy man “Do
you remember me?” It is very likely that he does not and he is put in an
uncomfortable position.

The more tactful way would be to say: “I had the pleasure of seeing you four years
ago and I remember quite distinctly what you said to me.”

We know that in handling people, there is a magical effect in remembering what they
like. If a shop assistant says, “I know you prefer grey,“ the lady is pleased.

If a waiter says, “We have your favourite dish today”, the customer is pleased. It is
an effective touch of courtesy to remember the wishes and opinions of others.

Tact is a subtle discrimination of not saying what you are itching to say, as it is on
your tongue-tip. Say what the situation demands, not what your bile suggests.


Psychiatrists have caught up with Socrates and cashed on this technique. They employ this
technique as a powerful self-communication instrument to bring about personality change and

The troubled person just talks (to himself) while the psychiatrist records his expression—verbal as
well as facial. He also carefully watches his body language.

The aim is not to advise him but to give him an opportunity to unburden his mind, to see his own
thinking in a new perspective, and thus find solutions to his problems.

Here is one example from my own life. I was at cross-roads of my career, after a spell of
unemployment. It so happened that I got three offers almost simultaneously. These were PR job
in Haryana government, a similar job in a Haryana University, and a lecturer’s job in Panjab
University. I debated the dilemma of job-thinking in my mind for a couple of days, and opted for
the PU job.

It was self-communication that helped resolve the dilemma. The role of the self can be
adequately played by a good listener.

One person who is truly understanding, who listens to you as you struggle with your problems,
can change your outlook on the world.

Few people go to professional psychiatrists with their problems, but many take their troubles to
friends and some to relatives.

When a person in trouble knows that he has a good listener he shares his thoughts fully, which
makes it easier to solve his problems. As he talks he finds a solution to his problem himself.

The emphatic listening is described as non-directive. The word refers to the reaction that a
listener should present to a talker who is trying to discuss his own problems.

Another way of putting it is to say that the listener makes an effort to understand what is said, but
does not give direction.

The listener realises that he is a sounding board. The talker does not want advice. He wants to
talk freely so that he can listen to his own thoughts as they are put into words.

With this opportunity to hear himself speak, he is able to furnish his own advice.

In brief, the good listener accepts that is said, tries to understand it, and above all, makes no

Empathic understanding with a person, not about him, is an effective approach. It can bring about
a major personality change.

If you want to find out how it is to listen without making evaluation judgments, test this
experiment. The next time you find yourself in a heated discussion with your friend or spouse, let
this rule be followed:

Each person can speak up for himself only after he has first restated the ideas and feelings of the
previous speaker accurately and to the speaker’s satisfaction.

This means that before presenting your own point of view, it would be necessary for you to
achieve the other speaker’s thoughts and feelings so well that you could summarise them for him.

Sounds simple, but you will discover that it is one of the most difficult things you have ever tried to

However, once you have been able to see the other’s point of view, your own comment will have
to be revised. You will also find the emotion going out of the discussion, the differences being
reduced, and those differences which remain being of a rational and understandable sort.

Why is non-directive listening so difficult to accomplish? The answer lies in the fact that such
listening requires a kind of courage that few of us have ever required.
When we listen to another person’s ideas, we open ourselves up to the possibility that some of
our own ideas are wrong.

Most of us fight change, especially when it has to do with altering our own thoughts. Therefore,
when we listen, something from inside makes us want to fight the change in our thinking that
might be brought about by what we hear.

Hold on there, we are urged to say. You must be wrong. That isn’t the way I think. And you are
not going to change my mind. I won’t allow it.

There is no sure formula for the kind of listening that can help people when they feel the very
human desire to be heard. It depends too much on an attitude that must come from inside the
No one can spell out a method by which you can become sympathetic and understanding to
another person.

The following point will help in forming non-directive listening.

Listen: Whenever you sense that someone is troubled or needs to talk, give him your time.
Though it may seem like a waste of time to you, it seldom is.

If by listening you can help him clear his mind, it will also help communication between you and
the person talking.

Also, there may come a time when you need a listener, and it is a fact that a good listener has
little difficulty finding listeners.

Be attentive: If a verbal avalanche is launched, let it flow uninterrupted until it is exhausted.

Make every mental effort to understand what is said. Put yourself in the talker’s place to
understand what he says.

Verbal reactions: As the talker proceeds, use a series of eloquent and encouraging grunts:
Humm, Uh-huh, Oh, or I see.

If the talker pauses, you should remain silent. Or nod your head, until talker starts again.

If he becomes unreasonable, you should restate what has just been said, putting it in the form of
a question. Examples of such restatements might be: You really think life that? Or, you believe
your mother-in-law is trying to ruin your marriage?

Probe not: There is a difference between willingness to listen and curiosity designed to dig for
hidden information. The latter must be avoided. your purpose is not to obtain unwanted
Evaluate not: You should refrain from passing moral judgment upon what is said. In no case
should you give the talker advice—even if he requests for it.

Have faith in the ability of the troubled talker to solve his own problems.

You are witnessing an amazing human phenomenon. the person is talking things over with
himself. If you do not inject yourself into his conversation, the chances are that the talker will work
things out for himself.

The importance of what lies behind the need for listeners is important. An understanding of what
happens when a person talks and another listens is found at the foundations of today’s wellness
psychotherapy. It is the therapatic value of communication. It works wonders in human
relationships. Just know and follow the fundamentals.

The psychiatrist’s most important tool is listening. A non-directive counselling, now practised
more and more widely throughout business and industry, depends upon persons trained to listen
quietly and objectively. In most job interviews one basic approach is to let the candidate speak
about himself. This provides a peep into his inner self, the real purpose of interview, a view from

Even in day-to-day living there is a way that you can communicate with yourself but it requires the
help of another individual, a listener, and a very good one.

If you find such a listener, he, in a sense, becomes a mirror that throws back a reflection of

The listener hears your words but, what is more important, you hear yourself talking. If the listener
remains active, but silent, giving you a chance to talk freely, thoughts from both the conscious
and subconscious levels of your brain are put into words.

As a result you have the opportunity to hear both parts of our brain speaking. Many times this
result in self-communication you have been seeking all along. In effect, then you solve your own
You don’t have to spend enormous money or energy to be yourself. Just talk to yourself.

J ames Allen says in “As a Man Thinketh”, “A Man is literally what he thinks, his
character being the complete sum of all his thoughts. As the plant springs from the
seed, so every act of man springs from the hidden seeds of thought.”

What you make of your life and career depends mostly on your mental attitude and
not so much on aptitude. Aptitude is readiness to learn or natural ability. Attitude is a
collection of opinions hardened into a studied position. It is more important than
aptitude in the matter of career advancement.

You can regard the routine study and effort as a boring round of familiar, uninspiring
chore. It is easy to brush it away as unnecessary framework for achievement. In the
same way, you can take either a
positive or negative attitude to your success and failure.

You can dismiss success as a fluke, unlikely to happen again. Or you may regard it as
an opportunity for future and further achievement. It is your attitude that matters.

You can allow failures and setbacks to brake your progress, looking on them as proof
that you cannot succeed. you may invent an alibi that you aimed too high.

Alternatively, you may take the positive line of learning. Obviously, the right attitude is
the positive one. This attitude leads to achievement.

You can acquire this attitude. Yes. you have to break the hold of the negative. You
cannot cultivate the positive attitude if your mind is dominated by the negative. You
cannot achieve anything if you do
not have the courage to try. Try to throw the negative out. Replace it with the positive.
Assess your abilities. Know your strong as well as weak points. Strengthen your plus
points. Fill in the deficiencies. List the qualities that make you, in your own
estimation, a unique person. This will make you feel more positive about yourself.

Watch your words. use bright, optimistic expressions about your own self; steer clear
of discouraging and disparaging. Draw attention to the positive. Turn your back on
back-biting. When a person is being painted black, do not join the chorus. Try to put
in a good word.

Keep distance from chronic nags. They always speak destructively. Do not talk with
them about your future plans and programmes. It is foolish to invite discouragement.
Drop the chronophages, and the nags. They prove millstones round your neck.

Positive mental attitude means refusing to cave in when things go wrong. There is
nothing bad in failing, but it is a disgrace failing and not trying again. Give yourself
another chance, gaining from the experience of failure.

You can believe in success by acting as though you already had this
valuable quality. The right attitude turns even the worst of negative, crippling failure to
a positive, thrilling success. your mental attitude must be turned to achievement if
you want to achieve.

Even the blazing sun cannot burn a hole in a tissuepaper unless its rays are focused
and concentrated on one spot! The fact is that you have the spark which can ignite
success. You have the mental ability that can take you high. Then, what is wrong?
What is holding you back? You are using only a fraction of your real brainpower. If
you do not focus your mind, you lack determination to get to a goal. Your desire to get
to the goal is not strong enough.

Concentration is another name of stickability. Improve your power of concentration by

coming to a realisation of the cost of its opposite-inattention. Lack of concentration
means failure to hit the bull’s eye which means waste of energy, time and effort. But
more than that, it means shattering of self-confidence.

Focus now on a course you had enrolled in but abandoned because you had a
wandering mind. Incomplete or badly done tasks give you a let-down. They make you
pay a high price for inattention and lack of concentration.

Discipline your mind to ward off distractions. Deal with one thing at a time. Be like the
who says, “One patient at a time.”

Harness imagination to accomplish your goal. Visualise to realise. See yourself

enjoying the privileges and power which follow after you reach your goal.

Concentration means directing the wayward mind into a predetermined stream. You
do it by assaulting your mind with questions that collect the wayward threats and put
them on the main theme.

Shut out the irrelevant. This helps you reach the desired objective. You cannot
concentrate effectively on something trivial or of no significance. Visualise the
completed task. See yourself finishing it.
People who perform complicated tasks at work, tend to develop an intellectual
flexibility that they carry to other parts of their life and are more independent-minded
and open to new experiences than those who perform routine jobs. They also select
intellectually activities for their leisure pursuits. A satisfied worker is more productive
than one who is not. Instead of satisfaction contributing to greater
job accomplishment, it is the sense of accomplishment, doing well on the job that
makes the one feel competent and contended.

For most, earning salary is the primary incentive for having a job. But other factors do
play their role. Among them are the needs to feel productive, to meet challenges, and
to be creative. These lead to inner wellness. A job can build a sense of competence
and self-esteem. Individuals attain social status through their jobs.

Many people also cite the companionship of their co-workers as a reason to work.
Which factors are most important, depend on the individual and his or her
background, expectations and goals.

In most surveys, majority of professionals report enjoying their work. This is partly
explained by the high income levels in such professions as medicine and law.

Experts now believe that instead of being the right kind of person, a successful
executive is one who happens to be in the right place at the right time. Events then
mould the individual into an effective one.

His capability depends on how his or her leadership style fits the work situation
involved. The most revealing trait is whether he tends to give priority to getting a job
done or to having good relations with workers.

Job-oriented chiefs fare better in situations where workers already get along well with
one another and the task to be done is clearly defined.

A chief is not likely to get the best out of employees, if he or she is constantly giving
mixed signals,
delegating responsibilities but not power, and failing to define the job to be done. A
poor communicator makes a poor leader. So does a one-man company.

The effectiveness of a chief may change with circumstances. For example, an

entrepreneur can be outstanding in spurring a small group to start a successful
enterprise but may not be good at handling the complex organisational problems of
an expanding organisation. One may be good at expanding but not at handling.


Y ou can learn from many sources that you live in a world of your own making. That what you
think tends to make your life. That since you are masters of your own thought life, and can
choose what you think, you have it in your power to change your life from failure to success. If
you are lacking in self-confidence, you can transform yourself and brim with supreme confidence.

When Napoleon said that the word impossible was found only in the dictionary of fools, he was
not mouthing a mere platitude, he was giving expression to what goes by the name of splendid
self-confidence. People who find life unbearable and boring, often fail and blunder. They find it
difficult to take any lead. They should examine their own mental picture of themselves that they
have nursed for years, and compare it with what they actually are in life. They will find that the
two really correspond with each other. In other words, what you are inside, you show outside. For
example, you may be good, capable, impressive and successful. This is not a chance. It means
you have carved your mind accordingly. If you are bad, incapable, unimpressive and
unsuccessful, you have moulded your mind in that frame.

The secret of successful living lies in your own vision of yourself, not what others think of you. Or
you of them.

If you want to be outgoing, confident, capable of bracing career and life, look to your thought life.
Change your thinking and stick to it. Negativity is the nightmare of many young people. You may
have big aspiration for success but your efforts and thinking are hedged with ‘ifs’ and ‘buts’. You
cannot organise yourself nor give proper perspective to a long-range panoramic view. Your
confidence is thus crippled. He naturally has a stalemate in his mind. “I am good but there is
something fake in me. I think I should end it all.” And he does give up. Lack of confidence gets
the better of him.

This negativity often shows in depressive moods. A person is locked in himself. He is empty. He
feels foul and chained. He is a goner! You feel beaten before you start something new. you either
don’t try at all or begin half-heartedly, expecting failure. This attitude invites the failure that is
feared. Try to put aside the fear and take a chance. Break the chain of discouraging defeats
which seem to prove your inadequacy. Give yourself an opportunity to prove you can achieve
reasonable success. You often say or do the wrong thing.

Your awkwardness comes from a foregone conclusion that you will be awkward. instead of
brooding over the bad impression you expect to make, plan to be cool and tactful. When you
study a new subject or try to master a new skill, you keep your mind on how hard it is, how long it
will take, and how little you will remember. If you give half your energy to your work and half to
worry about your work, you will be fifty per cent efficient. Keep your mind on the work itself. This
is a question of directing attention properly.

Even if you do a job well, you worry because it isn’t perfect. If you get eight-five out of a hundred
on an examination, you think of the fifteen you didn’t get! This is negative. People with great self-
doubt are simple perfectionists. They want too much. Acknowledge the fact that a perfect score
every time would make you a museum piece instead of a human being. Otherwise, it is true that
nothing you ever do will please you. You worry about being too tall, too short, too thin, too heavy,
or the shape of some feature.

People who feel inferior magnify their own faults. Let the problem-solving attitude help. Try to
obscure, or compensate for actual physical shortcomings. Remember that the other fellow is
usually just as concerned about the impression he makes on you!

You haven’t been to college, or university. you feel bad and take a back seat when others talk. It
is not the lack of a diploma—it is the inferiority feeling! Here’s another misdirection of attention.
Instead of thinking, ‘I have no degree’, think of the subject under discussion, or the job to be
done. If you know, speak up. If you don’t know, read up!

You think you don’t do as well as your friend. Comparison with those who seem more successful
leaves you no sense of achievement. Do well for yourself! You are a success when you improve
on your own record! When something goes badly, you think it is your own fault. If it rained and
spoiled a picnic, you would feel responsible and apologetic. This is negativism at its best. It is
Lame excuses must be avoided. But there is such a thing as poor business conditions over which
you have little or no control. Self-doubt causes you to absorb troubles and add to your sense of
failure. Give them their due! But not over-due! Do not boast or act high, run everything down,
even though you do not really enjoy it. You are acting a wind-bag. This is compensation game. A
person who feels inferior, puffs himself up or pushes other people down. This does not bolster his
ego, and it only serves to irritate those he meets. Put up a mental stop-sign when you estimate
people and what they do.

Realise that the origin of vanity is in the insecurity feeling itself. You talk too quickly, answer
questions too fast, and greet people with nervous haste. You are undignified. People who doubt
themselves act as if they thought no one would wait for them to speak, and as if it was always
they who must snap to attention and say it first.

Again, use that stop-deliberate! sign when with other people. It’s a strain at first, but a relief to see
that you can slow down and achieve a feeling of stability. You spend a lot of time telling people
where they get off—in your imagination. In real life, you rarely express resentment and let people
impose on you too much.

The cure is to find suitable expression in real life. Plan to express yourself firmly and calmly when
you find it necessary. It will do you good to find that people soon accept your new image of
yourself as a person who stands up for his rights. You cannot be over-ridden. When you have a
big task, you think of the whole thing at once. You never feel you have done enough on any one
day because there is always so much more to do.

You need a schedule for tackling a big job. Assign a day for each part of the job. Concentrate on
one part at a time, on one day at a time. This lets you know when you say, “I’ve done my day’s
work!” You envy those with special skills and special funds of knowledge. You think you are not
good enough at any one particular thing.

If you are not, then you have never tried to be. Consider your high points. Language?
Photography?Music? Some aspect of business? Begin to build one or two of those high points by
study and practice.

You put things off till the last minute, then find yourself terribly rushed, do a bad job, and prove
again—as you see it—that you are not very good. Postponement always makes a job look
harder. Plan when to do it. At that exact time jump to it, and do it. No procrastination.

When people criticise you, it makes you feel simply terrible for a long time. People who doubt
themselves tend to dangle by the opinions of others. They lack stability.

Sometimes a critic is trying to make you feel low and make himself feel more secure. In that case,
feel sorry for him. You have accepted yourself as an inferior person, who will play an inferior role
in life. There’s a world of difference between being inferior and feeling inferior. Yet, a person who
feels inferior for years often comes to think he is inferior. Remember, that with proper effort, you
can change the role you play in life.

Take a few moments every evening to note exactly how inferiority attitudes have caused trouble.
Plan to handle similar situations more effectively. Don’t expect to “snap out of it” overnight.
Gradual improvement should cause you to congratulate yourself. It is satisfaction from
reasonable progress that builds confidence.
You forget names and faces, facts and figures, simply because you never really has to
remember them. You would be surprised at your powers of recollection if your career depended
on it.

Dr Salo Finkelstein, Polish mathematical performer, was once asked by a broadcasting company
to tally the returns of a US presidential election because he was faster than an adding machine.
He did it in 4.43 seconds.

People have different types of mind. Some remember pictorial images, others recall sounds,
others learn by the “feel” of words. Most have some share of each type of ability, although one
faculty usually predominates.

No matter what type of mind you have, there are some general rules that will help you in training
your memory.

In memorising, tackle a thing as a whole. In learning a poem, you might imagine it would be
easier to memorise couple of stanzas at a time. Read the poem right through from start to finish,
many times as necessary, and you will learn it in connected form.

Don’t try too hard. It produces mental tension. Over-trying slows down the

Every time you remark that you have a memory like a sieve, you are knocking one more hole
through its bottom.

Shun artificial aids such as associating disparate elements. This puts your mind to unnecessary
labour in handling two kinds of material that have no natural relation to each other.

It is possible to recognize familiar pattern in figures themselves. This was the secret of Dr
Finkelstein’s wizardry. He viewed a long number as a string of smaller, three-digit figures.

The best time to memorize a thing is just before you go to sleep. Bedtime
memorisers score consistently 20 to 30 per cent higher than those memorising at other hours.
The material sinks in most effectively then.

You must keep the memory traces fresh if you wish to recall easily. This needs frequent revision.
The more you can reiterate the matter you want to recall, the more efficiently you will do it.

New information has to be associated with what you already know. Recall is then easy. This may
be compared to a bicycle chain. Each link brings along the one behind it provided the connection
is there.

In the dark recesses of the mind are filled literally billions of information bits. Each time you dip
back into the past you are activating this most remarkable of faculties.

You have a prodigious memory. In a few cubic inches your brain stores much more information
than can be stored in a large computer installation costing millions. Further, it can do things that
would stump any present-day computer; remember how burning leaves smell, or how a chocolate
ice-cream tastes.
One researcher calculates the brain’s storage capacity at one quadrillion bits of information—
that’s a million times a billion. With such capacity, says Harvard’s John Merritt, “No one has ever
filled the pitcher to overflowing.”

Memory works in queer ways. Some people have extraordinary retrieval powers. A few
individuals can look at something and have total recall of minute details.

A friend of Professor William James was introduced to a Colonel in the British army. Presently the
men were chatting about the signs of age, at which the colonel challenged anyone to say how old
he was. The professor’s friend astonished both the Colonel and others present by giving the
correct date of his birth.

He later revealed that one day he had picked up a copy of the Army List and while turning over
the pages had unconsciously memorised the birth dates and various particulars. When he was
introduced to the Colonel all the particulars he had read about him rose into his mind without any
conscious bidding.

James Macintosh, a well-known writer and politician, claimed that he could remember all the facts
coming to his attention in the course of a long and busy career and most of what he had read.

He could identify even obscure quotations. He could repeat not only the passage correctly but
say on which page it would be found.

Hazlitt said of this man: “There is scarce an author that he has not read….If an opinion in an
abstruse metaphysical author is referred to, he is probably able to repeat the passage by heart,
can tell the side of the page on which it is to be met with, can trace it back….and thus give you in
a few minutes space, and without any effort of previous notice, a chronological table of the
progress of the human mind in that particular branch of inquiry”.

It was said of Bonar Law that he never prepared speeches or spoke from notes, yet once, while
Secretary of State for Colonies, he delivered the annual statement of his department’s work, a
very lengthy speech, with many figures, without a single note.

Robert Browning had only to read a book once to be able to quote entire pages fluently and
easily. It is also related that Ben Johnson could recite long books by heart. Jonathan Swift, when
three, could read most of the different passages in the Bible. He also repeated easily from
memory what he had read.

Sir William Robertson Nicoll, for many years editor of The British Weekly, read on an average two
books a day, which he claimed to master at the rate of 40,000 words an hour.

Nicoll’s memory and mental grasp were remarkably sure, for in a few seconds he had mastered
even the most difficult paragraphs. In addition to such mental activity he wrote between 30,000
and 40,000 words a week and maintained complete control of his paper.

He was born and reared in a Scottish manse containing over 17,000 books, which overflowed
from the rooms into the passages and down the staircase. In his own library he had over 25,000
books and could put his hand on any book he wanted and turn up any quotation with no delay.

Clement Shorter said: “He could read a page while I read a sentence.” And Sir James Barrier,
“No pocket could have contained all the books he needed for the shortest journey.”

In protracted travelling he gra-dually left his clothing behind him as more and more books
crowded it out of his valises. He was so fond of books that I am sure he never saw a lonely one
without wanting to pat it and give it six pence. I should say that he read thousands of them every
year of his life, and as quickly as you or I may gather black berries.

It was said of Professor Richard Porson, a famous Cambridge authority on Greece, that he
remembered substantially the hundreds of scholarly books he had read in the course of a busy

He was one of the few men of his time who knew by heart every ancient Greek writer so well that
he could tell the position of a quoted line in the copy of the work concerned in his library.

Dr Samuel Clarke, a famous divine, always took a book with him and claimed that he
remembered all that he had read.

The mind often takes impression with the accuracy of a camera and reproduces them as readily.
Macauly, the historian, was fond of demonstrating this feature of the mind’s activities. He would
read rapidly several pages of print, close the book and repeat what he had read word perfect.

If your constant regain is, “I cannot. It cannot be done. I do not have the luck except of the bad
kind. Things always go the way opposite I want”, you are inflicting a psychological injury on your
own self. You are crippling your chances of a bright career and life.

This negative trend gets so deeply sunk into your personality that failure, gloom and self-
disapproval become an integral part of your whole being.

However, this need not be so. Negative can give way to positive. It is easy because both are
acquired thought patterns. You were not born a negative. You can now become a positive. Learn
from the photographer. He develops negatives into positives. Be your own photo-grapher!

In simple words, the negative and destructive or disintegrating forces can be forced out, and
replaced by new and constructive ones which re-build your personality.

Negative thinking generates a circle which goes on re-cycling emotional toxins. Regrets, self-
distrust, anticipation of failures, creeping tears build an invisible horror edifice of inside you.
Each time you become a little more like what you dread like being, you forge one more link to the
vicious chain.

If it is true of negative thoughts, it is also true of positive ones. Positives begin to reverse the
negatives, just as glimmers of light dispel thickness of darkness. One solid positive thought lays
foundation of a cheerful edifice.

The antidotes for poisons of failure and false ambition exist in your mind. Replace them.

Experiments made by Elmer C. Gates have shown that depressing emotions generate injurious
compounds. Agreeable emotions generate chemical compounds which stimulate cells to
generate energy.

You can build your own mind, calling up pleasant memories and ideas. Summon feelings of
benevolence and unselfishness. Heaven and hell exist in your own mind!

Devote time to these emotional gymnastics. At the end of a month you will find the change in
yourself which will be apparent in your actions and thoughts.
Anger, for example, changes the chemical properties of the saliva to a poison dangerous to life.
Sudden and violent emotions can weaken the heart in a few hours, and can cause imbecility,
even death.

Use emotional chemistry to neutralise a thought with the opposite thought, just as an acid is
neutralised by an alkaline antidote!

Counteract the corrosive power of depressing thought by its cheerful antidote. The optimistic
thought is sure death to the pessimistic one.

Harmony neutralises discord. The health thought will antidote the ailing, sick thought. You cannot
smile and scout at the same time.

“I am ailing. I am dying.” Replace it with, “I am well and kicking. I am growing in vitality. Why
should I nurse death-thoughts?”

Nothing exhausts life as hatred, jealousy and revenge. They who nurse these passions are worn
out; look haggard, even before they have reached middle age. They are premature fossils of life.

If you have a fever, you go to a physician for an antidote, but when jealousy or hatred is raging
within, you suffer until the fever gradually wears itself out, not knowing that by an application of
love which would quickly antidote it, you could easily have avoided suffering and the wear and
tear of the system.

You cannot drive darkness out of a room. Let in the light and the darkness flees! The way to get
rid of failure is to flood the mind with success.

Vijaya, a struggling journalist, has acquired the habit of refreshing her mind even in the most
trying and exacting conditions. Knowing the power of mental images to renew the mind, she has
learned to eliminate all those which suggest dark, unfortunate images, by dwelling on their
opposites—those which bring beautiful, cheerful, uplifting, encouraging pictures to her mind.

Through magic of chemistry, she has been able to maintain serenity and balance which endear
her to all who know her.

In the past, you have been pilling one gloomy thought on another and have built a solid wall.
Now, reverse the process.

As a starter, use Emil Coue’s famous: “Every day in every way, I am getting better and better.”

Such a positive affirmation repeated loudly echoes in your mind, driving out the doubts, your
You can adopt a multi-dimensional approach—personal, significance, work, people, life.

If you look upon yourself as worthless, a waif afloat on the water of life, you will reflect it in your
words and actions.

If you exhibit bright image, confident words and self-assured behaviour, it also shows lifewise.

Negative thinking hinges on a feeling of inferiority and worthlessness just as positive thinking on
personal worth. It is important to have a feeling of personal
significance. You are unique as individual.
Positive thinking is a way of looking at life. Sometimes, a negative approach springs from wanting
to do things you are not fit enough to do. You misfire.

There must be self-acceptance in ample measure. Your real potential remains unexplored, but
you go about exploring what really does not belong to you. This happens when you try to be
someone else than your own self.

A batchmate of mine desperately tried to become what I had. His efforts ended in vain because
he was not trying to explore and realise his own potential. He was trying to fake me. His attempts
at getting into and staying in print ended after a few feeble attempts.

This happens to many because they nurse delusions about themselves, either overestimating or
underestimate themselves.

How do you look at your work? Do you look upon it as a necessary evil? If so, current of gloom
flows in your thinking. You go about life as a lost soul. You are distracted. You will meet mishaps
because you are an accident in search of occurrence!

Bias and prejudice play an important role in negative thinking. A senior faculty member of the
university department where I taught, was driven by strong, inexplicable forces against me. I was
baffled till a journalist friend told me that he would continue to boil against me till my by-line
appeared in a prestigious English language daily of the region.

This gentleman had not cultivated a simple maxim of positive thinking: congratulate those who
deserve it.

Success in life does not depend on our circumstances, but on ourselves. More men have ruined
themselves than have ever been destroyed by others. More houses and cities have perished at
the hands of man, than storms or earthquakes have ever destroyed.

Who fills madhouses? Surely, not fairies of nature. Just ravages inflicted upon man by his own
There are two sorts of ruins; one is the work of time, the other of man. Of all ruins, the ruin of man
is the saddest. “A man’s worst enemy”, Seneca said, “is the one in the breast.”

Providence does not create evil, but gives liberty, and if we misuse it we are sure to suffer, but
have only ourselves to blame. “Many men”, says La Bruyere, “spend much of their time in making
the rest miserable”.

We all know how to make ourselves miserable.That is simple enough. Be selfish, take offence
easily, think too much of yourselves and too little for others, be extravagant, run into debt, take
too much to eat and drink, and you will be miserable enough. This is suicide in measured steps!

Life is not a bed of roses, but neither should it be a field of battle. Some people waste their living
in wishing for what they know they cannot have, in regretting what they cannot avoid, and talking
of what they do not understand.

What we call evil is good misapplied, or carried to excess. A wheel, or even a cog out of place
throws the whole machinery out of gear, and if we place ourselves out of harmony with the
harmony with the constitution of the universe, we must expect to suffer accordingly. Actions have

Courage in excess becomes foolhardiness, affliction, weakness, thrift, avarice. It is proverbial that
what is one man’s meat is another man’s poison.
We bring the troubles of life on ourselves by own errors—errors in both senses, by doing what we
know all the time to be wrong; but also, and perhaps almost as much, by our mistakes.

Try to do what you ought and you will have no doubt what you ought to do. If we do wrong, it is
with our eyes open; for if they are not open, unless indeed we have wilfullly shut them, we may
act unwisely, but it is not sin.

We must trust to reason; to that of parents, of elders, of friends; to our education and to
Indeed, our education is part of ourselves. We have all at any rate one pupil whom we must teach
and educate. What we teach ourselves becomes such more a part of our being than what we
learn from others.

Education does not end when we leave school. It has, in fact, just begun! It goes on through life.
“How well it would be”, said Seneca, “if men would but exercise their brains as they do their
bodies, and take as much pains for virtue as they do for pleasure.

“What you wish to be, that you are; for such is the force of our will that whatever we wish to be,
seriously, and wish a true intension, that we become.”?Moreover, we generally know what we
ought to do, for conscience tells us “more than seven watchmen that sit aloft in a high tower.”
Humour is a subject that has attracted the attention and interest of some of our greatest
minds, from Aristotle and Kant to Freud. It has also fascinated and played an
important part in the work of some of the greatest writers such as Shakespeare and
Oscar Wilde.

However, curiously, after thousands of years spent trying to understand humour,

there is still a great deal of controversy about what humour is or why something is
funny. There are some interesting theories, though, on this matter.

For Aristotle, comedy is based on “an imitation of men worse than the average,” of
people who are “ridiculous”. Hobbes carried the same idea a bit further. He said, “the
passion of laughter is nothing else but sudden glory arising from a sudden
conception of some eminency in ourselves by comparison with the infirmity of
others, or with our own formerly.”

There is another theory that is probably the most important and most widely
accepted of the explanations of humour. This theory argues that all humour involves
some kind of a difference between what one expects and what one gets.

One of the more interesting and controversial theories of humour stems from the
work of Freud. The psychoanalytic theory of humour argues that humour is
essentially masked aggression which gives us gratifications we desperately crave. As
Freud wrote in his classic book—Jokes and Their Relation to the Unconscious— “and
here at last we can understand what it is that jokes achieve in the service of their
purpose. They make possible the satisfaction of an instinct (whether lustful or
hostile) in the face of an obstacle that stands in its way.”

Freud also recounts a number of wonderful Jewish jokes in his book and alludes to
the remarkable amount of self-criticism found in jokes which all Jews tell about
themselves. “Incidentally,’ he wrote, “I do not know whether there are many other
instances of a people making fun of such a degree of its own character”. His use of
the word “fun” is important. He did not regard Jewish jokes as masochistic
(gratification gained from pain, deprivation). Just the opposite.

It might be argued that since humour is an effective way to keeping in touch with
reality, Jewish humour has been intimately connected with Jewish survival. Also,
humour is not some kind of an idle and trivial matter but generally enables people to
gain valuable insights into social and political matters.

The fact of the matter is that this seemingly trivial, inconsequential, common thing
we know as humour is very enigmatic and plays a vital role in our psychic lives and in

The public choice strategy proposes that functions that are not being carried out
properly/efficiently or have received a lackadaisical approach towards them must be
delegated to the private sector. The world has been seeing a wave of privatization
sweep across many spheres. It is sometimes not only essential but also the only
choice that remains when breaking the monopoly of the government is concerned,
especially in infrastructure. The impact of privatization on education could not be
contained either, as it seemed to help a cause and diversify choice of resources
available. At the school-level, privatization has become a very normal phenomenon.

Even though privatization is a necessity, it does not come without drawbacks. The
process involves private sector in the ownership or operation of a State-owned
enterprise. In reality, the ideals that are upheld by the State in its enterprises has
been overtaken by the underlying mantras of business enterprise— profits and more
profits. It becomes necessary at this stage to understand that when the Constitution
has laid down free and compulsory education for children until they complete 14
years of age, why is the State not able to meet its responsibility. And subsequently,
even if it does involve the private sector to reach its goals, why is it unable to hold
the ideas of social equity and service to the deprived sections! Is privatization of
education really going to help or is it just another up-scale factory turning up nose
on the natives?

Miss A At the time of independence, Nehru’s vision to make India a socialist

country placed immense responsibility on the shoulders of the State to establish and
oversee the expansion of educational institutions. The highly ambitious goals of
literacy achievement have been shouldered by the State-run schools so far. In the
rural pockets, the elementary schools are State-aided and so are the majority of
schools in the urban areas. In the present times, the presence of private enterprise is
being felt much in the area of school-level education concentrated in the urban areas
only. Even at the colleges and the university levels, the State’s contributions loom
large over the country’s education scenario. Now the time has come when India’s
burgeoning population demands more resource allocation and larger infrastructure
to combat illiteracy and promote education. With the paucity of funds being an
almost permanent feature of the departments of State, privatization has to be
resorted to on a larger scale if the targets are to be met. In this scenario, the
unrealistic burden that has been cast upon the State can be effectively met, too.

Mr B There are many myths about the private enterprise in education and how it
can aid the government’s efforts in scaling down illiteracy and building up a veritable
force of educated human beings. It must be realised at the very outset that the
motives of the two organisations are at cross-purposes and one cannot substitute for
the other. It has been seen a lot many times that corporate/religious bodies take up
the onus of contributing to the field of education. There is a great exhibition of the
philanthropic spirit in the beginning, but it soon fizzles out. In reality, these are the
image-building exercises of these trusts, which transform into commercial activities
guided by motives of profit-making and diversifying operations to garner more
resources. In this arena also exists the misnomer of ‘public schools’, which are
completely run by private bodies or trusts. These schools have English as the
medium of imparting education and are churning out children from the upper class
exclusively, while the lesser mortals continue to go to the State-aided schools.

Miss C The quantum of knowledge available to the world has increased rapidly in
the past few decades and that itself is a pointer to the fact that knowledge is power.
It is of utmost importance that the developing and the underdeveloped must focus
on the education for keeping the knowledge gap between themselves and the
developed nations to the minimum extent possible. Even the World Bank has
corroborated the view, stating that the knowledge explosion is fast dividing the
world into fast moving rich economies and the slow moving poor ones. Now, that this
is the true state of affairs, education is no longer considered a part of social service.
It is a necessary area that needs careful investment that will be a greatly
contributing factor to the human resource development. The value of human capital
has dawned upon the world and it is much more important to invest in human being
than to invest in assets of any other sort. There can be no doubts about the required
contributions of the private sector in the enhancement of the education, as they are
sure to benefit from such a move. Technological developments across the country
have fostered a need for skilled and knowledgeable manpower. Without adequate
infrastructure we will not be able to meet up the challenges, therefore the
intervention of the private sector is required.

Mr D It is true that we need a large and competent infrastructure to meet the

demands of the new times and that the current system will need a great revamp.
However, calling for the contribution of the private sector in a field like education can
have serious ramifications. One has to consider several aspects here. When the State
undertakes the onus of educating the masses, a certain non-partisan character of
education can be guaranteed. But when the management is in the hands of people
who are private entities, they could have agendas for fulfilment through education,
ranging from generation of profits to promotion of an ideology, to mould the
children’s characters in tune with certain specific values, to mention a few. In that
the government think tanks have to get rolling and churn out ways and means to
ensure the meeting up of requirements and standards in the field of education. It is
certainly one area that cannot be left in the hands of private individuals. It is quite
evident from the public school experience that the children who come out of those
systems have little powers to empathize with anyone else but those of their own
social class and ethos. However, when the idea is to reduce gaps and foster social
equity, one cannot rely on this option.

Miss A There is not one but many maladies that ail the system of governance in
our country. And to think that it is easy to circumvent or surmount those issues to
reach the goal of equitable education and opportunities in the same field is like
burying one’s head in sand, like an ostrich. The government resources are on a real
low as compared to the needs of the people. It is not an inherent lack but it so
happens that the funds allocated happen to disappear on their way to the projects. It
is not really possible to replace the people handling the affairs in one go. In such a
scenario, privatization can relieve the system of the enormous responsibility that is
important and yet not fulfilled. It can easily make up for the lack of funds, sincerity
and political will that effects the public sector. Privatization of education can be
relied upon for overcoming structural and operational rigidities and promote the
effective and efficient steps towards the implementation of education projects
necessary for development of the human capital. According to W.W. Rostow, the
world is going through the fourth Industrial Revolution and it needs true
professionals to fit the slots created for employment.

Mr B Against the backdrop of speck and span environments and efficiently run
organisations, are the other realities that need an equal mention. The new breed of
entrepreneurs—the educational entrepreneurs—take full advantage of the situation
and capitalize on the need for good education. Land allotment is done on a nominal
cost and slowly as the structure begins to take shape, students are charged with
building fee, development fee, maintenance fee and sundry other charges. These
unaided schools, although they charge huge sums from the students, come to be
sweatshops for the teachers. The country has a high level of unemployment, which
helps these institutions hire well-qualified individuals at low salaries. The teacher’s
work under a system of rigid rules and regulations, where innovation in teaching is
not appreciated; they only have to tread the beaten path. The management has the
prerogative of hiring or firing a person any time and this is what keeps the teachers
on their toes. The State-run schools, however, have much attractive packages for
their employees.

Miss C One has to look at the gains in terms of the output vis-à-vis the inputs
given. The case with the public sector education has been that it has failed to
regenerate constructive resources from the recipients of education. Over the years,
time and again, as the State has been identified responsible for the provision of
education to the masses, services have been sought from it, however, considering all
that comes free in this deal and the number of subsidies that are given, education
has come to be a social service activity. People do not place the premium on it as is
required. It is just the same phenomenon that happens to all things—they are not
valued when they come free of cost. On the other hand, if education is privatized,
and the institutions charge a full fee at all times, the student is likely to value it, the
parents will take care that every penny worth is extricated and that efficiency and
effectiveness in service is maintained. It will stop the process of devaluing of

Mr D The position of our country, on the ladder of development, demands that

great strides be made in the direction of building up the human resource base. It is
imperative and a need of the times that education is necessarily provided to the
people. The definition of literacy itself needs a revamp, because simply learning to
read and write does not bestow powers of discernment on an individual. It has often
been recognised by the experts that skill imparting and development of areas where
the aptitude of the learner lies, are prerequisites of good education. The economic
base of the country cannot support demands of the country, but there is nothing
impossible if there is willingness and the great Indian ingenuity is put to use. The
role of private sector has proved to be greatly facilitating in diverse fields, but the
need for a guarded approach cannot be ruled out in areas like education. Relevant
legislations can be worked out to ensure that privatization does not degenerate into
commercialization. An under-standing between government and the private sector
can work miracles—universities can start up R & D activities funded by the
corporates. In so far as professional courses are concerned, the issue of capitation
fees must be taken seriously and here is where State intervention is required.


The 2010 HDR Report by United Nations Development Programme (UNDP), titled “The Real Wealth
of Nations: Pathways to Human Development” celebrates the contributions of the human
development approach, which is as relevant as ever to making sense of our changing world and
finding ways to improve people’s well-being. The Report is also about how the human development
approach can adjust to meet the challenges of the new millennium.

India is ranked 119 out of 169 countries on the Human Development Index (HDI) of the UNDP’s
2010 Human Development Report. This marks an improvement of just one rank between 2005 and
2010 though the report, a special 20th anniversary edition, places India among top 10 performers
globally in terms of HDI measured on income growth. The category is led by China. India comes
10th after Botswana, South Korea, Hong Kong, Malaysia and Mauritius.

China has improved eight notches (from 2005 to 2010) to secure the 89th position. In South Asia,
Nepal has gained five places to reach the 138th rank. Maldives has risen four places to 107; Sri
Lanka at 91 too has pipped India in the rankings though Pakistan has lost two ranks to fall to 125,
while Bangladesh is up one at 129.

Though high on GDP growth, India reports severe inequalities (the report for the first time
measures inequalities, gender gaps and multidimensional poverty as markers of human
development) while several low-income nations have posted huge profits by investing in education
and health. Nepal is the only South Asian country, which despite low income, stands as the third
best performer in the top 10 movers the report highlights.

While the Congress-led UPA Government can take heart from the fact that India’s HDI value has
increased from 0.320 in 1980 to 0.519 in 2010, higher than South Asia’s average of 0.516, India
still lags behind among medium HD nations. South Asia, particularly India, post shocking
percentage losses in HDI values if inequalities are counted.

South Asia loses 33 per cent of its HDI value if health, education and income disparities are factored
in. This is the second largest loss after sub-Saharan Africa’s. India fares particularly poorly here,
losing 30 per cent overall on the inequality-adjusted HDI. This loss includes 31.3 per cent loss on
inequality-adjusted life expectancy index; 40.6 per cent loss on education but only 14.6 per cent
loss in income-adjusted HDI index.

The best HDI ranker in the world, Norway, loses just 6.6 per cent to inequality while China loses 23
per cent and Bangladesh 29.4 per cent.

On all major markers of human development, India’s neighbours Bangladesh and Pakistan beat it.
India’s life expectancy at birth is among the lowest, 64.4 years as against China’s 73.5;
Bangladesh’s 66.9, Pakistan’s 67.2 and Nepal’s 67.5. In mean years of schooling too, India lags
behind recording 4.4 years while China has 7.5; Pakistan 4.9 and Bangladesh 4.8. On female labour
force participation too, Bangladesh with 61 per cent is much ahead of India, which has just 31 per

The 2010 report uses several new methodologies; hence its indicators are not comparable to those
in the earlier reports.

Human development is about sustaining positive outcomes steadily over time and combating
processes that impoverish people or underpin oppression and structural injustice. Plural principles
such as equity, sustainability and respect for human rights are the key.

Human development is also the expansion of people’s freedoms to live long, healthy and creative
lives; to advance other goals they have reason to value; and to engage actively in shaping
development equitably and sustainably on a shared planet. People are both the beneficiaries and
the drivers of human development, as individuals and in groups. This reaffirmation underlines the
core of human development—its themes of sustainability, equity and empowerment and its inherent
flexibility. Because gains might be fragile and vulnerable to reversal and because future generations
must be treated justly, special efforts are needed to ensure that human development endures—that
it is sustainable.

A major contribution of 2010 HDR is the systematic assessment of trends in key components of
human development over the past 40 years. This retrospective assessment, an important objective
for the 20th anniversary, is the most comprehensive analysis of the HDR to date and yields
important new insights.

In some basic respects the world is a much better place today than it was in 1990—or in 1970. Over
the past 20 years many people around the world have experienced dramatic improvements in key
aspects of their lives. Overall, they are healthier, more educated and wealthier and have more
power to appoint and hold their leaders accountable than ever before.

The world’s average HDI has increased 18 percent since 1990 (and 41 percent since 1970),
reflecting large aggregate improvements in life expectancy, school enrolment, literacy and income.
But there has also been considerable variability in experience and much volatility, themes to which
we return below.

Almost all countries have benefited from this progress. Of 135 countries in our sample for 1970–
2010, with 92 percent of the world’s people, only 3—the Democratic Republic of the Congo, Zambia
and Zimbabwe—have a lower HDI today than in 1970.

Overall, poor countries are catching up with rich countries in the HDI. This convergence paints a far
more optimistic picture than a perspective limited to trends in income, where divergence has
continued. But not all countries have seen rapid progress, and the variations are striking. Those
experiencing the slowest progress are countries in Sub-Saharan Africa, struck by the HIV epidemic,
and countries in the former Soviet Union, suffering increased adult mortality.

The top HDI movers (countries that have made the greatest progress in improving the HDI) include
well known income “growth miracles” such as China, Indonesia and South Korea. But they include
others—such as Nepal, Oman and Tunisia—where progress in the non-income dimensions of human
development has been equally remarkable. It is striking that the top 10 list contains several
countries not typically described as top performers. And Ethiopia comes in 11th, with three other
Sub-Saharan African countries (Botswana, Beninand Burkina Faso) in the top 25.

Not all countries have progressed rapidly, and the variation is striking. Over the past 40 years a
quarter of developing countries saw their HDI increase less than 20 percent, another quarter, more
than 65 percent. These differences partly reflect different starting points—less developed countries
have on average faster progress in health and education than more developed ones do. But half the
variation in HDI performance is unexplained by initial HDI, and countries with similar starting points
experience remarkably different evolutions, suggesting that country factors such as policies,
institutions and geography are important.
Health advances have been large but are slowing. The slowdown in aggregate progress is due
largely to dramatic reversals in 19 countries. In nine of them—six in Sub-Saharan Africa and three
in the former Soviet Union—life expectancy has fallen below 1970 levels. The causes of these
declines are the HIV epidemic and increased adult mortality in transition countries.

Progress in education has been substantial and widespread, reflecting not only improvements in the
quantity of schooling but also in the equity of access to education for girls and boys. To a large
extent this progress reflects greater State involvement, which is often characterized more by
getting children into school than by imparting a high-quality education.

Progress in income varies much more. However, despite aggregate progress, there is no
convergence in income—in contrast to health and education—because on average rich countries
have grown faster than poor ones over the past 40 years. The divide between developed and
developing countries persists: a small subset of countries has remained at the top of the world
income distribution, and only a handful of countries that started out poor have joined that high-
income group.

Understanding the Patterns and Drivers of Human Development

One of the most surprising results of human development research in recent years is the lack of a
significant correlation between economic growth and improvements in health and education.
Research shows that this relationship is particularly weak at low and medium levels of the HDI. This
is traceable to changes in how people become healthier and more educated. The correlation in
levels today, which contrasts with the absence of correlation in changes over time, is a snapshot
that reflects historical patterns, as countries that became rich were the only ones able to pay for
costly advances in health and education. But technological improvements and changes in societal
structures allow even poorer countries today to realize significant gains.

The unprecedented flows of ideas across countries in recent times—ranging from health-saving
technologies to political ideals and to productive practices—have been transformative. Many
innovations have allowed countries to improve health and education at very low cost—which
explains why the association between the income and non-income dimensions of human
development has weakened over time.

Income and growth remain vital. Income growth can indicate that opportunities for decent work are
expanding—though this is not always so—and economic contractions and associated job losses are
bad news for people around the world. Income is also the source of the taxes and other revenues
that governments need in order to provide services and undertake redistributive programs. Thus,
increasing income on a broad basis remains an important policy priority.

One important aspect is how relationships between markets and States are organized. Governments
have addressed, in a range of ways, the tension between the need for markets to generate income
and dynamism and the need to deal with market failures. Markets may be necessary for sustained
economic dynamism, but they do not automatically bring progress in other dimensions of human
development. Development that overly favours rapid economic growth is rarely sustainable. In
other words, a market economy is necessary, but not enough.

Regulation, however, requires a capable State as well as political commitment, and State capability
is often in short supply. Some developing country governments have tried to mimic the actions of a
modern developed State without having the resources or the capacity to do so. For example, import
substitution regimes in many Latin American countries floundered when countries tried to develop a
targeted industrial policy. In contrast, an important lesson of the East Asian successes was that a
capable, focused State can help drive development and the growth of markets. What is possible and
appropriate is context specific.
Beyond the State, civil society actors have demonstrated the potential to curb the excesses of both
the market and the State, though governments seeking to control dissent can restrict civil society

The dynamics can be virtuous when countries transition to both inclusive market institutions and
inclusive political institutions. But this is difficult and rare. Oligarchic capitalism tends to spell its
own demise, either because it stifles the productive engines of innovation—as in the failed import
substitution regimes of Latin America and the Caribbean—or because material progress increases
people’s aspirations and challenges the narrow elite’s grip on power, as in Brazil, Indonesia and
South Korea since the 1990s.

Human development is not only about health, education and income. Even when countries progress
in the HDI, they do not necessarily excel in the broader dimensions. It is possible to have a high
HDI and be unsustainable, undemocratic and unequal just as it is possible to have a low HDI and be
relatively sustainable, democratic and equal. These patterns pose important challenges for how we
think about human development, its measurement and the policies to improve outcomes and
processes over time.

Trends conducive to empowerment include the vast increases in literacy and educational attainment
in many parts of the world that have strengthened people’s ability to make informed choices and
hold governments accountable. The scope for empowerment and its expression have broadened,
through both technology and institutions. In particular, the proliferation of mobile telephony and
satellite television and increased access to the Internet has vastly increased the availability of
information and the ability to voice opinions.

The share of formal democracies has increased from less than a third of countries in 1970 to half in
the mid-1990s and to three-fifths in 2008. Many hybrid forms of political organization have
emerged. While real change and healthy political functioning have varied, and many formal
democracies are flawed and fragile, policy-making is much better informed by the views and
concerns of citizens. Local democratic processes are deepening. Political struggles have led to
substantial change in many countries, greatly expanding the representation of traditionally
marginalized people, including women, the poor, indigenous groups, refugees and sexual minorities.

Recent years have also exposed the fragility of some of the achievement—perhaps best illustrated
by the biggest financial crisis in several decades, which caused 34 million people to lose their jobs
and 64 million more people to fall below the $1.25 a day income poverty threshold. The risk of a
“double-dip” recession remains, and a full recovery could take years.

But perhaps the greatest challenge to maintaining progress in human development comes from the
un-sustainability of production and consumption patterns. For human development to become truly
sustainable, the close link between economic growth and greenhouse gas emissions needs to be
severed. Some developed countries have begun to alleviate the worst effects through recycling and
investment in public transport and infrastructure. But most developing countries are hampered by
the high costs and low availability of clean energy.

New measures for an evolving reality

Over the years the HDR has introduced new measures to evaluate progress in reducing poverty and
empowering women. But lack of reliable data has been a major constraint. This year HDR has
introduced three new indices to capture important aspects of the distribution of well-being for
inequality, gender equity and poverty. They reflect advances in methods and better data

Adjusting the Human Development Index for inequality. Reflecting inequality in each
dimension of the HDI addresses an objective first stated in the 1990 HDR. 2010 report introduces
the Inequality-adjusted HDI (IHDI), a measure of the level of human development of people in a
society that accounts for inequality. Under perfect equality the HDI and the IHDI are equal. When
there is inequality in the distribution of health, education and income, the HDI of an average person
in a society is less than the aggregate HDI; the lower the IHDI (and the greater the difference
between it and the HDI), the greater the inequality.

A new measure of gender inequality. The disadvantages facing women and girls are a major
source of inequality. All too often, women and girls are discriminated against in health, education
and the labour market—with negative repercussions for their freedoms. A new measure of these
inequalities, built on the same framework as the HDI and the IHDI—to better expose differences in
the distribution of achievements between women and men—has been introduced. The Gender
Inequality Index shows that gender inequality varies tremendously across countries—the losses in
achievement due to gender inequality (not directly comparable to total inequality losses because
different variables are used) range from 17 percent to 85 percent. The Netherlands tops the list of
the most gender-equal countries, followed by Denmark, Sweden and Switzerland.

Countries with unequal distribution of human development also experience high inequality between
women and men, and countries with high gender inequality also experience unequal distribution of
human development. Among the countries doing very badly on both fronts are Central African
Republic, Haiti and Mozambique.

A multidimensional measure of poverty. Like development, poverty is multidimensional—but

this is traditionally ignored by headline figures. 2010 report introduces the Multi-dimensional
Poverty Index (MPI), which complements money-based measures by considering multiple
deprivations and their overlap. The index identifies deprivations across the same three dimensions
as the HDI and shows the number of people who are poor (suffering a given number of
deprivations) and the number of deprivations with which poor households typically contend. It can
be de-constructed by region, ethnicity and other groupings as well as by dimension, making it an
apt tool for policy-makers.

About 1.75 billion people in the 104 countries covered by the MPI—a third of their population—live
in multidimensional poverty—that is, with at least 30 percent of the indicators reflecting acute
deprivation in health, education and standard of living. This exceeds the estimated 1.44 billion
people in those countries who live on $1.25 a day or less (though it is below the share who live on
$2 or less). The patterns of deprivation also differ from those of income poverty in important ways:
in many countries—including Ethiopia and Guatemala— the number of people who are multi-
dimensionally poor is higher. However, in about a fourth of the countries for which both estimates
are available—including China, Tanzania and Uzbekistan—rates of income poverty are higher.

Sub-Saharan Africa has the highest incidence of multi-dimensional poverty. The level ranges from a
low of 3 percent in South Africa to a massive 93 percent in Niger; the average share of deprivations
ranges from about 45 percent (in Gabon, Lesotho and Swaziland) to 69 percent (in Niger). Yet half
the world’s multi-dimensionally poor live in South Asia (844 million people), and more than a
quarter live in Africa (458 million).

The impacts of the HDR have illustrated that policy thinking can be informed and stimulated by
deeper exploration into key dimensions of human development. An important element of this
tradition is a rich agenda of research and analysis. This Report suggests ways to move this agenda
forward through better data and trend analysis. But much is left to do.

Three priorities are: improving data and analysis to inform debates, providing an alternative to
conventional approaches to studying development, and increasing our understanding of inequality,
empowerment, vulnerability and sustainability.
The economics of growth and its relationship with development, in particular, require radical
rethinking. A vast theoretical and empirical literature almost uniformly equates economic growth
with development. Its models typically assume that people care only about consumption; its
empirical applications concentrate almost exclusively on the effect of policies and institutions on
economic growth.

The central contention of the human development approach, by contrast, is that well-being is about
much more than money: it is about the possibilities that people have to fulfil the life plans they
have reason to choose and pursue. Thus, our call for a new economics—an economics of human
development—in which the objective is to further human well-being and in which growth and other
policies are evaluated and pursued vigorously insofar as they advance human development in the
short and long term.

Indigenous Peoples and Inequality in Human Development

An estimated 300 million indigenous peoples from more than 5,000 groups live in more than 70
countries. Some two-thirds reside in China.1 Indigenous peoples often face structural disadvantages
and have worse human development outcomes in key respects. For example, recent Mexican
government analyses show that while extreme multidimensional poverty is 10.5 percent nationally,
it exceeds 39 percent among indigenous Mexicans.

When the Human Development Index (HDI) is calculated for aboriginal and non-aboriginal people in
Australia, Canada, New Zealand and the United States, there is a consistent gap of 6–18 percent.
Indigenous peoples in these countries have lower life expectancy, poorer education outcomes and
smaller incomes. In India 92 percent of people of Scheduled Tribes live in rural areas, 47 percent of
them in poverty. In Chhattisgarh, with a sizeable share of Scheduled Tribes, the State-wide literacy
rate is 64 percent—but that of tribal peoples is only 22 percent.

Some evidence suggests that a schooling gap between indigenous and non-indigenous peoples
remains. In China, India and Lao PDR geography, climate and discrimination based on ethnicity
make it difficult to deliver basic infrastructure to remote areas, where many indigenous peoples and
ethnic minorities live.

Work in Latin America and the Caribbean exploring access to land and this aspect of discrimination
shows that a focus on broad-based economic growth can benefit indigenous peoples but is unlikely
to be enough to close the gap. More targeted strategies are needed, as proposed by indigenous
peoples and as informed by their views and priorities.

Three Success Stories in Advancing the Human Development Index

Some countries have succeeded in achieving high human development following different pathways.

Nepal—major public policy push. That Nepal is one of the fastest movers in the Human
Development Index (HDI) since 1970 is perhaps surprising in light of the country’s difficult
circumstances and record of conflict. Nepal’s impressive progress in health and education can be
traced to major public policy efforts. Free primary education for all children was legislated in 1971
and extended to secondary education in 2007. Gross enrolment rates soared, as did literacy later
on. Remarkable reductions in infant mortality reflect more general successes in health following the
extension of primary healthcare through community participation, local mobilization of resources
and decentralization. The gap between Nepal’s life expectancy and the world average has narrowed
by 87 percent over the past 40 years. By contrast, economic growth was modest, and the lack of
jobs led many Nepalese to seek opportunities abroad.

Nepal is still a poor country, with enormous scope to improve human development. It ranks 138th
of 169 countries in the HDI. Large disparities in school attendance and the quality of education
persist, particularly between urban and rural areas and across ethnic groups. Major health
challenges remain, related to communicable diseases and malnutrition.

Oman—converting oil to health and education. Oman has had the fastest progress in the HDI.
Abundant oil and gas were discovered in the late 1960s, so our data capture the evolution from a
very poor to a very rich country, showing a quadrupling of gross enrolment and literacy rates and a
27-year increase in life expectancy.

But even in Oman economic growth is not the whole story. Although first in HDI progress, it ranks
26th in economic growth since 1970, when it had three primary schools and one vocational
institute. Its initiatives to convert oil wealth into education included expanding access and adopting
policies to match skills to labour market needs. Health services also improved: from 1970 to 2000
government spending on health rose almost six-fold—much faster than GDP.

Tunisia—education a policy focus. Tunisia’s success extends to all three dimensions of the HDI,
with education a major policy focus. School enrolment has risen substantially, particularly after the
country legislated 10 years of compulsory education in 1991. There has also been some progress in
gender equity: about 6 of 10 university students are women. But large inequalities persist, as
Tunisia’s modest (56th of 138 countries) ranking on our new Gender Inequality Index

Rapid decline in fertility and high vaccination rates for measles and tuberculosis have yielded
successes in health, as has eradication of polio, cholera, diphtheria and malaria. Annual per capita
income growth has been around 3 percent over the past 40 years, linked to fiscal and monetary
prudence and investment in transport and communication infrastructure.

India’s National Rural Employment Guarantee Act

India’s National Rural Employment Guarantee Act (NREGA) of 2005, the world’s largest public works
programme ever, provides basic social security for rural workers: a universal and legally enforceable
right to 100 days of employment per rural household on local public works at minimum wage.
Labourers who are not given work within 15 days of asking for it are entitled to unemployment

The act has other noteworthy features:

• Encouraging women’s participation. A third of employment generated is to be set aside for

women and provided within 5 kilometres of their village; child care facilities (if required)
must be provided at the work-site.
• Decentralizing planning and implementation. At least half of allocated funds are to be spent
by elected local councils; village assemblies are to select and prioritize projects.
• Creating rural assets. People are to be employed to create public assets (such as roads and
check-dams) as well as assets on private lands (such as land improvement and wells).
• Imposing strict norms for transparency and accountability. All documents are to be publicly
available, with proactive disclosure of essential documents (such as attendance records),
and periodic audits are to be carried out by village representatives. In fiscal year
2009/2010 India spent almost $10 billion (approximately 1 percent of GDP) on the
programme, and 53 million households participated.

On average, each participating household worked for 54 days. Disadvantaged groups

joined in large numbers; a majority of workers were members of Scheduled Castes or
Scheduled Tribes, and more than half were women.
Payments of minimum wages and improved work conditions at NREGA work-sites
have created pressure for similar improvements in the private labour market,
benefiting all rural workers. Distress migration to urban areas has slowed. And for
many rural women programme earnings are an important source of economic
independence. As Haski, a tribal woman from Rajasthan, said when asked who
decided how programme wages should be spent: “Main ghar ki mukhiya hoon” (I am
the head of the household).

Refining the Human Development Index

The Human Development Index (HDI) remains an aggregate measure of progress in
three dimensions—health, education and income. But in 2010 report the indicators
used to measure progress in education and income have been modified, and the way
they are aggregated has been changed.

In the knowledge dimension mean years of schooling replaces literacy, and gross
enrolment is recast as expected years of schooling—the years of schooling that a
child can expect to receive given current enrolment rates. Mean years of schooling is
estimated more frequently for more countries and can discriminate better among
countries, while expected years of schooling is consistent with the reframing of this
dimension in terms of years. Ideally, measures of the knowledge dimension would go
beyond estimating quantity to assessing quality, as several National and Regional
Human Development Reports (HDRs) have done.

To measure the standard of living, gross national income (GNI) per capita replaces
gross domestic product (GDP) per capita. In a globalized world differences are often
large between the income of a country’s residents and its domestic production. Some
of the income residents earn is sent abroad, some residents receive international
remittances and some countries receive sizeable aid flows. For example, because of
large remittances from abroad, GNI in the Philippines greatly exceeds GDP, and
because of international aid, Timor-Leste’s GNI is many times domestic output.

A key change was to shift to a geometric mean (which measures the typical value of
a set of numbers): thus in 2010 the HDI is the geometric mean of the three
dimension indices. Poor performance in any dimension is now directly reflected in
the HDI, and there is no longer perfect substitutability across dimensions. This
method captures how well rounded a country’s performance is across the three
dimensions. As a basis for comparisons of achievement, this method is also more
respectful of the intrinsic differences in the dimensions than a simple average is. It
recognizes that health, education and income are all important, but also that it is
hard to compare these different dimensions of well-being and that we should not let
changes in any of them go unnoticed.

Income is instrumental to human development but higher incomes have a declining

contribution to human development. And the maximum values in each dimension
have been shifted to the observed maximum, rather than a predefined cut-off beyond
which achievements are ignored.


Last one year has pulled down the hopes of most of the investors in the stock markets, who had
hoped that the slowdown in the world economy would not impact the Indian economy beyond a
limit. The initial contention of the Finance Minister, as well that of the Reserve Bank of India was
also based on this belief only. The Prime Minister’s Office, which till July 2008 was maintaining
that the growth rate of the economy could be around eight per cent during the current fiscal, has
now changed its projections to around seven per cent.

It was after the fall of Lehman Brothers and liquidity crisis in some of the biggest investment
banks in USA that the policy makers began to take the crisis seriously. It was the time when the
Indian government had failed to control the inflation rate which continued to be in double digit for
almost one year, several Indian companies had began to hand over ‘pink slips’ to their
employees, lending rates had skyrocketed and the real estate prices had registered a fall upto 40
per cent. All these developments resulted in reverse flight of the Foreign Institutional Investment
(FII) and the bloodbath in the Indian stock exchanges continued unabated.

The phenomenon of capital market crash was not peculiar to India only. The markets all over the
world witnessed similar trends. The crumbling of the stock markets all over the world re-affirmed
the fears of deepening recession in the world. While the US economy had already been in the
recession mode, the Europe also began to fear the worst. Global data with the International
Monetary Fund (IMF) revealed that the US economy would be in recession between the periods
of second half of the year 2008 to the first half of the year 2009. This suggests that the worst has
just begun. Such a forecast would certainly continue to spook the stock markets all over the

Why Crash?

Rise and fall of the markets is part of normal economic activity in any market. But ‘crash’ of the
markets is quite different from routine ‘fall’. Recession and capital markets have some cause and
effect relationship and it may be extremely difficult to establish as to which one of the two is
responsible for the other. In fact, both the economic phenomena supplement each other. But
more than that is the factor of human psychology that is responsible for the crash.

As per economic theory, the economic systems grow with cyclical fluctuations when every
recession is followed by recovery and up-swing of the economy, to be again engulfed by the
recessionary tendencies. The only thing not known is the time of the switch. All investors love the
ideal situation and pray for the bullish trends in the markets. But the collective attitude of the
society undergoes change during the bullish times and people wishfully hope that the markets
would continue growing for all times to come. The investments are made with this attitude and

But the bearish trends are inevitable at such a stage, as the economic cycle has to take full turn.
Several economic factors play a major role in determining the timing of the downward trend to
begin. Liquidity position in the economy, the effective demand, the interest rates, money supply,
inflation rate and overall global economic situation are some of the factors that determine this
timeline. With the advent of downswing, comes the downward trend in the capital market and the
euphoria of the investors turns into downright pessimism.

It is said that in the financial markets, the majority is always wrong. Since the stock market
operations are a zero-sum game and for every gain there is a loser, it is not possible for everyone
to win in the markets. But the euphoric investors during the boom times fail to appreciate this fact.
When the inevitable begins to become a reality, the average investor starts losing the money and
the panic strikes the markets.

As the US markets began to display the continuing downward trend, the Indian stock markets
also pressed the panic buttons. While the global deceleration was the prime cause, the
projections about the slowdown in India also acted as fuel to the fire. The sectors and sub-sectors
having extreme global dependence and exposure began to get jittery. Reduction in recruitment by
the software companies and the staff reduction initiatives by the aviation and financial sector set
the ball rolling for the crash of the stocks. The artificially inflated markets began to lick the dust
and the prices of the stocks began to locate their true economic price. The reverse flight of the FII
did the rest.

Actions Taken and Required

The role played by the RBI to take timely actions to inject more liquidity in the market and to
reduce the lending rates to push up the investment activity, has been laudable. The monetary
policy measures taken by the RBI were part of extremely difficult options, particularly in the face
of mounting inflationary pressures. Reductions in the CRR and repo rate released the desired
liquidity in the markets. The parleys of the Governor of the RBI with various bank chiefs to reduce
the lending rates not only resulted in building up the confidence but also reduction in the lending

While the monetary policy measures of the RBI have been appreciated by the banks as well as
the investors, the role of the SEBI in sustaining the faith of the common man in the Indian stock
exchanges is a big suspect. At the time when the stocks were crumbling, the SEBI failed to
convince the investors that this was the time to invest in the stocks. If the investors were properly
guided at that stage, the resultant buying activity in the market would have helped in expediting
the upswing of the markets and the economy.

Indian markets as well as the economic system are facing a dilemma. While the liquidity is low,
there appears to be a need to release more money supply into the economy. But at the same
time, with inflation close to the double digit, increase in liquidity may fuel the inflation rate, which
is already at a level higher than the desirable. The government agencies have so far treaded the
corrective path very carefully.

Compared to the great depression of 1929, the situation is much better this time. During 1920s,
there were no strong and robust Asian economies on the global economic scene. Today, the
vibrant and resilient economies of the ASEAN countries, including those of Japan, China, South
Korea, Indonesia, Malaysia, and even India, would ensure that the recession is not allowed to hit
the world as hard as it did eight decades ago.

Asian economies would certainly help in quicker turnaround of the world economy. After all, it
cannot go on for ever, and if the recession comes, can the upswing be far behind? The current
period of recession is marked by virtually no credit and lack of equity, as there is no aggressive
lending or stock buying activity. This also implies that the corporate sector would undergo a
phase of consolidation and in a short time would be ready to bounce back, duly consolidated.

The government would need to support the corporate world by sacrificing some of its revenues
and reduce the tax and duty rates for a while. It would also be the duty of the government to
create favourable conditions for investment, reduce the interest rate, control the inflation, create
more employment opportunities and balance the liquidity in the economic system.

Positive reforms in the financial sector, higher public investment in the social and infrastructure
sectors and streamlining the procedures could be some of the items on the action plan of the
government to revive the economy and resultantly the capital markets. Changes in the FII policy
by providing for some lock-in period may also prevent the reverse flight of the foreign investment
and may go a long way in checking the crash of the markets in future. It is felt that the price of
stocks in India had been artificially high in the past which also triggered the sudden crash. To
prevent such occurrence, there has to be some checks on speculative trading of stocks by the

While the need for long term financing is met by the capital or financial markets, money market
is a mechanism which deals with lending and borrowing of short term funds. Post reforms period
in India has witnessed tremendous growth of the Indian money markets. Banks and other
financial institutions have been able to meet the high expectations of short term funding of
important sectors like the industry, services and agriculture. Functioning under the regulation and
control of the Reserve Bank of India (RBI), the Indian money markets have also exhibited the
required maturity and resilience over the past about two decades. Decision of the government to
allow the private sector banks to operate has provided much needed healthy competition in the
money markets, resulting in fair amount of improvement in their functioning.

Money market denotes inter-bank market where the banks borrow and lend among themselves to
meet the short term credit and deposit needs of the economy. Short term generally covers the
time period upto one year. The money market operations help the banks tide over the temporary
mismatch of funds with them. In case a particular bank needs funds for a few days, it can borrow
from another bank by paying the determined interest rate. The lending bank also gains, as it is
able to earn interest on the funds lying idle with it. In other words, money market provides
avenues to the players in the market to strike equilibrium between the surplus funds with the
lenders and the requirement of funds for the borrowers. An important function of the money
market is to provide a focal point for interventions of the RBI to influence the liquidity in the
financial system and implement other monetary policy measures.

Quantum of liquidity in the banking system is of paramount importance, as it is an important

determinant of the inflation rate as well as the creation of credit by the banks in the economy.
Market forces generally indicate the need for borrowing or liquidity and the money market adjusts
itself to such calls. RBI facilitates such adjustments with monetary policy tools available with it.
Heavy call for funds overnight indicates that the banks are in need of short term funds and in
case of liquidity crunch, the interest rates would go up.

Depending on the economic situation and available market trends, the RBI intervenes in the
money market through a host of interventions. In case of liquidity crunch, the RBI has the option
of either reducing the Cash Reserve Ratio (CRR) or pumping in more money supply into the
system. Recently, to overcome the liquidity crunch in the Indian money market, the RBI has
released more than Rs 75,000 crore with two back-to-back reductions in the CRR.

In addition to the lending by the banks and the financial institutions, various companies in the
corporate sector also issue fixed deposits to the public for shorter duration and to that extent
become part of the money market mechanism selectively. The maturities of the instruments
issued by the money market as a whole, range from one day to one year. The money market is
also closely linked with the Foreign Exchange Market, through the process of covered interest
arbitrage in which the forward premium acts as a bridge between the domestic and foreign
interest rates.

Determination of appropriate interest for deposits or loans by the banks or the other financial
institutions is a complex mechanism in itself. There are several issues that need to be resolved
before the optimum rates are determined. While the term structure of the interest rate is a very
important determinant, the difference between the existing domestic and international interest
rates also emerges as an important factor. Further, there are several credit instruments which
involve similar maturity but diversely different risk factors. Such distortions are available only in
developing and diverse economies like the Indian economy and need extra care while handling
the issues at the policy levels.

Diverse Functions

Money markets are one of the most important mechanisms of any deve-loping economy.
Instead of just ensuring that the money market in India regulates the flow of credit and credit
rates, this mechanism has emerged as one of the important policy tools with the government and
the RBI to control the monetary policy, money supply, credit creation and control, inflation rate
and overall economic policy of the State.

Hence, the first and the foremost function of the money market mechanism is regulatory in
nature. While determining the total volume of credit plan for the six monthly period, the credit
policy also aims at directing the flow of credit as per the priorities fixed by the government
according to the needs of the economy. Credit policy as an instrument is important to ensure the
availability of the credit in adequate volumes; it also caters to the credit needs of various sectors
of the economy. The RBI assists the government to implement its policies related to the credit

plans through its statutory control over the banking system of the country.

Monetary policy, on the other hand, has longer term perspective and aims at correcting the
imbalances in the economy. Credit policy and the monetary policy, both complement each other
to achieve the long term goals determined by the government. It not only maintains complete
control over the credit creation by the banks, but also keeps a close watch over it. The
instruments of monetary policy, including the repo rate, cash reserve ratio and bank rate are used
by the Central Bank of the country to give the required direction to the monetary policy.

Inflation is one of the serious economic problems that all the developing economies have to face
every now and then. Cyclical fluctuations do affect the price level differently, depending upon the
demand and supply scenario at the given point of time. Money market rates play a major role in
controlling the price line. Higher rates in the money markets reduce the liquidity in the economy
and have the effect of reducing the economic activity in the system. Reduced rates, on the other
hand, increase the liquidity in the market and bring down the cost of capital substantially, thereby
increasing the investment. This function also assists the RBI to control the overall money supply
in the economy. Such operations supplement the efforts of direct infusion of newly printed notes
by the RBI.

Future of Open Markets

Financial openness is said to be a situation under which the residents of one country are in a
position to trade their assets with residents of another country. A slightly mild definition of
openness may be referred to as financial integration of two or more economies. In recent years,
the process of globalization has made the money market operations and the monetary policy
tools quite important. The idea is not only to regulate the economy and its money markets for the
overall economic development, but also to attract more and more foreign capital into the country.
Foreign investment results in increased economic activity, income and employment generation in
the economy. Free and unrestricted flow of foreign capital and growing integration of the global
markets is the hallmark of openness of economies.

Indian experience with open markets has been a mixed one. On the positive side, the growth rate
of the country has soared to new levels and the foreign trade had been growing at around 20 per
cent during the past few years. Foreign exchange reserves have burgeoned to significantly higher
levels and the country has achieved new heights in the overall socio-economic development. The
money market mechanism has played a significant role in rapid development of the country
during the post-reforms era.

On the flip side, the post-reforms period has witnessed relatively lesser growth of the social
sector. Money market mechanism has kept the markets upbeat, yet the social sector needs more
focused attention. With the base of the economy now strengthened, the money market
mechanism must also focus on ensuring that proper direction is provided to the credit flows so
that the poorest sections of the society also gain.

Despite the high growth rate of the economy, in absolute terms India still is a low income
economy, with its per capita income at a level less than $500 per annum. Low per capita income
is a pointer towards the existing sharp divide between India’s wealthiest and poorest sections of
society. Out of the total population, about 26 million people live below poverty line and 35 per
cent out of this group, also classified as the poorest of the poor, have income level of less than $1
per day. As per 2001 Census, about 78 million people in the country were living without a home
and more than that number were holed up in urban slums. The number of the poor living in the
country is more than the poor living in any other country of the world.

Despite the above socio-economic problems plaguing the Indian society, post-reforms period has
been marked by high growth rate, placing the country among the front runners in the race for
highest growth in the world. During the past five years, India has been second only to
China in terms of the growth rate achieved. India’s Information Technology (IT) industry, services,
manufacturing and automobile sectors have been booming. The urban areas, particularly the
metropolitan cities, have been the centres of growth. Industrial centres have also been the hubs
of economic activity and the income levels in the country are on the rise.

During the past about a decade, the foreign sector in the country has also been performing
extremely well and the policy of globalization has paid rich dividends, with the foreign sector,
registering over 20 per cent growth in the past several years. Without taking away the credit from
the liberalization policy, the resilience of the Indian economy must also be given its due credit for
outstanding achievements.

Unfortunately, the spurt in economic activity in the country and increase in the growth rate over
the past few years has not been able to make a discernible dent on the problem of poverty,
deprivation and exploitation of the downtrodden. The divide between the rich and the poor has
now become a tangible reality. There are more Indian billionaires in the Forbes list than ever
before. But the number of the poor and hungry is also not decreasing. The growth centres are
encircled by the group of underprivileged people whose basic needs are still to be met. During
this era of rapid growth, the problems of unequal and skewed distribution of economic resources
and the fruits of growth have surfaced.

In addition to the economic divide between the rich and the poor, the digital divide between
various regions of the country has also become an important issue. It has been admitted by the
government policy makers that the growth rate in the rural areas has been quite sluggish despite
high growth rate in the urban centres. Economic activity in the rural areas has not been able to
pick up to match the rapid growth of the cities. The result is that in the hope of getting better
employment and growth opportunities a large number of people are migrating to the cities every

Rural economy is largely comprised of the agriculture and allied activities. The growth rate of the
agricultural sector has been between 2 to 4 per cent over the past couple of decades, while the
rest of the economy is growing at the rate of around 8 per cent. It implies that increase in incomes
in the rural sector has been almost one-third of the average growth of incomes in the country.
Resultantly, the rural economy has emerged as a poor cousin of the urban and industrial sectors
and the existing yawning gap has actually increased further.

The above does not imply that all is well in the urban sector as a whole. Urban areas have their
own set of problems and inequalities resulting in what is known as urban-urban divide. The urban
problems in India are no different. With about 300 million people living in 5,000 cities and towns,
the urban population cries for more care, investment in urban infrastructure and basic civic

About 40% of the urban population in India lives in 60 metropolitan urban agglomerations. As per
one estimate of the government, about 65 million urban people live in slums and squatter
settlements in these agglomerations. It is estimated that the urban population of the country
would increase to 468 million by the year 2020. This poses a Herculean task to the cities
in terms of improvements in civic infrastructure, housing, basic amenities and employment

The current situation in most of the cities and towns is pathetic. Mumbai, Delhi and Kolkota are
the main business and growth centres in the country. In addition cities like Bangalore and
Hyderabad are the hub centres of the IT revolution in the country. But these very cities have their
darker side as well. There is a huge population of urban poor and slum dwellers living there.
Water supply and sanitation is a serious problem and solid waste collection and its safe disposal
is something that requires a major national initiative.

While a person from the middle class and upper middle class in the cities would invariably have
access to better health, educational and other facilities, the poorer sections would generally be
denied these facilities, which come at a higher cost than they can afford. The variation in the
income levels in the cities has also created a kind of dichotomy in the society and the vertical split
in the society is a matter of serious concern for the sociologists as well as the economists.

Bridging the Gap

Equitable growth of the economy is the ultimate goal and every government must strive hard to
achieve this goal. Indian Constitution, through the Directive Principles of State Policy entrusts this
responsibility of equitable distribution of economic resources to the government policies.

Globalization cannot snatch away the basic right of decent living from the poor and the
downtrodden. It is the duty and responsibility of the government to take immediate measures for
bridging the widening gap, which requires pragmatic policies aimed at redistributive justice on
sustainable basis.

Government of India has already launched an ambitious programme aimed at stimulating the
economic activity in the rural areas. Known as Bharat Nirman, this new initiative is expected to
pump in huge sums of public expenditure in the development of rural infrastructure of the country.
Two more flagship programmes, called Sarv Siksha Abhiyan and “National Rural Health Mission”,
are being implemented which aim at bringing in qualitative as well as numerical improvement in
the education and healthcare sectors, particularly in the rural areas. To take care of the urban-
urban divide, another ambitious programme called Jawaharlal Nehru National Urban Renewal
Mission is being implemented in 66 major cities of the country under which a lot of funds are
being spent to upgrade the urban infrastructure, housing and service delivery mechanism.
In addition to the above initiatives, the government has to ensure distributive justice through its
taxation and other economic policies. Due attention is required to be paid to the education sector
in the rural areas so that the people living there are able to get the best possible education to
compete with their urban counterparts. Healthcare and sanitation facilities need a total upgrade in
the entire country. Special attention of the government is required to be focused on stepping up
the economic activity in the rural areas so that the rural incomes experience the required upsurge
and the existing gap is bridged to some extent. Divide in the early stages of development is a
global phenomenon but it must not be allowed to perpetuate beyond reasonable limit.

As per the latest estimates of the Central Statistical Organisation (CSO), the growth rate of the
Indian economy during 2008-09 is expected to be around 7.1 per cent, as against the earlier
expectations of 8 per cent. Not only this, it has now been estimated that India’s growth rate during
the financial year ending March 2010 would moderate further to 5.5 per cent, which would be
lowest during the past several years.

As direct fallout of the ongoing global recession, rapidly increasing unemployment rate has been
a major cause of concern. In USA, the unemployment rate has gone up to 8.7 per cent and the
same in Japan has also been the highest in the recent times. China has reported 20 million job
losses. In India this figure is officially estimated to be about 5 lakh during the quarter ending
December 2008. Loss of jobs in the unorganized sector due to reduced economic activity is going
to be much higher and beyond estimation.

International Labour Organisation (ILO) maintains that the employment rate in India and other
South Asian nations may by lower than the world average, due to their lesser exposure to the
Ameri-can economy and the financial markets. Further, relatively larger rural base in India is a
positive and strong factor in combating the ill effects of global recession. It is perhaps for the first
time after the onset of the process of reforms that the Indian government has realized the
importance of the rural
economy to tide over the difficult econo-mic situation.

Rural Orientation

Indian economy is peculiar to the extent that it has a lot more rural orientation than most
economies of the world. Majority of the countries in the world are dependent on their industrial
centres and rapidly growing cities for maintaining their growth rate. In India, though industries and
the services sectors are centred around the industrial and urban areas, yet over 60 per cent of
the work force is directly or indirectly dependent on the primary sector. This sector contributes
about one fourth of the total GDP and offers tremendous potential for growth in the near future.
Being a low income segment, this also does not get influenced easily by extraordinary econo-mic

As per the views of the Rural Marketing Association of India, there has been no impact of
economic slowdown on the rural economy of India. A nation-wide study carried out in the rural
markets of the country found out that the rural markets in the country actually offer an opportunity
to the marketers to come out of current economic crisis.

Main reasons for such immunity are stated to be higher percentage of total expenditure on food
items and the fact that majority of the population is involved in self-employment occupations,
having no fear of loss of jobs. The telecom sector has witnessed a rapid growth in the villages
and small towns. The total telecom subscriber base for India grew from 70.83 million in the first
quarter of 2008 to 90.98 million in the second quarter. Out of this growth 71 per cent rise in this
sector came from the rural India, while the urban areas accounted for the remaining 29 per cent

The study also brings out that more than 72 million Kisan Credit Cards are in use in the rural
areas of the country, which number almost matches the number of Credit Cards under use in the
urban areas. During 2008, larger part of growth of Fast Moving Consumer Goods (FMCG) came
from rural and sub-urban markets.

Majority of the people in the rural areas do not invest in stock markets and park their savings in
low risk portfolios like post office/bank savings or fixed deposits. The government of India was
quick to realize this and immediately after the recession began to show its impact began to direct
its economic policies towards the rural sector. Fortunately for the country, at the critical juncture
when the great recession knocked at the doors of Indian economy, several government
sponsored programmes involving huge public expenditure in the rural areas were already being

The Interim Budget for the year 2009-10, presented by Mr Pranab Mukherjee on February 16,
2009, also had its focus on the rural eco-nomy. Under the NREGS during the year 2008-09,
about 3.51 crore rural households were benefited, generating 138.76 crore mandays. For the
year 2009-10, a massive allocation of Rs 30,100 crore has been made for the said scheme. In
other words, this huge sum would be distributed as wages to the rural households during the said

Another gigantic rural development programme is Bharat Nirman, which aims at huge public
expenditure in the rural infrastructure. It has six components, including rural roads, rural
telecommunication, irrigation, drinking water supply, rural housing and rural electrification. As per
the Finance Minister, the allocation to this programme was increased by 261 per cent during the
period between 2005-09. A provision of Rs 40,900 crore has been kept in the interim budget,
2009 for this programme.

In addition to stiff doses of funds proposed through the above two flagship programmes, the
Finance Minister also made significant allocations to various other programmes and schemes
having rural focus. A sum of Rs 13,100 crore has been allocated for Sarv Siksha Abhiyan, most
of which is to be spent in the rural areas. Mid-day meal programme, which is also termed as the
largest school feeding programme of the world, has been allocated a sum of Rs 8,000 crore. To
further supplement the efforts of nutrition to the rural students, another provision of Rs 6,705
crore has been made under the Integrated Child Development Scheme (ICDS), under which the
pre-school children and the lactating mothers are provided nutrition and healthcare
under Anganwaris.

Another important scheme with rural focus is Rajiv Gandhi Rural Drinking Water Mission, which
aims at providing drinking water supply to the villages not covered by tap water supply. A sum of
Rs 7,400 crore has been provided for this scheme for the financial year 2009-10. Rural sanitation
is also an ongoing programme for which Rs 1,200 crore provision has been kept. NRHM, which is
a healthcare programme for the rural areas, has been provided with a hefty provision of Rs
12,070 crore.

It is apparent from the above that the direction of the Interim Budget 2009-10 has been towards
the rural areas.

Whether it is the growth of FMCG or consumer durables, or the telecommunication growth, rural
areas of the country hold the key for future development. Enormous amounts of funds being
pumped into the rural economy by the government would greatly supplement the natural growth
of these areas. The trickle down effect, though delayed, has begun to actually show. If the trend
continues, the so-called ‘digital divide’ may start experiencing imminent and rapid bridging.

Rural markets in the country have arrived in a big way. The hereto ignored rural areas have now
revealed their true potential. The policy makers have realized that as soon as the cities and the
industrial centres start becoming saturated with growth potential, it is the rural market of the
country which holds the key for future. Even at the pre-sent times of crisis, it is the rural economy
and its hidden capabilities that may ultimately bail the eco-nomy out. It is for sure that the rural
emphasis in the India’s economic policy is going to stay for quite some time in future.

The rural areas had remained, by and large, neglected after independence. But now, with
improved focus on rural wage employment, rural infrastructure, rural healthcare,
telecommunications, irrigation, rural housing, drinking water supply, nutrition and rural
electrification in a big way by the government, the purchasing power of the people in these areas
is on the rise and, if the current trends continue, the day is not far when the history of rapid
growth of the economy for the next two decades would be scripted by the smart growth of rural
economy in the country.

India is one of the fastest growing economies of the world. At the same time, the country is also
home to almost one fifth of the total world population. With such a huge chunk of the world
population and growth rate of the economy hovering around 8 to 9 per cent per annum for last
five years, the demand for the petroleum products is expectedly high. Keeping the social and
ramifications in mind the government has always remained involved with the pricing and supply of
these products.

The reasons for the direct involvement of the government are not difficult to seek. While the
demand for the petroleum products is rising by almost 15 per cent per annum, the domestic
production of the crude oil has virtually remained stagnant over the last two decades, making the
country heavily dependent on the import of crude.

Further, the rapidly developing economy requires petroleum products like diesel and petrol in
huge quantities for carrying goods across this vast country. Diesel is also used by many
industries as a critical input for production. The booming automobile sector of the country also
needs a lot of petrol and diesel at reasonable prices. Thus, any steep increase in the prices of oil
adversely affects the Indian economy.

More than 250 million people in the country live below poverty line and there is a vast majority of
population classified as the middle class. It is the responsibility of the government to provide the
cooking fuel to the poorer sections at affordable rate and the government has been continuing
with its policy of subsidising kerosene heavily. At the same time, the middle class, constituting
majority of the population of the country, cannot afford the LPG at the market rate and hence the
government has to subsidise the LPG as well.

Immediately after independence the cost realization to the oil companies in the country was
linked to the ‘import parity’ type of pricing, known as the ‘Value Stock Pricing’ (VSA). This
mechanism was basically a cost-plus formula to the import price, which included added elements
of all the costs such as shipping charges upto the Indian ports, insurance, transit losses, import
duties and other levies and charges.
The VSA was followed by the Administered Price Mechanism (APM) which actually involved
artificial price fixing by the government from time to time and hike or reduction in the prices
become a political decision, rather than being a rational economic decision. The decision to
dismantle the APM was aimed at gradually shifting from artificial pricing of petroleum products
towards a situation where the price is determined by the market forces of demand and supply.
Hence, as a conscious policy decision, the government brought into the force a new pricing
mechanism with effect from April 1, 2002.

The new mechanism was designed to partially insulate the prices of petroleum products in the
country from volatile international crude oil prices. At the same time it was to ensure that the
prices of certain products like kerosene and LPG remained subsidised as per the government

It was expected that the new pricing mechanism would be the first step to move forward towards
a pricing mechanism based on the interaction of the market forces.

While the weaknesses of the new system had come to the fore during the past six years of its
enforcement, the recent spurt in the global crude prices has completely exposed the flip side of it.
While devising the new mechanism six years ago, no one had thought that the global crude
prices would be close to $150 per barrel.

One of the most prominent arguments advanced by the Central government in favour of the
recent steep hike in the prices of the petroleum products was that the oil companies were
suffering heavy losses and had to be bailed out. This logic, however, exposes the illogic of
system of pricing these products. If the aim was to effect the import price recovery, the same
badly lost focus in the previous years and the price determination for this sector has again turned
out to be a purely political decision.

While the country is undoubtedly dependent heavily on imports, almost one fourth of the total
crude requirement is met by domestic production. When price per barrel of crude oil is discussed,
the fact that one fourth of the total supply of the crude is met domestically is over-looked.
Domestically produced crude oil costs the nation something around $55 per barrel and if the
global price is taken to be around $150 per barrel, the average weighted domestic price comes to
be around
$122 per barrel. When converted to per litre, it costs the country about Rs 31 per litre. The
refining and distribution costs included, the average cost of petroleum products like diesel and
petrol should not be more than Rs 35 per litre, while the average rate of these commodities has
been fixed higher.

At the same time it should not be forgotten that the petroleum products are the most taxed
commodities in the country. If the government is so much concerned about the prices of the
petroleum products, it must reduce the excise duty and the VAT rates across the country. But
such a decision would result in loss of revenue. It looks like the loss to the oil companies is a
myth created by the government to protect its own revenues.

The performance of the public sector oil companies does not suggest that these companies are
under any threat of loosing out their profits after the global crude price increase. Their profits have
actually increased.

The Alternative

T he logic behind the extent of increase in prices is neither understood by the general public and
nor is transparent. Under the current scenario, where the crude oil prices are fluctuating with
upward trend, the pricing mechanism has become even more suspect.

But the government does not have many options. One option is to go back to the previous APM
regime, having zero transparency. But such a step would be retrograde in nature. Even if re-
introduced with certain modifications, the APM may fail to come up to the expectations of the

Second option is to switch over the market driven system under which the government would
have little role in determination of petroleum prices. Should the government decide to go in for
this regime, several prior actions are required to be taken. The government shall have to
dismantle the regime of subsidies in respect of diesel, LPG and kerosene altogether. If the
subsidies are not to be scrapped altogether and are to be provided to the targeted group of
people (viz. those living below poverty line), then a separate distribution network needs to be
identified to cater to their needs.

Such a system, however, may be politically unacceptable to most of the political parties. More
particularly in the present day scenario, when the inflationary pressures are at their peak.

The solution lies in suitably modifying the existing system to a large extent. The changes must
aim at reducing the discretion in the process of determining the prices of the petroleum products.
Deter-mination of prices should be more transparent, with sufficient and well defined role of the
market forces. Subsidisation of the products like kerosene and LPG should only be targeted to
the people living below the poverty line by devising a suitable mechanism. Remaining subsidies
must be withdrawn by adhering to a prescribed timeline.

A suggestion has been made that different types of diesels should be used for trucks and luxury
cars. It makes no sense to supply diesel at subsidised rate for the owner of a luxury diesel car. It
is high time that the railways also switched over to the use of 100% electricity for running the
trains. For transport vehicles CNG should be used, which is less polluting, on the one hand, and
would result in liberating the goods transport sector from the use of diesel, on the other.

Recent spurt in prices came as a rude shock to the government which was preparing to take on
the serious economic challenges like tumbling of the stock exchanges in the country and global
slowdown. In a democratic system like ours, nothing can be more worrying to the party in power
than the soaring prices in an election year. Surprisingly, the inflationary pressure is coupled with
the reduction in economic growth of the country, and defying the principles of monetary theory,
the Indian economy is behaving like a typical developing economy. By the end of March, the
inflation rate had reached an alarming 7.41 per cent level and has been hovering above 7 per
cent thereafter.

No one need to scratch one’s head to find out the reasons for the price rise in the recent weeks,
despite several desperate measures taken by the government to control it. First and foremost is
the global environment. Globally, the prices of food articles have risen by about 75 per cent
during the last about six months. The situation is so precarious in the African continent that
groups of people suffering from hunger in several African countries have tried to loot the
foodgrain stores of the government and the other organisations.

The world community became even more concerned after the recent report that the world has
been left with food stocks only for three to four weeks. Sharad Pawar, the Agriculture Minister of
India was quick to respond to the above report and announced that the situation was under
control in the country, as the buffer stocks of food were more than the prescribed limit. But
notwithstanding the said assertion by the Agriculture Minister, the prices of foodgrains, edible oils,
pulses, fruits, vegetables etc. continue to head northwards.

In India, agriculture sector is growing at the rate of around two per cent while the growth rate of
population is also around two per cent. In other words, more people in the world are chasing
lesser food articles, resulting in pressure on the prices. In addition, the world economy is also
trying to pay attention to the sectors having high growth potential and the primary sector is getting
ignored. India has not been an exception in this regard.

Global prices of crude oil have been on the rise during the past about two years now. Towards
end of April, the crude oil prices in the international market had crossed $ 120 per gallon, putting
pressure on the government to increase the retail prices of petrol and diesel in the country.
Increase in the prices of these products has cascading effect on the prices of other commodities
due to increase in the transportation cost. This has been one major factors responsible for higher
inflation rate in the country.

Another factor responsible for the constant increase in prices has been the rising prices of
cement and steel. This is perhaps due to increased demand for steel and cement due to
increased construction activity, infrastructure development through various flagship programmes
of the government and increased demand for these commodities for such programmes and the
activities of the National Highway Authority of India. Increased steel prices put pressure on the
prices of many products that use steel as raw material, including the automobiles, construction
industry and other such industries.

Defying Monetary Policy?

As per the monetary theory, inflation is largely a monetary phenomenon and it is the monetary
policy measures that come to the rescue of the government to control inflation. In developed
countries, it is the increased money supply that generally causes inflation and the government
takes monetary measures like increasing the bank rate, Credit Reserve Ratio (CRR), increasing
the deposit rates to mop up the surplus flow of money in the economy. Traditionally, inflation in
India has generally defied the monetary theory and has refused to be curbed by the monetary

The economy has been growing at around 8 per cent per annum during the past five years and
the forecast for the current financial year is also around eight per cent. But, on the other hand, the
prices of food articles, cement, steel and oil are on the rise. Though the agricultural sector has
been growing at slower rate of around 2 per cent per annum, other sectors like the manufacturing
and the services sector are booming with a growth rate in double digits. All these factors
contradict the teachings of the monetary policy.

Another principle of the monetary policy is that the price rise due to increased money supply of
one commodity is offset by the price fall of another. In a poor and agrarian country like ours,
where majority of the people spend major chunk of their earnings on food articles, this cannon
seems ridiculous. With food scarcities galore and the food prices soaring, it is immoral to say that
the increase in the prices of food articles is offset by reduction in the prices of other goods, say
cosmetics. People need food at every cost and not the cheaper cosmetics!

The above phenomenon has forced the policy makers to control inflation by moving away from
the monetary policy measures to other measures. One of the most frequently used measures
has been the changes in the import-export policy. To tackle inflation, India has often resorted to
the policy of reducing the import duties on the food articles, on the one hand, and banning the
exports of the select food items, on the other.

Recently, Raghuram Rajan Committee had suggested that the Reserve Bank of India should not
resort to routine multi-tasking covering the exchange rate, growth and inflation, but should focus
primarily on control of inflation. It is believed by many that in the Indian conditions, non-core
inflation is often the dominant part of inflation, and under such a scenario, the monetary policy
measures are week tools for curbing inflation. The policies which are successful in the European
countries may not work in the country like ours and there is no point in blindly following the
monetary policy measures as prescribed in the economic (monetary) theory book.

Corrective Actions

The Wholesale Price Index (WPI) is an index of a few commodities and if one looks at the
composition of such goods, the prices of several articles have not undergone any change,
indicating the inflation rate at 7.41 per cent as on 29th March 2008.

For example, fertilizers and pesticides have about 10 per cent weight in the index, but the prices
of these commodities have not undergone any major change in the last one year. But even if
these two commodities are excluded, a significant percentage of index representing a host of
commodities has remained unchanged over the last several months. Electrical goods, for
example represent about 2 per cent weight in the WPI and their prices have remained static
during the last about eight months.

The above facts indicate that the WPI takes into account the weighted average of the
commodities included by the government in it and ignores the prices of the commodities that are
excluded from the index. Hence, in the modern day of consumerism, where there are several
segments in a particular commodity, the WPI needs to be made broad based to include more
commodities. As on today, it does not represent the true picture about the price rise in the

For rural and agricultural workers the impact of the inflation has been even higher. Ironically,
these categories have very low income levels when compared to the national average. Consumer
Price Index (CPI) for the agricultural labourers and rural labourers during the month of March has
been close to 8 per cent. Since the calendar year 2007, the CPI for the agricultural labourers
(CPI-AL) has been increasing at a much faster rate than the WPI. During April-March 2007-08,
CPI-AL has remained higher than the WPI, with the gap between the two being around 3.5 per
cent at an average. The reason is that the CPI has higher weightage for the food and consumer
items than the WPI. This also explains why the impact of price rise for the consumer is higher
than the announced inflation rate by the government. CPI is more relevant to the consumers and
not the WPI.

House rents and miscellaneous services have also become dearer than before, adding to the
worries of the consumers. As per the latest data released by the NSSO, the most consumed
items in the Indian households are rice, wheat, onion, potato, milk, arhar and edible oils. During
April-March 2007-08, the WPI of rice increased by 6.35 per cent, arhar by 14.52 per cent, milk by
8.68 per cent, wheat by 5.57 per cent, mustard oil by 28.91 per cent and coconut oil by 10.8 per

Increased prices of the food articles are attributed to the supply side constraints and the
developments in the international markets. Exports have become expensive due to the global
price rise. Hence, the government was left with no alternative but to take measures to control
inflation directly. The zero import duty facility has been extended to the import of several food
commodities and export of pulses has been completely banned. Further, several State
governments like Delhi and Maharashtra initiated several de-hoarding drives by raiding the
foodgrain godowns.

Being in the election year, the UPA government at the Centre can ill-afford to let the situation of
price rise prevail and perpetuate. The measures have begun to show some results when the
inflation rate eased to 7.14 per cent during the week ending April 5, 2008. It is felt that a spell of
good monsoons would further improve the position, while the failure of the monsoons may spell
doom not only for the farmers, but also for the consumers.

Money lending in one form or the other has evolved along with the history of the mankind. Even
in the ancient times there are references to the moneylenders. Shakespeare also referred to
‘Shylocks’ who made unreasonable demands in case the loans were not repaid in time along with
interest. Indian history is also replete with the instances referring to indigenous money lenders,
Sahukars and Zamindars involved in the business of money lending by mortgaging the landed
property of the borrowers.

Towards the beginning of the twentieth century, with the onset of modern industry in the country,
the need for government regulated banking system was felt. The British government began to
pay attention towards the need for an organised banking sector in the country and Reserve Bank
of India was set up to regulate the formal banking sector in the country. But the growth of modern
banking remained slow mainly due to lack of surplus capital in the Indian economic system at that
point of time. Modern banking institutions came up only in big cities and industrial centres. The
rural areas, representing vast majority of Indian society, remained dependent on the indigenous
money lenders for their credit needs.

Independence of the country heralded a new era in the growth of modern banking. Many new
commercial banks came up in various parts of the country. As the modern banking network grew,
the government began to realise that the banking sector was catering only to the needs of the
well-to-do and the capitalists. The interests of the poorer sections as well as those of the common
man were being ignored.

In 1969, Indian government took a historic decision to nationalise 14 biggest private commercial
banks. A few more were nationalised after a couple of years. This resulted in transferring the
ownership of these banks to the State and the Reserve Bank of India could then issue directions
to these banks to fund the national programmes, the rural sector, the plan priorities and the
priority sector at differential rate of interest. This resulted in providing fillip the banking facilities to
the rural areas, to the under-privileged and the downtrodden. It also resulted in financial inclusion
of all categories of people in almost all the regions of the country.

However, after almost two decades of bank nationalisation some new issues became contextual.
The service standards of the public sector banks began to decline. Their profitability came down
and the efficiency of the staff became suspect. Non-performing assets of these banks began to
rise. The wheel of time had turned a full circle by early nineties and the government after the
introduction of structural and economic reforms in the financial sector, allowed the setting up of
new banks in the private sector.

The new generation private banks have now established themselves in the system and have set
new standards of service and efficiency. These banks have also given tough but healthy
competition to the public sector banks.
Modern Day Role

Banking system and the Financial Institutions play very significant role in the economy. First and
foremost is in the form of catering to the need of credit for all the sections of society. The modern
economies in the world have developed primarily by making best use of the credit availability in
their systems. An efficient banking system must cater to the needs of high end investors by
making available high amounts of capital for big projects in the industrial, infrastructure and
service sectors. At the same time, the medium and small ventures must also have credit available
to them for new investment and expansion of the existing units. Rural sector in a country like
India can grow only if cheaper credit is available to the farmers for their short and medium term

Credit availability for infrastructure sector is also extremely important. The success of any
financial system can be fathomed by finding out the availability of reliable and adequate credit for
infrastructure projects. Fortunately, during the past about one decade there has been increased
participation of the private sector in infrastructure projects.

The banks and the financial institutions also cater to another important need of the society i.e.
mopping up small savings at reasonable rates with several options. The common man has the
option to park his savings under a few alternatives, including the small savings schemes
introduced by the government from time to time and in bank deposits in the form of savings
accounts, recurring deposits and time deposits. Another option is to invest in the stocks or mutual

In addition to the above traditional role, the banks and the financial institutions also perform
certain new-age functions which could not be thought of a couple of decades ago. The facility of
internet banking enables a consumer to access and operate his bank account without actually
visiting the bank premises. The facility of ATMs and the credit/debit cards has revolutionised the
choices available with the customers. The banks also serve as alternative gateways for making
payments on account of income tax and online payment of various bills like the telephone,
electricity and tax. The bank customers can also invest their funds in various stocks or mutual
funds straight from their bank accounts. In the modern day economy, where people have no time
to make these payments by standing in queue, the service provided by the banks is

While the commercial banks cater to the banking needs of the people in the cities and towns,
there is another category of banks that looks after the credit and banking needs of the people
living in the rural areas, particularly the farmers. Regional Rural Banks (RRBs) have been
sponsored by many commercial banks in several States. These banks, along with the cooperative
banks, take care of the farmer-specific needs of credit and other banking facilities.


Till a few years ago, the government largely patro-nized the small savings schemes in which not
only the interest rates were higher, but the income tax rebates and incentives were also in plenty.
The bank deposits, on the other hand, did not entail such benefits. As a result, the small savings
were the first choice of the investors. But for the last few years the trend has been reversed. The
small savings, the bank deposits and the mutual funds have been brought at par for the purpose
of incentives under the income tax. Moreover, the interest rates in the small savings schemes are
no longer higher than those offered by the banks.

Banks today are free to determine their interest rates within the given limits prescribed by the
RBI. It is now easier for the banks to open new branches. But the banking sector reforms are still
not complete. A lot more is required to be done to revamp the public sector banks. Mergers and
amalgamation is the next measure on the agenda of the government. The government is also
preparing to disinvest some of its equity from the PSU banks. The option of allowing foreign direct
investment beyond 50 per cent in the Indian banking sector has also been under consideration.

Banks and financial intuitions have played major role in the economic development of the country
and most of the credit- related schemes of the government to uplift the poorer and the under-
privileged sections have been implemented through the banking sector. The role of the banks has
been important, but it is going to be even more important in the future.
Every economy makes arrangements for its macroeconomic management through its Central
Bank, mostly by manipulating the monetary policy measures. The nature of the policy and its
thrust would depend upon the desired outcomes. Macroeconomic management may aim at rapid
growth of the economy, facilitating or restricting the flow of credit into the economy, controlling
the interest rates in the economy and controlling the money supply in the system on the basis of
the requirements from time to time. The aim could also be to ensure more self-employment,
increasing investment and increased wage employment opportunities. Regulation of money
supply is also used as an instrument to control the prices in the economy.

Handled by the Central Bank, Monetary Policy of a country is the primary tool for efficient
macroeconomic management. As per the advanced estimates of the Central Statistical
Organisation (CSO), the performance of the Indian economy during 2007-08 has shown a robust
growth of 8.7 per cent. Despite slight moderation in its achievements over the previous year, the
economy has continued to grow in tune with the trends obtained during the five-year period of
2003-04 to 2007-08.

As per the advanced estimates, total foodgrain production during the year 2007-08 is expected to
reach all time high of 227.3 million tonnes, recording an increase of 4.6 per cent over the previous
year’s production, thus exceeding the targets. During the same year, the index of industrial
production rose by 8.7 per cent and the manufacturing sector recorded even higher growth rate of
around 9 per cent. Infrastructure sector, however, disappointed and grew at the rate of 5.6 per
cent. But the services sector surged ahead with its double digit growth at 10.6 per cent, despite
some moderation in its pace and continued to be the major contributor to the GDP growth.

Despite the slight slowdown in most of the sectors, the process of fiscal correction and
consolidation under the Fiscal Responsibility and Budget Management (FRBM) Act continued.
The Revised Estimates (RE) for the year 2007-08 placed the revenue deficit and Gross Fiscal
Deficit (GFD) at 1.4 per cent and 3.1 per cent of GDP, respectively, which were lower than the
budget estimates, both in absolute as well as relative terms. The Union Budget for 2008-09 also
proposes to continue the fiscal consolidation process with the key deficit indicators like revenue
deficit and GFD, budgeted to be lower by 0.4-0.6 percentage points and primary surplus higher
by 0.5 percentage points of GDP in 2008-09 than in the previous year. While the FRBM targets
relating to GFD are set to be achieved in accordance with the mandate, the Budget proposes to
reschedule the stipulated target of zero revenue deficit by 2008-09.

Worrisome Future

On April 28, 2008 the Reserve Bank of India (RBI) released a document, “Macroeconomic and
Monetary Developments in 2007-08”, to serve as background to the Annual Policy Statement for
2008-09. It noted with concern that during the second half of the year 2007-08, the combined
effect of the higher food and fuel prices, coupled with strong demand conditions, especially in the
emerging economies like India, would result in pressure on the price level. The report also
pointed out that the monetary policy responses during the year were mixed in view of growing
concerns about the implications of credit crunch arising out of the US sub-prime crisis. The
government reacted with caution to ensure that the price control measures may not result in
depressed economic growth of the economy. But the situation worsened with the global crude oil
prices burgeoning beyond expectations, crossing $135 per barrel by the last week of May 2008.

Global financial markets also remained volatile during the latter part of the previous financial year,
as the US sub-prime crisis spilled over from mortgage and credit markets to other assets.
Resultantly, the Indian financial markets, after remaining stable and buoyant upto December
2007, suffered bouts of volatility towards the second week of January 2008. In the foreign
exchange market the Indian rupee generally exhibited two-way movements against major foreign

The external sector, by and large, remained within the comfort zone and offered some spark.
India’s balance of payments position also remained comfortable during 2007-08 (April-
December). The merchandise trade deficit widened to US $66.5 billion in April-December 2007,
from US $50.3 billion in April-December 2006. Net surplus under invisibles (services, transfers
and income taken together) was higher at US $50.5 billion in April-December 2007 as compared
to US $36.3 billion. Despite sharp rise in merchandise trade deficit, the net invisible surplus,
mainly resulting from the rise in remittances from the overseas Indians and software services
exports, contained the current account deficit in trade at US $16.0 billion during April-December
2007, as against US $14.0 billion in April-December 2006.

The Third Quarter Review of January 29, 2008 had noted with concern the unfolding of
unfavourable global developments and the responses of monetary authorities which seemed to
provide an indication of threat to growth and financial stability worldwide. Consequently,
developments in global financial markets in the context of the US sub-prime crisis required more
intensified monitoring and quick responses with all available instruments, to preserve and
maintain macroeconomic and financial stability of the economy. In addition, risks associated with
high and volatile international prices of fuel, food and metal prices intensified, complicating the
task of the policy in maintaining the right quantum of liquidity and solvency in the financial
markets and institutions.

Against this background, it was realised by the Reserve Bank of India that Monetary Policy had to
be vigilant and proactive in protecting the real economy from excess volatility in financial markets,
while at the same time understanding well that the country cannot be totally immune to global

In view of the unprecedented economic complexities there were certain key factors that
determined the direction of the Monetary Policy for 2008-09. Firstly, there was an immediate
challenge of northward movement of food and energy prices which possibly contains some
structural components. Secondly, while demand pressures continue, there has been some
improvement in the domestic supply response, alongside a build-up of additional capacities
enabled by a conducive policy environment. Accordingly, even as investment demand continues
to be high, elasticity of supplies can be expected to improve further and new capacities should
surface in near future. Thirdly, the monetary policy in the recent years has been aiming at the
outcomes relating to growth and stability, barring the recent episodes of external shocks. Thus,
the monetary policy measures undertaken since September 2004 continue to have stabilising
effect on the economy.

Measures relating to the cash reserve ratio, and recent initiatives with regard to supply-
management are giving favourable results, while a more reliable assessment of crop prospects
by the government is also underway. Critical to the monetary policy is the importance of
expectations relating to both global and domestic developments. While monetary policy has to
respond urgently to immediate concerns with respect to the requirements of overall
macroeconomic management, it cannot afford to ignore the considerations for the immediate
future prospects and expected developments. At the same time, it was important to demonstrate
on a sustainable basis, a determination to act decisively, effectively and swiftly to allay the fears
with regard to increasing pressures of price rise.

In view of the above pressing uncertainties and confusing dilemmas, it was considered necessary
to take well considered decisions with regard to the timing and magnitude of policy actions on
sustained basis. As a result, the RBI decided to continue with its well tested policy of active
demand and liquidity management through proper use of the CRR stipulations and open market
operations, and by utilising judicially all the policy instruments at its disposal.

Excluding the possibility of any adverse and unexpected developments in various sectors of the
economy, assuming that capital flows are effectively managed and keeping in view the outlook for
growth and inflation in the Indian economy, the overall focus of the Monetary Policy in 2008-09
aimed at ensuring a macroeconomic environment that accorded high priority to price stability, firm
projections of inflation, favourable conditions in financial markets and other conditions conducive
to continuation of high and sustainable growth rate in the economy. The Monetary Policy also
aims at quickly responding to the ongoing adverse global developments on sustainable basis, as
also to the domestic situation resulted by the apprehensions about the inflation, financial stability
and growth momentum, with both conventional and non-conventional measures. The Policy also
emphasizes the need for a good credit quality, as well as credit delivery, particularly for
employment-intensive sectors while ensuring financial inclusion of the masses.

The broader aim is to achieve high growth rate, controlled prices and burgeoning foreign trade.
Instead of being rigid with its measures, the RBI has been using flexibility as the centre-stone of
its macroeconomic management framework. All the policy measures may not be able to yield the
expected results, but these measures do impact the economy positively. As the Monetary Policy
measures alone may prove inadequate to achieve the perfect macroeconomic management,
such measures are also expected to be supplemented by appropriate fiscal policy measures.

The period immediately after independence posed a major challenge to the country. Due to
centuries of exploitation at the hands of foreign powers, there were very high levels of deprivation
in the economy—both social as well as economic. To take up the Herculean task of rapid growth
with socio-economic justice, the country adopted the system of planned economic development
after independence. Due to paucity of economic resources and limitations of availability of capital
for investment, the government also came up with the policy of setting up public enterprises in
almost every field.

The fiscal activism adopted by the government resulted in large doses of public expenditures for
which not only the revenues of the government were utilized but the government also resorted to
borrowing at concessional rates, which kept the financial markets underdeveloped. The growth of
fiscal deficit also continued unabated year after year. Complex structure of interest rates was a
resultant outcome of this system.

Nationalisation of major commercial banks in the late sixties and early seventies provided the
government with virtually the complete control over the direction of the bank credit. The emphasis
was mainly on control and regulation and the market forces had very limited role to play.
The economic system was working to the satisfaction of the government. The social indicators
were gradually improving and the number of people below poverty line also declined steadily. The
only problem area had been that the growth rate of the economy had been very low, and till late
seventies, the growth rate of the GDP was hovering around 3.5 per cent per annum. It was only
during mid-eighties that the growth rate touched 5 percentage points.

The situation became difficult by the eighties. Financial system was considerably stretched and
artificially directed and concessional availability of credit with respect to certain sectors resulted in
distorting the interest rate mechanism. Lack of professionalism and transparency in the
functioning of the public sector banks led to increasing burden of non-performance of their assets.

Late eighties and early nineties were characterised by fluid economic situation in the country. War
in the Middle East had put tremendous pressure on the dwindling foreign exchange reserves of
the country. The country witnessed the worst shortages of the petroleum products. High rate of
inflation was another area of serious concern. Most of the economic ailments had resulted due to
over regulation of the economy. The international lending and assisting agencies were ready to
extend assistance but with the condition that the country went in for structural reforms, decontrols
and deregulation, allowing increased role for the market forces of demand and supply.

The precarious economic conditions left the country with no alternative other than acceptance of
the conditions for introducing the reforms.

Post Reforms

Rationalisation of the taxes has already taken place on the basis of the recommendations of
Raja Challiah Committee Report during mid-nineties. The government has been able to tighten its
fiscal management through the FRBMA and the continuing increase in the fiscal deficit has been
contained significantly. Reforms in the external sector management have yielded results in the
form of increased foreign capital inflows in terms of Foreign Direct Investment (FDI), Foreign
Institutional Investment (FII) and the exchange rate has also represent true international value of
Indian rupee vis-à-vis hard global currencies.

The primitive foreign exchange regulation regime controlled by FERA has been replaced by a
liberalized foreign exchange rate management system introduced by FEMA. Introduction of such
a modern management law was perhaps a pre-condition for allowing FDI and FII. In 1993, the
RBI issued guidelines to allow the private sector banks to enter the banking sector in the country,
a virtual reversal of the policy of bank nationalisation. Foreign banks were also given more liberal

The thrust of the monetary policy after the introduction of the process of reforms has been able to
develop several instruments of efficient financial management. A Liquidity Adjustment Facility
(LAF) was introduced in June 2000 to precisely modulate short-term liquidity and signal short-
term interest rates. A lot of reliance is being placed on indirect instruments of monetary policy.
Strengthening and upgradation of the institutional, technological and physical infrastructure in the
financial markets has also improved the financial framework in the country.

Economy and Reforms

The introduction of financial sector reforms has provided the economy with a lot of resilience
and stability. The average annual growth rate of the economy during the post-reform period has
been more than 6 per cent, which was unimaginable a decade before that. The economy
withstood boldly the Asian economic crisis of 1997-98. Even the economic sanctions by the US
and other developed countries after the nuclear testing did not affect the economy to the extent
apprehended. The current global slowdown and sub-prime crisis affecting the banking system all
over the world has not impacted the Indian economy to that extent.

Banking and insurance sectors are booming. While the private and foreign banks are giving stiff
but healthy competition to the public sector banks, resulting in overall improvements in the
banking services in the country, the insurance sector has also witnessed transformation. The
consumer is a gainer with the availability of much better and diversified insurance products.

The stock exchanges in the country are in the process of adopting the best practices all over the
world. The RBI has also been able to control and regulate effectively the operations and growth of
the Non-Banking Financial Companies (NBFCs) in the country.

A few changes which are on the anvil pertain to the legal provisions relating to fiscal and budget
management, public debt, deposits, insurance etc. As per the Finance Minister, future reforms by
making legal changes also pertain to banking regulations, Companies Act, Income Tax,
Bankruptcy, negotiable instruments etc.

But there are certain issues that call for more cautious approach towards the financial sector
reforms in the future. The social sector indicators—like availability of doctor per 1000 population,
availability of health institutions, quality of elementary education, literacy rate, particularly among
the females—are some of the areas of serious concern. Countries like China, Indonesia and even
Sri Lanka are much better than India in most of the social sector indicators.

Despite being among the most rapidly developing economies of the world, the literacy rate and
poverty percentage are two biggest embarrassments and the country still languishes at 128th
position in the Human Development Index of the UNDP, where it is virtually stagnating for the last
about five years. Further, the systems should also be able to check any unusual rise in prices to
protect the common man from inflation.

One of the major criticisms of the government policy has been that the reforms have lacked the
human face, as the government has been over-obsessed with the idea of achieving higher growth
rate and fiscal and monetary management, rather than addressing the needs for equitable and
inclusive growth. The reforms process has ignored the common man and the trickle down theory
has actually failed to deliver.

The Planning Commission, while finalising the Eleventh Five-Year Plan has now sought to
achieve the overall objective of achieving the ‘inclusive growth’, i.e., to include all those in the
process of economic growth, who has remained excluded from the process of economic growth
experienced by the country during the past decades.

The economic problems of the global slowdown began to surface in India during the mid-2008
when a few major investment banks in the USA collapsed and the US economy began to feel the
heat of the meltdown. After a phase of bullish euphoria in the financial markets in 2007, the Indian
stock markets began to suffer heavy setbacks after January 2008. While the markets were hoping
to recover to some extent at the time of Diwali, in October 2008, it turned out to be the other way
around as the markets suffered major reverses. To add to the woos of the common man, the
inflation rate was hitting the roof.

In addition to the exorbitant price level, there was liquidity crunch in the market and the interest
rates were very high, discouraging the investors from making any investment. The grim market
scenario forced the investors to put on hold even the most viable projects. The banks were also
shying away from funding the projects on one pretext or the other.

By October 2008, many companies, particularly in the IT and Aviation sectors, began to hand
over pink slips to quite a few of their employees. New recruitments were stopped and in many
cases the salaries of the existing staff were slashed. This was for the first time after the onset of
the process of reforms that such a situation was encountered in the country. Despite the brave
face put up by the government, the feeing of recession in the economy began to sink in.

As the crisis loomed large over the world economy, the US government took the lead to save its
investment banks through a bail-out package. The US government also considered the bailout
package for its three major automobile manufacturers. On the national front also, many corporate
entities began to announce salary cuts and reduction in the employee strength, forcing the
government to announce a package of unemployment doles for such employees. This was the
time when the Indian government also tightened its belt and came out with an economic package
which was multi-faceted and encompassed areas like indirect taxation, interest rate cuts,
monetary policy measures and duty cuts.

Focus of the package announced on December 6, 2008, was primarily on reducing the prime
lending rates of the commercial banks. The aim was to revive the economic activity by reviving
the housing, infrastructure and automobile sectors. The government tried to increase the
availability of liquidity in the market by adopting various monetary policy measures to trigger the
downward trends in lending rates of various banks, including the house building advances and
car loans. The first bailout package was estimated to have pumped in additional funds to the tune
of Rs 40,000 crores into the Indian economy. The second bail out package, announced in the
beginning of January, 2009, provided the system with additional liquidity to the extent of Rs
20,000 crore, taking the total additional fund availability to Rs 60,000 crores.

As an automatic corollary to the above mentioned measures was the resultant easier credit at
reduced rates. With the RBI announcing reduction in the Repo Rate and the Bank Rates, most of
the commercial banks reacted positively and announced reduction in their prime lending rates,
making it easier for the borrowers to borrow at reduced rates. Hence, not only the availability of
credit was enhanced, its cost was also reduced considerably.

Among the most important sectors is the automobile sector. During the last about one decade,
this sector has been the backbone of India’s industrial growth rate. Reduction in the excise duties
for most of the vehicles has helped this sector to cut the prices of the vehicles significantly,
protecting it from further slide. Reduction in the petrol and diesel also helped the auto sector to
tide over the difficult situation. The growth rate of the auto sector may not have improved greatly
after these
measures, but the measures have certainly helped this crucial sector to survive the global scare.

Civil aviation is yet another important sector that had been fuelling the growth rate of the country
in the recent years. But after the rise in fuel prices and global slowdown, this sector came under
immense stress. The government cut the prices of the aviation fuel three times during the months
of December and January, bringing down the costs in the aviation sector drastically.

Effectiveness and Future

The measures taken by the government in India were timely and apt. Any other government
under such a situation would have reacted in the similar manner.
Certain visible improvements have been observed in the Indian economy after the measures
were initiated. The capital markets have stabilized even though at a lower level. The inflation rate,
which had touched the figure of 12 per cent, has come down to a comfortable level of less than 6
per cent. Despite the projection of 1 to 2 per cent growth rate of the global economy, the Indian
economy hopes to post 7 per cent growth during 2008-09, which would be among the highest in
the world. It is expected that after the first quarter 2009-10 things would begin to improve and the
economy would again be back on the path of rapid development.

One of the classical criticisms of the fiscal and monetary policy measures can be summed up in a
proverbial expression that one can take the horse to water but cannot force it to drink.
Government may provide a good environment for the investors but the investors may wait for the
recession to be over before taking major investment decisions. In other words, the government
may provide the framework of revival but the revival may actually take longer than expected.
Further, the improvements in the global situation, particularly in the USA, would certainly play a
major role to bring the situation back to normal.

Many people feel that the attempts to add liquidity in the economy were too tentative and too less.
Rs 40,000 crore is just about one per cent of the GDP of the country. In a large and diverse
economy like ours, this sum may have no significant meaning. It is also believed by many that the
liquidity added by various measures was sucked in by the oil bond operations of the government
and the net impact on the liquidity was virtually negligible.

The government has made clear its intention to encourage the private investment and step up the
public expenditure to keep the eco-nomy buoyant. Mere statement of the intention to invest is not
sufficient and higher investment must happen quickly and effectively and the routine delays in the
government expenditure must be curbed. Infrastructure and social sector are two such areas in
which the government agencies can push up the investment rate significantly. Programmes like
the National Rural Employment Guarantee Scheme, Bharat Nirman, and Sarv Siksha Abhiyan
are some of the programmes having a lot of funds for investment in the rural areas and, if
implemented properly, these would keep the economy vibrant despite the global economic blues.

Housing is another important activity in India. There are many countries in the world that had
grown rapidly by supporting their housing activities. With about 4 per cent increase in population
in the cities, half of which is due to large scale migration from the villages to the cities, housing is
going to be a basic need of the people in India. Affordable housing must be encouraged by the
government to counter the situation of economic slowdown.

With a huge rural population base, the policy makers must ensure that the real incomes in the
rural areas of the country continue to rise. With the economy offering a lot of scope for
development and growth in the rural areas, increased income levels in the rural areas would
generate demand on sustainable basis. Besides, a large chunk of the Indian population is still not
adversely affected by negative growth of the Indian stock markets. In this way, India is different
from rest of the world.
That India is one of the most corrupt in the world is not the news, the news is that there
is no hope for any respite from this evil which is essentially an anti-poor
phenomenon. According to the Transparency International, India ranks very high on
the Corruption Perception Index. There are a lot of things because of which one is
proud of being an Indian. However, there are a lot more for which one is ashamed of
being an Indian, and corruption is one of them.

Courage, integrity and moral values of life have been major casualties in recent
times. We have seen how these qualities have nose-dived to absurdly low depths.
Our leaders have lost total sense of responsibilities and propriety and have misused
and abused the power and authority vested in them with impunity, and with utter
disregard to public interests. They have literally converted the governmental
infrastructure as their personal fiefdom, resulting in series of scams and scandals. As
a natural aftermath of this degradation on moral values and quality of leadership,
everyday life of common citizens has become a living hell. Municipal services are
heaped in corruption and inefficiency, with erratic electricity and water supply,
choked and overflowing sewers, smelly drains, neglected roads and streets with
potholes, and dotted with rotting garbage dumps and stinking public toilets.
Standards of education in government schools and colleges have gone down and
several money spinning private schools and coaching centres have mushroomed,
whose sole aim is to fleece the public.

In the present economic scenario, the basic prerequisites of an efficient

administrative system, conducive and growth-oriented environment and good and
reliable infrastructure are not available in our governing apparatus, which are
essential for a sound economy. Inefficient and inapt administration, which has no
work-culture worth the name, and which is forever on holiday or holiday-mood, has
caused serious overruns on development projects, resulting in losses and chronic
shortages of power, roads, ports and means of communication. Family-planning
programmes have failed miserably, which has led to further inadequacies of our
basic facilities—education, health, housing and transport projects. Perennial shortage
in our infrastructure network has stunted our industrial and commercial growth.
Absence of right environments has failed the system and driven out our intellectuals
to greener pastures in foreign lands, thereby causing brain-drain. Even our space
programmes have been jeopardized due to flight of scientific talent. Our
industrialists have also failed the nation. Inspite of prolonged protection from
foreign competition, they have not developed the indigenous technology and have
remained heavily dependent on outdated imported technologies to produce
substandard products, most of which cannot compete in international markets either
in price or in quality.

The root cause of all this is our poor work-culture and corrupt practices, which have
now become endemic in our national character. The main aim of the bulk of our
citizens is to make hay while the sun shines and not to worry about the nation and its
plebeian designs.

Our political system has proved to be the fountain-head of corruption. During

elections, help of industrial and business houses and criminal elements are invited to
fund the extravagant election expenses of candidates and use muscle power to
muster votes, which results in nexus between politicians, business houses and
underground mafia. This nexus associates are later reimbursed through scams and
scandals by siphoning off public funds.

Huge amounts received from international agencies for welfare projects are pilfered
and shared among the nexus associates of the politicians in power. The bureaucracy
has been made servile through carrot and stick policy. In fact, most of them have
now become conduit for slush money for their political bosses, and in process have
become drain into the vortex and are partners in promoting corruption. They have
forgotten the legacy of courage, integrity and uprightness of their predecessors—the
Indian Civil Services cadre of yore. They have forgotten that their first duty is to
serve the people and not their self-interests or their political bosses.
Corruption is an anti-poor phenomenon which can only be tackled by better
governance and less government. Apart from its moral and ethical dimension,
corruption is the major cause of poor becoming poorer and, of course, rich getting
converted into super rich or filthy and vulgar rich. In democratic set up, and in a
plural economy like ours, everyone is guaranteed the right to grow to one’s potential
and create wealth by all legitimate means. However, corruption of any kind deprives
the common man from ‘climbing’ the next ladder and he either continues at the same
or slides further down to a more pathetic condition.

Corruption is really anti-poor. 31.5% of the food grains and 36% of sugar in the
Public Distribution System (PDS) gets diverted to black market. The fact is that Rs
20,000 crores is the subsidy involved in the PDS and 30% leaks to the black market,
in other words, more than Rs 6,000 crores are made available for the politicians,
corrupt officials of the PDS, the corrupt shopkeepers and their protectors. We can,
therefore, see how, while in the name of the poor, an argument can be made for food
security and subsidy. Different scams have shown the linkage between anti-national
elements. 300 people died in Bombay blast in 1993 and this was made possible
because RDX could be smuggled by bribing Rs 20 lakh to certain Custom officials. We
can, therefore, see that corruption is anti-economic development, anti-poor and anti-

What is corruption and why should any government and its people fight corruption?
The World Bank definition of corruption is “Use of public office for private profit”.
Some or all government offices are public, and the use of these offices for ‘private
profit’ by politicians, bureaucrats and the others is common in India. So much so, we
have created such systems in our country that corruption has become endemic. Like
Mark Twain’s statement that every one talks about the weather but nobody seems to
be able to do anything about it, the entire nation talks about corruption but nobody is
able to do anything about it. Former Central Vigilance Commissioner, N. Vittal, used
to compare corruption with a disease like AIDS. He felt as AIDS is the result of
uncontrolled sexual behaviour, corruption is the outcome of uncontrolled financial

The next aspect to be understood is why the government and responsible citizens
must fight corruption? The straight forward answer is, because corruption is anti-
poor and anti-development. The Human Development Report for South-Asia, pointed
out that if India’s level of corruption could be brought down to the Scandinavian
countries, its GDP will improve by 1.5 % and foreign bank investment by 12%.
Anything that is anti-poor and hence anti-social must be on top of the government
agenda to rectify the situation, but in a country where populism takes priority over
good governance, it doesn’t find even a mention. It is often said that leaders of India
have deliberately kept the people ignorant so that they won’t know how badly they
are governed. The present state of anarchy has made everyday life of the citizens a
living hell. They not only live in the fear of life and property, they also have to make
do with inefficiency in every government department.

Perhaps, the present state of affairs can be described in the words of Mahatma
Gandhi whose understanding of India and patriotism cannot be challenged. “India is
a country of self-suppression and timidity”, he said. This contributes to a common
man’s low expectations from anything Indian, including the administration. Many
intellectuals who are painted by others ‘as full of self-loathing’, perhaps also
contribute to this phenomenon—that nothing can be done to eradicate corruption and
we have to resign to our destiny and fate. It is not true. Of course, a lot can be done,
provided there is a will to change the present state of affairs.
Mahatma Gandhi’s dream was to see India with every face without a tear. Alas, in
more than 60 years, we have not been able to meet the aspirations and objective
potential of our people. Official figures indicate that at least 36% live
below the austerely defined by the Planning Commission. Today, millions of our
citizens do not have the elementary freedom from economic poverty, social
deprivation or political tyranny. As famous Nobel Laureate Amartya Sen will like us to
understand, we are only technically free but not truly free. EDUCATION FOR
The gains achieved since the Education for All and Millennium Development Goals were
adopted in 2000 are undeniable: great strides have been made towards universal
primary education, increased participation in secondary and tertiary education and,
in many countries, gender equality. More widely, there have been improvements in
overcoming hunger, poverty, and child and maternal mortality.

The global financial crisis could radically change all this. Reaching the marginalized
demonstrates that declining government revenue and rising unemployment now
pose a serious threat to progress in all areas of human development. Government
budgets are under even greater pressure and funding for education is especially
vulnerable. So are poor households. Rising poverty levels mean that the challenge of
meeting basic human needs is a daily struggle. Lessons from the past teach us that
children are often the first to suffer—as is their chance to go to school.

Global Monitoring Report, 2010, underscores that there is a long way to travel. There
are still at least 72 million children worldwide who are missing out on their right to
education because of the simple fact of where they are born or who their family is.
Millions of youths leave school without the skills they need to succeed in the
workforce and one in six adults is denied the right to literacy.

The 2010 Report is a call to action. We must reach the marginalized. Only inclusive
education systems have the potential to harness the skills needed to build the
knowledge societies of the twenty-first century.

The international community needs to identify the threat to education posed by the
economic crisis and the rise in global food prices. Human development indicators are
deteriorating. An estimated 125 million additional people could be pushed into
malnutrition and 90 million into poverty in 2010.

With poverty rising, unemployment growing and remittances diminishing, many poor
and vulnerable households are being forced to cut back on education spending or
withdraw their children from school. National budgets in poor countries are under
pressure. Sub-Saharan Africa faces a potential loss of around US$4.6 billion annually
in financing for education in 2009 and 2010, equivalent to a 10% reduction in
spending per primary-school pupil.

As part of an effective response, it is need of the hour to provide sustained and

predictable aid to counteract revenue losses, protect priority social spending and
support progress in education.

The situation is not hopeless everywhere, though. Some countries have achieved
extraordinary advances. Benin started out in 1999 with one of the world’s lowest net
enrolment ratios but may now be on track for universal primary education by 2015.
The share of girls out of school has declined from 58% to 54%, and the gender gap
in primary education is narrowing in many countries. Between 1985–1994 and 2000–
2007, the adult literacy rate increased by 10%, to its current level of 84%. The
number of adult female literates has increased at a faster pace than that of males.

However, much need to be done. Malnutrition affects around 175 million young
children each year and is a health and an education emergency. There were 72
million children out of school in 2007. Business as usual would leave 56 million
children out of school in 2015.

Around 54% of children out of school are girls. In sub-Saharan Africa, almost 12
million girls may never enrol. In Yemen, nearly 80% of girls out of school are
unlikely ever to enrol, compared with 36% of boys. Literacy remains among the most
neglected of all education goals, with about 759 million adults lacking literacy skills
today. Two-thirds are women.

Millions of children are leaving school without having acquired basic skills. In some
countries in sub-Saharan Africa, young adults with five years of education had a 40%
probability of being illiterate. In the Dominican Republic, Ecuador and Guatemala,
fewer than half of grade 3 students had more than very basic reading skills. Some
1.9 million new teacher posts will be required to meet universal primary education
by 2015.

The urgent international measures required include: increased concessional financial

support through bilateral aid and the World Bank’s International Development
Association (IDA), with a commitment to increase IDA replenishment from US$42
billion to US$60 billion; a review of the implications of the global economic downturn
for the financing of development targets in advance of the 2010 Millennium
Development Goals summit; an emergency pledging conference during 2010 to
mobilize additional aid for education; budget monitoring to pick up early warning
signs of fiscal adjustments that threaten education financing, with UNESCO
coordinating an international programme to these ends; revision of the IMF’s loan
conditions to ensure consistency with national poverty reduction and Education for
All priorities.

Education Quality
The ultimate measure of any education system is not how many children are in
school, but what – and how well – they learn. There is growing evidence that the
world is moving more quickly to get children into school than to improve the quality
of the education offered.

Learning achievement deficits are evident at many levels. International assessment

exercises point consistently towards severe global disparities. The 2007 Trends in
International Mathematics and Science Study (TIMSS) found that average students in
several developing countries, including Ghana, Indonesia and Morocco, performed
below the poorest-performing students in countries such as Japan and the Republic
of Korea. Inequalities within countries, linked to household disadvantage and the
learning environment, are also marked. The problem is not just one of relative
achievement. Absolute levels of learning are desperately low in many countries.

Evidence from South and West Asia and from sub-Saharan Africa suggests that many
children are failing to master basic literacy and numeracy skills, even when they
complete a full cycle of primary education. Low learning achievement stems from
many factors. Schools in many developing countries are in a poor state and teachers
are in short supply. By 2015, the poorest countries will need to recruit some 1.9
million additional primary school teachers, including 1.2 million in sub-Saharan
Africa, to create a good learning environment for all children. More equitable teacher
deployment is also vital: all too often, the poorest regions and most disadvantaged
schools have the fewest and least-qualified teachers. Several countries, including
Brazil and Mexico, have introduced programmes targeting schools serving
disadvantaged communities. Governments can also raise standards by spotting
problems early, using constant monitoring and early-grade reading assessments.

Education for all Development Index (EDI)

While each of the six Education for All goals adopted in 2000 matters in its own right,
the commitment undertaken by governments at the World Education Forum in Dakar
was to sustain advances on all fronts. The Education for All Development Index (EDI)
provides a composite measure of progress, encompassing access, equity and quality.
Because of data availability constraints, it includes only the four most easily
quantifiable goals, attaching an equal weight to each: (1) universal primary
education, measured by the primary adjusted net enrolment ratio (ANER); (2) adult
literacy, measured by the literacy rate for those aged 15 and above; (3) gender
parity and equality, measured by the gender-specific EFA index (GEI), an average of
the gender parity indexes of the primary and secondary gross enrolment ratios and
of the adult literacy rate; (4) quality of education, measured by the survival rate to
grade 5.

The EDI value for a given country is the arithmetic mean of the four proxy indicators.
It falls between 0 and 1, with 1 representing full EFA achievement.

India is ranked 105 on the EDI index. On top of the list is Norway, followed by Japan
and Germany.

Education Scenario of India

Literacy in India has made remarkable strides since Independence. This has been
further confirmed by the results of the Census 2001. The literacy rate has increased
from 18.33% in 1951 to 64.84% in 2001. This is despite the fact that during the
major part of the last five decades there has been exponential growth of the
population at nearly 2% per annum.

The Indian Constitution resolves to provide quality education to all and, in an effort
to fulfil the educational needs of the country, specifically for the diverse societies and
cultures of the country, the government has chalked out different educational
categories: elementary education, secondary education, higher education, adult
education, technical and vocational education. Free and compulsory education to all
children up to the age of fourteen years is now a constitutional commitment in India.
Despite serious handicaps of means and resources, the country has built up during
the last 50 years a very large system of education, and has created a vast body of
men and women equipped with a high order of scientific and technological
capabilities, robust humanist and philosophical thought and creativity.

The government of India has initiated a number of programmes to achieve the goal
of Universalisation of Elementary Education (UEE), from among which the Sarva
Shiksha Abhiyan (SSA), launched in 2001, is the most recent one. It aimed at
achieving universal elementary education of satisfactory quality by 2010. The SSA is
expected to generate demand for secondary education in view of which the
government of India has recently launched the Rashtriya Madhyamik Shiksha
Abhiyan (RMSA) to improve universal access and quality at the Secondary and Higher
Secondary stages of education.

For successful implementation of any educational programme, effective monitoring

and an efficient information system are essential. While the monitoring framework
for the SSA is developed separately, concerted efforts have been made towards
strengthening the Educational Management Information System (EMIS) for the
elementary level of education. The District Elementary Education Plans (DEEP) across
the country are being developed primarily based on the data generated though the
information system developed for the SSA, i.e. the District Information System for
Education (DISE).

The elementary education system of India has expanded into one of the largest in
the world. Number of primary schools increased from 2.15 lakhs in 1950-51 to 6.1
lakhs in 1997-98; the corresponding increase in upper primary schools was from 0.14
lakhs to 1.85 lakhs. These 8.17 lakh schools together enrolled 1,110 lakh children as
compared to 192 lakh in 1951.

Universal provision of education has been substantially achieved at the primary stage
(classes I-V). An estimated 95 percent of the rural population living in 8,26,000
habitations has a primary school within a walking distance of one km and about 85
percent of the rural population has an upper primary school within a walking
distance of three km. More than 150 million children are currently enrolled covering
around 90 percent of the children in the age group of 6-14 years. Recent surveys on
literacy rates indicate a phenomenal progress in the nineties and indicate a
significant rise in the literacy level.

Despite such significant achievements in the recent years, it is realized that there are
serious problems of gender, regional, sectional and caste disparities in UEE. A
significant proportion of children continue to drop out due to socioeconomic and
cultural factors as also due to lack of adequate infrastructure, shortage of teachers
and unsatisfactory quality of education provided.

The country has the dubious distinction of having the largest number of illiterates
and out of school children in the world—30% of the world’s adult illiterates (300
million) and 21.87 percent of out-of-school children. At least 24 million children in
the age group 6-14 are out of school of whom about 60% are girls; about 121.3
million are adult illiterates in the age group 15.35 of whom about 62 percent are
women. Given the demographic pressures the numbers are likely to increase further.
Universalisation of elementary education thus, poses a formidable challenge to India:
the numbers of children dropping out, not attending school regularly and never
enrolled are immense. Quality of education is poor; teachers are inadequately trained
and have lack of motivation.

A major concern is to improve the skills and motivation of teachers, promoting the
participation of communities in the running of schools and enrolling/retaining
girls/working children of urban poor and children with special needs in schools. Also,
in India, a large universe of working children exists such as the street children,
neglected and destitute children, children of sex workers and children practising as
sex workers. Many of these have been targeted through non-formal initiatives but
never main-streamed. Besides, along with access and retention, the quality of
education provided to them is questionable.

India has significant requirements and goals set for it, which will enable it to possess
self-equipped citizens holding a key to the progress and development in all spheres.
This implies that all the provisions stated in the NPE must be realized by 2025. To
begin with, it is important to understand the quantitative requirements of the sector
concerning issues of enrolment, school infrastructure, and teacher availability etc.
Thereafter, it will be logical to analyse the scenario that will exist in the year 2025,
with respect to the attainment of the requirements.

Given the requirements in purely quantitative terms it is important to understand the

non-negotiables for their achievement by 2025. It will be critical to have at least a
growth rate of 9-10 per cent per year in the economic sphere, necessitating the
requirement for human skills, especially the research skills. There will have to be no
compromise with respect to enrolment and retention of children in schools. For this
there has to be 100 per cent literacy and 100 per cent enrolment at primary,
secondary and technical levels. The problem of drop-outs will need to be main-
streamed together with the quality of education at the primary, secondary and
technical levels and for this the rural sector will have to be mobilized and encouraged
in the cause of education.

Economic development of our country is built around educational development. There

is considerable data which shows that education is based on economic development
and vice versa. This aspect has also been realised by the community at large and
education is now being considered important. This is even highlighted by the analysis
of household income versus expenditure, which shows that investment in education
in even the poorest households is high. People have understood the economic value
of education and are now ready to invest. This is also seen in the fact that many
youths are opting out of labour force and are spending larger period on education.

However, the government’s capacity to pay for education is limited. Thus, there is a
need to explore private and other investments. It has been established beyond doubt
that besides its social and cultural dimensions, education is also an economic and
political investment yielding long-term benefits. It is not only justifiable but also
desirable to focus on this investment in order to gain maximum benefit.

In terms of allocation for education, it needs to be underlined that the present 3.6
percent of GNP is less than: (a) the requirement of the education system to provide
reasonable levels of quality education to all the students enrolled presently; (b) the
requirements of the system to provide universal elementary education of eight years
for every child of the age-group 6-14, and consequent growth in secondary and
higher education, as universalisation of elementary education in a comprehensive
sense, includes universal provision of resources. This implies that it will be important
to raise money from private sources in order to ease pressure on public spending.
This, of course, is not meant to release the State from its financial commitments,
which have been substantial in India.

Along with the issue of investment, the quality issue also demands attention at all
levels of education. In this context, the Research and Development area, which is
extremely weak, has to be focused. This area is critical as it provides base to the
planning process, links it up to the implementation and subsequently highlights
areas for reform. A weak system endangers the life of the intervention, its
sustainability and impact.

Linked to the overall issue of education is the sub-issue of value education. It is

feared that the more we industrialize, greater will be the need for value education at
all levels. Although, we have been led to believe that India’s values are the best, the
western values are associated with progress, development, quick achievement, and
hence are being readily imbibed by the students. It has to be understood that there
is no particular set of values which guarantees success and that the societal values
must match with the organizational values and hence, values such as wisdom,
humility, rationality, intellectualism etc. will have to be inculcated in education at all
levels. In this context, India’s cultural values will need to be integrated with
The fiscal space generated in the 2004-05 to 2007-08 period, following the Fiscal
Responsibility Budget Management Act (FRBMA) mandate, mitigated on effects of
global financial and economic crisis in 2008-09 through an expansionary fiscal stance
to boost aggregate demand. Traditionally, assessment of public finances was
confined to analysis of fiscal indicators, but the macro-economy-wide impact of the
crisis underscored the importance of accounts data in tandem in such assessments.

In advanced economies, the operation of automatic stabilizers and discretionary

fiscal policies pursued to obviate the adverse impact of the global financial and
economic crisis was made possible by the space available and the largely cyclical
nature of the fiscal deficit. In India, the rapid and significant fiscal consolidation
achieved in the post-FRBMA period up to 2007-08 was indeed an important
achievement that enabled greater fiscal space for a macro-economic policy stance to
counteract the impact of the global economic crisis. As a proportion of the GDP, the
reductions in fiscal deficit in the period 2003-04 to 2007-08 were made possible in
equal measure by higher tax revenues and expenditure compression. This facilitated
use of both tax and expenditure measures in the expansionary fiscal policies to boost
demand. As such, the progress in fiscal consolidation in India is different from the
typical models elsewhere, which are driven purely by expenditure compression.

As the impact of the crisis continued through 2009-10, the expansionary fiscal stance
was continued in the Budget for 2009-10. Given the relative levels of shares of
private final consumption expenditure and government consumption expenditure,
such expansion could only be a short-term measure and the Medium Term Fiscal
Policy Statement presented along with the Budget for 2009-10 favoured a
resumption of the fiscal consolidation process, albeit a gradual one, with fiscal deficit
declining to 5.5 per cent of the gross domestic product (GDP) and 4.0 per cent of the
GDP in 2010-11 and 2011-12, respectively. In its report, the thirteenth Finance
Commission has traced the path of fiscal consolidation for the Centre and States. The
resumption of the path of fiscal prudence would complement the recovery process in
the near term and lay the foundation for reviving the growth momentum in the long

A low and stagnant tax-GDP ratio characterized Central government revenues for a
considerable period since 1990-91. This reflected in part the reform of the tax
structure through lower rates in indirect taxes and the levels of the tax base. The
rapid growth momentum in the post-FRBMA period helped change the composition of
taxes, deepen the process of rationalization of taxes and widen the base. As a
proportion of gross tax revenue, direct taxes rose from a level of 19.1 per cent in
1990-91 to reach 49.9 per cent in 2007-08; in 2008-09, they were at 55.5 per cent.

As a proportion of GDP, total expenditure fell from a level of 17.1 per cent in 2003-04
to 14.4 per cent in 2007-08, largely driven by the steep fall in capital expenditure.
Total expenditure was placed at Rs 8,81,469 crore in 2008-09, which implied a
growth of 23.7 per cent over 2007-08 levels and 17.4 per cent over that assumed in
2008-09. The front loading of Plan expenditure was evident in the rise in its
proportion to the GDP from a level of 4.1 per cent in 2007-08 to 4.9 per cent in 2008-
09. Thus, the reversal in major fiscal deficit indicators in 2008-09 and 2009-10 was a
policy-driven stimulus to counter the demand slowdown.

In the post-FRBMA period (2004-05 to 2007-08), average annual/compound growth

in total expenditure was 11.2 per cent, which compared favourably with the 12.2 per
cent in the previous four years. Within total expenditure, growth in capital
expenditure was again lower than that in revenue expenditure. Adjusting for one-off
distortions in capital expenditure, like redemption of securities of the National Small
Savings Fund in 2004-05 and the expenditure on acquisition of State Bank of India
(SBI) shares from the Reserve Bank of India (RBI), growth in capital expenditure
was more stable. While traditionally assessment of the trends in expenditure,
particularly in the context of the fiscal consolidation process, had focused on the
compression in terms of proportions of GDP, in view of the policy-driven expansion
process it would be useful to understand the magnitude and direction of the
expansion. In 2008-09 and 2009-10, the increase in total expenditure was of the
order of 23.7 per cent and 43.2 per cent, respectively, over the levels in 2007-08. In
2008-09, the main components of expenditure significantly higher than their 2007-
08 levels were major subsidies, social services, Plan expenditure and economic
services. In 2009-10, the major components of the expansion were interest
payments, defence, social services and economic services.

To an extent, rising interest payments reflect past consumption and do not

contribute to current productive uses and are primarily tax financed. They are a drag
on the present generation. Inter-generational equity concerns were one of the key
objectives of institutionalizing the fiscal consolidation process in the form of the
FRBMA. Interest payments appropriated substantial proportions of revenue receipts
and the efforts in the FRBMA period were to reduce the level of deficits and
incremental assumption of debt to contain the interest burden. Interest payments as
a proportion of revenue receipts declined from a level of 52.1 per cent in 1998-99 to
a level of 31.6 per cent in 2007-08. They were at the 35 per cent level in 2008-09 and
were budgeted at 36.7 per cent in 2009-10. The rise in the levels of gross market
borrowings in 2008-09 and 2009-10 has resulted in a reversal of the trend towards
fall in average cost of borrowings.

The global commodity price shock (particularly in crude petroleum) that preceded
the global financial crisis in 2008-09 led to a burgeoning of the subsidy bill and a
sharp rise in the below-the line issuance of bonds to oil and fertilizer companies. As a
proportion of GDP, major budgetary subsidies rose from 1.6 per cent in 2003-04 to
2.2 per cent in 2008-09 and were budgeted at 1.7 per cent in 2009-10. Besides, the
above below-the-line issuance of oil and fertilizer bonds was of the order of 1.7 per
cent of GDP in 2008-09. The Budget for 2009-10, recognizing the importance of
institutional reforms, announced the intention to move towards a nutrient-based
subsidy regime in respect of fertilizers and ultimately towards direct cash transfers
and the setting up of an expert to advise on a viable and sustainable system of
pricing for petroleum products.

Finances of State governments

Following the adoption of Fiscal Responsibility Legislations (FRLs), the combined
finances of the States exhibited a faster than anticipated turnaround in 2005-06,
with the level of fiscal deficit at 2.4 per cent of the GDP. There were, however, large
variations amongst States, with Assam having a fiscal surplus of 0.6 per cent of the
Gross State Domestic Product (GSDP) and Mizoram having a high fiscal deficit of 14.7
per cent of the GSDP in 2005-06. States combined posted a revenue surplus in 2006-
07. The record of fiscal consolidation of the States combined was indeed remarkable
and was facilitated by the growth in their own revenues following the successful
adoption of State-level Value-Added Tax (VAT), the buoyancy in Central taxes, the
higher levels of transfers and the scheme of Debt Consolidation and Waiver linked to
fiscal consolidation.

In 2008-09, there was a growth of 15.3 per cent in States’ own tax revenues and
26.6 per cent in non-tax receipts. However, with higher levels of disbursements,
which grew by 26 per cent, fiscal deficit went up to a level of 2.6 per cent of the GDP
but was still well below the 3.0 per cent level mandated by the FRLs. With the
relaxation in State-level fiscal targets to obviate the adverse impact of the global
crisis, revenue deficit of 0.6 per cent of the GDP and fiscal deficit of 3.2 per cent of
the GDP was budgeted in 2009-10.

The Debt Consolidation and Relief Facility (DCRF) has two components: (i)
consolidation of Central loans (from the Ministry of Finance) contracted till March 31,
2004 and outstanding as on March 31, 2005 and (ii) provision of interest relief and
grant of debt waiver to States based on their fiscal performance. Consolidation of
Central loans has given interest relief to States. Debt waiver is granted to States
based on their fiscal performance, for which an assessment is made annually.
Benefits under the DCRF helped States by easing debt and interest pressures and
also incentivized States to follow the path of fiscal correction.

So far, Central loans to 26 out of 28 States have been consolidated to the extent of
Rs 1,13,601.1 crore. From 2005 to 2009, States have been granted debt waivers for
an aggregate amount of Rs 22,039.4 crore and interest relief of Rs 18,688.5 crore.

Typically, the fiscal responsibility rules world over are anchored in balanced budget
and debt targets with clear differences in framework across advanced economies and
developing countries. In India, under the FRBMA, the rule focused on incremental
assumption of liabilities. By and large this rule was adhered to in the post-FRBMA
period; since 2008-09, there has been a rise in the assumption of net incremental
liabilities as a result of the expansionary fiscal policy stance. As a result, with the
revised GDP series (2004-05) released by the CSO, the ratio of outstanding liabilities
to the GDP after falling from a level of 61.6 per cent in 2004-05 to 56.3 per cent in
2008-09, has risen marginally to 56.7 per cent in 2009-10. Internal debt, mainly
market borrowings, continues to be the main component of outstanding liabilities.

The full picture of public finances and their impact on the macro-economy is best
analysed through the levels of deficits in the consolidated General Government. As a
proportion of the GDP, revenue receipts of the consolidated General Government rose
from a level of 19.0 per cent in 2004-05 to reach a level of 21.2 per cent in 2007-08.
They were budgeted at 20.5 per cent in 2009-10. With total disbursements remaining
at more or less the same levels in four years ending 2007-08, the combined revenue
and fiscal deficit came down. In fact, the combined levels of deficit were much lower
than the levels (sum of Centre and States) mandated by the FRBMA and State-level
FRLs. Reflecting the overall expansion to stimulate demand, fiscal and revenue
deficit for 2009-10 is placed at 9.7 and 5.2 per cent of the GDP. STATE OF
Readers will find this feature useful in their preparations for Civil Services Exam and
other similar UPSC and SSC exams. The information provided is also useful for Bank
P.O. and Bank Clerk Recruitment exam preparations as also any competitive exam
[MBA, NDA, CDS, IFS, IES etc] in which questions on General Awareness or General
Knowledge and Current Affairs are asked.

In the second half of 2008-09 there was a significant slowdown in the growth rate,
following the financial crisis that hit the world in 2007. The fiscal year 2009-10, thus,
began on a difficult note. There was apprehension that the slow-down will continue
to affect the economy thus making 2009-10 a difficult year.

However, 2009-10 turned out to be a year of reckoning for the policy makers, who
took a calculated risk by providing substantial fiscal expansion to counter the
negative fallout of the global slowdown.

The downside of the fiscal stimulus was that India’s fiscal deficit increased, reaching
6.8 per cent of GDP in 2009-10. A sub-normal monsoon added to the overall

Despite all odds the economy, at the end of the financial year, posted a remarkable
recovery, not only in terms of overall growth figures but, more importantly, in terms
of certain fundamentals, which justify optimism for the Indian economy in the
medium to long term.

The real turnaround came in the second quarter of 2009-10 when the economy grew
by 7.9 per cent. As per the advance estimates of GDP for 2009-10, released by the
Central Statistical Organisation (CSO), the economy is expected to grow at 7.2 per
cent in 2009-10, with the industrial and the service sectors growing at 8.2 and 8.7
per cent respectively.

This recovery is impressive for at least three reasons. First, it has come about despite
a decline of 0.2 per cent in agricultural output, which was the consequence of sub-
normal monsoons. Second, it fore-shadows renewed momentum in the
manufacturing sector, which had seen continuous decline in the growth rate for
almost eight quarters since 2007-08. Indeed, manufacturing growth has more than
doubled from 3.2 per cent in 2008-09 to 8.9 per cent in 2009-10. Third, there has
been a recovery in the growth rate of gross fixed capital formation, which had
declined significantly in 2008-09 as per the revised National Accounts Statistics
(NAS). While the growth rates of private and government final consumption
expenditure have dipped in private consumption demand, there has been a pick-up in
the growth of private investment demand.

There has also been a turnaround in merchandise export growth in November 2009,
which has been sustained in December 2009, after a decline nearly twelve
continuous months.

The broad- based nature of the recovery created scope for a gradual rollback, in due
course, of some of the measures undertaken to overcome global slowdown effects on
Indian economy, so as to put the economy back on to the growth path of 9 per cent
per annum.

The emergence of high double-digit food inflation during the second half of the
financial year 2009-10 was a major cause of concern. On a year-on-year basis,
wholesale price index (WPI) headline inflation in December 2009 was 7.3 per cent,
but for food items (primary and manufactured), with a combined weight of 25.4 per
cent in the WPI basket, it was 19.8 per cent. A significant part of this inflation was
due to supply-side bottle-necks in some of the essential commodities, precipitated by
the delayed and sub-normal southwest monsoons.

Overall GDP growth

The CSO has effected a revision in the base year from 1999-2000 to 2004-05. It
includes changes on account of certain refinements in definitions of some
aggregates, widening of coverage, inclusion of long-term survey results and the
normal revision in certain data in respect of 2008-09. While there are no major
changes in the overall growth rate of GDP at constant 2004-05 prices, except for
2007-08 where it has been revised upward from 9.0 to 9.2 per cent, there are some
changes in growth rates at sectoral level and in the level estimates of GDP.

The contribution of the agriculture sector to the GDP at factor cost in 2004-05 has
declined from 17.4 per cent in the old series to 15.9 per cent in the new series.
Similarly, while the contribution of registered manufacturing has declined from 10.9
per cent in the old series to 9.9 per cent in the new series, that of unregistered
manufacturing has increased from 4.9 to 5.4 per cent.

There is also an increase in the contribution of real estate, ownership of dwellings

and business services from 8.2 per cent to 8.9 per cent.

In the case of level estimates of GDP at current prices, the difference ranges from 3.1
per cent in 2004-05 to 6 per cent in 2008-09. As a result, there are also changes in
the expenditure estimates of the GDP.

The advance estimate of GDP growth at 7.2 per cent for 2009-10, falls within the
range of 7 +/- 0.75 projected nearly a year ago in the Economic Survey 2008-09.
With the downside risk to growth due to the delayed and sub-normal monsoons
having been contained to a large extent, through the likelihood of a better-than-
average rabi agricultural season, the economy responded well to the policy measures
undertaken in the wake of the global financial crisis. While the GDP at factor costs at
constant 2004-05 prices, is placed at Rs 44,53,064 crore, the GDP at market prices,
at constant prices, is estimated at Rs 47, 67,142 crore. The corresponding figures at
current prices are Rs 57,91,268 crore and Rs 61, 64,178 crore, respectively.

The recovery in GDP growth for 2009-10 is broad based. Seven out of eight
sectors/sub-sectors show a growth rate of 6.5 per cent or higher. The exception is
agriculture and allied sectors where the growth rate is estimated to be minus 0.2 per
cent over 2008-09. Sectors, including mining and quarrying, manufacturing; and
electricity, gas and water supply have significantly improved their growth rates at
over 8 per cent in comparison with 2008-09.

The construction sector and trade, hotels, transport and communication have also
improved their growth rates over the preceding year, though to a lesser extent.
However, the growth rate of community, social and personal services has declined
significantly, though it continues to be around its pre-global crisis medium-term
trend growth rate.

Financing, insurance, real estate and business services have retained their growth
momentum at around 10 per cent in 2009-10.

In terms of sectoral shares, the share of agriculture and allied sectors in GDP at
factor cost has declined gradually from 18.9 per cent in 2004-05 to 14.6 per cent in
2009-10. During the same period, the share of industry has remained the same at
about 28 per cent, while that of services has gone up from 53.2 per cent in 2004-05
to 57.2 per cent in 2009-10.

Per capita growth

The growth rates in per capita income and consumption, which are gross measures of
welfare in general, have declined since 2008. This is a reflection of the slowdown in
the overall GDP growth. While the growth in per capita income, measured in terms of
GDP at constant market prices, has declined from a high of 8.1 per cent in 2007-08 to
3.7 per cent in 2008-09 and then recovered to 5.3 per cent in 2009-10, per capita
consumption growth as captured in the private final consumption expenditure (PFCE)
shows a declining trend since 2007-08 with its growth rate in 2009-10 falling to one-
third of that in 2007-08. The average growth in per capita consumption over the
period 2005-06 to 2009-10 was slower at 6.08 per cent than that in per capita
income at 6.52 per cent. These year to year differences in growth rates can be
explained by the rising savings rate and also the rise in tax collections that have
been observed in some of these years.

Aggregate demand and its composition

The change in the base year, from 1999-2000 to the new base of 2004-05, has
brought about significant revision in the expenditure estimates of the GDP for 2008-
09. Whilegrowth of the PFCE in 2008-09 was revised upward from 2.9 per cent to 6.8
per cent, growth in government final consumption expenditure was revised
downwards from over 20 per cent in 2008-09 on the old base to 16.7 per cent on the
new base. In 2009-10 a growth of 4.1 per cent is expected in private final
expenditure and 8.2 per cent in government final expenditure.

There is a significant decline in the growth of consumption expenditure in 2009-10.

However, the overall share of consumption expenditure, both private as well as
government in GDP at market prices, at constant 2004-05 prices, has declined only
marginally from 70.9 per cent in 2008-09 to 69.6 per cent in 2009-10.

At the same time, the growth rate of gross fixed capital formation in 2008-09 has
also undergone a revision. It was revised downward from 8.2 per cent in the earlier
base to 4 per cent in the revised base for 2008-09. It is, however, estimated to grow
by 5.2 per cent in 2009-10.

With growth in private expenditure on food, beverages and tobacco falling behind the
overall growth in private consumption expenditure, the share of expenditure on food
items has gradually been declining over the years. As per the CSO data, it was 35.3
per cent in 2008-09 as against 39.6 per cent in 2004-05. At the same time, the
growth in expenditure on transport and communication and miscellaneous goods and
services has been increasing, though with occasional aberrations, with the result
that together they account for nearly the same share in total private consumption as
the expenditure on food items.

Total foodgrains production in 2008-09 was estimated at 233.88 million tonnes as
against 230.78 million tonnes in 2007-08 and 217.28 million tonnes in 2006-07. In
the agricultural season 2009-10, the impact of the delayed and sub-normal monsoon
is reflected in the production and acreage data for kharif crops. As per the first
advance estimates, covering only the kharif crop, production of foodgrains is
estimated at 98.83 million tonnes in 2009-10, as against the fourth advance
estimates of 117.70 million tonnes for the kharif crop in 2008-09 and a target of
125.15 million tonnes for 2009-10.
Overall production of kharif cereals in 2009-10 has shown a decline of 18.51 million
tonnes over 2008-09.

In terms of acreage, the kharif 2009-10 season saw a decline of nearly 6.5 per cent
or 46.18 lakh ha in the area covered under foodgrains. Almost the entire decline in
this acreage was confined to the kharif rice crop. Some of this decline in acreage may
have been made up by the increased acreage in the rabi season.

Industry and Infrastructure

The cyclical slowdown in the industrial sector, which began in 2007-08 and got
compounded by the global commodity price shock and the impact of the global
slowdown during the course of 2008, was arrested at the beginning of 2009-10. After
the first two months of 2009-10, there were clear signs of recovery. While the CSO’s
advance estimates place industrial-sector growth at 8.2 per cent, as against 3.9 per
cent in 2008-09, the IIP industrial growth is estimated at 7.7 per cent for the period
April-November 2009-10, significantly up from 0.6 per cent during the second half of
2008-09. The manufacturing sector, in particular, has grown at the rate of 8.9 per
cent in 2009-10.

Core industries and infrastructure services, led by the robust growth momentum of
telecom services and spread across power, coal and other infrastructure like ports,
civil aviation and roads, have also shown signs of recovery in 2009-10. In the current
fiscal, electricity generation emerged from the lacklustre growth witnessed in the
previous year and equalled its performance in 2007-08. That this was achieved
despite constraints imposed by the inadequate availability of coal and the dismal
hydel generation scenario due to the sub-normal monsoon, attests well to its

The domestic supply of crude oil remained around 34 million metric tonnes (mmt)
and natural gas at about 32 billion cubic metric tonnes during the past five years.
With 15 new oil and gas discoveries during 2009-10, the domestic availability is
expected to improve. During 2009-10, the projected production for crude oil is 36.7
mmt, which is about 11 per cent higher than the actual crude oil production of 33.5
mmt in 2008-09.

In 2009-10, as against the stipulated target of developing about a 3,165 km

ofnational highways under various phases of the National Highway Development
Project (NHDP), the achievement up to end November 2009 has been about 1,490
km. Similarly, as against the 2009-10 target of about 9,800 km for awarding projects
under various phases of the NHDP, projects totalling a length of about 1,285 km have
been awarded up to end November 2009.

The service sector which has been India’s workhorse for well over a decade has
continued to grow rapidly. Following the NAS classification, it comprises the sub-
sectors trade, hotels, transport and communications; financing, insurance, real
estate and business services; and community, social and personal services. As
against a growth of 9.8 per cent in 2008-09 it grew at 8.7 per cent in 2009-10.

Savings and investments

Gross domestic savings (GDS) at current prices in 2008-09 were estimated at Rs
18,11,585 crore, amounting to 32.5 per cent of GDP at market prices as against 36.4
per cent in the previous year. The fall in the rate of GDS has mainly been due to the
fall in the rates of savings of the public sector (from 5.0 per cent in 2007-08 to 1.4
per cent in 2008-09) and private corporate sector (from 8.7 per cent in 2007-08 to
8.4 per cent in 2008-09).

In respect of the household sector, the rate of saving has remained at the same level
of 22.6 per cent in 2007-08 and 2008-09. The rate of GDS on the new series
increased from 32.2 per cent in 2004-05 to 36.4 per cent in 2007-08 before declining
to 32.5 per cent in 2009-10, as against the old series where it rose from 31.7 per
cent in 2004-05 to 37.7 per cent in 2007-08.

Gross domestic capital formation (GDCF) at current prices (adjusted for errors and
omissions) increased from Rs18,65,899 crore in 2007-08 to Rs19,44,328 crore in
2008-09 and at constant (2004-05) prices, it decreased from Rs16,22,226 crore in
2007- 08 to Rs15,57,757 crore in 2008-09. The rate of gross capital formation at
current prices rose from 32.7 per cent in 2004-05 to 37.7 per cent in 2007-08 before
declining to 34.9 per cent in 2008-09.

The sectoral investment rate is a useful indicator of the direction of new

investments. While the overall growth of investment in India was in the range of 15
to 16 per cent per annum during the last few years, it plunged to -2.4 per cent in
2008-09 as a result of the external shock-led slowdown. At sectoral level, there has
been a welcome rebound in the growth rate of investment in the agricultural sector,
which grew at 16.5 per cent and 26.0 per cent in 2007-08 and 2008-09 respectively.
This is in contrast to the growth rate of 1.4 per cent recorded in

Prices and Inflation

The year-on-year WPI inflation rate was fairly volatile in 2009-10. It was 1.2 per
cent in March 2009 and then declined continuously to become negative during June-
August 2009, assisted in part by the large statistical base effect from the previous
year. It turned positive in September 2009 and accelerated to 4.8 per cent in
November 2009 and further to 7.3 per cent in December 2009. For March to
December 2009 period WPI inflation was estimated at 8 per cent.

Year-on-year inflation in the composite food index (with a weight of 25.4 per cent) at
19.8 per cent in December 2009 was significantly higher than 8.6 per cent in
previous year. In respect of food articles, inflation on year-on-year basis in
December was 19.2 per cent and on fiscal-year basis (i.e. over March 2009) it was
18.3 per cent. At the same time, the composite non-food inflation within the
manufactured group of the WPI (with a weight of 53.7 per cent) at 2.4 per cent in
December 2009, was lower than the 6.7 per cent recorded in previous year.

A significant part of this inflation can be explained by supply-side bottlenecks in

some of the essential commodities, precipitated by the delayed and sub-normal
south-west monsoons as well as drought-like conditions in some parts of the
country. The delayed and erratic monsoons may also have prevented the seasonal
decline in prices, normally seen during the period from October to March for most
food articles other than wheat, from setting in. At the same time, it could be argued
that excessive hype about kharif crop failure, not taking into account the comfortable
situation in respect of food stocks and the possibility of an improved rabi crop, may
have exacerbated inflationary expectations encouraging hoarding and resulting in a
higher inflation in food items. This is supported by the estimates on shortfall in
production/availability of major food items in 2009-10 for rice and wheat, as also for
some other items, except pulses. In the case of sugar, delay in the market release of
imported raw sugar may have contributed to the overall uncertainty, thereby
allowing prices to rise to unacceptably high levels in recent months.

The implicit deflator for GDP at market prices defined as the ratio of GDP at current
prices to GDP at constant prices is the most comprehensive measure of inflation on
annual basis, Unlike the WPI, the GDP deflator also covers prices in the services
sector which now accounts for well over 55 per cent of the GDP. Overall inflation, as
measured by the aggregate deflator for GDPMP, increased from 4.7 per cent in 2005-
06 to 5.6 per cent in 2006-07 and then declined to 5.3 per cent in 2007-08, before
rising again to 7.2 per cent in 2008-09. It has been estimated at 3.6 per cent in
2009-10 as per the advance estimates.

External-sector Developments
The global economy, led by the Asian economies especially China and India, has
shown signs of recovery in fiscal 2009-10. While global trade is gradually picking up,
the other indicators of economic activity such as capital flows, assets and commodity
prices are more buoyant.

As per the latest data for fiscal 2009-10, exports and imports showed substantial
decline during April-September (H1) of 2009-10 vis-à-vis the corresponding period in
2008-09. However, there has been improvement in the balance of payments (BoP)
situation during H1 of 2009-10 over H1 of 2008-09, reflected in higher net capital
inflows and lower trade deficit. The trade deficit was lower at US$ 58.2 billion during
H1 (April-September) of 2009 as compared to US$ 64.4 billion in April-September
2008 mainly on account of decline in oil import.

The net invisibles surplus (invisibles receipts minus invisibles payments) stood lower
at US$ 39.6 billion during April-September of 2009 as compared to US$ 48.5 billion
during April-September 2008. The current account deficit increased to US $ 18.6
billion in April-September 2009, despite a lower trade deficit, as compared to US $
15.8 billion in April-September 2008, mainly due to the lower net invisibles surplus.

Net capital flows to India at US $ 29.6 billion in April-September 2009 remained

higher as compared to US $ 12.0 billion in April-September 2008. All the components,
except loans and banking capital that comprise net capital flows, showed
improvement during April-September 2009 from the level in the corresponding
period of the previous year.

Net inward FDI into India remained buoyant at US$ 21.0 billion during April-
September 2009 (US $ 20.7 billion in April-September 2008) reflecting better growth
performance of the Indian economy. Due to large inward FDI, the net FDI (inward
FDI minus outward FDI) was marginally higher at US$ 14.1 billion in April-
September 2009, reflecting better growth performance of the Indian economy.

Portfolio investment mainly comprising foreign institutional investors’ (FIIs)

investments and American depository receipts (ADRs)/global depository receipts
(GDRs) witnessed large net inflows (US $ 17.9 billion) in April-September 2009 (net
outflows of US $ 5.5 billion in April-September 2008) due to large purchases by FIIs
in the Indian capital market reflecting revival in growth prospects of the economy
and improvement in global investors’ sentiment.

Given the uncertain global context, the government did not fix an export target for
2009-10. Instead, the Foreign Trade Policy (FTP) 2009-14 set the objective of
anannual export growth of 15 per cent with an export target of US$ 200 billion by
March 2011. With the deepening of the global recession, the beginning of 2009-10
saw acceleration in the fall of export growth rate. The upwardly revised export
figures for the first half of 2008-09 also contributed to the faster decline in the
growth rate. While the export growth rate was a negative 22.3 per cent in April-
November 2008-09, in November 2009, it became a positive 18.2 per cent after a 13-
month period of negative growth. This significant turnaround is due to the low base
figures in November 2008 (at $11.2 billion compared to $14.1 billion in October 2008
and $13.4 billion in December 2008). The export growth rate in November 2009 over
October 2009 was marginally positive at 0.04 per cent. In December 2009 the
recovery in export growth has continued with a positive year-on-year growth of 9.3
per cent and a growth of 10.7 per cent over the previous month.

During 2009-10 (April-December) import growth was a negative 23.6 per cent
accompanied by a decline in both POL and non-POL imports of 29.8 per cent and 20.7
per cent respectively. Gold and silver imports registered negative growth of 7.3 per
cent primarily on account of the volatility in gold prices. The continuous rise in prices
of gold also dampened the demand. Non-POL non-bullion imports declined by 22.4
per cent reflecting slowdown in industrial activity and lower demand for exports.
Import growth was at a positive 27.2 per cent in December 2009 due partly to the
base effect and partly the 42.8 per cent increase in the growth of POL products with
the pick-up in oil prices and industrial demand. Non-POL items also registered a
significant growth in imports at 22.4 per cent, despite a high negative growth of gold
and silver imports.

Trade deficit fell by 28.2 per cent to US$ 76.2 billion (as per customs data) in 2009-
10 (April– December) from US$ 106 billion in the corresponding period of the
previous year. There have been significant changes in the composition and direction
of both exports and imports in this period.

During fiscal 2009-10, foreign exchange reserves increased by US$ 31.5 billion from
US$ 252.0 billion in end March 2009 to US$ 283.5 billion in end December 2009. Out
of the total accretion of US$ 31.5 billion, US$ 11.2 billion (35.6 per cent) was on BoP
basis (i.e excluding valuation effect), because of higher inflows under FDI and
portfolio investments, while accretion of US$ 20.3 billion (64.4 per cent) was on
account of valuation gain due to weakness of the US dollar against major currencies.

Besides, the Reserve Bank of India (RBI) concluded the purchase of 200 metric
tonnes of gold from the IMF, under the IMF’s limited gold sales programme at the
cost of US$ 6.7 billion in the month of November 2009. Further, a general allocation
of SDR 3,082 million (equivalent to US$ 4,821 million) and a special allocation of SDR
214.6 million (equivalent to US$ 340 million) were made to India by the IMF on
August 28, 2009 and September 9, 2009, respectively.

Monetary Policy
Since the outbreak of the global financial crisis in September 2008, the RBI followed
an accommodative monetary policy. In the course of 2009-10, this stance was
principally geared towards supporting early recovery of the growth momentum,
while facilitating the unprecedented borrowing requirement of the government to
fund its fiscal deficit. The fact that the latter was managed well with nearly two-
thirds of the borrowing being completed in the first half of the fiscal year not only
helped in checking undue pressure on interest rates, but also created the space for
the revival of private investment demand in the second half of the year.

The transmission of monetary policy measures continues to be sluggish and

differential in its impact across various segments of the financial markets. The
downward revisions in policy rates announced by the RBI post-September 2008 got
transmitted into the money and G-Sec markets; however, the transmission was slow
and lagged the in the case of the credit market. Though lending rates of all
categories of banks (public, private and foreign) declined marginally from March
2009 (with benchmark prime lending rates [BPLR] of scheduled commercial banks
[SCBs] having declined by 25 to 100 basis points), the decline was not sufficient to
accelerate the demand for bank credit. Consequently, while borrowers turned to
alternate sources of possibly cheaper finance to meet their funding needs, banks
flush with liquidity parked their surplus funds under the reverse repo window.

Demand for bank credit/non-food credit remained muted during 2009-10. It was
only from November 2009 that some signs of pick-up became evident. On financial-
year basis (over end March), growth in non-food credit remained negative till June
2009. It picked up thereafter, only to hover between 0.0 to 1.8 per cent till mid-
September 2009. Consistent growth in non-food credit was recorded only after
November 2009.

Growth in sectoral deployment of gross bank credit on a year-on-year basis (as on

November 20, 2010) shows that retail credit has not picked up during 2009-10.
While growth in credit to agriculture remained more or less the same as on the
corresponding date of the preceding year, for the other broad sectors–industry,
personal loans and services—growth in credit decelerated as compared to the
corresponding period of the preceding year.

Fiscal Policy Developments

The fiscal expansion undertaken by the Central government as a part of the policy
response to counter the impact of the global economic slowdown in 2008-09 was
continued in fiscal 2009-10. The expansion took the form of tax relief to boost
demand and increased expenditure on public projects to create employment and
public assets. The net result was an increase in fiscal deficit from 2.6 per cent in
2007-08 to 5.9 per cent of the revised GDP (new series) in 2008-09 (provisional) and
6.5 per cent in the budget estimates for 2009-10 (as against 6.8 per cent of the GDP
on the old series, reported earlier). Thus the fiscal stimulus amounted to 3.3 per cent
of the GDP in 2008-09 and 3.9 per cent in 2009-10 from the level of the fiscal deficit
in 2007-08.

As part of the fiscal stimulus, the government also enhanced the borrowing limits of
the State governments by relaxing the targets by 100 basis points. As a result, the
gross fiscal deficit of the States combined rose from 1.4 per cent of the GDP in 2007-
08 to 2.6 per cent in 2008-09 (revised estimates [RE]) and was estimated at 3.2 per
cent of the GDP in 2009-10 (BE).

The relative success of the fiscal stimulus in supporting effective demand,

particularly the consumption demand, in 2008-09 and 2009-10 could be traced to its
composition. The approach of the government was to increase the disposable income
in the hands of the people, for instance by effecting reductions in indirect taxes
(excise and service tax) and by expanding public expenditure on programmes like
the National Rural Employment Guarantee Act (NREGA) and on rural infrastructure.

The implementation of the Sixth Pay Commission recommendations and the debt
relief to farmers also contributed to this end. The fact that the approach worked is
attested to by the GDP growth rate and more specifically by the growth in private
consumption demand in 2008-09 and also in 2009-10 as reflected in the relevant
data on the NAS new series. Consumption expenditure, by its very nature, has short
lags, and affects demand quickly, with little or no effect on productivity, while
productive infrastructure expenditure takes much longer to translate into effective
demand. The recovery having taken root now necessitates a review of public
spending. It has to be geared towards building medium-term productivity of the
economy and making up for the decline in investment growth in certain sectors of
the economy.

Social-sector Development
Fiscal 2009-10 saw the strengthening of several public initiatives and programmes
with a view to cushioning the impact of the global slowdown on the more vulnerable
segments of the population in the country. While some of these programmes were a
part of the ongoing interventions to give effect to a more inclusive development
strategy, there were some measures that were undertaken as a direct response to
the slowdown of growth, especially in the tradable sectors of the economy. Thus
emphasis in favour of higher allocation to social-sector development given in recent
years continued to be reflected in the allocations under the Union Budget 2009-10.
Theshare of Central government expenditure on social services, including rural
development in total expenditure (Plan and non-Plan), increased to 19.46 per cent in
2009-10 (BE) from about 10.46 per cent in 2003-04. Similarly, expenditure on social
services by general government (Centre and States combined) as a proportion of
total expenditure increased from 19.9 per cent in 2004-05 to 23.8 per cent in 2009-
10 (BE).

A major concern was regarding the possibility of a rise in unemployment due to the
slowdown of the economy. While comprehensive employment data for the current
financial year are not available, some sample surveys conducted by the Labour
Bureau, Ministry of Labour and Employment, government of India, indicated job
losses in the wake of the global financial crisis, which seemed to reverse in later part
of 2009-10. Employment is estimated to have declined by 4.91 lakh during the third
quarter (October-December) of 2008; it increased by 2.76 lakh during January-March
2009, followed by a decline of 1.31 lakh during April-June 2009, and then an increase
of 4.97 lakh during the second quarter (July-September) 2009.

Under the NREGA, which is a major rural employment initiative, during the year
2009-10, 4.34 crore households were provided employment till December 2009.

Road Ahead
There are some deep changes that have taken place in India, which suggest that the
economy’s fundamentals are strong. First, the rates of savings and investment have
reached levels that even ten years ago would have been dismissed as a pipedream
for India. On this important dimension, India is now completely a part of the world’s
fast growing economies.

In 2008-09 gross domestic savings as a percentage of GDP were 32.5 per cent and
gross domestic capital formation 34.9 per cent. These figures, which are a little lower
than what had been achieved before the fiscal stimulus was put into place, fall
comfortably within the range of figures one traditionally associated with the East
Asian economies. Since these indicators are some of the strongest correlates of
growth and do not fluctuate wildly, they speak very well for India’s medium-term
growth prospects. It also has to be kept in mind that as the demographic dividend
begins to pay off in India, with the working age-group population rising
disproportionately over the next two decades, the savings rate is likely to rise
Second, the arrival of India’s corporations in the global market place, and informal
indicators of the sophisticated corporate culture that many of these companies
exhibit, lends to the optimistic prognosis for the economy in the medium to long run.

In the medium term it is reasonable to expect that the economy will go back to the
robust growth path of around 9 per cent that it was on before the global crisis
slowed it down in 2008. To begin with, there has been a revival in investment and
private consumption demand, though the recovery is yet to attain the pre-2008
momentum. Second, Indian exports have recorded impressive growth in November
and December 2009 and early indications of the January 2010 data on exports are
also encouraging. Further, infrastructure services, including railway transport,
power, telecommunications and, more recently but to a lesser extent, civil aviation,
have shown a remarkable turnaround since the second quarter of 2009-10. The
favourable capital market conditions with improvement in capital flows and business
sentiments, as per the RBI’s business expectations survey, are also encouraging.
Finally, the manufacturing sector has been showing a buoyancy in recent months
that was rarely seen before. The growth rate of the index of industrial production for
December 2009 was a remarkable 16.8 per cent. There is also a substantial pick-up
in corporate earnings and profit margins.

Hence, going by simple calculations based on the above-mentioned variables,

coupled with the fact that agriculture did have a set-back in 2009 and is only
gradually getting back to the projected path, a reasonable forecast for the year
2010-11 is that the economy will improve its GDP growth by around 1 percentage
point from that witnessed in 2009-10. Thus, allowing for factors beyond the reach of
domestic policy-makers, such as the performance of the monsoon and rate of
recovery of the global economy, the Indian GDP can be expected to grow around 8.5,
with a full recovery breaching the 9 per cent mark in 2011-12.


The performance of the agricultural sector influences the growth of the Indian economy.
Agriculture (including allied activities) accounted for 17.8 per cent of the Gross
Domestic Product (GDP-at constant prices) in 2007-08, as compared to 21.7 per cent
in 2003-04.

Notwithstanding the fact that the share of this sector in GDP has been declining over
the years, its role remains critical as it accounts for about 52 per cent of the
employment in the country. Apart from being the provider of food and fodder, its
importance also stems from the raw materials that it provides to industry. The
prosperity of the rural economy is also closely linked to agriculture and allied
activities. The rural sector (including agriculture) is being increasingly seen as a
potential source of domestic demand; a recognition, that is shaping the marketing
strategies of entrepreneurs wishing to widen the demand for goods and services.

In terms of composition, out of the total share of 17.8 per cent in GDP in 2007-08 for
the agriculture and allied activities sector, agriculture alone accounted for 16.3 per
cent of GDP, followed by fishing at 0.8 per cent and forestry and logging at 0.7 per
cent of GDP.

Area, Production and Yield

Growth in the production of agricultural crops depends on acreage and yield.
Limitations in the expansion of agricultural land suggest that increase in gross
cropped area can come from multiple cropping. In view of this, the main source of
long-term output growth is improvement in yield.

Compound growth rates of index of area under rice showed a negative growth of (-)
0.1 per cent per annum during 2001-08, compared to the 1990s. Area under rice
cultivation has remained more or less stagnant in the recent years while growth in
yield has shown an increase.

Area under wheat, that was around 25 million hectares in 2002-03, increased to 26.4
million hectares in 2005-06 and further to 28 million hectares in 2007-08. The
coverage under irrigation has been about 87 to 89 per cent of area for wheat. The
compound growth rates of indices of area, production and yield of wheat during
1991-2000 and 2001-08 show a perceptible decline.

Cotton occupies an important place among the cash crops in India. Cotton is grown in
nine major States namely, Punjab, Haryana, North Rajasthan, Gujarat, Maharashtra,
Madhya Pradesh, Andhra Pradesh, Karnataka and Tamil Nadu. Area under cotton
increased from 7.60 million hectares in 2003-04 to 9.43 million hectares in 2007-08.
The yield of cotton went up from 307 kgs per hectare in 2003-04 to 466 kgs per
hectare in 2007-08. The compound growth in index of yield has shown an increase
from (-) 0.4 per cent during the 1990s to 15.8 per cent during 2001-08. However, the
growth in index of area moderated, but remained positive. The combined effect on
index of production was an increase in growth from 2.3 per cent during the 1990s to
17.5 per cent during 2001-08.

During 2008-09 the area sown at all-India level under kharif was 2.3 per cent less
than the area sown in 2007-08 of 1,039.23 lakh hectares. As on March 27, 2009, area
sown under all rabi crops taken together has been reported to be higher at 638.33
lakh hectares, as compared to 619.68 lakh hectares in the corresponding period of

Agricultural Inputs
Improvement in yield, which is a key to long-term growth, depends on a host of
factors that include technology, use of quality seeds, fertilizers and pesticides and
micro-nutrients, and, not the least, irrigation. Each of these plays a role in
determining the yield level and in turn the augmentation in the level of production.

The first decisive step that a farmer takes relates to sowing. The availability of
quality seeds (among other factors) makes a critical difference to output growth. In
India, more than four-fifths of the farmers rely on farm-saved seeds, leading to a low
seed replacement rate.

The Indian Seed Programme includes the participation of Central and State
governments, the Indian Council of Agricultural Research (ICAR), State agricultural
universities and the cooperatives and private players. There are 15 State seed
corporations besides two national level corporations, viz. the National Seeds
Corporation and the State Farms Corporation of India. Indian seeds programme
recognizes three kinds of seed generation, viz. breeder, foundation and certified
seeds. Production of breeder and foundation seeds during 2008-09 is anticipated at
1.00 lakh quintals and 9.69 lakh quintals, respectively, and the distribution of
certified/quality seeds at about 190.0 lakh quintals.

The Ministry of Agriculture is implementing a Central sector scheme, “Development

and Strengthening of Infrastructure Facilities for Production and Distribution of
Quality Seeds”, on all-India basis since 2005-06. The scheme is aimed at making
available quality seeds of various crops to the farmers at affordable price, and in
time, so as to enhance seed replacement rate, boost seed production in private
sector and help the public sector seed companies to contribute in enhancing seed

A major thrust under the scheme is on improving quality of farm-saved seeds

through“Seed Village Programme,” under which more than 25,000 seed villages have
been organized during 2008-09 across the country. Certified/quality seed production
has increased from 194.31 lakh quintals during 200607 to 250.35 lakh quintals
during 2008-09.

The seed component of the Prime Minister’s Relief Package for distressed farmers is
being implemented in 31 suicide-affected districts in four States of Maharashtra,
Andhra Pradesh, Karnataka and Kerala. Under the scheme, certified seeds are
supplied at 50 per cent of the seed cost to the farmers in such affected districts.
During the year 2008-09, an amount of Rs. 445.81 crore was released under the PM’s
Relief Package.

The Protection of Plant Varieties and Farmers’ Rights (PPV&FR) Authority was
established in November 2005. The Authority has the mandate to implement
provisions of the PPV&FR Act, 2001. Fourteen crops, namely, rice, bread wheat,
maize, sorghum, pearl millet, chickpea, pigeon pea, green gram, black gram, lentil,
field pea, kidney bean, cotton and jute were notified for the purpose of registration
under the Act. The Authority has plans to extend its coverage to forestry, aromatic
agriculture and food management and medicinal plants.

In response to the changes that have taken place in the seed sector, the existing
Seeds Act, 1966 is proposed to be replaced by a suitable legislation to, inter alia, (i)
create a facilitative climate for growth of the seed industry so as to enhance seed
replacement rates, boost the export of seeds and encourage import of useful
germplasm, create a conducive atmosphere for application of frontier sciences in
varietal development and for enhanced investment in related R&D.

The government of India has taken up irrigation potential creation through public
funding and assisting farmers to create potential on their own farms. Substantial
irrigation potential has been created through major and medium irrigation
schemes.The total irrigation potential in the country has increased from 81.1 million
hectares in 1991-92 to 102.08 million hectares up to the end of the Tenth Five Year
Plan (2006-07). Of the total potential created, however, only 87.2 million hectares is
actually utilized. The Working Group on Water Resources for the Eleventh Five Year
Plan (2007-12) has proposed creation of irrigation potential of 16 million hectares (9
million hectares from MMI sector and 7 million hectares from MI sector) during the
Eleventh Five Year Plan period.

The Central government has also initiated the Accelerated Irrigation Benefit
Programme (AIBP) from 1996-97 for extending assistance for the completion of
irrigation schemes remaining incomplete. Under the programme the project
approved by the Planning Commission are eligible for assistance. In 2008-09, Rs.
2,791 crore was released to AIBP for major and medium irrigation schemes up to
December 2008.

Chemical fertilizers have played a significant role in the development of the
agricultural sector. The per hectare consumption of fertilizers in nutrient terms stood
at 117.07 kg in 2007-08. However, recent trends in agricultural productivity show a
decline in marginal productivity of soil in relation to the application of fertilizers and
in some cases has also become negative. Some of the evident factors contributing to
the decline in marginal productivity are: skewed NPK application ratio in the country,
comparatively higher application of straight fertilizers like urea, DAP and MOP as
against the complex fertilizers (NPKs) which are considered to be ergonomically
better and more balanced fertilizer products. Lack of application of proper nutrients
based on soil analysis has also contributed to slowdown in growth of productivity.

The domestic production of urea in the year 2008-09 was 199.22 lakh tonnes, as
compared to 187.27 lakh tonnes in 2002-03, whereas that of DAP declined in 2008-
09 to 29.33 lakh tonnes, after reaching a peak of 52.36 lakh tonnes in 2002-03,
mainly because of shift from DAP production to complex fertilizer production.

Availability of raw material/intermediates has also been a major bottleneck towards

increase in production. There is no domestic production of MOP and its requirement
is met fully by import.

The government has taken various policy initiatives for the fertilizer sector. These
cover pricing policy for indigenous urea, new investments in urea sector, nutrient-
based pricing, production and availability of fortified and coated fertilizers, uniform
freight subsidy on all fertilizers under the fertilizer subsidy regime, concession
scheme for decontrolled phosphatic and potassic fertilizers, inclusion of Mono
Ammonium Phosphate (MAP), Tri Super Phosphate (TSP) and Ammonium Sulphate
(AS) in the concession scheme, revised scheme for concession for Single Super
Phosphate (SSP) based on inputs cost and a uniform all-India maximum retail price
of Rs. 3,400 per tonne for SSP, policy for conversion of FO/LSHS urea units to natural

National Food Security Mission

The National Food Security Mission (NFSM) is being implemented in 312 identified
districts of 17 States of the country. The NFSM-Rice is being implemented in 136
districts of 14 States i.e. Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat,
Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Tamil Nadu,
Uttar Pradesh and West Bengal. The interventions covered under NFSM-Rice include
demonstrations on improved practices; system of rice intensification; promotion of
hybrid rice-production and distribution; distribution of HYV seeds; seed mini-kits;
micro-nutrients; liming; conoweeders; zero till seed drills; multi-crop planters; seed
drills; rotavators, diesel pump sets, power weeders, knap sack sprayers; plant
protection chemicals and bio-pesticides; farmers’ field schools; local initiatives;
award for best performing districts; mass media campaign; international exposures
for technical knowledge enrichment and project management team. NFSM-Wheat is
being implemented in 141 districts of 9 State—Bihar, Gujarat, Haryana, Madhya
Pradesh, Maharashtra, Punjab, Rajasthan, Uttar Pradesh and West Bengal.

The Rashtriya Krishi Vikas Yojana

Under the Scheme of RKVY, the following indicative broad activities have been
identified for focused attention–Integrated Development of Food Crops, including
coarse cereals, minor millets and pulses; agriculture mechanization; soil health and
productivity; development of rain-fed farming systems; integrated pest management;
market infrastructure; horticulture; animal husbandry, dairying and fisheries;
Concept to completion projects that have definite timelines; support to institutions
that promote agriculture and horticulture, etc.; organic and bio-fertilizers; and
innovative schemes. During 2007-08, an outlay of Rs. 1,500 crore was approved of
which an amount of Rs. 1,246.89 crore, including Rs. 48 crore at Rs. 10 lakh per
district for preparation of District Agriculture Plan (DAP), was released to the States.
For the year 2008-09, an outlay of Rs. 2,891.70 crore has been provided at revised
estimate (RE) stage and an amount of Rs. 2,886.80 crore has been released to the
eligible States as on March 31, 2009.

Information Availability
Timely availability of reliable information on agricultural output is of great
significance for planning and policy making. The existing system of agricultural
statistics, in spite of established procedures and wide coverage, has inherent
limitations in the matter of providing an objective assessment of crops at the pre-
harvesting stages, with the desired spatial details which are essential to identify
problem areas and the nature of required interventions in terms of spatial, temporal
and qualitative inferences. Capabilities of the existing system of crop forecasts and
crop estimation can be enhanced with the introduction of technological
advancements and the adoption of emerging methodologies. In turn, an efficient and
sound information mechanism can assist considerably in the management of
concerns in areas such as food security, price stability, international trade,
etc. Remote Sensing (RS), Information and Communication Technology (ICT) and
Geographic Information System (GIS)can be used towards this end.
Schemes/projects like Forecasting Agricultural Output using Space, Agro-
meteorology and Land-based Observations (FASAL) and Extended Range Forecasting
System (ERFS) have been initiated to establish a more scientific and reliable basis for

In 1987, the Department of Agriculture and Cooperation (DAC) sponsored a project

called “Crop Acreage and Production Estimates (CAPE)” with the objective of
developing methodologies using the RS techniques for crop area and production
forecasting. The project was implemented through the Space Applications Centre
(SAC), Ahmedabad and provided a platform for development and standardization of
basic procedures, models and software packages for crop area and production
forecasting, using remote sensing and weather data. The concept of FASAL seeks to
strengthen the current capabilities of early and in-season crop estimation capabilities
from econometric and weather-based techniques with remote sensing applications.

Keeping in view the expertise needed, some of the functions under the scheme have
been outsourced. For example, forecasting of area and production of major crops
using Remote Sensing technology is being handled by SAC, and forecast of
production based on econometric modelling is being done by the Institute of
Economic Growth (IEG), New Delhi. The activities relating to forecast of production
based on crop growth and yield modelling by making use of the agro-met data has
been assigned to the India Meteorological Department (IMD). All other functions,
including coordination with various groups are being performed by the National Crop
Forecasting Centre (NCFC) in the Ministry of Agriculture. Experimental forecasts
based on econometric models and forecast based on RS technology for specific crops
have commenced.

Agriculture Insurance
The frequency and severity of droughts, floods and cyclones and rising temperatures,
agro-climatic variations and erratic rainfall accentuates uncertainty and risk in the
agricultural sector leading to huge losses in agricultural production and the livestock
population in India.
The National Insurance Scheme (NAIS) for crops has been implemented from rabi
1999-2000 season. Under the scheme and until rabi 2007-08, an area of 184 million
hectares of about 1,155 lakh farmers have been covered and a sum of Rs. 1,21,606
crore insured. Claims to the tune of about Rs. 11,607 crore have been reported
against premium income of about Rs. 3,626 crore, benefitting 302 lakh families.

Under the Weather Based Crop Insurance Scheme (WBCIS) being implemented by
the Agriculture Insurance Company of India Ltd. (AIC), 10 States have been covered
on pilot basis during the kharif 2008 season. About 1.4 lakh farmers with 1.87 lakh
hectares of cropped area were insured for a sum of Rs. 309 crore generating a
premium of Rs. 31.5 crore (including subsidy, farmers’ share of premium is Rs. 11.82
crore). This pilot is being continued in rabi 2008-09. In addition to AIC, private
insurers like ICICI-LOMBARD General Insurance Company and IFFCO-TOKIO General
Insurance Company have also been included for implementation of the scheme in
selected areas.

National Policy for Farmers, 2007

Major policy provisions of the National Policy for Farmers, 2007, include provisions
for asset reforms, water use efficiency, use of technology, inputs and services like
soil health: good quality seeds, disease free planting material, support services for
women, credit, insurance etc. Provisions have also been made for National
Agricultural Bio-security System, setting up of farm schools in the fields of
outstanding farmers to promote farmer to farmer learning and to strengthen
extension services and expanding food security basket to include nutritious crops
like bajra, jowar, ragi and millets, which are mostly grown in dry land areas. A
comprehensive National Social Security Scheme for the farmers for ensuring
livelihood security, by taking care of insurance needs on account of illness, old age,
is included.

Food Management
Food management in India has three basic objectives viz. procurement of food-grains
from farmers at remunerative prices, distribution of food-grains to the consumers
particularly the vulnerable sections of the society at affordable prices and
maintenance of food buffers for food security and price stability. The instruments for
food management are the Minimum Support Price (MSP) and Central Issue Price
(CIP). The focus is on incentivizing farmers by ensuring fair value for their produce
through the Minimum Support Price mechanism, distribution of food-grains at
subsidized rates to 6.52 crore BPL families, covering all households at the risk of
hunger under Antyodaya Anna Yojana (AAY), establishing grain banks in chronically
food-scarce areas and strengthening the Public Distribution System (PDS). The nodal
agency which undertakes procurement, distribution and storage of food-grains is the
Food Corporation of India (FCI). Procurement at MSP is open-ended, while
distribution is governed by the scale of allocation and its off-take by the

Challenges and Outlook

The agriculture sector faces challenges on various fronts. On the supply side, the
yield of most crops has not improved significantly and in some cases fluctuated
downwards. The scope for increase in the net sown area is limited and farm size has
been shrinking. In the case of certain crops like sugarcane, extreme variability in the
acreage and production over the years has been a matter of concern. On the other
hand, in the case of pulses, production has just not kept pace with the requirement
leading to a rise in prices given that its availability in the international markets is

Therefore, there is clearly a need for a renewed focus on improving productivity, and
at the same time, to step up the growth of allied activities and non-farm activities
that can help improve value addition. The current focus on developing rural
infrastructure, particularly rural roads, needs to be maintained as it would go a long
way in providing connectivity that is essential for movement of agricultural produce.
The irrigation sector requires a renewed thrust, both in terms of investment as also
modern management. There is considerable scope for development of micro-
irrigation systems and watersheds and in the use of a participatory approach for
achieving the same.

There is also a need to narrow the gap between producer prices and consumer prices
through proper marketing support. The development of marketing infrastructure and
storage and warehousing and cold chains and spot markets that are driven by
modern technology will go a long way in addressing this need.

As per the Report of the Committee on Financial Inclusion (January 2008), more than
73 per cent of farmer households have no access to formal sources of credit.
Innovative institutional mechanisms that provide credit and financial products
(including insurance products) specifically designed to meet the needs of the farm
sector, keeping their risk-bearing ability in view, is the need of the hour.

The rural economy needs to be viewed as comprising of a continuum of interrelated

economic activities. Farming needs to be dovetailed with viable off-farm and non-
farm activities. Farmers need to be facilitated to take up value addition such as
processing of agricultural produce, horticulture, pisciculture, poultry, and
development of non-farm rural enterprises.

On the distribution side, there is need to ensure that benefits accrue to the targeted
population. A mission approach for promotion of smart cards and its cross reference
with ration cards and voter ID cards would help better targeting, lesser leakages and
easier administration.

An area that requires focused attention is the issue of sustainability of agriculture

with due emphasis on environmental concerns. Soil erosion, water logging, reduction
in ground-water table and the decline in the surface irrigation are the problems faced
by agriculture. The consequences of climate change on Indian agriculture also need
to be factored in the strategy for the development of this sector. WAR AGAINST
Readers will find this feature useful in their preparations for Civil Services Exam and other similar
UPSC and SSC exams. The information provided is also useful for Bank P.O. and Bank Clerk
Recruitment exam preparations as also any competitive exam [MBA, NDA, CDS, IFS, IES etc] in
which questions on General Awareness or General Knowledge and Current Affairs are asked.

In a world that could provide for all its people, extreme poverty and hunger are the daily lot of
millions. Of the world’s more than six billion people, 2.8 billion—almost half—live on less than $2 a
day, and 1.2 billion—a fifth—live on less than $1 a day, with 44 per cent living in South Asia. In rich
countries, fewer than one child in 100 does not reach its fifth birthday, while in the poorest
countries as many as a fifth of children do not.

Over two million childhood deaths occur annually due to vaccine-preventable diseases; hunger daily
stalks nearly 800 million people in the developing world. Every day, 31,000 people die from
preventable causes, half of them hunger-related. UNICEF says that some 1,400 girls and women die
each day from causes related to child-birth, 99 per cent of them in developing countries. About 1.1
billion people still lack access to clean drinking water. More than 40 million people are living with
HIV/AIDS, and there are 14 million AIDS orphans under the age of 14.

This destitution persists even though human conditions have improved more in the past century
than in the rest of history—global wealth, global connections, and technological capabilities have
never been greater. But the distribution of these global gains is extraordinarily unequal. The
average income in the richest 20 countries is 37 times the average in the poorest 20—a gap that
has doubled in the past 40 years.

The global economic crisis has wiped out developing Asia’s recent gains in poverty eradication as
the meltdown is expected to have driven more than 21 million people in the region into poverty. A
joint report by the United Nations and the Asian Development Bank shows that the global economic
slowdown slackened trade, slashed export and tourism receipts and raised unemployment levels.
This makes it difficult for the region to achieve its Millennium Development Goals (MDGs), which
range from halving extreme poverty to halting the spread of HIV and AIDS and providing universal
primary education, all by the target date of 2015. The latest data suggests that the Millennium
Summit target will be reached only in 2030.

Understanding & Responding to Poverty

The right to development and the right to a life free from poverty are basic human rights. The UN
Charter, the Universal Declaration of Human Rights, the World Summit on Social Development and
many other multilateral declarations and conferences have recognized and reconfirmed economic,
social, political, civil, and cultural rights with the goal of eradicating poverty and its consequences.
Among these rights are an adequate standard of living, food, housing, education, health, work,
social security and a share in the benefits of social progress.

Traditionally, poverty has been defined in terms of shortfalls of consumption or income. Income
poverty lines are set against the cost of a basic diet for a group and/or the combination of dietary
needs and a few non-food essential items. One commonly used income poverty definition is
subsisting on US$1 per day or less.
UNDP addresses poverty as a denial of human rights. Good health, adequate nutrition, literacy and
employment are not favours or acts of charity to be bestowed on the poor by governments and
international agencies. They are human rights, as valid today as they were 50 years ago when the
Universal Declaration of Human Rights was adopted. UNDP defines poverty from a sustainable
human development perspective. Poverty is the denial of various choices and opportunities basic to
human development. These include the ability to lead a long, creative and healthy life, to acquire
knowledge, to have freedom, dignity, self-respect and respect for others, and to have access to the
resources needed for a decent standard of living.

Nature and Determinants of Poverty

Under-nutrition and hunger are the hallmarks of poverty. Poverty goes beyond lack of income. It is
multi-dimensional, encompassing economic, social and governance perspectives. Economically, the
poor are not only deprived of income and resources, but of opportunities. Markets and jobs are
often difficult to access, because of low capabilities and geographical and social exclusion. Limited
education affects their ability to get jobs and to access information that could improve the quality of
their lives. Poor health, due to inadequate nutrition and health services, further limits their
prospects for work and from realizing their mental and physical potential. This fragile position is
exacerbated by insecurity.

Not surprisingly, the poor generally fare the worst in terms of social indicators, such as illiteracy,
malnutrition, ill health (incidence of communicable diseases such as tuberculosis and HIV/AIDS),
and mortality and morbidity rates. Among this group, women and girls are often the most severely
disadvantaged, as evidenced by low school enrolment rates and higher incidence of maternal
mortality rates.

Strategies for poverty reduction

The approach to reducing poverty has evolved over the past 50 years in response to deepening
understanding of the complexity of development. In the 1950s and 1960s, many viewed large
investments in physical capital and infrastructure as the primary means of development. In the
1970s, awareness grew that physical capital was not enough, and that at least as important were
health and education. World Development Report, 1980, articulated this understanding and argued
that improvements in health and education were important, not only in their own right but also to
promote growth in the incomes of poor people.

The 1980s saw another shift of emphasis following the debt crisis and global recession and the
contrasting experiences of East Asia and Latin America, South Asia, and Sub-Saharan Africa.
Emphasis was placed on improving economic management and allowing greater play for market
forces. World Development Report, 1990, proposed a two-part strategy: promoting labour-intensive
growth through economic openness and investment in infrastructure and providing basic services to
poor people in health and education. In the 1990s, governance and institutions moved towards
centre stage—as did issues of vulnerability at the local and national levels.

Actions at the country level

The lives of poor people are most affected by actions at the country-level. Countries need to get on
a path of sustainable, pro-poor growth that provides opportunities for all, a voice in decision-making
and protection from shocks.

The World Development Report, 2000, proposed a strategy for attacking poverty in three ways:
promoting opportunity, facilitating empowerment, and enhancing security.

Opportunity: Expanding economic opportunity for poor people by stimulating economic growth,
making markets work better for poor people, and working for their inclusion, particularly by building
up their assets, such as land and education.
Although economic growth is crucial for generating opportunity, poverty remains intractable despite
economic growth in many countries, partly because of income inequality within countries. In
societies with high inequality, greater equity is particularly important for rapid progress in reducing
poverty. This requires action by the State to support the build-up of human, land, and infrastructure
assets that poor people own or to which they have access. Investments in the physical and financial
assets of poor people are, thus, necessary—adequate schooling and skill development, secured
nutrition, preventive health care, rural infrastructure and credit.

And, there is a two-way relationship between poverty and growth. Rapid growth is a necessary—but
not a sufficient—condition for poverty reduction. What is too seldom mentioned, however, is that
persistent poverty and inequality reduce growth rates and undermine economic stability and
security. Vigorous and comprehensive investments in reducing poverty, in other words, is a
necessary component of long-term growth.

In addition to achieving faster growth rates, it is essential that economic growth be broad-based to
maximize its impact on reducing poverty. Economic growth also needs to be labour absorbing,
providing jobs and economic opportunities for self-employment—a challenging task, because
industries need to be internationally competitive as well. This requires diversified industrial and
service sectors and the networking of international and local enterprises of different sizes, to
enhance synergism between different economic segments.

Market reforms and the expanding to international markets can be central in expanding
opportunities for poor people, but reforms need to reflect local institutional and structural
conditions. And mechanisms need to be in place to create new opportunities and compensate the
potential losers in transitions.
Policies that promote low inflation, realistic and stable exchange rates, reasonable fiscal deficits,
effective integration into the global economy, and private sector activity, are all needed.

Empowerment: Strengthening the ability of poor people to shape decisions that affect their lives
and removing discrimination based on gender, race, ethnicity, and social status.

The potential for economic growth and poverty reduction is heavily influenced by State and social
institutions. Action to improve the functioning of State and social institutions improves both growth
and equity, by reducing bureaucratic and social constraints to economic action and upward mobility.
The importance of good governance for economic growth and poverty reduction is now generally
accepted. Participatory democratic systems and the rule of law are essential to ensure that leaders
are held accountable to the people and that open and transparent systems exist for the
management of public resources.

Good governance also has a direct bearing on poverty, for poor people are often direct victims of
bad governance. Due to their lack of representation, they tend to be left out of public expenditure
programmes, especially those related to access to productive assets and the delivery of social

Social structures and institutions form the framework for economic and political relations and shape
many of the dynamics that create and sustain poverty—or alleviate it. Social structures that are
exclusionary and inequitable, such as class stratification or gender divisions, are major obstacles to
the upward mobility of poor people. Governments can help by fostering debate over exclusionary
practices or areas of stigma and by supporting the engagement and participation of groups
representing the socially excluded. Groups facing active discrimination can be helped by selective
affirmative action policies. Other actions could include removing ethnic, racial, and gender bias in
legislation and the operation of legal systems and encouraging the representation and voice of
women and disadvantaged ethnic and racial groups in community and national organizations.
The promotion of gender equality is expected to contribute to the achievement of several goals at
the same time. Accordingly, a general policy framework is required to reduce the marginalization of
women, helping them participate effectively in economic, political, and social life and increasing
their involvement in the development of policies that affect their lives. Achieving this requires
conscious allocations of public resources in favour of women and of production areas where women
are most concentrated. In short: gender-sensitive budgeting.

Security: The poor are often the most severely affected by adverse shocks of macro and micro-
economic origin, so mechanisms to reduce the incidence of shocks, and help the poor cope with
them are essential. These mechanisms should guarantee minimum consumption levels and access
to basic services, protect investments in human capital during crises, and reduce the risk exposure
faced by the poor in their productive choices. Such mechanisms range from making fiscal policy
counter-cyclical and improving management of natural disaster risks, to instruments that help the
poor cope with illness, crop failure, unemployment and old age. These include subsidies targeted to
the poor, public works and “food for work” programmes, sustainable, well-designed pension,
unemployment and social assistance programmes, and severance payments to those laid off during
civil service retrenchment or public enterprise reform.

Special measures are also needed to ensure that spending on programmes important to poor people
—social programmes and targeted transfers—does not fall during a recession, especially relative to
the rising need.

To manage the risk of financial and terms of trade shocks, sound macro-economic policy and robust
financial systems are fundamental. But they have to be complemented by prudent management of
the opening of the capital account, to reduce the risk of volatile short-run flows.

Thus, reducing poverty calls for a three-pronged approach: promoting pro-poor growth, securing
social development, and ensuring good governance. The three are inter-related and complementary.
Pro-poor growth stimulates employment and other economic opportunities, and generates
revenues, which can be directed, through good governance, at providing services needed by the
poor and vulnerable groups.

Globalization and Poverty Reduction

Appropriately structured and sequenced, trade liberalization can be an engine of development and
poverty reduction. Countries that participate in the global economy, show higher economic growth
than those that maintain closed trade regimes. This is because of incentives created by export
opportunities and import competition, and the doors it opens for productive domestic-foreign
Increased openness to trade creates opportunities for new investments and jobs, and promotes
more efficient use of resources and higher productivity. The liberalization of capital flows permits
greater access to the external resources, needed to finance such investments, and foreign direct
investment can also encourage the transfer of technology, managerial expertise and skills. But,
relatively few developing countries have benefited from trade liberalisation.

The lesson? If trade is to contribute all it can to development and poverty reduction, the poorest
countries must be able to participate more fully in its benefits. For these countries, agricultural
trade liberalization is critical. They depend far more heavily than the better-off developing countries
on agriculture for their GDP and exports.

Although developing countries have been constantly lectured, pushed and pressured to open their
markets, reduce tariffs and remove subsidies by developed countries, yet, markets in developed
countries and in the US are increasingly closed to them, as new and additional subsidies and
protectionist measures are being implemented. Increasingly, these are for products that are critical
to the majority of the population in poor countries.

For example, Africa accounts for less than 1% of world exports. Both the European Union and the
US have promised action to tackle marginalisation. What have they done? Continued business as
usual, including the business of damaging African agriculture through farm subsidies.

The challenge for developing countries is to enact domestic policies that attract more foreign direct
investments of a relatively long term and stable nature, as well as adopting structural reforms to
enable domestic adjustment when necessary.

Aid Effectiveness and Debt Relief

Donor countries could strengthen developing countries’ ability to pursue poverty reduction by
increasing aid flows to countries with a sound policy environment, supportive of poverty reduction.

Aid should be delivered in ways that ensure greater ownership by recipient countries and effectively
helps poor countries help themselves.

In fact, the “rethinking development” has led the World Bank, in partnership with the IMF, to begin
intensive work on a new, more sharply focused approach to supporting member countries’ poverty
reduction strategies. Indeed, it has already started to work with selected countries on “Poverty
Reduction Strategy Papers” (PRSPs).

The PRSP emphasizes on two fundamental changes. First, poverty reduction strategies will no longer
be drafted in Washington by the IMF and World Bank and presented to national authorities as a fait
accompli. Rather, concessional support will be based on the strategy developed by national
authorities, with the broad participation of local civil society, especially the voices of the poor.
Second, the PRSP forces much closer co-operation between the two institutions, which should lead,
at least, to better analysis. Extraordinary as it seems, there has in the past been little connection
between the IMF’s macroeconomic analysis and the World Bank’s work on poverty. The strategy will
benefit from the intellectual contributions of all providers of external support—and will provide a
single, transparent direction for the future.

Supporting country-owned poverty reduction strategies will, hopefully, go some way to achieving
greater poverty reduction than in the past, but will not be sufficient if more aid is not made

The real value of aid to developing countries is down about 8 per cent in the past decade. Recent
studies show that achieving the MDGs would require doubling present ODA flows.

Security and Conflict

The incidence of poverty can worsen substantially in conflict situations and may not be reversed for
a prolonged period after the conflict has ended. The international community should seek to stem
armed conflict—which affects poor people the most—by taking measures to reduce the international
arms trade, promote peace, and support physical and social reconstruction after conflicts ends.
Donors also need to avoid any gap between the provision of humanitarian and reconstruction
assistance, so that both contribute in a mutually reinforcing way to an early restoration of durable
peace. This calls for substantial technical and financial assistance for demilitarization,
demobilization, and rehabilitation, and the restoration of domestic institutional capacity. The
industrial countries further need to ensure greater coherence and transparency in their own policies
on arms sales.

Just as conflict can lead to poverty, the scourge of poverty can lead to unrest, rebellion and
terrorism The forces unleashed will not recognise national borders. That is why poverty should be at
the heart of the international security agenda.

The lack of consensus on poverty alleviation has itself proved unhelpful by pulling countries in
different directions. Most of the large bilateral government donors tread a middle path. They
increasingly downplay governance issues whilst promoting the concept of inclusive growth with pro-
poor institutional capacity building and the provision of social safety nets to protect the poorest. The
L’Aquila Food Security Initiative announced at the 2009 G8 summit in Italy suggests a new priority
of investment in agriculture.

There is justifiable concern that these attempts to fine-tune solutions to global poverty may be
overwhelmed by the pace of events. The failure of politicians to respond to signals of climate and
economic breakdown has almost certainly provoked an inexorable rise in global poverty with
unpredictable consequences. A fundamental reordering of priorities is the only available remedy for
the poor. It may also prove to be the critical first step on the road to a sustainable future for us all.

UN Millennium Development Goals For 2015

• Eradicate extreme poverty and hunger. Halve the proportion of people with less than one
dollar a day. Halve the proportion of people who suffer from hunger.
• Achieve universal primary education. Ensure that boys and girls alike complete primary
• Promote gender equality and empower women. Eliminate gender disparity at all levels of
• Reduce child mortality. Reduce by two thirds the under-five mortality rate.
• Improve maternal health. Reduce by three quarters the maternal mortality ratio.
• Combat HIV/AIDS, malaria and other diseases. Reverse the spread of HIV/AIDS.
• Ensure environmental sustainability. Integrate sustainable development into country policies
and reverse loss of environmental resources. Halve the proportion of people without access
to potable water. Significantly improve the lives of at least 100 million slum dwellers.

• Develop a global partnership for development. Raise official development assistance.


There is a galore of Indian entrepreneurs in the Forbes’ list of the world’s wealthiest
every year. But, this is merely a factoid; more significant is the rise of new
entrepreneurs in India. In almost every new industry that has attained stature in the
last decade, the rising star is not from the established business houses but an

Take Sunil Mittal, whose phone company now has the sixth-highest value. Ten years
back, Mittal would not have figured even in the B list of Indian businessmen. Today,
he is ahead not only of patricians like Tatas but also of a global major like Hutchison-

Naresh Goyal’s Jet Aiways, barely in fifteen years, has emerged as the largest
airline in the country, upstaging the State-owned Indian Airlines, and buying up a
private sector rival, Sahara.

In the sunrise retailing sector the big boys, Kishore Biyani and B.S. Nagesh, are
creating a furore. Kishore, a totally unknown name a decade ago is now a media
darling, a man-on-the-go. Pantaloon and Shoppers’ Stop are the Indian challengers-
in-waiting for Wal-Mart as they have already swept the likes of Tata (Trent) and RPG
off the floor in the retail business.

What about the country’s leading airports? The carpetbaggers here are again first-
generation names like G.M. Rao and G.V.K. Reddy. Having interesting histories in
banking, power and hoteliering, both are now into the big league after outdoing
airport bids against celebrities with household surnames.

The most extraordinary stories of meteoric rise in the annals of entrepreneurship,

however, belong to Narayana Murthy, Azim Premji and Shiv Nadar. They have
surpassed their counterparts in advanced countries in software development and
helped India emerge as the leading Software power. In the same breath, we must
mention Subhash Chandra, the amusement parks owner and a pioneer of satellite TV
in India. Within a few years he has outperformed the oldest media house in the

Uday Kotak has founded a bank that promises to be yet another ICICI. Rajeev
Chandrashekhar, an engineer–turned-telecom tycoon is truly an adventurer.
Returning from the US, he got into a telecom business, sold it out and is now
entering into freight transport —as the railways are privatising the container
business. Kiran Mazumdar Shaw, another pioneer, has made impressive forays into
biotech industry.

Among the electronic media enterprisers Prannoy Roy and Raghav Behl are India’s
news kings. How about Jignesh Shah, the challenger. He is another first-generation
business entrepreneur involved in a David-Goliath duel with the country’s biggest
financial players for market leadership in commodity exchange. The list is getting
longer daily.

Only a few decades back, Indian entrepreneurs had to leave India in order to prove
their spirit of enterprise. Aditya Birla wandered all over South-East Asia setting up
companies and factories. Laxmi Mittal had to flee his homeland to become the
world’s steel sultan.

Doing business in India is no cakewalk, what with the bureaucracy’s red tape and
greasy palms, yet the Indian entrepreneur is proving his mettle. India is now a vast
and vibrant market. Capital can be organized and technology accessed. De-regulation
is creating new opportunities. Forbes list is no longer an Everest for Indian

Indian business is also fanning out and challenging the global multinationals. For
instance, Tata is now one of the world’s lowest-cost steel producers. Indians are
shaking Europe, America, other continents with their global mega-mergers and
hostile takeovers. L.N. Mittal—based in London but holding an Indian passport—
grabbed the world’s largest steel-maker, Arcelor. Tata, not to be left behind, gobbled
up another major steel manufacturer, Corus, to become the fifth largest producer.
These deals hail the emergence of global Indian entrepreneurs on the world stage.
India is fast becoming a hub for metals, petro-products and auto components.

India’s second largest private firm, the Mukesh Ambani-owned Reliance Industries,
may soon be among the top 10 in the world list.

According to a Boston Consulting Group (BCG) report, “a revolution in global

business is under way”, and the axis of corporate power was shifting towards the
BRIC (Brazil, Russia, India and China) countries.

A 2006 study by Mape, an investment bank, observed: “the Indian Multinational

Company (MNC) has finally come of age” and “Indian buyers have become a force to
reckon with in many industries such as pharma, auto components and oil and gas”.
Liberal policies, access to cash, and the rise of entrepreneurial ambitions are creating
conditions for the emergence of global Indian enterprises.

Besides the exceptional first-timer Indira Nooyi, the Pepsico chief, many banks,
insurance companies and business enterprises now have women in key positions—
chief executives, chief strategists, chief economists. Many head the human resource
wings and are tough and tactful while dealing with the hard-core politicos and burly
men dominating the restive trade unions. Kiran Shaw Majumdar, Biocon chief, or Anu
Agha, who took over Thermax after her husband’s sudden death, is no transient
phenomenon but is becoming a normal face of Indian business.

Higher education and new confidence are helping daughters and daughters-in-law of
traditional families take up high-profile corporate roles. Women are better students,
quick to grasp the nitty-gritty of work and more willing to listen to elders.
Shefali Munjal is a third generation member of the Munjal family who manages Hero
Group, among the world’s largest two-wheeler makers.
Priya and Priti Paul of Apeejay Surrendra Group, met the challenge after their father
got killed in a terrorist attack in India’s turbulent northeast, where the family has a
tea business.

Sulajja Firodia Motwani manages her Kinetic Group as well as family. She joined the
family enterprise on returning from Carnegie Mellon University. Mallika Srinivasan
of Chennai-based Tractor and Farm Equipment is the eldest daughter of A.
Sivasailam, chairman of the Rs 25 billion Amalgamations Group, and wife of Venu
Srinivasan of the TVS Group. She is rated as one of the most successful Indian
women CEOs.

Cremica is a popular biscuit and confectionery brand where Geeta Bector is both
director and wife of Akshay Bector, M.D. She thinks women have a special advantage
when it comes to food.

S.K. Dhamija in his book Women Entrepreneurs says: “The hidden entrepreneurial
potentials of women have gradually been changing with the growing sensitivity to
the role and economic status in society… Today, women entrepreneurs represent a
group that has broken away from the beaten track and are exploring new avenues of
economic participation.” It is estimated that women entrepreneurs currently
comprise about 10 per cent of the total number of entrepreneurs in India.

Shashi Ruia describes his Essar Group as “serial entrepreneurs” and predicts the rise
of new entrepreneurs. “There has not been a better time in India to reach out and
touch the horizon ... entrepreneurship is no more limited to family-managed
businesses in India”, he said while addressing a Convocation of the Entrepreneurship

The ethnic and linguistic diversity of India is proverbial and rivals the diversity of continental
Europe which is not a single nation-State like India. India contains a large number of different
regional, social, and economic groups, each with distinctive or dissimilar customs and cultural
practices. Region-wise, differences between social structures of India’s north and south are
marked, especially with respect to kinship systems and family relationships. Religious differences
are pervasive through out the country. There is the Hindu majority and the large Muslim minority
or “second majority”. There are other Indian groups—Buddhists, Christians, Jains, Jews, Parsis,
Sikhs, and practitioners of tribal religions—and hundreds of sub-religions or religious communities
within larger communities like the Arya Samajis, Sanatanis among the Hindus; Shias and Sunnis
among the Muslims; Monas and Keshdharis among Sikhs and hundreds of other castes, sub-
castes, communities, vegetarians and non-vegetarians from each religion. Each group is proud
of its faith and very sure of its superiority over other faiths.

A highly noticeable feature of India’s social structure is highly inequitable division of the nation’s
wealth. Access to wealth and power varies sharply. Extreme differences in socio-economic status
are glaringly visible among the smallest village communities to metropolitan cities and mega-
towns. The poor and the rich live side by side in urban and rural areas. Prosperous, well-fed,
perfumed men or women in chauffeured luxury cars passing and even living in narrow streets
with poor, starving, ill-nourished, ill-clad or even half-naked men, women, children dwelling on
their pavements and bathing in dirty water of its flowing or even clogged drains are common
sights. Contrasting extreme poverty and enormous wealth and obvious class distinctions are
egregiously visible in almost every settlement in India.
Urban-rural differences too are immense. Over 70 per cent of India’s population lives in villages;
agriculture still remains their mainstay. Mud houses, dusty lanes, grazing cattle, chirping and
crying of birds at sunset and rising smell of dung and chulah-smoke are the usual settings for the
social lives of most rural Indians. In India’s enlarging cities, millions of people live among roaring
vehicles, surging crowds, overcrowded streets, busy commercial establishments, loudspeakers
blaring movie tunes or religious recitations, factories and trucks and buses breathing poisonous
pollution into unhealthy lungs.

Gender distinctions are highly pronounced. The behaviour norms of men and women are very
different, more so in villages. Prescribed ideal gender roles are fast losing to new patterns of
behaviour among both sexes. Individually, both men and women behave in one way and
collectively in quite another way. Public behaviour of both men and women is rude and unhelpful,
but the same people when in individual situation and relationship can be very different. People
occupying public positions are extremely unhelpful and even normal actions done toward others
as part of normal routine are projected as personal favours. Even senior citizens, retired
persons, war widows do not get their pension approved for years! A clerk in a government office
wields greater actual power than a decision-making executive and can withhold implementation of
his superior’s orders for ever. If the victim of delay approaches the court, the litigant is in for a
shock after shock as the case gets adjourned endlessly and after years of attending court
hearings gets an unimaginably skewed judgment written in a highly ambiguous language.
Litigants pay high fees to lawyers and bribes to court staff and even to judges.

Surprisingly, observers tend to bypass these all-pervading differences of region, language,

wealth, status, religion, urbanity, gender and absence of the rule of law but pay most devoted
attention to that special and peculiar feature of Indian society: “CASTE”. The most loved and
recognized identity of Indians is their caste. And, there are thousands of castes and caste-like
groups. These are hierarchically ordered and named groups into which members are born. Caste
members, as far as possible, marry within the caste or sub-caste and follow caste rules with
respect to diet, ritual and aspects of life.

Yet, no generalisation can be made because, increasingly, caste- discipline is loosening and
every individual is free to decide her or his own social ways and such an indivi-dual will always
find small or big support and a milieu to evolve a suitable mode of living in spite of turning her/his
back on caste and caste-ridden society, though at times, this can be a harrowing experience,
especially in sub-caste communities where inter-caste and widow marriage is equated with
community honour leading to honour-killing of the perceived violator of caste-norms, especially if
the violator is weak. However, underlying norms of life, though honesty of thought and action may
not be among them, are widely accepted in India.

Indian city dwellers are often nostalgic about “simple village life”, but Indian villages have been
losing both simplicity and gaiety of life and are boiling in the caste cauldron of petty rivalries.
They are afflicted with addiction to all kinds of drugs like alcohol, opium and heroin. Roads,
television and mobile phones are now changing the village scene though dirt, squalor and
disease still vitiate rural India.

Indian village life is neither simple nor inviting. That is why no villager who has come to the city
goes back. According to sociologists: “Each village is connected through a variety of crucial
horizontal linkages with other villages and with urban areas both near and far. Most villages are
characterized by a multiplicity of economic, caste, kinship, occupational, and even religious
groups linked vertically within each settlement. Factionalism is a typical feature of village politics.
In one of the first of the modern anthropologi-cal studies of Indian village life, anthropologist
Oscar Lewis called this complexity “rural cosmopolitanism.”
Typical Indian villages have clustered dwelling patterns built very close to one another.
Sociologists call them “nucleated settlements”, with small and narrow lanes for passage of people
and sometimes carts. Village fields surround these settlements. On the hills of central, eastern,
and far northern India, dwellings are more spread out. In wet States of West Bengal and Kerala,
houses are a little dispersed; in Kerala, some villages merge into the next village and visitor are
not able to see divisions between such villages.

In northern and central India, neighbourhood boundaries can be vague. Houses of Dalits are
ordinarily situated on outskirts of nucleated settlements. Distinct Dalit hamlets, however, are
rare. Contrastingly, in the south, where socio-economic divisions and caste pollution observances
tend to be stronger than in the north, Dalit hamlets are set at a little distance from other caste

Bigger landowners do not cultivate lands but hire tenant farmers to do this work. Artisans in
pottery, wood, cloth, metal, and leather, although diminishing, continue to eke out their existence
in contemporary Indian villages like centuries past. Religious observances and weddings are
occasions for members of various castes to provide customary ritual goods and services.

Accelerating urbanization is fast transforming Indian society. More than 26 per cent of the
country’s population is urban. India’s larger cities have been growing at twice the rate of smaller
towns and villages. About half of the increase is the result of rural-urban migration, as villagers
seek better lives for themselves in the cities.

Most Indian cities are densely populated. New Delhi, for example, had 6,352 people per square
kilometre in 1991. Congestion, noise, traffic jams, air pollution, grossly inadequate housing,
transportation, sewerage, electric power, water supplies, schools, hospitals and major shortages
of key necessities characterize urban life. Slums and pavement dwellers constantly multiply so
also trucks, buses, cars, auto-rickshaws, motorcycles, and scooters, spewing uncontrolled
fumes, all surging in haphazard patterns along with jaywalking pedestrians and cattle.

A recent phenomenon is illegal migrants from neighbouring Bangladesh and terrorists via Nepal,
Bangladesh and Pakistan. They stalk all big cities and State capitals and strike at will. India’s city
life is extremely insecure and crime-infested.

Once a sleepy land of docile people, India has become one of the 20 most dangerous countries
of the world to live in.

Unlike the American and British political systems which have existed in their current form for
centuries, the Indian political system is recent and dates from India’s Independence from Britain
in 1947 and proclamation of India’s Constitution in 1950.

In contrast to the constitution of Japan that has seen no amendments, the constitution of India is
a much-amended national document. The last 104th amendment enforcing OBC reservations
was carried in 2006. Arising from disagreements between the Parliament and the Supreme Court
or under pressure from political interest groups and compulsions of a modernizing society or the
process of change within the society, each constitutional amendment has had implications for
India’s politico-social system.

A political system is, after all, a set of institutions, interest groups (such as poli-tical parties, trade
unions, lobby groups) and provides dynamics of interaction among those institutions and bases
for political norms and rules that govern their functions, say, Constitution and the Law. Foremost,
it consists of the members of a social organisation (group) who are in power but also of
interdependent components and peripheries of the milieu with which it interacts.

Theoretically, a political system is regarded as the way a government makes policy and organizes
administration. A political system, if sound, ought to ensure the maintaining of order and harmony
in the society and provide institutions for addressing grievances and complaints of citizens at

The Lok Sabha, the most important element of India’s political system, modelled on the British
House of Commons, is the Lower House of the Indian Parliament. The Rajya Sabha or the
Council of States too is partly modelled on the British House of Lords or Upper House of
Parliament but India’s federal system of government has many features similar to federalism as
practiced by the United States, Canada and Australia.

The Head of State in India is the President, mostly a ceremonial position derived from the
concept of constitutional monarchy of the United Kingdom, and like the British monarch is
expected to “advise, encourage and warn” the elected government on constitutional matters. The
President can return a Parliamentary Bill once for reconsideration and, in times of crisis such as a
hung Parliament, President’s role becomes pivotal. The President can declare a state of
emergency which enables the Lok Sabha to extend its life beyond the normal five-year term.

As members of an electoral college, around 4,500 members of the national parliament and state
legislators are eligible to vote in the election of the President. The Indian Presidency has recently
attracted special attention because for the first time a woman, Pratibha Patil, occupies it.

The head of the government is the Prime Minister, appointed by the President on nomination or
election by the majority party or coalition of political parties in the Lok Sabha. The Prime Minister
has to be a member of either House or get elected within six months if not a member at the time
of appointment. The Ministers are then appointed by the President on the recommendation of the
Prime Minister.

The Lok Sabha or House of the People, is composed of representatives of the people directly
elected on the basis of adult suffrage. The maximum strength of the House provided by the
Constitution is 552 that includes up to 530 members to represent the States, 20 members to
represent the Union Territories and two members of the Anglo-Indian Community nominated by
the President, if that community is not adequately represented in the House. The ratio between
the number of seats allotted to each State and the population of the State, as far as practicable, is
kept the same for all States.

Currently, the size of the house is 545—made up of 530 elected from the States, 13 elected from
the Territories, and two nominated from the Anglo-Indian community. Uttar Pradesh with 80
members has the largest number of Lok Sabha members, being the most populous among all
Indian states. Three states have only one representative each; certain constituencies are
reserved for candidates from scheduled castes and scheduled tribes.

The upper house in the Indian political system is the Rajya Sabha or Council of States which has
up to 250 members, 12 of which are nomi-nated by the President for their accomplishment in art,
literature, science, or social services. The remainder of the house—currently comprising 238
members—is elected indirectly by the state and territorial legislatures in proportion to the unit’s
population. Uttar Pradesh has 31 members.

The method of election followed by legislatures is ‘single transferable vote’. Term of office is six
years, with one-third of the members seeking election every two years. The Rajya Sabha meets
in continuous session. Unlike the Lok Sabha, it is not subject to dissolution.
The two houses share legislative powers, except in the area of Money Bill where the Lok Sabha
has overriding powers. In the case of conflicting legislation, a joint sitting of the two houses is
held. If there is a conflict which cannot be resolved even by the joint committee of the two houses,
it is solved by vote in a joint session of the Parliament, where the will of the Lok Sabha, which is
twice as large as Rajya Sabha, almost always prevails.

Though not mentioned in the Constitution, political parties are a most vital element of the Indian
political system. The Indian National Congress (INC) since its inception in 1885—and its
successor—has been a dominant political party in India. Until 1947, it campaigned for Indian
independence from Britain. Since independence, it has competed for power and for considerable
period governed the country either as the largest party in Parliament or, as currently, head of a
16-party coalition called UPA (United Progressive Front).

Originally socialistic, it followed policies of moderate socialism, planned, mixed economy but now
supports deregulation, privatisation, foreign investment, and from non-alignment it has shifted to
pro-American foreign policy.

A peculiar feature of Congress Party is its one-family leadership of Jawaharlal Nehru, India’s first
Prime Minister for 17 years; his daughter Prime Minister Indira Gandhi; his grandson Prime
Minister Rajiv Gandhi ; currently Rajiv’s widow, the Italian-born Sonia Gandhi Congress President
but more powerful than the Prime Minister; and her son Rahul Gandhi, Member Parliament being
projected as a future Prime Minister.

The other major political party in India is the Bharatiya Janata Party (BJP). Formed in 1980, it
champions the socio-religious cultural values of the country’s Hindu majority and advocates
strong national defence. The BJP-led the National Democratic Alliance (NDA) government
between 1998-2004. National Democratic Alliance (NDA) founded in 1998, then had 13 parties in
the coalition but currently has nine.

The Indian Political System, like the USA’s, is based on the principal of checks and balances of
power and has a strong and independent judiciary with the Supreme Court as the highest judicial
authority in civil, criminal and constitutional cases.

Demographically and geographically, India is big and highly diverse; it operates a federal system
of government. Besides the Central government, there are governments and administrative set-
ups in 28 States and seven Union Territories.

India has been changing from a highly centralized. one political party-dominated system to an
increasingly discrete polity with regional parties pulling in different directions. Political norms have
been declining and politics in India is much rougher and much more corrupt than in the
democracies of Europe and North America. Likewise, Judiciary and bureaucracy are steeped in

Unfortunately, the Indian political system has been unable to incorporate the multiple
stakeholders of the complex Indian society even though it has lent stability and continuity to
Indian democracy. As a result, after sixty years of Indepen-dence, our experiment with demo-
cracy is in peril. Currently, Indian democracy finds itself reduced to the ballot box, vote banks and
populism. A constitution can provide only a framework; it is its institutions that infuse life into a

The Indian political system was expected to produce accountable governments, conscientious
ruling elites and democratically aware citizens. All this has not happened and as Galbraith’s put it,
Indian demo-cracy is a functioning anarchy.

Obama’s overblown media image has blurred the perceptions of the proverbial common man. In
spite of the fact that most facts of his life are known to the public, it is difficult to understand him
as a political leader and to say definitely, at this starting point of his Presidency, what kind of
President he would make. He has been compared to Lincoln, Roosevelt and J.F. Kennedy, but
these comparisons appear invidious because all of them were white Americans; nor can his
realization of the American Dream be called a rag to riches story. To a perceptive observer, he
would look like a mulatto character from Faulk-ner’s novels who suddenly has woken up into the
twenty–first century multicultural America and remembers no nightmares of the reality of his 18th
or 19th century past of racial discrimination and historic humiliation.

He is the first African-American to hold the office of the President of the United States. He, more
than anything else, re-presents the mixed, educated, immigrant middle-class of the present-day

Obama is a graduate of Columbia University and Harvard Law School, where he was the first
African-American president of the Harvard Law Review. He worked as a community organizer,
and practiced as a civil rights attorney in Chicago before serving three terms in the Illinois Senate
from 1997 to 2004. He also taught Constitutional Law at the University of Chicago Law School
from 1992 to 2004. He was defeated in the US Congress elections 2000, but got elected to the
Senate in November 2004. In July 2004.

As a Democratic minority member in the 109th Congress he helped make legislation to control
conventional weapons and for greater public accountability in federal funds spending. He also
made official trips to Eastern Europe, the Middle East and Africa. During the 110th Congress he
contributed to legislation on lobbying and electoral fraud, climate change, nuclear terrorism, care
for US military personnel returning from combat assignments in Iraq and Afghanistan.

Thus, he is not entirely the creation of the media. Had he been purely white, instead of half-white
half-black as he is, his rise would not have attracted such exaggerated media attention. How long
the honey- moon with the media will last is hard to say. He faces the enormous task of putting the
derailed economy on course and sustaining the vast but doubtful military involvements of USA
abroad, especially in Asia. As President, he will also have to rework political, economic and
diplomatic equations with almost every important country of the world.

The spell of relief from the outgoing toxic Bush administration will be over soon The obvious
historical significance of an African-American taking over as President of the United States, “a
polity substantially founded on the genocide of one race and the slave labour of another”, will also
soon start glowering at all Americans—implications will be global.

Obama’s sudden rise, no doubt, is the outcome of racial politics. He has certainly benefited from
the legacy of the civil rights and black liberation movements of the 1960s, led by Martin Luther
King Jr. and Malcom X, both of whom got assassinated. So many others died in these
movements. These events have left a great impact on American society and transformed large
segments of its people. That social transformation is believed to have been responsible for
making 66 per cent of those between the age of 18 and 29, and 52 per cent of those in the 30-44
age group vote for Mr Obama. Surprisingly, he is neither a product of that legacy nor one to
associate with its militant ideological stance. Yet, he is its absolute beneficiary.

Obama’s middle Muslim name created some early troubles but repeated assertions of his deep
Christian faith finally overcame the public doubts. He strictly prohibited his campaign staff from
wearing any visibly Islamic gear, both in public or on television. He made it a point to visit
churches and synagogues but never a mosque, ignoring the unsolicited counsel of important
newspapers like The New York Times and International Herald Tribune.

His foreign policy postures also reflected a similar stance. Obama criticized the UN for permitting
the Iranian President Ahmadinejad to address the UN General Assembly even when US national
agencies confirmed that Iran has no nuclear weapons program. He has reiterated quite a few
times his intention to use all American power, including military force, to stop Iran’s nuclear
program. Almost in Bush-like tones, he has expressed his unwavering commitment to escalate
the war in Afghanistan and widening the scope of US bombing in northwestern Pakistan, with or
without the consent of the Pakistanis. To that extent, he has indicated continuity of Bush
administration’s military unilateralism.

His pursuit of support from Israel and the Israeli lobby in the US has been persistent. Uri Avnery,
the veteran Israeli writer and peace activist, described Mr Obama’s appearance at the American-
Israeli Public Affairs Committee (AIPAC) as one that “broke all records for obsequiousness and
fawning”. He stopped former President Jimmy Carter from speaking at the Democratic Party
Convention for fear of a backlash from the Israeli lobby; this was described as “a cynical kind of

Mr Obama’s stirring populist rhetoric during the campaign and use of words like “Change” and
“Hope” and undulating chant, “Yes, We can”, boosted a demoralized nation and supercharged its
younger people.

He made broad promises to rebuild a crestfallen nation—its infrastructure, its education and
health systems and to revamp its tax structure to favour families earning less than $250,000 a
year. He forged a cross-racial coalition of the young, the poor and the unemployed, as also the
middle classes imparting to his campaign—a progressive veneer in a nation soaked in neo-
liberalism. So the Right Wing labelled him as a “socialist” but to no effect. For Obama, winning
the elections proved easier than subduing Hillary Clinton. The financial meltdown too came just at
the right moment to turn the tables on John McCain.

Obama’s campaign raised far more money than any other US pre-sidential candidate in history,
not all from small donors, contrary to his campaigners’ claim. Fewer than 2,600 contributors to Mr
McCain campaign fund were “chief executives”, nearly 6,000 of Mr Obama’s contributors were
listed as chief executive officers. Washington lobbyists and lawyers, the communication industry
and the electronics industry, healthcare-related private interests, nuclear and pharmaceutical
industries and all kinds of big business made huge contributions. Lobbyists alone gave $37
million. Will they and other big donors not be rewarded?

His previous record in politics shows that he made a speech opposing the impending Iraq war in
2002, before he came even into the Illinois Senate but he voted in favour of every war
appropriation bill during the Bush administration. He edited the Harvard Law Review, taught law
at Chicago University, and was a civil rights lawyer before coming into politics, but as a Senator
he, without compunction, voted for the Patriot Act 2, notorious for extreme curtailment of civil
liberties in recent US history. He, along with Mr McCain, voted in favour of the bailout plan that
gifts hundreds of billions of dollars to the very financial institutions who caused the infamous
meltdown. As President-elect he urged the Bush administration to bail out General Motors as

Mr Obama has been advocating a military policy that is incompatible with the investments he has
proposed to re-build America’s failing physical and social infrastructure. Thus, somewhere there
is a quirk in his leadership—projected as pacifist and progressive.
Finally, we have to consider the Indo-US relationship under Mr Obama? The basics of the new
Indo-US equation were formulated under Mr Clinton and not under Mr Bush. A far-reaching
military alliance for the Indian Ocean and beyond; the US-Israel-India axis for West Asia; the
nuclear trade are likely to be pursued by Obama, though without flair. There could be some
pressure to sign the Comprehensive Test Ban Treaty (CTBT) but that will not endanger nuclear

Obama represents a declining West and America. For an assurance of his doubtfully great
presidency, he can only look backward to the USA’s past glory. America is a
futurist nation, but if Obama looks forward, he will only see an Asia Rising—not a very
comfortable thought even for an African-American President of the USA!

Governments continue to dither and differ on solutions and their adoption. Experts are in panic
because the rich nations are trying to lock in their advantages by revising the 1992 Rio bargain
and re-ordering their Kyoto Protocol obligations, inviting sharp division between haves and
have-nots, on a similar pattern as was created by the Non-Proliferation Treaty (NPT) when the
Nuclear Powers tried to impose an unequal treaty to which India never became a signatory. Now,
belatedly the Nuclear haves are tackling the anomalies through the India-USA Nuclear Deal.

On Climate Change, a new bargain is being hammered out for fashioning a 2009 Copenhagen
Protocol to rich nations’ advantage.

The Kyoto Protocol had targeted only 7 per cent reduction in carbon dioxide emissions below
1990 levels but richer nations did not adhere to their commitments. For their failure, they are
blaming India and China. They are resorting to high sounding rhetoric to justify their lack of
responsibility and asserting that global warming cannot be slowed down unless India and China
agree to cut their emissions at par with them, even though emission levels in these countries are
much lower.

Decision makers in rich countries hold the ultimate power to decide the fate of billions but cannot
think beyond their own national and geographic boundaries. They can also not think of times
beyond their own. They care only for their immediate national interests, pushing the world to the
brink of global disaster. But, the threat of climate change is global and cannot be dealt with by
individual nations who all face the challenge of sustainable development.

Men of narrow vision believe that global warming would affect different countries differently and
some, who currently wield great political clout, are smug with the thought that their own country
would not be so badly off. The rich nations, with their vast technological resources, appear to
have calculated that countries in the colder climes would, in fact, gain by climate changes
because warming would bring about favourable changes in terms of cropping and vegetation,
thus providing them with greater food security than they enjoy currently.

Such beliefs could prove devastatingly illusory. Recently, US Senator Joe Lieberman
acknowledged at a group discussion that US government dishes out such ideas and information
as foster resistance in the US Congress to America slashing its high emissions. This was the
reason why the Lieberman-Warner cap-and-trade Bill got defeated in the US Congress. We must
not forget that the USA accounts for nearly a quarter of the world’s total carbon emissions. The
sly diplomacy of the
western nation-States led by the USA is shocking.
The Western powers, whether it is the question of subsidies at the WTO’s Doha rounds of talks or
global bargaining on climate change, are trying to trick and deceive the poorer nations into
arrangements that would render them even more vulnerable. And, Western powers’ political and
economic dominance will continue. They are not willing to work out arrangements that are
equitable and fair to all nations.

China and India are being targeted to bear the maximum brunt of climate change even though
their current contribution to global warming is small compared to that of the advanced G-8
countries. China and India’s enlarging economies are causing concern among Western nations
and they would do every thing possible to keep India and China at a competitive disadvantage.

Western diplomacy works on the principle that national interest is the ultimate director of foreign
policy and the powerful nation is entitled to use all the persuasive-coercive tools to make other
nations bend to the powerful nation’s demands and interests. But in the present situation, they
are forgetting that there will be no winners against global dimensions of climate change. Climate
change, as is already being seen, will make weather patterns more unpredictable everywhere,
including in higher latitudes. In the upper reaches of the Arctic already warming is twice as fast as
the rest of the world. Un-seasonal heat and rain, floods and droughts have affected Europe and
USA as much as Asian countries. Climate change potentially can wreck agriculture, public health
and ecosystems in colder lands also, besides breeding unmanageable viruses. Strangely, in the
subsahara regions it is bringing rain and greenery and a new pattern of cropping that these
deserts never saw before.

Another important point to remember is that China and India are no longer weak on the
negotiating table. The western countries are not in a position to ignore the huge developing
markets and economies of these two Asian giants. These two countries are fast developing and
leading other poor nations in the WTO and other forums. Western powers are finding it difficult to
divide the poor nations at the economic forums and so is also the case at the Climate Change

There is danger and risk in this climate of distrust and division among governments of the world
for people everywhere. These divisions and unresolved disagreements will create more threats
for humanity. The efforts and vision of sustainable development at this time is enveloped in an
atmosphere of devilish disregard to the questions of survival. We cannot talk of sustainable
development and national interests at the same time. Globalization is being exploited by richer
nations to gain an upper hand and not for treating the McLuhanesque global village as one

It is true that our scientific knowledge at this time is short of fully understanding and answering
questions that are being thrown up by climate change and changing world environment. So, US
President and other western leaders find the environmental issues as mere exaggerated
projections of scientists and human rightists. They, therefore, underestimate the likely impact of
climate change.

In the present international political scenario, we can see that climate change could escalate
interstate and intrastate competition and contest over natural resources. For India, this potential
threat looms very large. The Great Game over water, experts predict, will have Asia in its grip.
China’s control over Tibet, which is the source of all major Asian rivers except the Ganga, may
create problems of continental dimensions for agriculture and sustainable development and
countries from India to Cambodia could find it difficult to sustain the growth of their economies.
“Accelerated melting of glaciers and mountain snows would affect river-water flows, although
higher average temperatures are likely to bring more rainfall in the tropics”, says Brahma
Chellany, a security expert.
Higher extremes of weather could create a rise in ocean levels and will “spur greater interstate
and intrastate migration—especially of the poor and the vulnerable—from the delta and coastal
regions to the hinterland”. The influx of aliens would disturb the local populations and “provoke a
backlash” and internal and regional security will be threatened as there would be strains on the
resources. Already, Bangladesh, has been losing land to saltwater incursion and further trend in
this environmental change will force its people to enter India in hordes.

The whole concept of sustainable development is in jeopardy because of climate change and
human security itself faces the maximum threat. Climate Change will devastate the vulnerable
economic sectors altogether. Disparities are bound to get aggravated. The resource conflicts and
uncontrollable migrations, failing states, spreading extremism and high frequency of
unpredictable weather are in store for the whole world, if governments do not come together to
deal with questions arising from the issue of changing climate and its impact on human

The changing pattern of production and how it will impact humanity at large is illustrated by the
diversion of food for biofuels that has created a windfall for major farm industries while pushing
the world’s poor to greater backwardness. This is how the issues of environment and sustainable
deve-lopment are inextricably linked. Another innovative but highly coun-ter productive measure
is the buying of carbon credits from poor nation-States to exceed carbon emission targets of
richer nations. This is proving as no more than mere “environmental grandstanding” and a form of
“carbon colonialism” because, ultimately, the net impact on global warming remains the same.

India is considered a well-established democracy. Looking back, it has been a momentous

journey since Independence in 1947 and adoption of the Constitution on January 26, 1950. Yet,
the Indian democracy has not fructified. Its constitutional goals and democratic aspirations remain

Even though the Indian democracy has withstood six decades of social, economic, political
challenges, including an 18-month long State of Emergency, the challenge to its democratic
governance persists. Simply put, “The rule of law” does not prevail in India. In fact, threats to the
rule of law are relentlessly subverting Indian democracy and imperilling its system of governance
in the country.

It has been proved beyond doubt that social and economic progress achieved by developed
democratic societies is directly the result of their vigilant protection and enforcement of the
rule of law.

The right to equality before the law, often phrased as ‘equal protection of the law’, is fundamental
to any just and democratic society. Rich or poor, majority or minority, political ally of the State or
its opponent—all are entitled to equal protection before the law.

We may argue that life does not treat every one equally and even in the same family each
member has a different course of life. However, the State and its systems are the creation of man
and not of fate and the State has the responsibility to treat all its citizens equally. According to the
constitutional law expert John P. Frank, “Under no circumstances should the State impose
additional inequalities; it should be required to deal evenly and equally with all of its people.”

In a democratic State, no one is above the law. Democracy is for the people, by the people and of
the people, said Abraham Lincoln. The laws in a democratic State are created in the name of the
people by the elected representatives of the people. They are not supposed to be imposed upon
them. There is a sound presumption that citizens of a democracy submit to their laws because
they know that they are submitting to themselves, however indirectly, as makers of laws. Once
the laws have been made and the people obey them, both law and democracy prevail.

The history of every society shows that the power-holders tend to get corrupt and tyrannical. In a
demo-cracy, those who administer the criminal justice system hold great power and the potential
for its abuse is inevitably there. The State power is exercised to imprison, seize property, torture,
exile and execute individuals without legal justification—and even without any formal charges
being brought. A democratic society that tolerates such abuses faces the peril of
curtailing its democracy and even losing it.

No State can exist without having the power to maintain order and punish criminal acts.
Democratic States too must have the power to punish the wrong-doers but the rules and
procedures by which the State enforces its laws must be explicit, transparent and open to the
public view. Yet, no democratic State is free from secret, arbitrary and manipulative power and
political trickery.

There are essential requirements of due process of law in a democracy that may be briefly
described as follows:

[1] No one’s home can be broken into and searched by the police without a court order showing
that there is good cause for such a search. The midnight knock of the secret police is repugnant
to democracy.

[2] No person can be arrested without manifest, written charges that specify the alleged violation.
The accused are entitled to know the exact nature of the charge against them and must be
released at once under the doctrine known as habeas corpus, if the court finds the charge and
arrest invalid.

[3] Persons charged with offence should not be held for protracted periods in prison. They must
have the right to a speedy public trial, and to cross-examine their accusers.

[4] The authorities must grant bail, or conditional release, to the accused pending trial, if there is
little likelihood of the suspect to flee or commit other crimes. “Cruel and unusual” punishment, as
determined by the traditions and laws of the society, such as
community panchayat’s punishing members of their community for violation of their customs,
must be prohibited.

[5] Persons must not be compelled to be witnesses against themselves. This prohibition must be
absolute and the police must not use torture or physical or psychological abuse against
suspects. A legal system that bans forced confessions stops the police from using torture,
threats, or other forms of abuse to obtain information because the court will not allow such
information as evidence during trial.

[6] No person shall be subject to double jeopardy; that is, no one be charged with the same
offence twice.

[7] The so-called ex post facto laws are also proscribed. These are laws made after the fact so
that someone can be charged with an offence even though the act was not illegal at the time it
was committed.

[8] Defendants should have access to additional protections against coercive acts by the State.
For example, in the United States the accused have a right to a lawyer who represents them at all
stages of a criminal proceeding, even if the accused is not able to pay for such legal service. The
police must inform suspects of their rights at the time of their arrest, including the right to have a
lawyer and the right to remain silent for avoiding being witness against themselves.

Though efforts have been made to enforce and institutionalise the rule of law in India they have
not achieved the intended results. We cannot say that the normative framework of constitutional
governance does not exist in the country. This has been provided by India’s Constitution and
many institutions have also been established under it. However, no deep values have been
ingrained, nor unassailable principles, as directed by the Constitution, are being practiced by
India’s institutions. As a result, the Indian society is bereft of the benefits of constitutionalism.

Six decades of governance should have been long enough for a country like India with a very
long tradition of Satyamev Jayate to develop institutions whose working would reflect both
inherited and acquired values of enlightenment and rational social and political conduct. All that
our institutions have done is to rouse high social expectations with a modicum of their fulfilment.
The abuse of power has, in fact, become a universal phenomenon.

The Indian judiciary enjoys good reputation both nationally and internationally for its progressive
interpretation of various provisions of the Constitution that has helped promote the cause of social
justice. Judicial interpretations have expanded the scope of our fundamental rights as
enshrined in the Constitution. Higher Judiciary has also helped overcome restrictions on rules
relating to locus standi and created new avenues for seeking remedies for violation of human
rights. It has allowed public interest litigation petitions and genuinely intervened in the areas of
child labour, bonded labour, clean and healthy environment, and women’s rights, to cite a few
instances of judicial intervention. Such judicial interventions on behalf of human rights have been
successful in upholding the rule of law.

But, in view of the vast and unmitigated violations of justice, these judicial achievements simply
pale into insignificance. The scale of prevailing inequalities and violations of human and
fundamental rights have made the Indian democratic State look like a despotic dispensation.
Enforcing the rule of law itself remains a fundamental challenge, leave aside other innumerable
crises of the Indian legal system. We do have the laws, but no implementation of these laws; we
have a vast body of rules that are followed more in their violation than in their observation.

The behaviour of those who govern is highly reprehensible. They have no respect for the laws of
the land. Citizens too have ceased to care for the laws and be law-abiding. This lack of respect
for laws by the government and the people at large is becoming a most serious threat to Indian
democracy. The Indian people are fast losing trust and faith in the democratic institutions.

Passing more laws and establishing more institutions is causing what appears to be an organized
confusion in the legal system of the country. Plethora of laws and increasing number of Tribunals,
Rights Commissions and Forums are only increasing the role and size of the insensitive
bureaucracy in the system of governance. They are creating and perpetuating an unjust society
that the people now accept as a fact to live with. There is need for a fundamental re-examination
of the approaches that have been adopted to enforce the rule of law and critically examine the
effectiveness of Indian democracy.

A report of the National Commission to Review the Working of the Constitution in India noted:
“The paradox of India, however, is that in spite of a vigilant press and public opinion, the level of
corruption is exceptionally high. This may be attributed to the utter insensitivity, lack of shame
and the absence of any sense of public morality among the bribe-takers. Indeed, they wear their
badge of corruption and shamelessness with equal élan and brazenness.”

In the last decade there has been an expansion of legal education. Innumerable law schools and
universities have come up but the ethical standards in the legal profession have sunk very low.
Both judges and advocates now indulge in corrupt practices. The law itself favours the criminals;
complainants and witnesses suffer the most in the crowded courts and through interminable trials.
Adjournments have become a bane of almost every court, highest and lowest in the whole
country. Neither the judges nor the successful lawyers now inspire the youth. They have created
an unbridgeable gap between the law as it obtains in the books and the law as it is actually
practiced in the courts of diverse description.

Democracy and the rule of law are inextricably connected. Urgent steps are needed to establish a
rule of law society in India or else our credibility as a democracy will get destroyed.


Having maintained steady economic growth over the years, it is time to make India a
knowledge society/hub. Comment.
When the goal is to excel, expediency is ruled out; when the only course open is
merit, mediocrity is out of reckoning; and when the competition is cut-throat,
compromise on quality is out of the question. Making India a knowledge society is
not a pipe dream but a reality, both actionable and achievable. We have already
taken the first step in this direction by establishing the ‘National Knowledge
Commission’. Since the objective of making India a knowledge hub is closely linked
with the setting up of World Class Universities and Institutions undertaking high
ranking research, it is imperative that we focus on right perceptions and correct
practices, irrespective of the compulsions of electoral politics or other petty

The master plan of establishing World Class Universities may hit many a roadblock
unless and until the three key agencies—Human Resource Development Ministry,
University Grants Commission and National Knowledge Commission—agree on the
need of allowing the proposed universities to prosper and excel in pursuit of the
highest standards of academic and research achievements. Since public finance is an
integral constituent of universities worldwide, most of the new universities shall
need significant initial financial support from the government, without any political
and bureaucratic control or interference. Once it is admitted that the universities
shall grow without any covert or overt outside influence, and there will not be any
automatic career advancement but through open competition, the goals envisaged
now will begin to appear after some years and India will be on top as the fountain of

We need intellectuals and original thinkers and for this to happen we must provide
facilities to our universities at par with world standards. Granting intellectual
freedom to universities, Vice Chancellors and faculty members is also the
prerequisite of making India a knowledge hub. MARKET ECONOMY VERSUS
A casualty of the expanding market economy has been the devaluation of the academic
profession. Comment.
Today, when we stand in front of our shopping malls, multiplexes and other exhibits of money and
market power, we find to our dismay that the real and regretful casualty of the expanding market
economy has been the devaluation of the academic profession.

Although comparisons are odious yet they are inevitable in the globalised village that we inhabit.
Both competition and competence are the buzzwords. If by design or default academic excellence is
allowed to suffer at the altar of economic forces, the consequences in the years to come could be
quite unpleasant and unwanted. One of the fallouts of the shortage of research scholars will mean
hindering India’s progress as a knowledge economy. There is already a severe shortage of well-
trained young doctorates to fill existing posts in research institutes and universities. This problem is
likely to be even more acute in the envisaged élite new universities of the international standards.
There is ample evidence that India is not well-placed and prepared for the future transformation
since the growth in the number of doctorates has only been 20 per cent in the period 1991-2001,
compared to 80 per cent in China. In the opinion of prof M.G.K. Menon, eminent scientist, there is a
crying need to provide better incentives to encourage youngsters to take up science and research as
a career. For this to happen it would also be necessary to get the best amongst the young to come
into science, and take up research. There has to be a sustained campaign to point to the excitement
of science and the discoveries that come through it.

Besides offering lucrative incentives to those who wish to go in for academic career as faculty
members and research scholars, there is a pressing need for urgent government policy
interventions, including high priority initiatives, to attract, nurture and retain the country’s best
young minds in academia and research. Under no circumstances should the market economy be
allowed to undermine academic profession-cum-research. Those at the helm of affairs should know
that increased coverage in the media of different facets of teaching, research and academic
achievements, both nationally and internationally, can turn the tide in favour of academia.

Recent corporate scams have highlighted the necessity for enacting or amending suitable
laws to protect the interests of investors and share- holders.” Give
arguments For and Against this view.
Recent corporate bungling in Satyam Computers has triggered
a debate in the corporate circles as well in the government. The attempted move was aimed at
benefiting two promoters of Maytas by more than Rs 7000 crore, by proposing to buy their
shareholding in Maytas Infrastructure in a slip-shod manner, without any transparency. The most
startling issue was that the proposal was only to buy the stake of the promoters and not that of the
company as a whole. This was an overt move to transfer the investors’ money from Satyam
Computers to two promoters of Maytas, who happen to be the sons of the CMD of Satyam
Computers, without following any prescribed procedure under the Companies Act, highlighting the
need for amending the statutes to prevent the recurrence of such incidents.

Arguments For the View

(a) The Companies Act was legislated several decades ago when
the trade and industry were in a nascent stage in the country. At that stage several contingencies,
which are obvious now, could not be anticipated. Hence, with the changing times, the legislation
must also be amended suitably.

(b) Fraudulent moves by the corporate houses have been experienced even in the past. It is a
matter of concern, as the lacuna in law has been identified by the law breakers very well. With a
view to obviate such moves in future, it is necessary to plug the loopholes by enacting a new piece
of legislation.
(c) It is the responsibility of the government to protect the rights of the small investors. The
government must come out with a new set of legislation or amend the Companies Law suitably.
Such a move would also restore the confidence of the investors in the markets.

(d) By virtue of their shareholding, the promoters are at the helm of affairs of the companies
promoted by them and are actively involved in the decision-making process. Unless there are
certain safeguards, such decisions aimed at benefiting the promoters would continue to take place.

Arguments Against the View

(a) The case of Satyam Computers is an isolated one and cannot be treated as a routine affair. It
would be inappropriate to enact another piece of legislation just because of a mischievous move by
one company. The possibility of similar moves by other companies in future, which are otherwise
covered by the existing laws, is remote.

(b) The existing legal framework is sufficient to tackle frauds. The need is to execute the existing
legal framework efficiently, rather than creating new set of laws and rules.

(c) SEBI has been set up by the government to safeguard the interests of the investors and to
ensure that no company enters in to any unethical practice. There appears to be no need to have
new set of laws to tackle such problems in future.

(d) Deregulation of the economy is one of the objectives of the new economic policy. Under such a
scenario, it would be wrong to enact new laws to regulate the economy further

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