No More the Quality of Education, It’s the Calibre of Students that is Making the Institutions Premier

What is the probability of an aspirant getting admitted in to a top IIM or a top IIT? No marks for guessing – it is less than one percent. Stated in other words, assuming (suspiciously) that the entrance exams JEE and CAT are capable of evaluating what is being sought to be evaluated, the probability that one who has been admitted to a top IIM or a top IIT belongs to the positive outlier zone of the mean calibre of the applicants.

Unfortunately, the same is not true for the calibre of the faculty who teaches at a top IIM or a top IIT. The education and teaching imparted is nearly as good or as bad as it is at the other top-ranked peer institutions. [this ranking of institutions as premier, tier-I, tier-II etc., is a caste system leading to an interesting aberration in the job market where employers end up hiring institutions rather than individuals; but more on this institutional caste-system some other time]. Not many would have the courage to acknowledge it in public, but many stakeholders associated with these so called top-rung institutions do acknowledge in private about quality-problems with the process of imparting education at their institutions.

Part of the quality problem is due to a low level of requirements in many subjects and the below average capability of the faculty engaged in such delivery. For the most part, the only, crucial, form of evaluation is assessments of student, which are more an expression of student satisfaction rather than a reflection of the quality of the education provided. There is an in-built incentive for mediocre teachers to use less-demanding course content or not be strict or demanding in assessments of performances of student. If the students are paying substantial fees there is an additional pressure to ensure that “the customers” are satisfied and to avoid reducing the market by failing students with weak results.

Institutions, programmes and courses that have low standards achieve a high student completion rate and are rewarded accordingly. Courses, specially the electives, that have a reputation for being demanding may also be less appealing to students and lead to fewer applicants.

It might be supposed that many institutions want to maintain high standards in order to improve their reputation with employers and ambitious students. But “student satisfaction” is not the same as high standards in terms of qualification output. A study of students’ ratings of lecturers’ show that people on courses assessed to be easy rather than difficult gave higher scores to their lecturers.

Another problem is lack of motivation amongst student to acquire knowledge. Their motivation for hard work at the pre-admission stage is in seeking the admission. Once admitted, failing in the programme of study need more delinquencies than the inadvertent effort put in here and there that suffices to succeed. The students in the institution are motivated only to grab the crème of job-offers that flow in quite unaffected by a limited study-input of many students but by the momentum of ranking and reputation.

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Take a PAUSE ! THINK !!

Profitability of business is associated with the efficiency of deployment of an input-mix comprising of – Machines, Manpower, Materials, Methods, and Money.  The era of increasing the component of Manpower in this heady mix is long gone and the emphasis has been on reducing the Manpower to a LEAN extent possible. Technology (Methods) makes labour a commodity-input that can be contracted as easily as any other. The shifts from outsourcing to ‘Uber’isation have been largely driven by the corporate imperative to create shareholder value, and under our current conditions, creating shareholder value and creating good jobs are largely incompatible. Corporations are “job creators” only as a last resort.

Out there is a sea of humanity, which more than anything in the world, wants a regular job with a wage. Jobs provide income, inclusion, confidence, comfort, security, a meaning to life and are a source of engagement that keeps people busy. Good jobs are essential to the good life. Yet good jobs are a minority and India needs lots of them.

Jobs and wages have to be at the heart of all economic growth. Growth without increase in jobs could trigger the rise of anti-nationalism, populism, crime, fanaticism or civil-unrest. Neither a Socialist nor a Capitalist approach to economic management can overcome the threats and consequences of job-less growth.

Technology is not destiny; nor is globalisation. Their direction is not random but shaped by decisions made by firms, governments and individuals. In other words, there is a choice, and it is up to leaders of governments, corporations and civil institutions to shape it in ways that will benefit ordinary citizens as well as themselves – or, as we have seen, ordinary citizens will do it for them.


Focussing onCSR whose Sense is Flawed

The Companies Act 2013 brought focus on Corporate Social Responsibility (CSR) using the logic – Companies take resources in the form of raw materials, human resources etc from the society. By performing the task of CSR activities, the companies are giving something back to the society.

The term CSR has been defined under the Companies (Corporate Social Responsibility Policy) Rules, 2014 that came into effect from 1 April 2014, which includes but is not limited to:

  • Projects or programs relating to activities specified in the Schedule; or
  • Projects or programs relating to activities undertaken by the Board in pursuance of recommendations of the CSR Committee as per the declared CSR policy subject to the condition that such policy covers subjects enumerated in the Schedule.

The activities that can be done by the company to achieve its CSR obligations include eradicating extreme hunger and poverty, promotion of education, promoting gender equality and empowering women, reducing child mortality and improving maternal health, combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria and other diseases, ensuring environmental sustainability, employment enhancing vocational skills, social business projects, contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women and such other matters as may be prescribed.

An objective analysis of the above shows that the government has attempted to transfer part of its developmental responsibility to the corporate sector; surreptitiously levied an additional corporation tax in the garb of mandatory CSR expenditure; and is simultaneously subsidising such expenditure through making CSR expenses tax deductible.

Government has no control over such haphazard expenditure of CSR funds. A parliamentary question (Lok Sabha Starred Q 373; 11 Aug 2017) proves the point.


PETER DRUCKER had explained CSR thus:

The proper social responsibility of business is to tame the dragon, that is, to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs, and into wealth.

CSR was thus social entrepreneurship which the great Indian polity and bureaucracy have reduced to obligatory expenditure. For business, it is turning out to be just another tax and cost of doing business in India.


The above was first posted on FaceBook on 23 January 2018. A report on 05 March 2018 in Indian Express substantiated the slapdash expenditure of CSR funds.

csr_Indian Express


Precariat – Appreciating the Rise of This Social Class

The richest 1 per cent in India cornered 73 per cent of the wealth generated in the country last year, a worrying picture of rising income inequality. Besides, 67 crore Indians comprising the population’s poorest half saw their wealth rise by just 1 per cent, as per the survey released by the international rights group Oxfam. The situation appears even grimmer globally, where 82 per cent of the wealth generated last year worldwide went to the 1 per cent, while 3.7 billion people that account for the poorest half of population saw no increase in their wealth. That the global picture is worse than what it is for India can be a very fragile solace.

In sociology and economics, the precariat is a social class formed by people suffering from precarity, which is a condition of existence without predictability or security, affecting material or psychological welfare. Specifically, it is the condition of lack of job security, including intermittent employment or underemployment and the resultant precarious existence.

In pursuit of competitiveness, governments have implemented policies of labor flexibility, making labour more insecure, leaving millions without health care, pensions or other benefits. Governments have turned to means-tested social assistance and to workfare. The welfare state has withered. The precariat has emerged from the liberalisation that underpinned globalisation. It consists of a multitude of insecure people, living bits-and-pieces lives, in and out of short-term jobs, without a narrative of occupational development, including millions of frustrated educated youth who do not like what they see before them, millions of women abused in oppressive labour, growing numbers of criminalised tagged for life, millions being categorised as ‘disabled’ and migrants in their hundreds of millions around the world. They are denizens; they have a more restricted range of social, cultural, political and economic rights than citizens around them.

Precariat is a new dangerous class-in-the-making, internally divided into angry and bitter factions, who face overlapping challenges of unemployment, low income and loss of social security. Most in it do not belong to any professional or craft community; they have no social memory on which to call, and no shadow of the future hanging over their deliberations with other people, making them opportunistic. The biggest dangers are social illnesses and the risk that populist politicians will play on their fears and insecurities to lure them onto the rocks of neo-fascism, blaming ‘big government’ and ‘strangers’ for their plight.

So far, the precariat in Europe has been mostly engaged in EuroMayDay parades and loosely organised protests. But this is changing rapidly, as events in Spain and Greece are showing, following on the precariat-led uprisings in the middle-east. Recent political discourse directed at the Precariat shaping the success in the election outcomes of the US, France and Philippines show the strength of this emerging class. Precariats face insecurity, instability and vulnerability. This tribe is as much anti-state as it is anti-business.

A progressive strategy for the precariat must involve more equitable control over other key assets of a tertiary society – quality time, quality space, knowledge and financial capital. There is no valid reason for all the revenue from financial capital going to tiny elite who have a particular talent to make money from money. The only way to reduce income inequality in an open market society is to ensure an equitable distribution of financial capital.

This article draws on “The Precariat: The New Dangerous Class” by Guy Standing


Change the Paradigm of Indian Economic Policy

(A Humble suggestion to the Hon’ble Finance Minister of India on the 2018 Budget Day Eve)

The paradigm of Indian economic policy was last changed during the Budget presentation for 1992-93. Popularly touted as LPG – Liberalisation, Privatisation, Globalisation, the policy reforms and changes in 1992 and thereafter appear to have triggered a drastic divergence in incomes and wealth.

India has been very happy with economy as a whole growing at 5.6% over the last 25 years. But at the ground level, income for 90% of the citizens grew merely at 2.0% while income of the top 10% people grew by 11.5%.  There is no global competition going on for being the highest growth economy. If at all there is one, it should be for the economy where bottom 90% of the population registers the highest growth rate in income. It might be better economics and better politics to change policies where income for 90% of the citizens grows at 4.0% even if the economy as a whole registers a marginal decline in its growth rate.

LPG paradigm shifted the economic policy from full employment to inflation targeting; the pursuit of “flexibility”, often through deliberate weakening of worker organisations, became the watchword for labour markets.

A new emphasis on shareholder value triggered a move from retention and reinvestment of earnings to cost-cutting and distribution in corporate allocation strategies; and these combined with technological advance to launch a wave of globalisation activated a very different cycle, than the previous growth cycles, in which jobs and wages were at the heart of what can now be seen as a virtuous circle. In such virtuous circle, wage growth led demand which fuelled investment, employment and higher productivity, feeding back into higher wages. When this was followed by redistributing the wealth created, employment was also a powerful vehicle of social mobility and inclusion.

Liberalisation has delivered the opposite of inclusion – inequality, insecurity, and the feeling of being excluded from global and technological advance is beginning to simmer below the ground. There is a choice, and it is up to you as part of the leadership of government. As gatekeepers of the investment decisions that determine how the larger trends play out both macroeconomically and where it counts for individuals, in jobs and pay. Your decisions and measures envisaged will have to go far beyond conventional supply-side adaptation, such as investment in education and infrastructures, to include the much-neglected demand side of the labour market equation and what drives it- the incentives which have fuelled short-term focus, national finance as the descriptor of real economy and the race to the bottom in pay and conditions that have done so much to fuel insecurity and inequality.

Business has to be a positive-sum game – value creation rather than appropriation – and reframes companies, in the late Sumantra Ghoshal’s words, as “society’s main engine of discovery and progress”. In like vein, businesses can be seen as society’s problem-solvers and growth as a measure of the rate new solutions to problems become available. The genius of capitalism, in this view, is not allocation or efficiency but creation and effectiveness – evolutionary processes in which companies that fail to innovate eventually succumb to the rising tide of the market.

“Free enterprise cannot be justified as being good for business. It can only be justified as being good for society”. Corporate responsibility is to deliver growth and prosperity for everyone, period. And that changes almost everything. The CSR spend as incorporated in the Companies Act is a cess on profits – just an increase in cost of doing business and a cleanser for guilt of being good only for shareholders and customers but not being good for the society.

The big task before you Hon’ble Finance Minister is to make “the economy work for everyone”, to quote UK premier Theresa May, and this will require everything but business as usual.