Saturday, February 06, 2016



“Strengthening Free Enterprise In India”

The Forum of Free Enterprise in association with the Nani A. Palkhivala Trust and ACC organised The Thirteenth Nani. A. Palkhivala Memorial Lecture on February 04, 2016, Thursday at the Tata Theatre, NCPA, Nariman Point, Mumbai.
The lecturer for the event was delivered by one of India’s finest and dynamic Economist Dr. Raghuram G. Rajan, Governor, Reserve Bank of India.
The Governor addressed the crowd of over 800 comprising of students, teachers, Economists and activists on his ideas about “Strengthening Free Enterprise in India.”
In the beginning Dr. Rajan talked about the great late Adv. Nani. A. Palkhivala, his heroic achievements and courageous fight for the free enterprise in India in the post independence era.
He then moved to talk about his ideas about the same and how we can strengthen free enterprise by motivating the young Indian minds to be the ‘job creators’ and not the ‘job seekers.’
He enlisted four points that are very important in this regard.
1.     Need For Free Enterprise:
Fewer Regulations:
Dr. Rajan explained that the free enterprise comes with a condition of no excess regulations. He pointed that the regulations must be simple to understand and easily implemented. He said this needs good regulators, jokingly adding, like himself.
He further added that the government and the Regulatory Structures (the central bank) are the most important institutions for the economy to perform well. To make sure no cartels are formed, to ensure perfect competition amongst players, to ensure no malfunctions in the working of the market, to ensure no customer or common man is conned. However, in reality, it is noticed that government and regulatory structures are biased and affect the good and healthy competition in the economy.
Dr. Rajan emphasised on the observation made by late Adv. Palkhivala that India always finds a way in any given problem. Sun eventually rises in India even after the sunset caused by the casting of a small man’s shadow.
Coming back, he pointed the need of free entry and exit, giving an example of his findings about Italy when he was working with some of the World Bank economists. Dr. Rajan’s team was surprised with the comparatively slow development of Italy despite having more number of small firms. As the rumor goes in the economic world that small firms ensure development, this observation proved to be a criticism for such beliefs. Dr. Rajan later pointed that the reasons for Italy’s slow development are biased regulations, license permit raj, inspector raj and corruption. Thus it is very important to have small firms that will grow big overtime and not the ones that will remain small. As small firms do solve the problem of unemployment in the short run, it is necessary for these small firms to grow big and occupy large number of people. Free enterprise is needed for small firms to grow.
Regulations are necessary, but they must be good and well enforced for the benefit of the Economy.
Dr. Rajan thinks that India, if it wants to develop its economy, has to get rid of license permit raj, and inspector raj, to make sure that new firms do grow big and face fewer obstacles during their infancy period. He fears that a new resource raj is growing in India. However, he is very optimistic about India’s future. He also praised the Government’s recent efforts to encourage new start-ups through their scheme of, “Start-up India”.
Access to Finance:
Money is the most important tool for development. He said, we have a wonderful saying in Hindi, “Paisa bolta hai” which, when translated in English literally means, “Money talks”. People can be empowered if they have access to credit.
Finance is an important aspect for firms to grow. Institutional development is one part of the story. He explained, most of the loans given by big banks are on the basis of character of a person. Also the process of big banks and their branches is long and hectic. This forces us to give importance to small banks. Small banks give credit to small investors and small firms.

Availability of Power:
Countries ability to pull in resources and power is also another important element. Here, by power he meant the capital (machines and technology), industrial plants, facilities, assets, natural resources, supply of electricity and water, space, access to land and infrastructure.
Infrastructure should be provided to the start-ups as small firms find it difficult to transport their material through air. Also logistics is a big deal for start-ups as they have to ensure their products reach on time.
Provision of land is also a big problem for new start-ups as land availability has become difficult. A firm needs a mass of land to establish its workshop or factory. Thus, provision of land is very important for small firms.

Resolution of the living-dead firms:
Dr. Rajan feels it is very important to allow small firms to exit the market freely if they are not performing well. He is disappointed with many IT Parks having vacant sheds. The reasons for many empty sheds are because they are owned by debt ridden companies who couldn’t pay the rent. This certainly can be changed provided we have laws for easy exit. We can then certainly have new firms in those empty sheds.

Loan Default and Market Competition:
Dr. Rajan later turned his attention towards bankruptcy. He was disappointed with loose laws of bankruptcy where large firms do get away but small firms remain trapped. The bankruptcy code is a necessity, he said.
Emergence of cartels and monopoly, according to Dr. Rajan, is a serious problem. However he displayed satisfaction over strengthening of the Competition Commission of India to prevent cartels from forming.
Dr. Rajan is aware of changing political times where government is getting work done and talking of development. The reason, he believes, for entry of competition and reforms in political arena is increasing pressure from the educated unemployed youth. Demand for jobs is in millions every year.

2. Protection Of Property Rights:
Great debate on retrospective taxation allowed us to finalise our stand. Dr. Rajan believes that we need a moderate level of taxation. He says that improvement in the taxation process has resulted in transparency and less demand. The current tax levels are comparatively better than the tax we had some years ago. He is very optimistic about the new Goods and Service Tax bill (GST) and hopes that the Parliament clears it soon. MNCs complain high taxation and hence they try to reduce tax or even evade tax over property rights.  This poses a conflict between the government and the MNCs. Dr. Rajan asked everyone to ensure that we get access to various social capabilities for success of free enterprise.

3. Access to Capability:
Dr. Rajan briefly talked about the capability of the entrepreneurs to enter the race of starting and eventually nurturing the enterprise to a large empire. He compared today’s world to the world in the era of great Economist, Prof. Adam Smith. He pointed that education and skills were not the necessity to enter into the business world back then, but today the fields of finance, accounting and business are growing and are the necessary as well as the sufficient conditions to enter the competition. Government is thus providing and encouraging the youth to take up programmes for education and skill development.

4. Safety Net:
Dr. Rajan emphasised the importance of safety net to insure individuals from suffering debt. He believes that safety net will make it easier to take risks. He says that it is about protection of individuals first and not the firms or organisations as we have to thrive competition in the market. Organisations can be uplifted or closed but individuals are supposed to be protected. However, he feels that safety net should be provided to individuals with respect to our budget. Government's budgetary capacity must be considered and thus have limited, affordable and reasonable insurance.

At the end of his address, Dr. Rajan said that it was overwhelming to see new enterprises growing. He is optimistic about the growth of manufacturing and service sector. He urged all the youngsters to start-up their own business, as doing business earns a reputation. He praised the businessmen like the Tatas, the Murthys and the Bansals for their focus on framework and advised the youth to take inspiration from them.
Dr. Rajan concluded his address by quoting the words of late Adv. Nani. A. Palkhivala, “India always seems to find a way, perhaps not quickly, but eventually in due course, for sure.”




As charted and compiled by Raj Kamble, Sanmeeka Deshmukh and Vidhi Anam. (Members of Forum of Free Enterprise, The Economics Club and students of Ramnarian Ruia College)

Monday, March 02, 2015

Seminar on Union Budget 2015- 16


Jointly organised by: The Economics Club Policy Advocacy Group and Cosmopolitan’s Valia C.L. College of Commerce & Valia L.C. College of Arts, D.N. Nagar, Andheri West



Date: .Saturday,7th March 2015                               

Time: 2.30 pm to 5.30 pm



Objective:

To invite a focussed discussion on the following areas:

ü  Fiscal Roadmap, Impact on Fiscal consolidation and other areas pertaining to the fiscal side of the budget

ü  Impact on Infrastructure Development and Investment

ü  Financial sector reforms and the impact on the capital market



Flow of The Seminar:



1)   Welcome Address:        Dr. Satheeth Menon, Principal,Cosmopolitan’s Valia College

2)   Introductory Remarks: Mr. Shashi Panikar, President, The Economics Club, Mumbai



3)   Presentations:

Sr. No.
Presentations
Topics
1)
Mr. Sunil Bhandare, Advisor (Economic & Govt. Policy), Tata Strategic Management Group and Former Chief Economist, Tata Group
Fiscal Roadmap, Impact on Fiscal consolidation and related areas of the fiscal side of the budget
2)
Dr. Chandrahas Deshpande, Independent Consulting Economist
Impact on Infrastructure Development and Investment
3)
Dr. Brinda Jagirdar, Business Economist, Former General Manager & Head Economic Research, State Bank of India
Financial sector reforms and the impact on the capital market
4)
Mr. Ritesh Kumar Singh, General Manager and Group Economist, Raymond Ltd.
Impact on the industry



4)   Floor Discussion



5)   Summary:  Dr. Madhavankutty G., Economist (Chief Manager), Bank of India



6)     Concluding Remarks

Tuesday, January 06, 2015

Workshop on 'The Role of an Economist.' (So what do you do Mr economist?)

The Economics Club Mumbai in Association with Valia CL College D.N. Nagar, Andheri West is organising a workshop on the Role of an Economist on 10th Jan. 2015.This workshop aims to help students and teachers of Economics from Mumbai to understand the role of  Economists in different sectors and how they influence the way in which the economy functions.


“So what do you do Mr. Economist?”
Demystifying the role of an economist…

Economics, as a field of study, is crucial to policy making and business decision-making. Interestingly, there are now a lot of opportunities in India for economists. However, it appears that most students are confused about the career opportunities that an economics degree could offer them. While students look up to leading economists with awe and admiration, they are unable to exactly describe the job of these experts.

Do I want to be an economist? What makes an economist? What does an economist do? How to think like an economist?”, these are just some of the questions in their mind.    

It is not rare to hear of well-performing students from Mumbai dropping out of economics programmes at the post-graduate level. Others graduate and take up jobs, only to realise that they don’t really enjoy the jobs that their degree has to offer. Some others don’t realise the immense opportunities that exist for economists just because they don’t know what to do with their degree.

The Economics Club, Mumbai, through various initiatives that include educational programmes, festival and campaigns, has been working with students, teachers and economics enthusiasts to ‘Create Leaders in Economics’!

As a part of these initiatives, The Economics Club, Mumbai in association with Cosmopolitan’s Valia CL College of Commerce & Valia L C College of Arts is organising a 'first of its kind' workshop on the role of an economist. Leading economists from different sectors – corporate, financial services and media will come together on a common platform to discuss their respective roles as economists. Mr. Sunil Bhandare, Advisor (Economic & Govt. Policy), Tata Strategic Management Group will deliver the Inaugural Address at the workshop.

Key speakers:
  Mr. Sunil Bhandare, Advisor (Economic & Govt. Policy), Tata Strategic Management Group and Former Chief Economist, Tata Group
  Dr. Brinda Jagirdar, Business Economist, Former General Manager & Head Economic Research, State Bank of India
  Mr. Ritesh Kumar Singh, General Manager and Group Economist, Raymond Ltd.
 Dr. Madhavankutty G., Economist (Chief Manager), Bank of India
Mr Sanjay Jog, Business Standard
This discussion aims to throw light on how economists engage with and influence both economic theory and practical decision-making. We would like students and teachers to understand the role of economists in different sectors and how they influence the way the world around us functions. This workshop would help students and teachers to understand what exactly qualifies someone to become a good economist? Is it just a degree in economics? What other skills and training would they require?
           
Date: Saturday, 10th January 2015     Time: 9 am to 2 pm
Venue: Smt. Jyotsna Harshad Valia Conference Hall, Cosmopolitan’s Valia C L College of Commerce & Valia LC College of Arts, D. N. Nagar, Andheri (W), Mumbai - 53
Registration Fee: Rs. 100/- (Students) Rs. 200/- (Others) [Includes Refreshments & Certificates]
Please confirm your participation by sending  an email to learneconomics@gmail.com / valiacollege@gmail.com or
Contact: Dr. Satheesh Menon, I/C Principal, Valia College (M. 9967598968)  
   Mr. G. S. Panikar, President, The Economics Club, Mumbai (M.9324818296

Friday, August 08, 2014

‘Challenges of Sustainable Development in India and the Union Budget’ an event organised by The Economics Club, Mumbai and Lala Lajpatrai College of Commerce & Economics on 22nd July 2014.

A seminar was organised by The Economics Club in association with Lala Lajpatrai College of Economics and Commerce.




Dr. Nirupam Bajpai addressed a gathering of economics and management students and faculty from Colleges across Mumbai on ‘Challenges of Sustainable Development in India and the Union Budget’ in an event organised by The Economics Club, Mumbai and Lala Lajpatrai College of Commerce & Economics on 22nd July 2014.

Sustainable development, Dr. Bajpai stated, has three components ‘Growth’ (attaining and sustaining growth), ‘Inclusion / Equity’ and ‘Environmental Sustainability’.

Dr. Bajpai reminded the audience that India is still largely dependent on agriculture and hence revival of agriculture is a top priority. We need to revitalise Indian agriculture especially in large states like Uttar Pradesh, whose dismal performance pulls down the national average. Various Government initiatives in this area include:
  • Focus on Laggard states
  • Identify crops that need support
  • Soil Health Cards for farmers
  • Investment in Irrigation

Certain challenges facing the government include how it deals with the Food Corporation and food inflation. How does one creatively think of challenges like surplus stocks, wastage and hunger, asked Dr. Bajpai.

The ability to create jobs on a large scale will be one of the parameters on which the success or failure of this government will be evaluated. In the next five years, there is a need to create around 60 million new jobs. While a lot of these jobs will come from the private sector, the government has to allow and enable the private sector to create these jobs. India needs to reform its archaic labour laws. Dr. Bajpai believes that action on labour reforms will be initiated by the government in the coming two months.

Dr. Bajpai emphasised that India jumped the gun by focussing on growth of the services sector before developing the manufacturing sector. Growth in the services sector does not necessarily create jobs and he hoped that structural changes in the economy will eventually happen.

Dr. Bajpai acknowledged that the current Finance Minister has inherited problems from his predecessor and that a budget created by the government in the first forty days of their rule can’t transform the country overnight. Controlling the fiscal deficit will be a big challenge for the finance minister. The fiscal deficit target is an ambitious target. India needs huge investment volumes to increase revenues. In this context managing expectations of different publics is critical for the government.

Some of the other points discussed:
ü In the area of taxation Dr. Bajpai felt that retrospective taxation should be scrapped as it sends out a negative signal to investors.
ü FDI in defence manufacturing is a positive step forward.
ü Urbanisation too should be seen as an opportunity and not a challenge.
ü The impact of climate change is been felt across the world. Climate change is disturbing hydrological cycles and patterns of rainfall. What can individuals do for climate change? He urged students to contribute towards conservation of energy by taking small steps like switching off unnecessary lights and fans.

While discussing aspects of the Budget not agreeable to him, Dr. Bajpai stated that investing in more IIMs and IITs in all states without adequate resources to ensure quality with respect to faulty, leadership and research was not a wise decision. Instead he feels that each state should create centres of excellence in medicine, engineering and management. Dr. Bajpai also felt that a bullet train is still a luxury and that the focus instead should have been on improving existing trains or on investing in important sectors like health or provision of safe drinking water.

Discussions during Q & A session:
ü Rising defence expenditure is an indicator of geo-political realities, stated Dr. Bajpai.
ü When asked about the cleaning of Ganga, Dr. Bajpai emphasised that what was needed above everything else was a change in mindset of the people.
ü Lack of political will is one of the key reasons for problems faced in the power sector. He appreciated innovative ideas like the use of solar panels over river Narmada to generate solar energy and prevent evaporation!
ü Addressing the need for a disaster management plan, Dr. Bajpai emphasised that we need to create a mindset that values human life.
ü He warned the audiences that increasing poverty could even lead to break down of a country. Hence the country needs to put in around 10 to 15 years of concerted efforts to fight poverty.
ü There is a need for investing in and improving basic health care especially in rural India. Based on his experience with health care projects across India, Dr. Bajpai believes that improvements in the health care system can be carried out through well-thought out plans and logistics.
ü Within manufacturing he emphasised that we should focus on agro-based industries. He also stressed the importance of investing in R&D in agriculture.
ü Creation of 100 smart cities was important.
ü What India needs is out of the box thinking, urged Dr. Bajpai.

Mr. A.K. Agarwala, Chairman, Business Review Council, Aditya Birla Group then addressed the youth and urged to come ahead to make a difference to society!

Mr. G. S. Panikar President of The Club ended the day by thanking Dr. Bajpai for a wonderful and inspiring session.

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  • The world is Flat by Thomas Friedman
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  • Arthur Hailey-Money Changers, Hotel, Wheels, Final Diagnosis
  • Barack Obama , The New face of American Politics
  • Undercover Economist - Tim Harford
  • Freakonomics
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