Homoeconomicus Issue#2 by Homoeconomicus

Bipolar Disorder pg. 33

Bill Sachs Aid pg. 21

HOMOECONOMICUS

An Irrational Quest for Rationality

Pricey

Onionlysis

Jan 2014 Vol 1. Issue No.2

Pg. 6 Integrating Mental Health to Family Health Care

Rigged

Reviews

Pg. 19 Bernanke’s Legacy

Tattle-Tales Pg. 27 Spelling out Naxalism

Tripping on

Economics Pg. 35 When Inflation gives you a heat wave

Paper

Mache

Pg. 43 Economic Resiliance of Hand-cart Pullers

In our

Shoes/Chappals Pg. 52

Editors’ Pick Premium Issue

Knowledge, Economics and War Pg. 56

Foreword…………………………………4 Tripping on Economics Note from HOD and Editors’ Desk…….5 When Inflation gives you a heat wave, bake a Pricey Onionlysis

Integrating Mental Health Into Primary Health Care………………………………………………………...6 Arundhati Jaywant The Georg(IND)ian Story……………………………....8 Prashant Maheshwary Ropewalk of Retail FDI…………………………………..9

cake!..................................................................35 Sharvani Divekar Dosa-Nomics…………………………...……….36 Sambar and Chutney The Economics of Education…………………38 Padmavathy Menon To buy, or not to buy?.....……………………...40

Chai and GOOD Bole

Moksha Kaul

Rupee-A Walk through the History of Indian Currency……………………………………………………….11 Ravindra Pandhey

It’s not all about dolling out money!..............41

India Needs a Sixer for Economic Growth………….12 Shiva Perumal Show Me the Money!…………………………………....13 Anubhav Chakravartty

Jasmine Bhownagri A textbook theory put to test………………..42 Joshika Mandal

Paper Mache

“Economic Resilience of Hand Cart Pullers ekfgrh ra=Kku O;olk;kaP;k la/kh ……………………………..…...15 with respect to Mumbai”……………………..43 Vatsal Khandelwal Purushottam Athalekar Ecoknowledge: the Gap……………………….46

Rigged Reviews

Mansi Khare

Downton Abbey-Through the Looking Glass……….16 Poorti Sathe

Oil Economics……………………………….....47

Public Choice A Rhetoric………………………………18 Vishaka Vadhwani Bernanke’s Legacy………………………………………19

Ramakrishna Kashelkar (Guest Writer) Domestic Workers and their Livelihood…...49 Shallaka Sajji

Alpha and Omega

In our Shoes

Bill Sachs Aid…………………………………………….21

Knowledge ,Economics and War!..................52 Adarsh Bhat

Sneha Menon Economywood……………………………………………23 Zelam Sule

Tattle-tales

An OMG Experience……………………….…..53 Priya Ramesh A Teacher’s Diary………………………...…...55

Time to admit your Government…………………….25

Tapati Dey (Guest Writer)

Akhil Oka

How NSS Changed my World……………….57 Pooja K.S E’CA’NOMICS………………………………….58

Slum Dwellers-Growth Drivers……………………….26 Suraj Singh Spelling out N-A-X-A-L-I-S-M……………….………...27 Karan Menon WONDERing about WOMEN………………………..29 Anantika Mehra Jobless Generation………………………………………30 Preksha Lalwani Did Liberalization Help?……………………………......31 Nithya Vishwanathan Bipolar Disorder………………………………………....33 Anuradha Kalhan (Guest Writer)

Sushant S. Hede मेरी पहली इंटर्नशिप...........................................59 Vagish Vandana Pandey

Editorial (Homoeconomicus is "Inceptioned")…………………………………60 Melony Snickette and the Editrix Extraordinaire

Credits……………………………….62

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Dr Rupa Rege Nitsure Chief Economist & General Manager

Bank of Baroda

FOREWORD

It is with great pleasure that I present to you the current issue of Homoeconomicus – a cross college magazine initiated by some passionate students of humanities from the renowned colleges of Mumbai. The magazine has a spacious canvas with multi-disciplinary flows. Just to make a sense of its reach, it receives entries from round about fifteen colleges, ten disciplines, seven universities, four cities, three languages and varied age groups. While the magazine is entitled as Homoeconomicus – a science about rational persons who pursue wealth for their own self interest, its line of enquiry goes beyond economic rationality, challenging the standard assumptions of economic rationality and unbridled self-interest with more behaviourally realistic alternatives. The primary strength of this magazine is that, it has fostered multidisciplinary academic engagement so as to provide the undergraduate students, a variety of perspectives that go beyond their formal programmes of study. Inside the issues of Homoeconomicus, you will find discussions on conceptual issues as well as their practical applications; debates on broader policy aspects; reviews of books, movies, personalities & academic courses; interviews with persons working at the grass root level and also selective research papers by guest authors from varied disciplines. Personally, I see a great educative value in the efforts like Homoeconomicus. Generally, during the undergraduate years, students are advised to read books and acquire knowledge from the works of great authors or by listening to their teachers. But merely by reading books or listening to

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teachers, one does not get sufficiently educated. Our students need a platform to write and express their own ideas in a good form and in whatever language they are comfortable with. I think, Homoeconomicus has filled the void and provided a mature platform to those, who wish to grow beyond the set syllabus and challenge the established ideas. At the same time, it is encouraging a wider community of students to think and develop their writing skills. It is extremely important for the students of social sciences, in general and that of Economics, in particular to develop their own power of thinking and strengthen the imagination. By contributing to a cross college magazine like this, the students are not just adding to their pool of knowledge but also learning the value of cooperation and healthy competition. I see Homoeconomicus as a powerful source of self-help and self-confidence to the students of humanities. To conclude, generally people associate writing with English department, and only to a lesser extent, with the subjects like Economics. Although we may think of Economics as the subject involving problem sets or mathematical equations, the fact remains that the results of Economic research are “written up”. As was said by Richard Schmalensee, an economist at MIT, “In talking about the economists’ craft, it is almost impossible to overstate the importance of clear and persuasive writing”. I salute the team of Homoeconomicus for realizing this “need” at an early stage and making a positive difference to the undergraduate student community. Thank you.

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1. Apply theory in real life circumstances and subsequently substantiate/ denounce the same

their immeasurable efforts and enthusiasm. Editors; Mallika, Manasi, Purnima, Swati, Vandana and Vasudha. Coordinators; Apoorva, Joshika, Priya, Shruti and Neha. Administrator: Kanchan and Creative designers; Anurag and Shashank. Kanchan, Shashank and several Ruia seniors must also be credited for having been those who on the onset, envisioned the magazine and launched the efforts to materialize the idea. We would also like to express gratitude to all the faculty members of our department; namely, Prof. Devayani, Prof. Varsha and Prof. Kaustubh. We hope you enjoy reading this premiere edition (as much as we enjoyed putting it together for you) and come to the same realization as us that; “Economics is inextricably linked to everything important!”

2. Discuss (perhaps rant) out loud their Happy Reading, apprehensions and thoughts about policy and socio-economic issues Aditi Abhyankar, HOD Econom3. Review Books/Movies/Personalities/ ics, Ramnarain Ruia College, Academic courses Editors-in-chief Akhil Oka and 4. Talk about Personal Experiences at the Grassroots

Sneha Menon

5. Publish Brief Research Papers Over and above this, the magazine intends to continuously study itself and economics students, with academic interest. This year’s issue features a small study of 100 and odd participants with the theme, “Everything Economics students want to know about other Economics students”. Keep an eye out for the results of the same, which are strewn all over the magazine1. We would also like to take this opportunity to thank the entire Team for

Reference: 1Our data and findings can be found at https:// sites.google.com/site/homoeconomicuspapermache/home

HOD Note From the Editor’s Desk

The active and dynamic Economics Department of Ruia College has been a model and microcosm of a well functioning economy. Events take place throughout the year and bring its denizens together to discuss, debate, learn and collaborate. The only aspect missing so far was the press, the fourth pillar of democracy; a forum for ideas to flow from one corner of the economy to another. Presenting to you Homoeconomicus, a first of its kind crosscollegiate, cross-university economics magazine that features work from students and guest writers from multiple disciplines and schools of thought. The objective of this magazine is to allow the youth to;

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Integrating Mental Health into Primary Health Care

The Opinion Editorials in this section will make you think till you know your onions, the pricey ones.

Pricey Onionlysis

A Cost Effective Alternative

Behind the veil of ignorance (Source : http://commons.wikimedia.org/wiki/File:India_-_Varanasi_hospital_-_2856.jpg, Author : Jorge Royan)

Legal Reforms in the offing The Times of India dated 13th August, 2013 states that a bill has been passed in the Rajya Sabha looking to allow adults to make an "advance directive" or decide on a course of action regarding how they wish to be treated in case of development of a mental ailment. Similarly, the Hindu, dated 21st August, 2013 carried a piece about a revolutionary mental health bill which explicitly states that acts of suicide will not be criminalized. To be more specific, those attempting suicide would be treated as mentally ill unless proved otherwise and therefore exempted from the current provisions of Section 309 of Indian Penal Code. Both these bills show a very positive change: A rising awareness towards the state of the mentally ill in India, and more importantly, a political will towards bringing about

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substantial changes in the way mental illness is accounted for in the legal framework. This move came in after India ratified the UN Convention on the Rights of Persons with Disabilities, which requires it to harmonise its laws with those prevalent worldwide. Most importantly, the bill ensures that all insurance companies will have to make provisions for medical insurance for treatment of mental illness as is the case with a physical ailment. The proposed laws, in my opinion are a path-breaking exercise in trying to introduce legal protection for those who suffer from mental ill health. In India's Eleventh Five Year Plan (2007â&#x20AC;&#x201D;2012), mental health has moved up the priority list. Similarly, the Twelfth Five Year Plan (2012-2017) saw a renewed focus on mental health. I think this is the first step towards changing the current situation of apathy and igno-

rance on the part of the caregivers. Whose Responsibility? This past decade has seen India become more aware about its mental health care requirements. We are on the right path with respect to updating our legal framework as per the changing needs of the country. However, the challenge lies in the management of the economic burden of health care in India. There is no dearth of will in implementing changes, but the country's mental health burden is too huge to be tackled by mental health professionals alone. â&#x20AC;&#x153;Delivering mental health care in India will require task-shifting to community health workers who are trained and supervisedâ&#x20AC;?, says Vikram Patel, professor of International Mental Health and Welcome Trust, London School of Hygiene and Tropical Medi-

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cine. Mr Patel is associated with ‘Sangath’ which is an NGO based in Goa. Sangath is currently working on the feasibility of non-specialists delivering care. Potential Resolution The way forward, is to integrate health care with the primary health care system. Primary healthcare is ‘the first level of contact of individuals, the family and community with the national health system’, WHO defines it mainly as a community based health care system. In India, however, psychiatric institutions are the only form of mental healthcare available to the population. These institutions are often located only in major towns and cities, a long way from where most people live, and consequently, many individuals do not receive the care they require. A strong support system is critical in mental health care and it doesn't make sense, then, to have individuals move away from their families in order to receive care. Now, mental healthcare available in primary healthcare means that people are able to access the treatment and care that they need near their homes, and thus stay with their families, receive out-patient care, maintain their support systems, remain integrated and active in the community and continue to contribute to society. Also, since primary care facilities near people's communities, indirect health expenditures like transportation to facilities located in urban areas are avoided. This makes primary healthcare the most affordable option both for patients, the community and the country. It is also a patient-friendly option because primary care services are not associated with any specific health condition; and the fear of being stigmatized as ‘crazy' or being discriminated against is reduced, thus making this level of care far more acceptable. What is PRIMARY about it? There are several reasons why treatment of mental disorders in primary healthcare services results in better

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health outcomes. One reason is that mental health is often co-morbid with many physical health problems such as cancer or thyroid problems and by attending to the physical health needs of someone with a mental disorder, or alternatively, to the mental health needs of someone with a physical health problem, a primary care worker can provide treatment and care in a holistic manner that greatly increases the likelihood of a good health outcome. The most economically viable and patient friendly option is to shift away from an institutional model of mental healthcare to a more holistic, comprehensive integrated delivery system at the primary healthcare level. The drawback to this system, however, is its dependence on a pre-existence of a well-functioning primary care system. Mr. Reddy, president of the Public Health Foundation of India, suggests two ways to strengthen the existing PHC (primary health care) system in India. The first involves increasing the health-care allocation to 2.5% of GDP. At present, the Indian government spends about 1% of its GDP on health care. Mr. Reddy would like to see it increase to 2.5% by 2017. The second way is to ensure that additional funds should into maintaining the primary preventive health care system. The expenditure of Indians on health has often favoured treatment at hospitals in large cities over more widely available basic and preventive care. “By directing your health financing mainly into tertiary care you’re not providing the population or providers with any incentive for preventive care,” says Mr. Reddy. He has a fair point. The problem with tertiary mental health care is that it is located mainly in major cities and towns, and is thus inaccessible to most and is much more expensive than PHC available in rural areas. Overcoming the step-sisterly treatment According to me, the main difference between mental disorders and other

health concerns is that the former are more often viewed as a low priority because they are perceived as less life-threatening. Too often, mental health comes to the attention of policy makers and the public only after a terrible global tragedy such as the fire in Erawadi, India, which resulted in the deaths of 25 people who had been left chained within a private psychiatric asylum. But as is the case with most tragic events, they quickly fade from public memory, and when the fervour dies down, it is easy for mental health to slip off government priorities. Getting the message across that investment in mental health can generate economical as well as social benefits is vital to its inclusion in the agenda for economic development. This, then, is our real challenge, since barriers to effective mental health care start with barriers in the mind. References : 1.WHO - Integrating mental health into primary care : a global perspective (2008) 2.www.sangath.com 3. World Health Organization World Health Report 2008: primary health care – now more than ever 4.Mental Health Programme and Legislation in India: Some Observations and Experiences S.C Malik 5.Barriers in the mind: promoting an economic case for mental health in low- and middleincome countries - David McDaid, Martin Knapp, Shobha Raja

Arundhati Jayawant The author is a student of economics at Ramnarain Ruia College, Mumbai. She's passionate about developmental economics and is specifically interested in the Indian health care system and its unique challenges. She is a tech-enthusiast and is hugely inspired by Steve Jobs; she hopes to start her company some day in the field of logistical support for health care workers

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A day before our 66th Independence Day, I was a part of the special editorial youth team which was going to select the news topics for the “Independence Day” special edition of a newspaper. I personally shortlisted an extremely well written article by a former Lokayukta Chiefon corruption only for it to be rejected by the rest of the board who believed that “no one in the country wanted to read about corruption anymore”. This incident was evidence to the fact that this country is beginning to lose hope in the fight against corruption. Team Anna, who embarked on this fight against corruption, also saw their efforts go down in vain as their demands fell on the deaf ears of the political class. Basket “case” But if India believes that they have lost the fight against this malice, and then I would like to highlight the dramatic turnaround of things in a tiny Caucasian country called “Georgia”. Georgia, for long, had held a reputation as second to none with respect to endemic corruption. The government officials had virtually abandoned their primary functions only to concentrate on corrupt informal transactions. There was literally an existence of a private market where the government players practised these corruption forms of converting administrative powers into raising economic capital were employed to make money. Things were so bad that even to conduct a funeral; one had to pay a hefty bribei. Public offices were sold and officials expected a return on their investments. Extortion, collusion with organized crime, sale of public goods, embezzlement and several other sophisticated of converting administrative powers into raising economic capital. The bounce back But gradually the situation took a turn for the better and in 2003, the

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The Georg(INDI)an Story advent of the Rose Revolution changed the dynamics of Georgia. The Rose Revolution brought to power reform-minded politicians headed by Mikheil Saakashvili. In the period Mr Mikheil Saakashvili was in power, the country took stringent steps in order to tackle corruption. Some of the steps were so harsh that they weren’t even welcomed by major International organizations working to curb corruption. But Georgia was determined to go all out in its fight to cure this cancerous deed. Whole public departments like that of the “traffic police (sound familiar?)” were fired and new policemen were recruited. Unofficial payments were virtually eliminated in the system of government. The country has moved from a situation where corruption was the norm in society to a new state where it is the exception. Systemic Change Beliefs such as “corruption is engrained in the governing system” have been altered and revisited. Sensible steps such as increasing the payroll of public servants have been taken in order to incentivize them. The total strength of public offices too has been limited in order to avoid unnecessary baggage. The whole approach has been built around transparency, modernization and liberalization. The public servants have to mandatorily declare their bank account papers and assets. Moreover, steps have been taken to make sure that minimal interaction takes place between public servants and private players as this interaction serves as the lifeblood for corrupt practices. The government has adopted a radical sweeping approach as they believe that for institutions where the rule of the game is corruption, a lenient, mild approach will not do the work. This

aggressive approach has pushed the villains to the wall. Grassroots up Apart from this, robust organizations with the required power and authority have been set up to monitor the ground. Criminalization of corruption related activities has also been instrumental in curbing corruption. It is very important to point out here that, independency of judiciary, activeness of civil society and freedom of the press has played a minimal role in this fight. No organization or person has played a more instrumental role than political and civilian will. This will power has singlehandedly orchestrated the whole revolutionary movement of Georgia. Georgia has been ranked as one of the most corrupt nations in the world. From that standpoint to today, the dynamics in this small country have changed. A nation that was known as the “Land of Tribes and Bribes” has altered its whole governing system through a movement that has given inspiration to all the nations in the world. It is therefore futile to think that India has lost its fight against corruption. If Georgia can, there is no reason to believe that India can’t. References: 1

http://www.diva-portal.org/smash/get/ diva2:609285/FULLTEXT01.pdf

Prashant Maheshwary, Prashant is a student of Economics who is fond of research on political and economic related issues.

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Ropewalk of retail FDI FDI in Retail had evoked extreme responses in our nation ever since the primary announcement in late Nov 2011 and right till the point where Bharti and Walmart split ways recently. Being a management student, I have had a wonderful time debating about the same and receiving different perspectives in the process. In this article, I present ‘a middle road’ as it can be called which can safeguard interests of the majority of those involved. Proponents of FDI in Retail argue for better supply chain management, reduction of waste and effective pricing – I would attempt at answering these concerns while I present the alternative.

he has to be well evaluated before employment. It may seem practical to usher in the FDI in retail with an argument of bettering prices for consumers but is the cost of our farmers' lives acceptable to us, as a country is what we must ask.

registered producers! Why can't this be done here? I am sure with the right intent and resources, it can be; even allowing tax sops and granting benefits for the same would be an ideal promotion strategy. Farmers can be encouraged to en bloc into a unit to sell their produce and an organization similar to the above mentioned FARMA can be established to govern all matters. The importance of Good Intentions Selfishness is bad; self-interest is Dharma (duty) - The latter is being sensitive to others and not profiting at the expense of others. Setting up Farmers' markets is ideal and a long term benefit if set up efficiently; FDI is an escape to not bring the evil 'dalals'(traders) to book. The Marathi movie Hapoos sheds light on this aspect. Dalals will stand to lose in the short term while farmers will benefit (if implemented) In the long run, the squeezing will start from the retailers' side and the situation of the farmer will be no different from what it is today. We as consumers will benefit; and so will the foreign players. Thus we can be ideal and pragmatic at the same time; and we can take great collective strides towards our goal of a super-power in such a way that every contributor to the economy prospers and prosperity for one is not poverty for the other. It attempts to raise the of standards of living which is key. It will

A Model worth replication The model I therefore propose is one which tries to solve not only issues related to supply chain management and bottle-necks but also the major concern of farmers in getting the right price for their products. These farmers would rather earn a modest living than be sacrificed at the altar of foreign retail giants who An inter-country comparison seek profit margins at their Let me begin my analysis with some expense or the home-grown country wise data on Agricultural and ‘hyena’ i.e. dalals who savour Labour contribution to the GDP. the cream of their efforts! The closest which comes to India is The London Farmers' Market is an China as far as the above numbers are innovative concept in existence in concerned. However it is inLondon for at least 12 years from appropriate to compare between the what I could find; once, every week, two as the latter is a command econall the farmers, bakers, fishermen omy as against the free market econand growers gather at a set place to omy that we are. Policy enforcement sell their produce directly to conis at a much advanced stage in China sumers cutting out the middle-men. as compared to us. Plus on all parame- Some of them also have agreements ters like GDP, GDP per capita, rewith restaurant owners and other serves and technical superiority, they retailers but the Market ensures beat us flat. that all of them get a fair price for My motive in putting up these stats their product and are not cheated was to point out that any policy because of competition or margin change impacting agriculture are reduction on the side of the retailmuch more severe in India ers or restaurants. The market as compared to anywhere else is FARMA (Farmers' Retail and Marglobally and especially the major kets Association) certified, having economies. What applies in these strict rules and regulation ensuring countries can't always work here and a smooth and fair functioning. There is stress Country % of GDP contribution by % Labour employment in laid on adverAgriculture Agriculture tisements and USA 1.2 00.7 citizens are enUK 00.7 01.4 couraged to Germany 00.8 2.4 purchase only France 2.1 3.8 from such certiChina 10.1 36.7 fied markets. Brazil 5.5 20.0 Even their webRussia 4.5 10.0 site carries deSingapore 0 0 tails on market Australia 4.0 3.6 locations, schedIndia 17.2 52.0 London Farmer’s Market ules, products (Source: http://commons.wikimedia.org/wiki/ File:Marylebone_Farmers_Market_2005.jpg , Auavailable and thor :Unknown)

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be too soon to comment whether retailers would actually come to a fragmented place as ours also given that the decision has been left to individual states to decide for Retail FDI) Reforms are needed and welcomed in this globalized world where we can’t live in isolation - agreed; but with a clear intent to resolve issues and not transfer them from one sector to other should be the path of

You, voting right?

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reforms. I for one would be glad to see the prices of the vegetables I purchase come down but I would not want my farmers to die in the process. Economics can’t solve Political problems – but Political Intent is important in resolving Economic Issues.

Chai & GOOD Bole

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Rupee Currency is the form of money that is used as a medium of exchange, specially circulating paper money (Circulation here means transmission from person to person as a medium of exchange). Nowadays, Currency Trading is a hotspot. It is a multi-trillion dollar market where world currencies are exchanged back and forth on a daily basis. Consider the Rupee alone, the evolution of Rupee is quite fascinating and interesting. The name Rupee comes from the Sanskrit word “Rupyakam” meaning ‘Silver Coin’. Since the Mughal Era our currency has been evolving from Copper coins to Silver coins and then in British Rule, finally to Paper Money. The long journey of our currency also tells us the whole history of our country’s economic system. Turning the time wheel back, let’s see the historical currency rates that prevailed in our country. A huge decline in the value of Rupee can be seen, but why has this happened? A major Devaluation of Rupee happened twice in 1966 and 1991. After Independence India choose a fixed currency rate but the two consecutive wars with China (1962) and Pakistan (1965) left India with big deficits due to which the Indian Government decided to devalue the Rupee. The second time, in 1991, our currency was forcibly devalued due to acute balance of payments crisis. These two major devaluations stoked the inflation in our country which further depreciated the Rupee and it reached to 32.42 till 1995. Effect of Devaluation & Depreciation Post Independence rates1:

King George VI on 10Rupee Bank Note (Source: http://commons.wikimedia.org/wiki/File:Colonial_Indian_Ten_Rupees_Observe_(1937-43).jpg, Author: Reserve Bank of India)

In both the cases the value of currency declines which has the following effects Cheap Exports Costly Imports Before going further I will like to put some light on Devaluation & Depreciation. Both the terms are different. How? Devaluation – Devaluation only happens with a fixed exchange rate. When a country is no longer in a position to defend its exchange rate then it devalues our own currency. In the same way when we were running with large deficits we witnessed the devaluation of our Rupee. Depreciation – Depreciation happens with a floating exchange rate. When a country applies free exchange rate then the Demand & Supply of currency gets dependent on Foreign Capital Inflows & Borrowings, Trade Balance and Volatility Spikes.

But after liberalization, the year 1993 was remarkable for our currency as the Indian Government decided to deregulate the exchange rate and make it market determined by applying the free Float Exchange rate system. We were in the grip of high inflation and low foreign reserves which kept pressure on the Rupee; still between 1995 to 2010 currency, traded in a range. As per the analysis of many economists Devaluation & Depreciation is

GUEST AUTHOR

A walk through the History of Indian Currency

actually good for a country because then the nation gets a chance to boost its exports with the low value of currency. In our case, since Independence and Liberalization, we have witnessed a rise in Foreign Exchange Reserves and India became an exporting country. There was stable movement but the swing on both sides started increasing in the last two years which we call ‘Volatility’. The depreciation of rupee from Rs40 to a dollar to Rs60 was quite a blow as a decline is acceptable and beneficial only up to a certain extent. Surely enough, after 2007 there was an explosion in our Current Account Deficit from $8 billion to $90 billion. Foreign Exchange Reserves reduced from $300 billion to $275 billion, almost equal to 7-8 months of reserve to defend this huge Current Account Deficit. Current Account Deficit reached 5% of GDP against the 2.5% which is considered healthy. So we saw how Devaluation & Depreciation didn’t prove very beneficial for us rather volatility in currency rates made the situation haywire. What is the Solution for this Currency Crisis? Immediate measures that can be applied to get the currency back on track are Rupee Internationalization – India is gradually expanding the trading network with many countries so the payment needs to get settled in terms of only the Rupee and not dollars. Actually our Government has already identified countries with which India is running large trade deficits like Japan, Iraq and Venezuela. It is a step towards Full Account Convertibility. Capital Control measures also can

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be useful to curb the Capital Flight. Speculative attacks on currency can be kept in check through tight capital controls only. REFERENCES 1

www.investing.com http://profit.ndtv.com/news/forex/article-7-reasons-why-india-is-staring-ata-currency-crisis-326532 2

Ravindra Pandhey tries to express himself through his write ups. He has an inclination towards Macro Economics and World Economy. It was not until his Post graduation (MBA – Finance) that he was inclined towards Economics but, his profession revised that. Being an Investment Advisor, he likes to write and share his views on Macro Economic Topics. The author can be reached through his blog :“wordsparadise.in”and on his email – rp2179@gmail.com.

INDIA NEEDS A SIXER FOR ECONOMIC GROWTH

A Citizen’s Worry (Source: http://www.flickr.com/photos/cgiarclimate/8000025086/sizes/m/, Author: CGIAR Climate)

One of the most pressing issues in India today is the current economic scenario. The Indian economy has had a bitter year due to many reasons such as the close to 13% plunge of the rupee, alarmingly high rates of borrowing, the fall in GDP, an increase in the deficit , and an increase in inflation. THE SIX-FIX WAY: 1) Use of alternate (renewable) sources of energy: India's crude oil and product import bill for April-July 2013 stood at $50.5 billion.1 This is

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an alarming amount! We have to bring this figure down. For that, we need to find alternate sources of energy. To be self-sufficient. One of the ways to do this is to harness; renewable and inexhaustible sources of energy. Like national parks and every state should have lands reserved for harnessing inexhaustible sources of energy like Gujarat’s solar park 2) Farmers should be made government servants: Farmers don’t get a fixed income. The crop productivity during a year is varied; sometimes low, and sometimes high. So the farmers

hoard the products so that they can sell those during less productive times. This problem can be eliminated if they get a fixed salary. In turn the farmers should give the products to the government. The government can then sell those products at standard prices all over India. 3) Curb black money: Some reports claim an elephantine sum of US$1.4 trillion is stashed in Switzerland.2Even though people are trying to get that money back and declare it as national funds, there is a serious

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doubt whether this can be achieved or not. But we can obviously prevent the generation of black money by some simple means. One of the ways is to make bills mandatory for every transaction that is made. Also, every transaction above an amount (say 20,000) should be made through checks. Thus there will be a record of every transaction which can prevent the circulation of black money. 4) Good infrastructure: is necessary because industries get attracted to places which have good road connectivity, electricity and water. If these things are provided, industries will flourish which will be great for our economy. Yes, this requires a very large amount of money, but it is a one-time investment that we need to make after which we can reap the rewards.

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5) Trade needs to be increased: Indian exports to China could be close to $1 trillion by 2050, almost the size of its entire GDP in 2008.3 There’s no better way to promote peaceful relations than to expand trade. 6) Boost higher education: India needs to focus on its human capital. It needs to pump out top grade graduates, post graduates and doctorates in order to provide for a rapidly growing economy. Indian youths need to be exposed to global standards and the private sector should be allowed to tie -up with established foreign universities to provide high quality education. In addition to all the above points, the most important thing is to educate our citizens about the current economic scenario. So, efforts must be made to make people aware of the part they can play in developing Indian economy, for the Indian citizens

are vital in the process of improving India’s current economic situation. References 1http://www.cerebralbusiness.com/KnowledgeBase/ Analysis/asd/2322/indias-crude-oil-and-product-import -bill-for-april-july-2013-stood-at-50-5-billion/09-172013 2http:// share.pdfonline.com/2333bd0c957f46a29541e91eb2e6 33f8/Indian%20black%20money.htm 3

http://www.bloomberg.com/news/2013-06-23/a-10step-program-for-india-s-economy.html

Shiva Perumal: He loves studies, football and friends. His hobby is writing and he hopes to be a VLSI designer one day. He is currently pursuing his engineering at Vivekanand Education Society's Institute Of Technology (VESIT) ,Chembur.(Engineering).

Like Jerry Maguire said: Show me the money! So, by now you must have guessed what this article is all about. No, it’s not about Jerry Maguire or Tom Cruise’s perfect hair in the movie, it’s basically about “showing you the money”. Readers: Beware if you are planning to find stock tips. You might be disappointed because today we talk about the different avenues of investments in the financial markets. I do not suggest where you should put your money; I merely show you where you could put it. It’s really simple, information is knowledge and an informed decision will show you the money. How, you ask? First let me brush up the concept of the time value of money. For example Rs. 100 received today will be worth Rs. 110 after 12 months if the money is invested at 10% interest rate. On the other hand Rs 100 will not be worth the same tomorrow if you keep your money just to yourself. In today's financial marketplace, financial instruments can be classified generally as equity based, representing ownership of the asset; or debt based,

representing a loan made by an investor to the owner of the asset. Financial instruments in basic terms could be described as a real or virtual document representing a legal agreement involving some sort of monetary value. Equity Equity based instruments are a type of security that represents the ownership in a company. They can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the company and are traded in stock markets. Equity investments work for both types of investors. The ones who want to make a quick buck are engaged in short selling techniques. These are active traders and are engaged in intra-day trading, a concept for another time. We are going to keep our focus on holding the securities for the long run with the belief that the price of the securities will rise in the future. However, it’s all about the timing! Buying and selling the shares are on speculations, and predicting the market takes a lot of expertise and time.

It is advised to invest in Blue Chip companies which provide a stable growth in your portfolio and a gradual increase in your returns. The key benefit in holding the securities over a period of time is to cash in on the higher profits these companies make. Blue Chip shares of companies like ONGC, Reliance Industries, and Tata Steel are good investment avenues. Debt Now let’s shift the focus to debt instruments such as bonds and debentures. Bonds are fixed income instruments which are issued for the purpose of raising capital. They are issued by the Government and carry the lowest level of risk but could deliver fair returns. MM Then there are money market instruments which are for short-term and long-term funds with maturity ranging from overnight to one year in India including financial instruments that are deemed to be close substitutes of money. The money market consists of diverse sub-markets, each dealing in a particular type of short-

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(Source: http://www.flickr.com/photos/stuartpilbrow/2942333106/, author: stuartpilborw)

term credit, from the conventional platform of treasury bills and call money to commercial paper, certificates of deposit, repos, forward rate agreements and most recently interest rate swaps. The money market quenches the need for short term highly liquid funds in the market and at the same time is a key control measure for The Reserve Bank of India’s intervention in the market. Deposits But the safest avenue of investment for an average income earning person would be fixed deposits in banks. They are relatively safe and give you fixed returns, the only downside being that it does not beat the inflation. This type of investment is generally meant for more conservative investors. The market for fixed deposits is highly competitive, where public banks offer an annual return of 9% and have gone up to 9.4% for 144 days with some schemes; whereas privately owned

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eral benefits to using financial instruments, and several situations in which they are a better choice than cash. Firstly, the ease of use: in many situations, it is simply easier to use financial instruments than actual cash. An example of this is the ease of sending a SWIFT message that acts as an instrument, or the ability to negotiate a financial instrument based on certain terms. Secondly, as security: the security measures in place for most financial instruments guarantee their worth, and many ensure that only those that are meant to are able to reap the benefits of the document. Thirdly, for assurance requiring an instrument versus cash for payment of products or services offers a much more secure guarantee of payment than simply the promise to pay cash. But don’t take my word for it! You can find expert advice on various websites and if they get very technical as they do for me, you can go to the SEBI website which provides you with readily accessible data for analysis as well as the dos and don’ts of investing. Stay informed, make informed decisions and you will be shown the money!

banks offer returns up to 9.2% for a year followed by a rate of 8.75%. Since we are talking about relatively safe avenues of investing, I'm sure you have also heard of mutual funds. MFs Mutual funds are investments which allow a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment objective. This avenue has made it fairly simple for new and inexperienced investors to invest in securities and debt alike. Hy- Reference: http://www.investopedia.com/terms/f/ brid mutual funds allow the investors’ financialinstrument.asp money to be invested in a mixture of debt and equity like the SBI EDGE fund Tata SIP fund. Mutual funds have reAnubhav Chakcently offloaded shares worth Rs 482 ravartty The author crore to take total outflows from equiis on the brink of ties to Rs 13,721 crores and have been graduating with a known to generate returns up to Bachelor of Com46.65%. However, with all of the techmerce degree in Accounting and Finance nological advancements and numerous from NM College. He has been a ways to pay “cash” electronically, the need to use financial instruments seems research intern at CAFRAL RBI. Being a creative soul with an obsolete. But there are in fact seveccentric mind, he learns something new every day!

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Guest Author

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s'kka'kh leUo; lk/k.;kl lqyHkrk fuekZ.k >kyh'kkldh;] [kktxh] f'k{k.k v'kk loZp laLFkkauk v'kk lsok iqjfo.;klkBh fu;e o vVh e/;s f'kfFkyrk fnyh xsyh-vkt >ikV;kus xkokaps 'kgjhdj.k gksr vkgs- R;keqGs xkokae/;s ekfgrh ra=Kku m|ksxkaoj fo'ks"k y{k dsafnzr dsys xsys;k {ks=krhy vxzx.; laLFkk MKCL vkf.k MSBTE ;k O;olk;k izf'k{k.kkr eksykps dke djrkr- tkLrhr tkLr {ks= ekfgrh o ra=Kku iz.kkyh[kkyh ;kohr ;k n`"Vhdksukrqu fu;e] vVh] dj ;kaph loyr fnyh vkgs- vkt dks.kR;kgh O;olkf;dkyk ekfgrh ra=Kku dsanz lq# dj.;kph la/kh vkgsekfgrh ra=Kku {ks= vU; loZp {ks=kauk lgk¸;Hkqr dj.kkjs izHkkoh lk/ku vkgs;k {ks=kaP;k O;kikjkeqGs dkekpk osx ok<rks] 'kkjhfjd Je deh gksrkr] deh [kpkZr mRiknu

ok<rs vkf.k uQkgh ok<rks- R;keqGs eqDr vFkZO;oLFksr tkxfrd cktkjisBsrhy Li/ ksZyk vki.k rksaM ns.;kl leFkZ Bjrks-% brdsp uOgs rj ntkZRed lsosP;k ek/;ekrqu vki.k vkiyk ncnck fuekZ.k d# 'kdrks- ^bZ&ekdsZVhax* ek/;ekrqu O;olk; o`/nhaxr dj.;kl enr gksrsvktdky ^bZ&dkWelZ*] ^bZ&cWadhx*] ^,e&cWadhx* v'kk ;k {ks=krhy 'kk[kk foLrkjr vkgksrekfgrh ra=KkukP;k mi;qDrrseqGs 'kkGkae/kqu ;k fo"k;h izf'k {k.k ns.;kph rjrqn ljdkjus dsyh vkgsijarq ;k {ks=krhy O;olk; ok<.;klkBh cWadk] foRrh; laLFkk ;kae/kqu dtZ iqjoBk lgt vkf.k lqyHk gks.ks vR;ko';d vkgs rjp vktph r#.k fi<h dsoG uksdjh vkf.k iWdst ;k n`"Vhus {ks=kdMs c?k.;k,soth LokoyacukP;k ek/;ekrqu vkf.k O;olk;kP;k n`"Vhdksukrqu fopkj djsyrls >kys rj] ekfgrh ra=Kku vkiY;k vFkZO;oLFkspk d.kk vf/kd cGdV djsy gs fuf'prMr.

Purushottam

Athalekar

besides being the Special Executive Officer at Pushkar Enterprises, has an avid interest in economics.

(Source : http://commons.wikimedia.org/wiki/File:Computer_education_boys_Gujarat.jpg, Author: yann)

Get your late-est (economic) reviews on Movies, Books, Public Lectures and People .

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Downton Abbey - Through the Looking Glass What does one really expect of a period soap opera drama? The fancy costumes or the elaborate sets ... the classier back stabbings ... the bustling valets, butlers and maids or a very decent sense of decorum and etiquette and a thousand courtesies. Well... that obviously ... But it’s a great chance for one to actually experience life as it may have been at that point and truly see how societal and economic shifts take place. It’s like entering a world through a strange albeit rather mouldy looking glass. Downton Abbey is a show that caught my attention not only because I'm such a lover of period dramas but because it is set in a time of a great many events. It was the early 1900's and it was the time of the invention of the telephone. It was the time when electricity and cars had just come to be used. It was the first time the world went to war. It was the time when there was a major gap between the rich and the poor. It was the time leading

very simple. It is the story of an aristocratic British family living in the British countryside. The story of the Earl of Grantham and his entire household. This includes not only his family but also the great number of servants that work in the house. A rather impressive house at that. Through the sprawling lawns of the English estate, one gets to see two lifestyles. One of the owners of Downton Abbey, the Crawley family and of the staff who work in it. One sees the very lavish lifestyle that was afforded by the rich in the years leading up to the First World War. And one also sees the hardships and the troubles faced by the servants of the house. It magnifies the different kinds of hardships faced by each class in the society. How it was considered beneath a gentleman to work at all. How a physically impaired man wants to serve as a valet. How the death of the heir of the estate puts the estate in the hands of a distant

(Source: http://commons.wikimedia.org/wiki/File:Curraghmore_House_meets_Downton_Abbey_ up to the Great Depression. It marked the end of the Edwardian era. The basic plot of the show is

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cousin who *gasp* is a middleclass solicitor from Manchester. It’s about the trials of the eldest daughter who can't in-

herit the house because she is a woman. It’s about a young daughter who feels that the she isn’t suited for the glitz and glamour associated with high class living. The early 20th century was a time of various sociopolitical shifts and economic turbulence. It marked a shift from the traditional agrarianbased economy to the more advanced methods of modern production. There were marked improvements in technology and better employment opportunities as various pieces of technology were invented at the time. It was also the period where 1% of Great Britain held about 2/3rd of the nation's wealth. The series started off with the sinking of the Titanic in which the Crawley family loses both its males heirs. The new heir turns out to be a middle-class solicitor and everything is done to avoid this. But the money and the estate and the title of the Earl of Grantham have been all tied up into a neat little bundle by their late ancestors. The second season focuses on World War I and the transformation of Downton Abbey into a convalescent home for injured soldiers. It also marks the poverty and the hard times faced by the common man especially war widows. There are various political issues that showed its face at this time. The rising rebellion of Ireland against the British Monarchy. It mentions the Liberal party Prime Minister David Lloyd George and his many endeavours to change the structure of the society such as giving the women the right to vote and to hold political office in Great Brit-

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ain; the general unhappiness surrounding the war and the repercussions of it. There is a little something for everyone in the show, for English literature students, for historians, for enthusiasts of the societal and political issues, and of course for economists too. What Downton Abbey firmly establishes through its various plot lines is that change is inevitable. That one must try their best to adapt to this change. This was what Great Britain lost out on when America was experiencing their "Roaring Twenties, an era of splendour in the industrial sector. As very well put by Shirley McLaine's American character in a recent episode "My world is coming nearer ... And your world ... it’s slipping further and

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further away". The Great Depression and the Second World War brought about an end to places like Downton Abbey in the real world. It became very hard to maintain these estates without any actual income. It will be interesting to see how the series deals with these historical shifts. And so this is how I found Downton to be an excellent barometer of the various economic activities between the various social classes at the time. So get out a cup of tea and your fancy hats (of course) and tune into Downton. It’s for the soap opera geeks and the romantics. It’s got a little something for everyone.

Poorti Sathe,is an amateur linguist .To simply calls her a movie buff would be an understatement of the herculean sort. She is a thorough TV show/soap/ situation comedy addict to the extent that a ‘TV show anonymous’ group would be rendered powerless. Her knowledge has the strength to baffle even the producers of the show. A voracious reader, one can swear by her reviews; and when the TYBA semester examinations approach Poorti Sathe of Ramnarain Ruia College, she sometimes, studies Economics.

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Eamonn Butler is an economist, author and broadcaster. He co-founded and presently leads the Adam Smith Institute, a think-tank working on “free market economies”. He graduated from the University of St Andrews in the 1970s and holds degrees The author is currently pursuing Bachelor of Arts in Jai Hind College and has interned with DNA, for a period of six months. She loves writing, debating and reading voraciously- everything under the sun, especially economic and political issues.

in philosophy, economics and psychology. His academic work includes analyses on three of this century's leading economists: F. A. Hayek (in Hayek: His contribution to the Economic and Political Thought of Our Time, 2010), M. Friedman (in Milton Friedman: A Guide to his Economic Thought, 2012) and Ludwig von Mises (in Mises: Fountainhead of the Modern Microeconomics Revolution, 2013) The book begins with an explanation of “public choice”1. Aside from the libertarian ideas that the book contains, the book is fairly simple for a person unaware about public policy to understand too. Butler manages to create a timeline describing the historic as well as modern tradition of public choice. The book elaborates on how people behave differently in markets than expected theoretically i.e. individuals are assumed to be ‘rational maximisers’2. It then goes on to debunk the myth that politics is a process which somehow discovers what is truly in the ‘public interest’. Butler discusses Duncan Black’s median voter theorem,3 Kenneth Arrow’s impossibility theorem4 and Anthony Down’s application of rational choice theory in a marketplace, in a spirited manner and puts them across in a jargon-less fashion. The median voter theorem is extremely

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Public Choice: A Rhetoric The book ‘Public Choice- A Primer’, was published in 2012, and has been written by Dr. Eamonn Butler. problem because their group is so well defined that they can easily keep the benefits of their lobbying to themselves. Butler elucidates further, the constitutional agreement put forth by Buchanan and Tullock, viz. “no rational and self-interested person would agree to adopt a set of decision-making rules that they thought would give rise to future decisions that would exploit them.” This brings about the need for careful control on tax policy as it is one of those decisions taken while considering the majority which may cause (Source: http://www.bookdepository.com/Public-Choice-Eamonnparticularly severe damage to miButler/9780255366502) nority groups. He goes on to speak about the interesting. It can be seen working in trade–off, needed in collective decithe modern day, when politicians dursion making, and the use of this to ing elections target specific groups, as minimize the use of force on disthese groups, have certain interests senters who do not benefit from which are easy to cater than a larger this. He is of the opinion that the diffused minority. This is also seen in problems that government interpolicy making, where a group, which is vention creates can be even more smaller, has concentrated interests can damaging than those it is intended put forward their demands better than to be correct. He states that if we the large diffused majority. For incan find a way of providing certain stance, in most countries, the tobacco types of public goods by voluntary industry has to put on warnings on collective action, there might be a their products, but the products are closer proximity to the kind of dinever banned, because the lobby of this versity seen in the market for priindustry is small and has protected its vate goods. The concentrated interinterests, carefully. The vote motive is est groups have powerful incentive another interesting topic discussed. to organize, raise funds and camThe ideas put forth are firstly, it is simpaign for policies that will specifiply not worth the voters’ time and efcally benefit them. By contrast, the forts to be well informed about the general public, with much diffused candidates or their policies”. Secondly interests, have little motivation to voting does not necessarily reflect the put much effort into the public detrue views of the electorate” and lastly bate. while majorities dominate direct deButler further elaborates on the mocracy, minorities dominate repreidea of Rent seeking 7by Gordon sentative democracy.” Tullock. Rent seeking produces Another intriguing theory put forth is nothing of value to the community, that of the logic of collective action5 he says. It is a gamble, which may or by Mancur Olson. The free rider may not pay off. The financial costs 6 problem explained is a very importhat rent seeking impose on the tant phenomenon. How bureaucracy rest of the public have another corand regulation are interlinked is porrosive effect. He reiterates that the trayed effectively. According to Butler, customers who seek the best are bureaucrats are just as much players in small groups with concentrated the political process as any other interinterests, rather than the uninest group. And there is no free rider

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formed and diffused mass of the public. elections, and public choice. Butler concludes with the sad truth References: 1 Glossary.EconGuru.com: A branch of economics is that populations will put up that applies economic analysis to public (that is, govwith various political injustices for ernment) decision-making, including voting behavior, legislative law-making and related issues, http:// a surprisingly long time. glossary.econguru.com/economic-term/public+choice The debunking of myths and gospel 2 Brian Edgar Butler, University of North Carolina, 2011: A rational maximizer of personal satisfactruths makes it an interesting read. tion adjusts means to ends in the most efficient way Butler’s far-sightedness in public possible. http://www.iep.utm.edu/law-econ/ 3 choice approach, and the manner in Brian Kennedy, DuangmaneeLaovakul, British and American Studies Program: Small groups can which he draws out the contrast bemake decisions on the basis of consensus, for larger tween different schools of public groups this is not possible. http:// www.ajarnkennedy.com/website/BAS/PubChoice/ choice, makes it engaging for those Median%20Voter%20Model.pdf who are familiar with these theories. 4 Library of Liberty and Economics: Under certain assumptions about people’s preferences beThe book is suitable for all political options, it is always impossible to find a voting science enthusiasts, as well as anybody tween rule under which one option emerges as the most interested to know the dynamics of preferred. http://www.econlib.org/library/Enc/bios/

Ben Bernanke, the outgoing Fed chairman, steps up for one of his last press addresses. And the whole of the financial world has his attention. After months of signals, the Fed finally announces tapering of the much talked about quantitative easing from the current $85 billion to $75 billion. It is a significant step. But to understand it fully, we must understand the fundamentals behind it. Friedman’s take on the Great Depression of 1929: To understand this, let’s go back to the great depression of 1929 and see what Nobel Prize winning economist Milton Friedman had to say about it. Milton Friedman had observed in his work that following the stock market crash of 1929 to 1933 the quantity of money in the United States declined by 1/3rd. This was largely because of bank runs caused by people panicking. When people started taking money out of the banks to hold on to it that caused bank deposits to shrink which led to a decline in money supply. When one deposits money in a bank the bank holds certain fraction of that money as stated by the Federal Reserve as reserve requirement and the rest it lends out to earn interest. Money supply is created when the bank finds a borrower to lend who in turn uses it to make an investment. In case of a bank run a large number of depositors withdraw money in a short period of time leaving banks with in-

Bernanke’s Legacy sufficient funds to lend. Decline in money supply leads to higher interest rates discouraging borrowing and investing in productive ventures because financing becomes expensive. All this leads to a reduction in GDP. Friedman believed that the Fed’s inaction to intervene and increase the money supply was responsible for pushing America into a deeper and prolonged depression than what could have been an ordinary cyclical recession had the Central Bank intervened. Bernanke’s decisions: Bernanke was faced with a similar situation in 2009 as the Fed officials did back in 1930s. But he heeded Milton Friedman and launched an unprecedented set of actions to keep Federal Funds rate (nominal interest rate) near zero which is the rate used by banks to borrow/ lend money to other banks. This zero interest environment was created to encourage lending and borrowing at low cost. As banks find more borrowers to lend the money supply is increasing. Implications of QE: The Fed began its series of actions known as “Quantitative easing” in 2009 in order to stimulate the economy. Roughly it means buying of different kinds of assets by the Fed in order to increase the money supply. In the latest series of QE (called QE3) starting from

Arrow.html 5 About.com: According to Mancur Olson, "In general, social pressure and social incentives operate only in groups of smaller size, in the groups so small that the members can have face-to-face contact with one another.” http:// economics.about.com/cs/macroeconomics/a/ logic_of_action_3.htm 6Glossary.EconGuru.com: The inclination to enjoy the benefit of a good without paying for it--if you don't have to. This is the main reason public goods are produced by government. http:// glossary.econguru.com/economic-term/freerider+problem 7 Library of Liberty and Economics: People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors. http://www.econlib.org/library/Enc/ RentSeeking.html

2012, the Fed began the purchase of $40 billion in government bonds and $45 billion in Mortgage backed securities (MBS). FED also kept interest rates low to change people’s behavior, to make it cheap for banks to lend and boost business investment by borrowing. On Dec 18, 2013 Bernanke announced reduction in purchases of $5 billion of bonds and MBS each, the fed is slowly starting to reduce demand thereby raising longer term rates slightly. Bernanke believes that the economy is resilient enough to grow. He further assured people that interest rates are going to stay low well past the unemployment rate falling below 6.5%. He also said that the Fed will still be buying assets at a rapid rate, $75 billion a month. Now the asset purchase program and low interest rate should boost confidence in the economy. But there is a risk involved. People’s behavior influences the market to a great extent. If the mood keeps on remaining optimistic, then people could theoretically keep on taking risk, leverage more and this could lead to a bubble. It is hard to predict if this will actually happen or not, but this is a very real possibility. When the mood is pessimistic, people take lower risks and lever-

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The blog "Alpha and Omega" is collaboration between Akshay Oka (University of Pittsburgh student) and Chinmay Shringarpure (University of Maryland student). Both of us are passionate about writing and debating; and this blog is an extension of our thoughts and ideas about various topics ranging from Psychology, Faith, Science, Math, Current news, Economics, Politics etc. Our blog is located at : http:// daydreamersac.wordpress.com/

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age lesser. Currently the inflation is below the Fed’s target inflation rate. Low inflation or deflation leads to lower prices and lower wages which may lead to lower production. The other extreme that monetary policy could affect through money supply and influencing people’s behavior by keeping interest rate low is rapid inflation, rise in prices. This scenario would hurt bond owners whose return is eaten away by inflation.

Student talks

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Bernanke although highly successful so far in raising asset prices R e f e r e n c e s : t e r m i n a l . by keeping interest rates low 1 ) B l o o m b e r g 2) Bernanke’s press release dated Dec 18th 2013 and also managed tapering expectations well by has left Janet Yellen, the next Fed chairman an unprecedented task of winding down this historic bond purchase program. Central Banks around the world have also eased their monetary policies following the FED.

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BILL SACHS AID As an Aspiring Behavioural Cum Developmental Economist, the names and works of Professors Jeff Sachs, William Easterly, Abhijit Banerjee and Esther Duflo have been hard to miss. Interestingly, I was exposed to their ideas in an anti-chronological order1. As a student with a ear to the social sector ground, the aid debate was something that had always left me quizzical and even though I agree with Duflo and Banerjee about not taking a sweeping stance on issues like this I was curious to know both sides in its entirety. This is how I came to read the “The End of Poverty” and “White Man’s burden” simultaneously2, hoping to come to some conclusion about the “Right Approach to Developmental Assistance” (as if they’d ever be such a thing!).

own oil. And in that, he attributes their decline to three types of traps viz. 1. Fertility Trap 2. Poverty Trap 3. Fiscal Trap Going further through the years of tied aid and proxy governance, S concludes that although international cooperation is necessary for the development of policies, there has to be an orientation toward local problems and local solutions. This is probably why S’ went on to successfully co-create sound MDGs and build Model MD Villages. Finally it came down to this; S believes the answer lies in the transfer of resources from one country to another. E begs to differ on this note. He begins his narrative with an elegant point wise refutation of S. He demolishes the idea Arguments and Counter Arguthat “Poor countries have always been ments: Moving in Cycles poor”, put forth by S. Using a simple I hypothesis test, E shows that countries To commence, with a point of agreeGDP could vary by chance due to ment between the two, Sachs and “Stationarity” and not because of the Easterly(S & E henceforth) believe INSTABILITY S claims. Next E makes that the reason for Europe’s early the point that Aid finances only Coneconomic success (pre war), specifisumption not Investment. cally England was their courageous Being the technocrat that he is, E sets move to open up markets which creout to prove a significant relation beated an economic environment that tween aid and growth and quotes sevfostered industrial innovation. S fureral other academics who have made ther credits England’s liberalisation as previous attempts to do so. Without the cause of economic success elseusing the words “vested interests”, E where (and E’s support stops right rubbishes (Burnside and Dollar 2000)’s here). significant correlation5. He does this According to S, growth with evidence (Easterly, Levine and diffused; from Britain to its colonies, Roodman, New Data, New doubts: A West Europe to East Europe, North Comment on Burnside and Dollar's Europe to South Europe and finally "Aid, Policies, and Growth" (2000) Europe to Latin America, America 2003). A third pair worth mentioning is and Africa. This was to him, the beour very own (Raghuram and Subramaginnings of globalization. But this was niam 2005) who found that aid has an 3 also when the White Man’s Burden effect only in the short run. took form. Yes, S brought this up II first. He characterized the White The question that E therefore Man’s Burden with the words poses is who regulates the regula“naiveté, compassion and brutality”. S tors? then goes on to recount the Great How do you stop aid from being paterEconomic Story, which we all know nalistic, imperialistic even? Take the ends in a deeply unequal society that case of “Free Market Reforms”, which seems to continuously falsify Malthuwas a la mode among economies, 4 sian predications . S then studied low brought into fashion by developed income countries’ adverse reaction countries a.k.a. aid donors. According to the period of neoliberalisation to E, the “Washington consensus failed (1985-2000) especially if they did not in implementation, not in principle.

Free market works but free market reforms don’t”. He stands firmly against the idea of pushing a country into sudden state of economic exposure (not unlike knocking someone into the swimming pool and pinching their clothes). Pointing to Russia and other economies E showcases how these countries were severely hit by “transitional recession”. The way S sees this is different. According to him, a big influx of aid pushes countries into a state of “self sustaining growth”, a state that is presumable improved when markets are freed. The following is how he sees the problem w.r.t the aforementioned poverty trap. If one were to begin at income I1 today, she would be unable to nourish herself enough to earn back I1 even if she spend the whole o it on food. I2 would fetch her lesser income the day after. However if she were able at one time cross T/I0 level of income, her future income would increase w. r. t. pas income. This T/I0 level is the influx needed to lift her out of poverty. The same is true for villages and countries. E thinks that this Big Push system apes Shock Therapy. He brings to surface an important point about unintended consequences. The externalities of developmental assistance. Although these consequences are usually unpredictable, over the years their existence can be taken for granted. These side effects include (Easterly 2006) Welfare dependence, Market Distortions, Geopolitical Tensions, Tensions between Aid Recipients and Non aid recipients, Coordination Failures, Project Failures and Faulty incentive structures. “There is something wrong with Aid, but also with what is expected of it” says E. He is opposed to the idea that aid be thought of as a panacea because those expectations by themselves lead to unintended consequences. Moreover E fears that aid does not foster a “No Nonsense” environment and

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exploitation is widespread. He illustrates with an example of the number of aid institutions (9) and donor countries (15) that could be chosen for a simple road repair in Tanzania. While it is good to be spoilt for choice, manoeuvring through the bureaucracy and diplomatic sensibilities is hardly what the poor passionate social worker aims to do. III. However S cannot be written off as an ignoramus where these issues are concerned. He also has a solution for the “coordination” problem. According to S, investments have to be made in packages. To him investments are most required in the form of human capital and knowledge capital rather than financial capital. A good example of this would be an Self Help Group (SHG) based development program where SHGs are linked to microfinance programs and women are trained to make/produce and sell articles and develop their business acumen. The irony however is that in order to circumvent the coordination problem, the size of the aid package has to expand, which in itself invites inefficiency. This is where S proposes PLANNING. According to him the following plans are indispensable (Sachs 2005); Diagnostic Plan, Investment Plan, Financial Plan, Donor Plan, Public Management Plan. In a sense these plans mean little if they are just part of a proposal for aid

money. Being the optimist that he is, S thinks that the exercise of planning a project, in itself, if thought of through various lenses can allow you to forecast troubles, prepare solutions and most of all create accountability among the visionaries. E is very wary of “Planners” as he

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calls them. He makes a compelling case for why planners “crowd out” participation. In an illustration he tells readers about how social workers are denied aid repeatedly over insignificant details of the proposal, just because it does not match the aid organizations model plan. In fact E is so critical of planners that his book is strewn with phrases such as “post modern imperialism”, “decentralized despotism” and “Sponsoring autocrats” etc. Easterly’s solution, (surprisingly much like S) is a local orientation of policy but this, by powering entrepreneurs; providing them property rights and facilitating their endless rounds of trial and errors. Solutions: Small and Big

for his emphasis on AID and ASSISSTANCE and call E and his advocates, “Demandwallahs” for his emphasis on SELF-DRIVEN development. According to D and B, if a poverty trap does not exist, people can work their up by themselves and it is only a question of creating awareness. In the case of poverty trap, the interventions proposed are low-cost and need very little aid money diminishing the scope for inefficiency. Apart from these “micro” solutions, the following the big MACRO insights that are common to S E D and B 1. Give the Poor a voice

The following are some of their findings (Duflo and Banerjee 2012) :

Sector

Poverty Trap?

Impactful Micro-Interventions

Nutrition

Yes

Iodizing flour

Education

Deworming Children

Savings

Yes

Provision of low unit savings options

(Authors creation from EDX course, “Poverty and Global Challenges”)

Firstly there is a consensus in the development world about adopting a “clinical approach”. Both S and Easterly mention this in different capacities. While S speaks of taking a “diagnostic approach’ to the problems of development much like a doctor does for his patients and prescribe keeping in mind the medical history of the family, E mentions Randomized Controlled Trials (RCTs), a method of research adopted by medical researchers to truly isolate the effect seen on subjects to the medicine administered alone. D and B have championed RCTs and according to me their outlook on development is the best consequence of the aid debate. Carrying out RCTs in various corners of the world, testing the impact of seemingly small, unconventional interventions, D and B have been able to show statistical evidence of success/failure of their cost effective interventions. They call S and his supporters, “Supplywallahs”

Intervene for Individuals not for their Governments 3. Allow Aid organizations to Specialize 4. Monitor and Evaluate EVERYTHING 5. Make sure interventions are not feel good 6. Allow for trials but more importantly for errors 7. Pay attention to local leaders and local governments And most of all 8. Continue Debating! References: In reverse order of publication of their seminal works: (Duflo and Banerjee 2012), then (Easterly 2006) and finally (Sachs 2005) 2 I must confess of having selectively read chapters, so please do discount these ramblings at your discretion. 3. White Man’s burden is a reference to an extraordinary poem by Rudyard Kipling by the same name. 4 See “Malthus, the false Prophet”, The Economist, May 15th 2008 http://www.economist.com/ node/11374623 5. You see, they were World Bank economists

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during the season of World Bank Aid packages.

(Please note that due to space constraints the given paper was truncated.) Bibliography Burnside, Craig, and David Dollar. "Aid, policies, and growth." American Economic Review, 2000. Duflo, Esther, and Abhijit Banerjee. Poor Economics. Random House, 2012. Easterly, William. The White Man's Burden. Penguin books, 2006. Easterly, William, Alberto Alesina, and Janina Matus. "Artificial States." New York University, 2006. Easterly, William, Ross Levine, and

Economywood What do we get when a producer combines a good script, good direction, great sets and talented actors? A big hit movie, of course! This is known to bring huge bucks to the individuals in the film-making as well as for the economy. The Industry does its bit for the growth rates. By the time a movie makes it to the theatre or to the shelf of the local video stores, people only see the big name of the stars and the famous producers and directors. But there is so much more to the industry than what meets the eye. The ‘behind the scenes’ scene is that it is an industry that creates revenue, jobs and most importantly products. The economic role that the movie industry plays just cannot be ignored. The global economy and movies originating from different parts of the world are closely interlinked with each other. With an increase in the income of the economies there has been a rise in more hubs of mass entertainment, which furthers economic development. Other than contributing to a country’s income, the film industry also provides us with knowledge about the economic wellbeing of different countries. Hollywood is a major contributor in

David Roodman. "New Data, New doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth" (2000)." NBER, 2003: http:// www.nber.org/papers/w9846. Raghuram, Rajan, and Arvind Subramaniam. "What undermines Aid's Impact on growth." IMF, 2005: http:// www.imf.org/external/pubs/ft/ wp/2005/wp05126.pdf. Sachs, Jeffrey. The End of Poverty. Penguin books, 2005.

SNEHA MENON, recently stum-

this regard. Given the sophisticated and state-of-the-art technology available, and the vast knowledge of film makers, this industry has become the top- ranking industry, both in terms of revenue collection, and public entertainment. It is a wonderful mixture of creating mass awareness, in a lighthearted, fun-filled, and engrossing manner. Different views on the economy are well depicted in some major hit films. A handful of them are as reviewed below: Blood Diamond: A blockbuster, the story revolves around a diamond cartel. The evil South African diamond monopoly buys diamonds from warlords in African countries suffering civil wars. The various warlords and armies use the “blood diamond” revenue to buy weapons to engage in further atrocities against innocent civilians, therefore fuelling the convenient status quo. The Great Gatsby: This story is based on the character Gatsby, it tries to explore the post WWI generation and their attitudes toward life. It examines the culture of the bright young things and their high living. Gatsby touches upon the apathy, boredom and depression of this culture, in the context of prohibition, wealth and luxury. Gatsby as a subject of analysis is a good precursor to Black Tuesday, the stock market crash of 1929. Margin Call: An enthralling thriller, well appreciated movie by critics and

public. The film is based on initial stages of financial crisis of 2007-08 featured at a Wall Street Investment Bank. The film explores capitalism, greed and investment fraud. What follows is a long night of panicked double checking and double dealing as senior management frantically tries to stabilise the market.

bled upon her lost love for Bombay in overhearing conversations of women in the Ladiz Dibba of local trains. Having discovered the joy of listening to Belle and Sebastian while doing Algebra, she took it up as a major alongside Economics (Maths, not Belle and Seb). She promises not to swear at critical comments about this article sent to snehamenon88@gmail.com

The Dark Knight: Here we can see prisoner’s dilemma unfold. Two sets of people are kept confined separately. It has been told to one group that if they don’t hurt the other, then the other will hurt them and vice versa. Although theoretically, it is best that they cooperate and not defect (hurt the other group), individually they have reasonable incentive to hurt one another as they both expect the worst of each other. However events take another turn in Dark Knight... F.R.I.E.N.D.S. : We are all aware of the famous series F.R.I.E.N.D.S. In the episode, ‘one where everyone knows’, characters, Racheal and Phoebe finds about Monica and Chandler having an affair. But they decide not to tell them. Whereas Monica and Chandler are also aware of the fact that Rachael and Phoebe know but they also decide not to let them know, that they already know about what Racheal and Phoebe know. Here both parties are play a strategic game by acting as if no one

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knows anything. It was their optimum strategy. Bollywood : Apart from the major Hollywood successes our Indian Bollywood industry has also been a platform for such economics based movies. Popular movies like Lagaan, Peepli Live and more recently Matru ki Bijlee ka Mandola were based on the concerns of oppressed farmers, exploitative colonial taxes, and farmer suicides which were followed by appropriate/inappropriate media and political response. Which such strong socio-economic subjects, they too were able to make their mark on public entertainment. Other movies like Guru, Corporate and Rajneeti, which are based on business and politico-economy of India, were also well (Source: http://commons.wikimedia.org/wiki/ File:Dark_Knight_Rises.jpg, Eva Rinaldi Celebrity ) received. Itâ&#x20AC;&#x2122;s not that economic aspects are porto learn how to apply theories in the real trayed clearly in every film; one has to develop an eye for them. Once you do, it world. is perhaps the most truly enjoyable way

Economic Stars

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Zelam Sule A 20 year old, soon to be graduate in Economics. Her interests are movies andalways loves to be up to date with the recent knowhows of the world. The greatest treasure of her life is her collection of movies of different genres. Being always happy to share my passion for movies, the author aspires to work for this industry. This is a 1st attempt to present her writings publicly and she is also working on some other articles, stories as well as translational work for few writers.The author can be reached through her email id - zelam111093@gmail.com and hence, would be happy to share her further writings with everyone.

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Time to admit your Government

Discuss( Rant) out loud your loud apprehensions and thoughts about policy and socio-economic issues

Tattletales

An open letter to Dr. Manmohan Singh

An Indian Protest (Source: http://commons.wikimedia.org/wiki/File:Baiga_adivasi_in_protest_walk,_India.jpg, Author: Simon Williams / Ekta Parishad)

It isn’t exactly a very happy period for your government today. It is true that in spite of so many different types of scams, scandals, inaction; your government has managed to wade through these murky allegations and will surely complete your full five-year term. But, I want to know the reason for your support and inaction to the various targets missed during the UPA regime. Poverty There was declaration of a victory by UPA in reducing poverty levels. Data released by the Planning Commission shows that 138 million people have come out of the poverty line. However, the buck does not stop here. The 33 Rupee per day mechanism of the Planning Commission to judge poverty levels is much less than accepted standards worldwide. By making a slight change in this parameter, things will appear much less rosier than they are currently. This is however, not taking away the fact that there has been a reduction in poverty. But, that is natural owing to a developing economy. Employment The employment figures are also constantly fluctuating in India. Currently, the figures have dropped down to a very

minute figure, but creation of jobs still remains quite stagnant. Mass schemes India has had a huge range of welfare schemes since Independence. PDS was such a mass welfare scheme, which without a doubt gave many rations at affordable rates. In this scenario, the Food Security Bill is one more such huge burden on the exchequer. It aims to give a select no. of items at throwaway prices. This is okay for welfare, but certainly not good for our economy. We have already missed all our targets to reach the double figure GDP mark and now, with this bill, it seems that even 4.5-4.8 % will be difficult to reach! Scams India has lost an enormous amount of money due to serious irregularities in the functioning of the government. We have had multiple scams ranging from the Commonwealth Scam to 2G to the recent Coalgate scam, causing lakhs of rupees to be lost, which could have been utilized for better purposes. Congress Party, in its manifestos in 2004 and 2009 have maintained high level goals like giving leverage to girl education, creation of jobs, good

business atmosphere and so forth. My question to you is that being in the field of economics for more than 4 decades, how did you fail to find solutions to these problems and merely remain silent! People reckon that a nonpolitician PM is the best cure for a country, especially if he is an economist. Despite this, why you and Dr. Montek Singh Ahluwalia failed to convince the political leadership of your party to see the drastic impact that these welfare schemes have on the economy! Sir, it is indeed an irony that you, who were credited to have opened up India’s economy and thus, a hero for many Indians; are now being subjected to jokes and indecent comments on the social media and openly in public. The recent role of the PMO in the Coalgate scam does put serious questions on your integrity too. My biggest query in this regard is that, in spite of being embroiled in so many controversies, any selfrespecting person would have hung up his boots. Why is there this unflinching devotion to the party leadership, when you yourselves are being treated not as the PM but, as someone always ‘second fiddle’ to the ruling family! I believe that still the time is there to accept your government’s failures and step down with dignity. Any further delay will just lead to a further loss of your reputation, which I think you do not deserve. Yours Sincerely, Akhil Oka References:

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http://indiatoday.intoday.in/gallery/upa-govt-9-years-9-scamssonia-manmohan/1/9401.html

Akhil Oka is a SYBA student at Ruia College, who has a keen interest in reading, writing, politics, cricket and current affairs.

http://aicc.org.in/manifesto09-eng.pdf http://www.dw.de/indias-poverty-statistics-may-be-flawedcritics/a-16999373

Slum Dwellers – Growth Drivers People living in India’s urban slums form the backbone of a service industry that most of us cannot do without. What was perhaps unclear till now was the contribution of slum dwellers to the constantly speeding economic engine of the country. According to a new study, people living in urban slums contribute over 7% to the GDP1. The study, which was conducted by Society For Participatory Research in Asia and Indicus Analytics, reveals that in million plus population cities, nearly 40% of households live in slums and in Mumbai, Delhi, Chennai, Hyderabad and Kolkata account for more than 50% of total slum households in the country. Despite their contribution, slum dwellers are seen as ‘outsiders’ and are deprived of basic necessities. The study found that 36% of slum households in the country don’t have electricity, safe drinking water and proper sanitation within their house premises. But come election, political parties throw all kinds of lipservice for their votes, only to forget them, once they win. A vintage example is of Delhi BJP vowing to return to power in Delhi after 15 years, recently promised to provide flats to each and every family living in over 600 slum clusters if it comes to power in the assembly polls approaching. However, in many countries slum upgradation has benefited huge number of people. Like in South Africa there have been some successful initiatives in which people who had no urban services were supplied with water, access to sanitation and

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(Sour ce: http://c ommons .wikimedia.or g/wiki/File:Potter y_uni t_in_Dhar avi,_Mumbai.jpg

Author :

M. M

fr om Switzer land)

proper housing. In Latin America crime is a major problem in slums and therefore there have been concentrated efforts to reduce crime and increase public safety. Even though state governments often see slums not as thriving economic unit but a burden on civic infrastructure, it is in the city’s best interest to upgrade slums. If slums are allowed to deteriorate, government can lose control of the populace and slums can become areas of crime and disease, impacting the whole city. Upgradation programmes can also address problems affecting slum residents, illegality, exclusion, precariousness and barriers to services, credit, land and social protection for vulnerable populations such as women and children. To sum it up, it is wrong to say that the slum dweller, contributing above 7% to the economy’s GDP, is a burden to the struc-

ture of city and the country. If concerned efforts are taken for their betterment, it shall boost their contribution to our economy as well as our global reputation with regards to eradicating poverty. We need to remember that they are ‘part’ of the nation and ‘not apart’ from the nation. Reference http://articles.economictimes.indiatimes.com/2013-10 -15/news/43068314_1_slum-dwellers-urbanpopulation-households

Suraj Singh is a Student of 3rd year Mechanical Engineering from KJ Somaiya College of Engineering. A football enthusiast and a keen learner, he ravels acquiring knowledge from any possible source.

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Spelling out N-A-X-A-L-I-S-M The bloody and violent Naxalite movement was inevitable. Since its rebirth in 1980 (It had collapsed after Charu Mazumdar’s killing in 1972) as The People’s War Group or the PWG in Andhra Pradesh, the movement has spread to a wide number of states forming a geographically contiguous region known as the ‘Red Corridor’. Now why would one call it inevitable? The answer to that question lies in the fact that the states worst affected by this leftist extremism are the ones who are worst off. Take Chhattisgarh for example, its basic literacy rate is 71% which is below the national average of 74%1. However, even this paints a rather rosy picture. To understand the truth in this state, one must separate the state’s 36% tribal population from the Hindu population of the state, for these Adivasis form the ranks of the Naxalite army, The Peoples Liberation Guerrilla Army (PLGA). Consider the Dantewada district (its population is overwhelmingly tribal) .Its literacy rate is a mere 33%! It lacks schools, has only a few hospitals, not many dispensaries and has one of the highest child mortality rates in the nation. Even the politically important Bastar district is in a similar state. This tribal dominated district (often called the UP of Chhattisgarh, due to the large number of seats it contributes to the State assembly) has a literacy rate of just 55% and again abysmal healthcare facilities. To understand the Naxalite Movement one has to examine the history of its second coming. For that we must start in the 1990s when into this toxic mix of poverty, stagnation, hunger and death the governments of these states added another dangerous ingredient, industrial development. This development included taking away the lands of the tribals at dirt cheap rates and leaving them to fend for themselves. In such a situation what choice did the tribal population of these states have? They couldn’t appeal to the very politicians who had green lighted these de-

velopment plans; they couldn’t appeal to the very police that was brutally evicting them from their own villages. In such a situation all they could do was join the Naxalbari Movement. The ranks of the so called ‘Peoples Liberation Guerrilla Army’ thus swelled.

in Dantewada in 2010 and the recent massacre of the Congress Leadership in Chhattisgarh. Hence it could be argued that “taking up the gun and fighting was the only option for these tribals. No other option was viable.” CrimsonTriumph The Naxal movement has achieved what its Adivasi members had set out to achieve i.e. drawing the state’s attention to their plight. Several contentious projects like PO-

Guns VS Grains With the support of the tribal populations the Naxals began a highly popular movement to kill or drive out the upper caste Hindu moneylenders and landlords who were accused of exploiting the tribals. They also targeted village heads who had accepted the governments mining and development plans. These twin policies of the Naxals were carried out ruthlessly throughout the 1990s. However, the Upper caste landlords organized a counter-attack and the early 2000s saw the formation of a number of so called ‘Purification’ movements across the red corridor; the most notorious of these was the Awakening movement of Jharkhand and The Salwa Judum2(literally Purification Hunt). Both were extremely violent and destroyed tribal communities further and antagonised the state to a far greater extent. These movements were http://commons.wikimedia.org/wiki/File:In%29naxal.gif backed by the state, however when SCO in Orissa and Vedanta mines the Supreme Court declared them in Niyamgiri hills have been virtually illegal and ordered them to be dis- suspended because of local opposibanded, the state was forced to com- tion to them. The new Land Acquiply in 2011. The government too has sition bill (Right to Fair Compensalaunched several paramilitary operation and Transparency in Land Actions like operation ‘Greenhunt’ to quisition, Rehabilitation and Resetdefeat the PLGA. These operations tlement Act, 2013) too recognizes are better organized and more sys- greater tribal control over land (and tematic than ever before. The ran- even tribal rights on forest land in dom beatings and shootings practised general). A slew of welfare measby the Paramilitary men in the past ures targeting Adivasis too have are now on the wane. This has also been implemented and state as well been coupled with a large number of as central governments have gone welfare programmes and rehabilita- into overdrive setting up new tion programmes for the Adivasis roads, school, hospitals and pumps affected by the war against the Mao- for irrigation in the afflicted disists. Despite this there have been tricts. Dantewada recently got its several spectacular attacks on the first engineering college and several Indian state by the Maoists, notably more schools are being set up by the massacre of 76 paramilitary men the government. Bastar too has got

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new roads, hospitals and a upcoming cluster of schools. In the face of these developments several Adivasis in the PLGA have taken the governmentâ&#x20AC;&#x2122;s surrender and rehabilitation policy, while many more have simply deserted. Further, the changing attitudes of the Adivasis can also be seen in the record voter turnouts in the recent elections despite the Maoists warning people not to vote. From this we can conclude that the Naxal foot soldier is not as ideologically driven as the leadership is and can be seduced to leave the movement if their (genuine) demands are met. The leadership of this movement, though, cannot be compromised with as they are ideologically driven men and women, who are very often upper caste, nontribals from outside. They are the core of his movement and will need to be crushed with pure might as their only aim is to overthrow the Indian State. The cadre though, as sufficiently proved, can be dissuaded from continuing in the movement. To understand how simple economics coupled with some military might stamp out this menace all one must

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do is look at Warangal district in Andhra Pradesh. After an efficient armed crack down, the government flooded the district with colleges and jobs. This rural district soon flourished and the one time fountainhead of Naxalism is today peaceful and (relatively) prosperous. CarrotSticks In conclusion, Iâ&#x20AC;&#x2122;d say that it is clear that Naxalism is an inevitable and necessary force in Modern India, as it is the only way the voice-less citizen can ensure that he is heard and his demands are met and he isnâ&#x20AC;&#x2122;t ignored. Once these movements start, first will come the stick, then the stick and the carrot and finally as Warangal (and all of Andhra Pradesh in fact) has proven, you will end up with just the carrot. A democracy like ours cannot ignore the cry for attention once it has been raised (if not for any other reason the fear of loss of credibility is enough to move states to action). The surrenders and the large scale voter turnout even in afflicted districts hence shows that the Naxal movement itself is largely discarded once the immediate goals are achieved. Its defining ideology et al is hence quite immaterial. The question

however is, when will the State understand this simple cycle from stick to carrot, and start being more discerning with the stick? References: 1. http://www.census2011.co.in/ literacy.php 2 The Salwa Judum are a group of civilians (local tribals) trained, armed, and deployed as soldiers by the Chhattisgarh state government as part of an anti-insurgency initiative, to obverse the Naxals. In 2011, The Supreme Court of India declared them to be illegal, and directed the Chhattisgarh government to disband them. Karan Menon The author is student of Sociology in The University of Delhi, though he fears that his true love may be the Political Sciences. You can email him at karanm95@rediffmail.com

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WONDERing about WOMEN In my recent travails through cyber- Of course we need to respect homespace, I came upon something slightly makers as much as we respect working women. But it doesn't happen, does it? In my own house, my mother has a 'part time' job, and her additional responsibilities include taking care of the house. It is just assumed that a woman is supposed to manage the running of a household, notwithstanding her other responsibilities. Wherever I look, I see housewives who have sacrificed their own career for their husbands and children. They are not financially independent, and how much money they can spend depends on how much they are allowed to. Of course it might not be All play and no work? spelled out that explicitly, but (Source: http://commons.wikimedia.org/wiki/File:1812-neoclassical-Youngeveryone knows that the Ladies-at-Home.png, Author: Henry Moses) person who earns the money disconcerting. A man argued, at a has a right over it. Of course this is forum dominated by feminists, wrong, because without a person to that if a woman didn't want to run your house you couldn't possibly study, all she had to do was “get work that efficiently, and the only fair married”, whereas for men, thing to do would be to divide it in earning a living and providing for half. Seldom do I see cases where the family were responsibilities, money is actually shared. and not options. While this was a troubling assumption, but the more I Does anybody actually make an thought about it, the more it seemed informed choice to not work outtrue. My own experience seemed to side the home? corroborate it. I come from a reasonably educated family, and yet most If young girls are conditioned to beof my cousins are happily married lieve that the sole purpose of their housewives. I could not come to existence is to please their husband, terms with this. There must be some- then of course, the entire purpose of the discussion is defeated. I don't thing deeper that I am missing. know much about rural areas, but Is a housewife less respectable than a having grown up in a not very posh working woman? Why is it important to area of Mumbai, I have met quite a be economically and financially independ- few women who HAVE TO work to ent? Is 'marriage' really a 'choice' that make ends meet. Their husbands are well informed women with access to wasted drunkards or louts, and they education would make? Is it beneficial for are, in essence, to use the sexist women to give up their careers for the term, the ones who wear the pants in sake of children? Is it about having priori- the family. Their husbands will still take their money from them. They ties? earn it but they don't even have the Break the Home-maker Phe- right to keep it! And the Indian societal norms we so revere, actually connomenon done this!

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There is a very strange social condition prevailing. I see women who are working, earning independently, yet they crave for someone to earn for them, so that they can sit at home. It makes sense, because everyone needs a break from the struggle of life. They are just 'waiting' to get married, and working in the interim because they are 'bored'. The irony is, these very women see their peers everyday being completely in the control of their husbands. Some are only manipulated, some are forced to have sex, and some are beaten and tortured. So why this obsession with getting married? Have all Indian women developed masochistic tendencies, or fetishes of submissiveness on their way to womanhood? I would think not! Societal pressure pushes them to not be independent. Evidently, we think that a marriage is a better way to survive than actually earning your own bread. So it’s only okay for women to have this attitude, but certainly not men! How many families take the education of women seriously? Sure, many women have BA degrees in obscure subjects, but it’s only to make them more marriageable. Do they really have any 'skill set' that they can use? The same is true for many men too. But since they are men, they need to earn money anyhow. Surely, this has something to do with the so called 'social division of labour' or as we should now call it 'antiquated practices that we should now let go of'. While we can glorify marriage as a 'sacred union' and all those other pretty names, we also have to recognize the fact thatit is a social contract. And in some cases, it very clearly spells out; clean my house and sleep with me, and you will have food, and maybe a little extravagant

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spending. Sometimes you might also get beatings and abuses on the side. Coming back to the question of how women can simply 'marry' and get away with the drudgery of life, we can see that it is not a solution at all. From the devil's mouth to the deep sea? True, the better to do you are, the less visible your chains are, but nevertheless, you are not in any true sense independent or free. Basically women have a choice; they are either dependent on someone else completely, or they fight the world. It’s a lose-lose situation for the women in any case. Moreover you can call the former sort women lazy, gold-diggers, pleasure seeking manipulators, or whatever you prefer, but the truth remains that these are not free choices. There are ele-

The Jobless Generation Youth unemployment is blighting a whole generation of youngsters today. The International Labour Organization estimates that there are 7.5 crore youngsters between 15-24 1 years of age fishing for jobs across the globe. This excludes a large number of youngsters who do not participate in the labour market1 at all! Similarly, across the developing countries, the World Bank estimates that there are 26.2 crore such youth who are not shielded by education, employment or training. Almost a quarter of the world’s youth do not participate in the labour market1. More young people are idle than ever before!

ments of coercion. She’s the Man I am no expert in these matters, but some simple steps could go a long way in ensuring financial independence for women. Firstly, no matter what position you are in, have a bank account ONLY in your name, and save money in it. You should not have to rely on your marriage to keep yourself alive. Independence is not only good, it is essential. Secondly, if you can, work. This is not to support the family as much to enable the you to prove that you can take care of yourself financially. Thirdly, assert your rights. Don't let a marriage hold you down. Break out if it is oppressive in any way- physically, emotionally or financially.

in informal or temporary employment. In developing countries like India, one fifth of the working people are either unpaid laborers or work in the informal sector. The financial crisis, inefficient labour markets and a mismatch between the skills and job availability are a few of the major reasons for unemployment. A majority of the youngsters have failed to acquire fundamental and exigent skills. Furthermore, the educational system is faulty and does not equip students for employment or for meeting market needs.

In India, since 1991, the share of the service sector both in terms of employment and contribution to the GDP has risen. Secondly, it is only natural for the economy to adopt advanced capital intensive techniques as it forges forth. This has resulted in the retrenchment of labour, renderWhy? Some of these youths simply ing several youth jobless. choose not to work. Others like How? Given that the effects of South Asian women are prevented youth unemployment can persist for by cultural reasons. Moreover among years, it is necessary to develop the under-24s who work, there is a strategies to tackle this quickly. For disproportionate proportion engaged example, vocational training is the

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Anantika Mehra born on 2nd may 1994 always had a making of a fighter, may it be for ice cream or puppy welfare. By the age of 15 her

choices became refined and she settled for engg and fighting for woman rights and is doing both quite happily. She is currently a student of City University of Hong Kong.

need of the hour. Economies all over the world should create a platform to train youngsters. The Indian government has set a target of training 500 million people by 2022.2One can also utilize technological solutions and innovations for better outcomes. It can greatly reduce the high cost of vocational education. “Serious games” can provide young people with a chance to gain “virtual” experience at minimum cost: McDonald’s uses competitive video games to teach people and interact with customers. Mozilla, the creator of the Firefox web browser, has created an “open badges” initiative that allows people to gain recognition for programming skills. Technology is also making it easier to take work to people who live in work-deprived areas or who are shut out of the market by cartels. Amazon’s Mechanical Turk, an internet marketplace, enables companies to hire workers to perform simple tasks such as identifying people in photographs. They can take part from anywhere. It is hard to be optimistic about a problem that has been a destructive force in the lives of so many. But

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perhaps, it is time to be a bit less pessimistic. Policymakers know what to do to diminish the problem—ignite growth, break down cartels and build bridges between education and work while evolving powerful tools, and embracing new technology. Countries that make the investments and choices needed to re-size their unemployed youth figures, will definitely flourish.

international/21576657-around-worldalmost-300m-15-24-year-olds-are-notworking-what-has-caused 2

http:// articles.timesofindia.indiatimes.com/201201-09/news/30606909_1_nsdcnational-skill-development-corporation -niit Other sources : World Bank, OECD

1 References: http:// www.economist.com/news/

Did Liberalization help? Have you ever been caught off guard by the sight of a malnourished beggar outside a swanky building? Then this article is for you. For you, if you still can’t digest the fact that female foeticide continues right below our noses, almost simultaneous to our famed female political empowerment at the PRIs. The truth is a considerable part of our population struggles to find 2 square meals a day while the rest of us happily chatter away over our smart-phones. It is impossible to miss these obscene displays of wealth amidst the grim and disturbing sights of absolute poverty. Welcome to the world of haves and have-nots! Why is this gap between the rich and the poor still widening? Perhaps we need to revisit our economic his-

tory. The economic liberalization reforms of the early 90’s were meant to usher in an era of country-wide economic prosperity, but its results were simply not as promising enough. The resultant host of opportunities that came our way were confined to a very small section of the society who could, and did, capitalize on it. Tools and technology propelled growth but the beneficiaries of this were mainly the educated, and the affluent. Stock markets opened up, making the investing class richer. Foreign investors also showed a partiality towards areas already at the “stage of mass consumption”. Moreover, one cannot ignore the impact of this on local manufacturers and small en-

(Source: http://upload.wikimedia.org/wikipedia/commons/5/5d/In_India_the_main_criticism_is_thatSocialism_for_the_rich_and_capitalism_for_the_poor.jpg, Author: Great Telangana)

Preksha Lalwani Apart from being an economics major, I Preksha Lalwani, am a creative person with love for photography, art and nature. I believe in living in the moment and giving my 100% to everything I do.

terprises. Small scale industries, handicrafts and agrobased firms are the core sectors of the economy and they saw marginal growth over this period. Add to this government policies that strongly incentivised capital intensive manufacturing processes over labour intensive ones. This has eventually led to an increase in the level of unemployment, further increasing the disparity between the rich and the poor. Let’s not forget the role that inflation has played here. It has slowly and steadily reduced the real spending power of the poor to an almost cruel low. One can’t help but worry about the other consequences of this terrible inequality viz. crimes and antisocial activities. Whatever happened to talent, hard work and moral desert as the basis of earning? Or have the rich found a way to circulate money almost solely among them. It can be argued however, that it is also in their interest to bridge this gap. The effect of the multiplier is stronger with more people rather than more money. The last two decades of liberalization have sown seeds of disparity and a conscious effort to restore the balance is the only solution to this problem. There needs to be a social barometer that measures distribution of income. Incentives in terms of public recognition,

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government sponsored awards should be mandated. These are some of the quick fixes that can bring us to a stage where we can concentrate on long term efforts of effecting equitable distribution of income and wealth.

Student talks

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Nithya Vishwanathan is a final year Arts student from Ruia College, majoring in Economics. She nurses a flair for freelance writing, reading & music and is proud to have completed 8 levels of Spanish. For further discussions, she can be reached at nityatg@yahoo.in. Disfrute del artĂculo!

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Bipolar Disorder In the period, 2004-05 to 2009-10 the proportionate share of sectors in employment reveals that a sector called non-manufacturing, comprising of construction has generated maximum employment followed by the service sector whose share has increased marginally . In the earlier period service sector had lead some employment generation. The traditional sectors (agriculture and manufacturing) share of employment has declined. Despite stagnation in employment, the quality of employment has improved somewhat however in this phase with rising share of regular workers and rising real wages across categories of workers. The diagnosis is that people in the age group of 1559 are therefore now opting out of the labour force so as to seek education / train further. School and college enrolment rates are going up even for girls. Women in turn are opting out of work to return to domestic work! This is supposed to be a general beneficial consequence of rising incomes.

AnuradhaKalhan

This period also saw the fastest decline in poverty, quoting the report of the planning commission â&#x20AC;&#x153;During the 11-year period 1993-94 to 200405, the average decline in the poverty ratio was 0.74 percentage points per year. It accelerated to 2.18 percentage points per year during the 7-year period 2004-05 to 2011-12. Therefore, it can be concluded that the rate of decline in the poverty ratio during the most recent 7-year period 2004-05 to 2011-12 was about three times of that experienced in the 11year period 1993-94 to 2004-05.â&#x20AC;? This rapid rate of poverty decline should have been matched by a commensurate rising rate of growth of employment. How else do people step out and stay out of poverty? How does the trickle down work? It cannot have been by welfare alone. There appears to be a growth in survival strategies to stay above the line of destitution instead of measurable employment. This survival strategy consists of using wel-

The Head of Department of Economics at Jai Hind College, Mumbai, the author is currently a fellow at the Teen Murti Bhavan, Delhi.

about slow employment growth; in fact the implications of this decoupling are hardly even mentioned. The implications of this disconnect between growth and employment is wide ranging and especially dangerous for a country like India with the largest youth population in the world.

It may be highlighted here that of the planning commissions estimated 470 million labour force, 26% are illiterate and 49% cumulatively classify as primary or and below that level of education. The reason they may not be willing to seek employment (and hence the declining LFPR) is perhaps because they are discouraged by the lack of remunerative nonfarm employment at their skill level. Such labour cannot make the mainstay of industrial growth. Yet according to the Ministry of Labour and Employment little less than two thirds of the seats available for Trade Apprentices, Graduate, Technician and Technicians Apprentices were utilised. This does points to a demand side bottle neck for even trained labour implicating the nature of growth we are experiencing. The quality, cost of this training and neglect of overall coordination between demand and supply for the labour market are also called to question. The previous 11th plan forecasted the creation of 58 million jobs of which estimates are that only 18

Guest Author

By now for those who recognise, it is obvious that economic growth of the kind we have had in India for the last two decades does not create as many jobs as anticipated by the Planning Commission, or the kind that can be counted by NSSO surveys. Employment growth for the period 1993-94 to 1999-2000 was 1% per annum, for the next ten years it was 1.5% per annum. The employment growth story is bizarre, by all estimates available there has been a virtual stagnation in employment during the period when growth was at its highest 2004-05 to 2009-10. This is in line with a declining trend in employment growth over a longer period in India for the post reform period as compared to the pre reform period. This does not show up in rising unemployment rates in India because of the slowdown in rate of growth of labour force and a decline in the labour force participation rates. Somehow media euphoria about the high growth rates has never been balanced by dejection

fare schemes specially food based and employment based ones along with multi-tasking, shifting between village and city, between selfemployment and casual work, between home based employment and casual employment, between different sources of credit, different kinds of casual work which is not reported as work to the interviewer . Under reporting of survival strategy is occurring specially among women workers, who bear the double burden of social reproduction and cultural prejudices against their work. Otherwise it is hard to imagine how women are coping with inflation and pressures of schooling their children. For women the problem of employment is compounded by their role at home, the need for work near home with flexible timings and work that compensates them adequately to cover the cost of neglected housework, lack of decent and safe work places. All these problems routinely discourage women workers.

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sent 10% to 25% and doubling the training capacity from the current 4.5 million is destined for the same one third achievement if left to the market . What is the consequence of this failure to coordinate and manage the labour market - a huge insecure labour force, not entirely illiterate, in

(Source: http://commons.wikimedia.org/wiki/File:HiH_-_SHG_Meeting_-_08-08-21_-_01_(6322002464).jpg, Author: McKay Savage)

larity of contract and casual labour are exactly those that will not induce or enable labour to invest in upgrading its skills and training. Employers have no incentive or compulsion to do so. There is a commitment deficit on both sides that feeds into a spiral of low skills. To be believable this discourse of inclusion must state and control the terms of inclusion for the weaker bargaining party.

fact increasingly literate and well informed, not destitute but not protected against inflation or external shocks is like an army of restless income gatherers and hunters, aspiring for a better life but ready to use any trick, any weapon or aggression to survive. The current fascination of the youth for a political strong man, posturing as a sphinx risen from the lowest social scale without formal education to his name, as an all-powerful central ruler advocating an agenda of ‘development at all costs and at any terms’ is a misdirected attempt by people to recapture a sense of self-assurance and control of their own fate. It is insecurity lead astray, evoking Germany on the eve of the ascent of Adolf Hitler.

Still an emphasis by the Planning Commission on market driven education and skills is touching but unreciprocated since markets are not driven by plans. Investment in education and training is a long term one and has opportunity costs like forsaking current employment, work experience over above the cost of education itself. What kind of returns and security does the labour In this situation of economic market offer them? All the projecand political upheaval the recently tions about increasing workforce announced National Rural Livelihood with formal training from the pre-

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Mission and its urban counterpart acquire a special meaning. They deal with the employment, insecurity and poverty issue simultaneously and treat them as sides of the same coin. The policy hinges around local skill formation for men and women, access to credit from cooperative or nationalised banks, wage employment, self-employment and formation of women’s shelf help groups and their federations. The political participation of associations of such groups and individuals will deepen and widen democracy, sense of security through solidarity and focus on livelihoods. Available field work evidence, about the women’s SHG component, suggests that if implemented correctly leads to acceleration in social, financial, physical and human capital at the bottom of the pyramid. It supports group self-employment and individual self-employment among women and reaches the heart of darkness and the seat of social reproduction directly. It impacts the skill, training and cultural capital of the next generation too. The policy needs to be well funded and implemented by the local governments with earmarked permanent staff and structure. The structure must be able to access resources and personnel horizontally and vertically in the administration machinery of the state. Some states have moved more rapidly than others. Kerala for example has set the pace and standard by its KudumbashreePoverty Eradication Mission. The achievements of this mission have been studied and commended on behalf of the Planning Commission. It is now recognised as a national resource organisation for replication across the country and must be perused with some real urgency.

Guest Author

million were created. An achievement of thirty one percent of target should have a sobering effect on any genuine planner. A future projection of 50 million nonfarm jobs by 2017 have been made. This time the hope is that manufacturing sector will grow via a multiplication of existing incentives and inducements. Some of those inducements like liberal labour laws and wide scale popu-

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When Inflation gives you a heat wave, bake a

on the ingredients plus on the amount of gas my oven just consumed. Had I relieved myself from this hard work of shopping and baking, just gone to some bakery and bought the same cake, probably it would cost me less in terms of both money and efforts. And my mom and grandma wasted no minute to explain me t h a t . Translation: Buying the cake is more economical so next time, consider that option!

I got a sinking feeling in my stomach, and was about My eyes were glued to the TV nilla, baking powder, eggs to open my mouth to agree screen. The movie Julie & Julia and chocolate slabs I came with them, that I recalled was playing. I watched in won- home with an empty wal- something the famous der agreeing to the very let. I knew the food inflation economist Milton Friedman words coming out of Amy in India was up high and I knew had said: “Inflation is always Adams’ mouth. She said and I I was experiencing it that day and everywhere a monetary quote: “You know what I love especially when my mother phenomenon, in the sense about cooking? I love that after asked me whether I had some that it is, and can be, produced only by a more rapid a day when nothing is sure, change for the dhobiwala. increase in the quantity of and when I say nothing, I mean As I mixed the egg yolks with money than in output.” And nothing you can come home maida, sugar and cocoa and it more recently Paul Krugman, and absolutely know that if turned thick, I felt the comfort an economist at University you add egg yolks to chocolate which Julie was talking about of Chicago said that high and sugar and milk, it WILL nowhere get thick. That’s such a com- seep through me. I prepared inflation is the batter and let in rest in the “merely” a monetary fort.” oven and in time, the irresisti- phenomenon and is ble smell of chocolate and “always associated with I could fully relate to her character. Just like Julie and Julia, I vanilla essence filled the room. severe social disruption.” simply love cooking and all I knew my cake was ready. This was social disruption aspects of it. Be it eating, The rich, thick butter cream indeed. In this case inflation baking, the anxiousness frosting took another half an was killing my passion. you experience when the hour. Now, frosting the cake Rather, I was about to allow batter is placed in the is and always will be my favor- inflation to kill my passion. oven, or even cleaning up ite part of baking. While frostthe aftermath of a disas- ing, I feel just like a makeup But you know what? No way trous recipe gone bad-I woman giving those, fine, last- was I going to concede delove it all!. Sometimes, I minute touches to a super- feat! I realized that perhaps I watch cooking shows on TLC model. And..Voila! The cake should not spend 500 bucks like normal people follow their was ready! The moment that so often, on baking cakes. I favorite soap operas on televi- everyone had been waiting for could do so only on certain was here. I had spent approxi- special occasions. Big deal! sion. mately a sum total of Rs. 500 At least I got to bake! I know (Source : http://commons.wikimedia.org/wiki/File:Chocolate_Fondant.jpg, Author : Ekabhishek)

Sure we maybe amateurs, but we know funda when we see it!

Tripping on Economics

Cake!

Inspired by the movie, all I wanted to do that day was bake a brown rich chocolate cake. After making a list of all the ingredients I needed, I set off to the market. After spending 100 rupees on butter yet and another whole Gandhiji note on cocoa powder, and some more 100s on maida, va-

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that the theory of diminishing marginal utility says that the utility or satisfaction derived from anything decreases with an increase in the number of repetitions. Well, no offence to Alfred Marshal, but I could bake cakes all my life and the smiles on the faces of the people nibbling it would give me the same feeling of happiness every time.

The bubble of the education industry is one that never goes bust. As this industry flourishes, one of the subsidiary industries it ushers in is the food industry and specifically, that of roadside variety. The prime reason being, where there are students, there is a need to socialize, and where there is a need to socialize, there is a need for affordable food which is where our street side food vendors, swoop in. Shakti’s special Jinni Dosa Shakti’s shakti Once outside the sprawling campus of Mithibai, one needs to have lost all visual senses to miss the bustling crowd outside Shakti Special Dosa. Shakti, with his beetle stained teeth, grins with pleasure when we ask him about how he manages to bring in such a massive number of people to his stall. It is those loyal customers, he says, who keep coming, because of the “mouth-mesmerising” taste of his dosas, which we had the privilege of trying. At face value, his stall, just like most others, has major infrastructural shortcomings. The temporary roof & makeshift kitchen seem very precariously balanced, right next to a gaping, open drain. But it is these very arrangements that define most of the unorganised market, specifically the food sector in Mumbai. He says, there are about eight to ten dosa stalls in the vicinity but doesn’t seem to ruffle a feather when asked about any stiff competition he might be facing.

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Conclusion: Passion trumps inflation!!! (With maybe some moderation)

The author of this article is better known as Shar, though originally christened as Sharvani Divekar. Along with tiring hours as an intern at Kirtane Pandit Chartered Accounts that the CA professional course mandates, she pursues her grad degree at the reputed R.A Podar college .In the time between these two soul sucking activities, she looks forward to brushing up her culinary skills ;that piece of herself which has been featured in her article!

DOSA-NOMICS A look into the back stories of how our beloved dosa wallahs make their business yummy! “Who doesn’t come to my stall?” he asks rhetorically. His loyal customers include not only the multitudes of students studying in the adjoining colleges, but also residents of surrounding localities. Looking at his demographics, he has had to adapt to & adopt the new pizza inspired varieties and his own special Jinni Dosa is in sharp contrast to the mere four varieties he sold twenty years back. When questioned about what sets his dosa apart, he replies saying “Ye Dosa Humare Dimaag Se Banta Hai” unlike the conventional food made from the heart paradigm. Shakti displays highly effective marketing strategies, as he is completely secure about his business. He has a websitei and makes sure to hand out his business card to interested customers. He is so assured about his devoted customers, that he is quick to offer us a free plate his famous Jinni Dosa. How do they do it? When one takes a closer look into the dynamics of the dosa business, it might strike you as the most vulnerable to food inflation. A dosa incorporates every kind of vegetable and the current varieties are nothing but by-products of dosas and other street food combinations. So, when the onion prices rise, (an issue that has been plaguing economists in India), these

dosawallahs, ideally should be affected. However, that seemingly does not happen. Most of the dosawallahs are ready to suffer shortfalls in their profits, while ensuring no compromise in the quantity of onions used. They do not respond to a rise in prices by hiking their dosa prices because of the intensely oligopolistic nature of the market and the dominating demographic of students. The owner of the neighbouring dosa stall, which sees a rather thin stream of customers in comparison to Shakti, reinforced that a change in price is undertaken, only when the rival dosa stalls do the same. There is also an underlying indifference to contending dosa suppliers, where the emotion of “Live & Let Live” prevails. So this

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profits. Seeing that the demand for their food is close to inelastic and will be the same for a long time to come, it would be illogical to expect their business to ever go kaput. Reference: i

For the ones interested:

www.shaktispecialdosa.com

discredits the conventional ideas of oligopolistic principles, where one dosawallah’s marketing strategies, in no way sabotage the others. There is a general atmosphere of contentment with one’s own customers which why there is no poaching of each other’s customers. Problem? No Problem! For a typical food joint, a lack of a permanent stall & basic amenities, would serve as a huge disadvantage. However these resilient dosawallahs never fail in dishing out dosas in quick succession. While one might feel that the lack of a seating area would send students, running to their college canteen, a canteen run by an organised supplier, reality contradicts this notion. The consumer here is looking for quick, affordable and delicious food & does not resemble the kind of customers who’d be sticklers for hygiene. In terms of

Which book worm?

challenges, none of these traditional challenges exist. To settle the other issues of permits and licenses, they have a union representation (namely Azad Hawkers Union). Secondly, a supreme court, diktat for the general welfare of street hawkers, ensures that they are provided with basic amenities and are not exploited by corrupt law enforcement agencies. These dosawallahs are nothing short of a lesson from a management book, as they teach us the importance of co-existing with their competitors (because they are barely two feet apart) peacefully. Profit drives all businesses, but these humble dosawallahs, are more concerned with satisfying their customers. They are clearly only concerned with basic sustenance and not deriving supernormal

Sambar and Chutney despite being stark opposites compliment each other the best. While one seems to be more interested in being all over the place, the other seems to find solace in being calm (relatively), collected and making sarcastic comments (occasionally).Together; they are probably as undefeated as Bruce Wayne and Selina Kyle, exclusive of their genders though.

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THE ECONOMICS OF EDUCATION

Does quantity demanded fall when price rises? Far from it, in fact the reverse trend has been observed over the past few years. The IB Program which set its foot in our city around 8 years ago has become fairly entrenched and is only growing from strength to strength. Witness the number of schools that have begun offering the Diploma Program; one newspaper report claims there has been a two -fold increase in these schools in the past 4 years1. So where is the Economics of it and more importantly where does the Law of Demand apply? To let out an open secret, it lies in the fee structure of these schools. Per annum 500,000 would be the least spent by the parent of an IB student. In other words at higher fees there should have been a deterrent to entry or rather reduced the number of students applying to this program. But, amazingly, as the report claims, from one thousand students who appeared for the Diploma Program Exams in 2007, 1800 have now appeared in the exams of 2011. In fact it seems that Veblen’s law rules the roost here in this system of education; in other words it’s the exception to the Law of Demand. Veblen’s Law holds true in case of luxury and status goods such as a Versace bag or a Tag Heuer Watch, the more snobbish and pricier it is, the more desirable it becomes. But is it not ironical that education, that should be a fundamental and universal right, is now

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available at a price of a home perhaps in a tier two or tier three city of India. And what happens to the law of supply? True to its premise, the law succeeds in this market of elite education as the moolah is there for raking in, for one who wishes. The more the profits to be earned, the more will be the number of entrants into this verdant pasture. The city is littered with the big names in construction, hotel, real estate, and others starting ventures in International Education and of course that begs the question who should be in education, but that is another debate. Now, to enter into another economic territory-the so-called short run and long run. So how long will the law of

ter offer quality and pedigree and also are a stepping stone to Western Universities and degrees. Even if education comes at a price and even if it is difficult to weigh the merits of the education and price on the same scale, I will venture to say that the quality is definitely present in International Education and gives the student an edge which is lacking in our local systems. To get back to the economics of it, how long will there be shekels to be earned for the business man and the law of Supply run riot and law of Demand be contradicted? The history of this system of education shows that these systems have been around for a while

Typical Model of an IBDP classroom (Source: http://commons.wikimedia.org/wiki/File:SWW-classroom1.jpg, Author: Thedofc)

demand stand on its head and the law of supply run true to course. With no tools of statistics at my disposal, I shall still venture to make projections into the unknown future. Given the frustration of an average upper middle classic parent of the Indian State and Central Education systems, programs like the IGCSE and IBDP are a straw to clutch at for their aspirations and dreams for their offspring. The lat-

in one form or the other and the most important element of them is their ability to evolve to the changing scenarios around us. This gives these systems an upper hand and that means they are here for long. But how long will the fee structure be celestial before they run true to the law of Demand? Well, here comes another concept of economics: What allows a firm to

Guest Author

So is there Economics to Education? Let me begin with the simple law of demand and supply. The law of demand states that, ceteris paribus, when price rises, quantity demanded will fall and vice versa; similarly the law of supply states ceteris paribus when price rises quantity supplied will rise. Since I belong to the elite International Baccalaureate Diploma Program, what happens when the law of demand is applied to this Program?

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price its good or service at an absurd or unreachable level, is its monopoly power. So as long as an establishment can distinguish its services and facilities from the others in the market, it will have the power to keep its price above the expected and thus maintain its privileged position. But does this mean it will be able to maintain it for long? Well one can hazard a guess based on the Ivy League college scenario. A few colleges have maintained their exclusivity for decades due to some form of distinction and features. What remains to be seen is, whether International Education succeeds in a similar manner. How fast will the Indian Education (now being questioned and getting rehauled) catch up with the International scenario and how much can the International Boards evolve with the needs of the Indian parent

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and student? In the near future of the next five years some changes will definitely be seen in the Indian scenario but they wonâ&#x20AC;&#x2122;t be too drastic. The next decade, however, might throw a few surprises and that will be the challenge that the International Boards will have to survive, to continue in their current form.

Reference: 1

http://www.hindustantimes.com/ india-news/mumbai/twofold-rise-innumber-of-ib-schools-over-fouryears/article1-706246.aspx1 http:// www.hindustantimes.com/india-news/ mumbai/twofold-rise-in-number-of-ibschools-over-four-years/article1706246.aspx

Padmavathy Menon teaches Economics, Business and Management at the IB Diploma Program. Sheâ&#x20AC;&#x2122;s a post graduate in commerce and also has a diploma in French. She has previously taught French and enjoys conversing in that language. Prior to her teaching career she was a banker. According to her teaching is the most creative profession. In her free time she likes to read philosophy, brush her culinary skills and spend time with her family.

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TO BUY, OR NOT TO BUY? THAT IS THE QUESTION!

When was the last time you had to choose a new pair of Nike kicks over a T-shirt or chose the latest bestseller ‘Inferno’ over new Skull candy earphones? Or chose pani-puri over home-made food? (Now, that’s a nobrainer!). Observe the by-lanes of a supermarket, closely, the next time you go grocery shopping. Ever seen the lady in the beauty products aisle buy every face-wash that has been placed on the counter? (Unless you’ve been witness to a crazy shopper) The answer to that question should be NO! The consumer, a Lady Dy (lemma), is in the need of face-wash, and is caught up in the problem of a “5second choice”. She has to choose between two brands that both match up to her requirements and she has to do so, quickly. Leave aside the problem of choice, for a consumer who is purchasing a product; in another example consider my grandfather. On any given Thursday, he has two options; to go to the bank and get the passbook renewed or to go to the doctor. The catch in this situation is the coincidence of timings between the two. Whatever his deci-

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Every Citizen’s Choice (Source : http://commons.wikimedia.org/wiki/File:Our_choice.jpg, Author: Kurz & Allison.

sion, the corresponding unselected option becomes his “opportunity cost”. Opportunity cost is what is often regarded by economists as the opportunity missed. If Lady Dy (lemma) chose neem leaves and herbal essence, she has to let go of rose water and jojoba seeds and that is her opportunity cost. Similarly, your decision of skipping lunch with your parents, to watch a movie with your friends, also has an opportunity cost which is, the food plus quality time. Understandably, this concept is useful to analyze consumer’s behaviour. The sacrifice of one “want” as a means of satiating another “want” helps us understand what the consumer bases his decisions on. In a previous example, the real cost of buying a book is the sacrifice he makes by not purchasing the earphones. That is, a hidden and often overlooked aspect of opportunity cost is the comparison of relative prices.Think about this: While purchasing the Nike Kicks, which cost around Rs.1000, you realise that in the cost for one pair of shoes, you can purchase two t-shirts. More often than not, without being

conscious of it, we tend to mentally calculate the relative prices of two products we are to choose from, thus utilising the concept of opportunity cost without even realising that we have done so! The solution to almost all human dilemmas can successfully be traced to opportunity cost. As further evidence, just a few weeks ago, I had to choose between attending a social gathering, (celebrating the birthday of my niece), which happened to coincide with my friend’s birthday. Attending the social gathering meant one on one time with my sister (the mother), and my relatives not disregarding me as a social outcast. On the other hand, attending my friend’s birthday would’ve meant half an hour with her, given how her parents were planning on whisking her away, for a day trip, later. Having weighed, how half an hour with my friend, was not entirely worth disappointing my sister, I decided on attending my niece’s birthday. To put it simply: opportunity cost isn’t merely a textbook concept which should be rotelearnt and forgotten post exam.

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It is, rather, an embodiment of a perfect solution to all quandaries involving matters of choice; which we can easily avail ourselves of, the next time we are stuck in a tight spot. So, the next time you are in a pickle, you know what to do!

One of the most popular places I know in Lucknow is the Bada Imambara Monument built by Asaf-ud-Daula, a Nawab of Lucknow.

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Moksha. Kaul Random, hyperactive, spontaneous, and an avid advocator of Ayn Rand’s individualism philosophy, Moksha never really gives up on seeing the brighter/funnier side to everything. Also has a minor issue with her official name. In her spare time, you can find her with her face buried in a book or watching people and secretly judging them.

It’s not all about doling out money!

In the year 1785, Lucknow was hit by a major famine, which left many people jobless. As part of a relief project and in order to provide employment to all the people, the Nawab decided to do something to help the people. The easiest way out would have been to distribute money to the poor. However, he had a vision. How long would that money last? And once people ran out of it, what then? Dole out more? And what after that?

You may ask what this legend has in common with economics.

What the Nawab wanted was to ensure that his people did not get money easily. Yet he wanted to make sure that no one slept hungry. So he decided to build a monument. So that people would have something to do and earn their living, simultaneously, honestly. Not something that they could get easily or temporarily, as a quick fix; but something that would later have value. And this is exactly what he did!

Imagine that two (benevolent) friends wanted to give you a gift worth Rs 100/- . One gives you a McDonalds meal worth Rs.100/and the other give you a Parker pen worth Rs.100/- Which gift would you prefer? Well, if you were really hungry and starving you might prefer the meal combo. But if you had just had lunch, you would rather be given the pen, since you might perceive it be of higher value on a full stomach. The important thing to note is that the price of both the gifts is the same. But their values depend on various things including need, perception, demand and supply etc.

The Bada Imambara built by the Nawab is one of best known monuments of Lucknow. Legend has it that only underprivileged workers were employed for construction. They would build the monument by day. This is not all; noblemen and elite workers were employed as secret workers and they would

It draws a parallel from what Keynes has been quoted as saying “In order to provide employment, dig ditches and fill them up.” In a nutshell: give people some work to do, pay them money and then collect taxes. This is how the economy will grow. But if one person were to just dig a hole and the other were to fill it, it would just not be productive.

(Source: http://commons.wikimedia.org/wiki/File:Asifportrait2__Asuf_ud_Daula.jpg, Author: Zoffany)

destroy the monument in the night. Their task was to demolish one fourth of what was built during the day. This served two purposes. One, that everyone got daily wages, while their dignity was maintained and two, this would delay the building process of the monument, thus giving adequate time for workers to master new skills and keep them employed for long. It is said to have provided employment to 22,000 people at a time for a period of 6 years, the time taken to complete it.

Similarly, the government at any given times can just print currency and synthetically raise the money

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Jasmine Bhownagri

supply? But this would simply raise aggregate demand, inflation and subsequently topple the value of the currency. Therefore the challenge for the government is not to create money, but to create value for money.

rency, but also to individuals. We need to create value for ourselves. Even if you crumple, crush, stamp,, roll in mud a Rs 500 note, the value of it is still going to be Rs.500/- and if you remove a Rs 100 note in mint condition from a gold case, the value is still going to be Rs 100/-

This is applicable not only to cur-

So whatâ&#x20AC;&#x2122;s your value going to be?

A textbook theory put to testâ&#x20AC;Ś. In India, most of the population is employed in the agricultural sector. Though it is the means of livelihood of almost 70% of the Indian population, its growth rate as well as contribution to the GDP (Gross Domestic Product) is quite less as compared to the other sectors. We have seen many farmers commit suicide in the past decade, because of poverty and inferior economic conditions. This is very shocking as India has made considerable progress in its economic status. Why then is this increase in national income or progress not reaching them? A Potential Explanation Recently I came across a theory which could explain part of the problem described above. This theory is elasticity of demand and in particular income elasticity of demand. The concept of income elasticity of demand shows clearly why farmers are not able to increase their income in the same way as the people in the other sectors such as that of manufacturing. We know that even if our income increases the amount of agricultural products (food) that we consume will not be more than what it is now, as it is one of the necessities of our lives. On the other hand, your expenditure on luxuries (manufactured goods such as Televisions, furniture etc.) will go up as your income increases, according to the conventional notion of consumer be-

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havior. In the language of economics the income elasticity of demand for agricultural products is less than one. This implies that it is difficult for the farmer's income to increase in proportion to the expanding national income. Thus, farmers in particular cannot keep up with those people who are in the other sectors and are producing products with high income elasticity of demand. Income Elasticity of Demand: The graph shows that the demand for agricultural commodities may increase initially with a rise in income, but becomes inelastic eventually. Economistsâ&#x20AC;&#x2122; Reach

The writer is a banker with over 9 years experience in a reputed bank. Though an MBA in Finance, her passion for I.T. ensured that Digital Banking does not remain merely an interest but an integral part of her work.

globalization heightens inequality of income in middle income developing countries, the political economy of uneven growth-where agriculture sees a decline in developing countries) somehow justifies the unequal distribution of national income to me in particular. And it dawned on me that economics, which is a field of my interest could answer many such questions as I keep trying to fathom the depth of this economic ocean. For, when we attempt to analyze socio-economic phenomenon, it is like walking with a blindfold. It is impossible to accurately predict future trends as well as deduce certain explanations for different happenings. Joshika Mandal is a student of Ruia College doing her FYBA. She is a multi-faceted person who enjoys reading, writing, sports and many more activities. Loves to travel to new places and explore new fields.

Thus, this concept (apart from many other theories on this issue like, the trickle-down theory, the theory that

Get your taza research findings, served hot from the field (data)

Paper Mache

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“Economic Resilience of Hand Cart Pullers with respect to Mumbai”

(Source: http://commons.wikimedia.org/wiki/File:Mumbai_street_scene.jpg, Author:Bruce Tan)

Part One: Introduction, Objectives and Hypothesis Economic resilience refers to the ability of any society to survive devastating stages of economic crises and prevent any sort of financial collapse. When it comes to the level of an individual, resilience implies maintaining the financial capability to afford the three basic subsistence requirements - food, shelter and clothing and thus, surviving any sort of economic upheaval. While countries can be economically resilient at a macro level, individuals too need to ensure resilience by having the ability to model their subsistence consumption patterns in such a way that they lie within the budgetary constraints. Here, we are not considering nations like India being resilient to economic crises such as the 2008 recession, but we are referring to millions of individuals working on the streets of this country, who despite being challenged by their low and recurrently fluctuating wages, lack of employment and credit facilities most of the times of the year, and rising prices of subsistence requirements such as food manage to be resilient amidst the crisis. These individuals without any “economic advisory body” unlike nations manage to survive against all odds and remain “alive”: for that is what resilience means to them or at least is meaningful for their livelihoods to continue. Economic resilience thus does not restrict its dimensions to nations and the world economy. If India’s food inflation rate rises, it is this individual who has to cut short his meals. If the employer runs short of money (presumably) and reduces the wage rate, it is this individual who has to work more hours to earn the same. If the local bank requires sufficient collateral even to extend small loans, it is this individual, devoid of any possession who has to live without any credit facility. If the government promotes vehicular transport facility, it is this individual who has to look for new employment sources. In all these cases, the macro-economic crises as well as the micro-economic tribulations redefine the concept of economic resilience- the ability to survive amidst economic disasters by making sure that the subsistence expenditure lies within the shrinking budget constraint. This paper seeks to analyze this concept of economic resilience with reference to the informal transport sector workers, the case study being- hand cart pullers. Economic resilience as seen from a micro point of view is nothing but compromise. Being resilient for these laborers means to survive even if they need to severely compromise on their living standards or change their dietary habits. This is resilience amidst crisis, resilience which calls for constant hard work and hours of tiring labor. It is time to look towards the informal sector and its workers who help ease our lives with much greater respect, at least for their economically resilient habits and this is precisely the entire purpose of the research. The various hypothesis includea Fall in daily wages leads to increase in daily working hours. This hypothesis will be studied with the help of budget lines and regression analysis. b Changes in wage rates affect expenditure on subsistence requirements such as food as well as leisure and entertainment. Regression Analysis will be done in order to validate this hypothesis. There are no comprehensive statistics on the extent of informal transport work, and most that are available were compiled in the 1980s and 1990s and cannot be used for analysis now. The dearth of reliable, comparative data highlights the extent of propounded inexistence of informal transport workers. So, in

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order to analyze the objectives and also validate the hypotheses, primary data has been collected from Crawford Market (South Mumbai) by posing various questions to the hand cart pullers present on the streets. Around 20 hand cart pullers have been questioned and the survey data collected has been interpreted using various statistical methods such as regression as well as qualitative analysis. Also, certain questions which do not have mathematically represented responses have been analyzed in a subjective manner. The paper, “Informal Sector and Informal Workers in India” by Ajaya Kumar Naik mentions that the growth rate of the informal transport sector from the year 1990 to 2004 has been 6.09 % , which evidently has not been affected by the growth of mechanized substitutes but has made the pullers work at lower wages for more hours. One must also understand that the same report which accounts for a growth of 5.13% in the informal manufacturing sector mentions the coincidence of the manufacturing informal sector with the informal transport indicating that the growth rate collectively is higher. If economic hindrances await the informal transport workers, then it is vital to understand how they still manage to counter these hindrances. The answer lies in resilience. Part Two: Analysis Most of the hand cart sellers are not easily approachable for a conversation during the day since they continuously work and any lapse in time is taken seriously by their employer (seth). The seth’s agent keeps a track of these pullers so that they do not stop for meals on the way or even for a rest. Talking to Salim (a hand cart puller in Crawford Market) made me realize the sheer hard work they put in just to be resilient and just to feed themselves and send money home to their families. The daily wages of hand cart pullers in Mumbai is Rs200 approximately and the “minimum” working hours schedule from 11 in the morning to 9 in the night. These hours of excessive hard work are not enough for them to survive. If there is no work for a day or two, these hand cart pullers resort to other temporary informal employment sources such as wedding helpers and filling lorries. Sickness is no excuse for them and any day’s lapse of work due to sickness is treated quite unkindly by the seth by reducing their wages and thus, as Salim puts it, “We prefer to drag ourselves to work even when we are sick. That is the intensity of our need for money”. Another hand cart puller, Ramcharan remarked, “We are no more than bulls. The difference is that at the end of the day we at least have a bed to sleep on”. The following section analyzes various quantitative and qualitative responses from the hand-cart pullers and thus, challenges/ verifies the various hypotheses as well as fulfills the objectives of the research. i India’s food inflation rate which was 6.07% in February 2012 rose to 10.74% in May and then marginally rose to 10.81% in June. While these figures rarely make some sense to the pullers on the streets, they often redefine their dietary habits and thus, their dietary expenditure. When asked, one of the hand cart pullers (Salim) mentioned that often rise in food prices makes him survive on cheaper vegetables such as potatoes and cheap grain such as rough bajra. This does not reduce his food consumption expenditure as the increased prices lead it to be the same. He thus ideally remains on the same budget line. However, it does impart to him one advantage which is the most important to him- resilience. The hand cart puller, by consuming cheaper vegetables, saves a part of his current income- (Y1-C1) say, which is then used to finance temporary income shocks that might affect future incomes. This saving, however is completely nullified by the rise in overall prices (P1P0) and the Temporary/Permanent Income Shock Analysis stands flawed as current saving (as a saving through compromise and not in real cash balances) does not increase future income. ii Mechanized substitutes often granted the title of “formal transport” by the government make the hand cart pullers work at cheaper rates to prevent the on-footage employers to resort to them. If the wage rates are too low, then they start doing multiple jobs which include helping in weddings and working as casual helpers in households. According to Ramcharan, since the past twenty years his work has reduced by about 75% due to the emergence of mechanized forms of transportations such as trucks and lorries. Out of the pullers surveyed all had the similar response that not only has vehicular transportation of goods reduced their financial capabilities but instead, all the more, forced them to work in multiple jobs. iii Fall in daily wages does affect working hours. This hypothesis has been validated by regression analysis and has shown that as daily wages fall, working hours increase. The regression equation obtained from the data collected was y = -0.0263x + 13.316, a negative B1 value indicating the inverse relationship. The r square value was R² = 0.8553 which thus indicate that the data regression result was more or less accurate. The graph showing the relationship between daily wages (X axis) and working hours (Y axis) and hence, being a strong example of economic resilience is shown below. Due to fall in daily wages and hence, fall in monthly income, entertainment often becomes a very miniscule expenditure source. However, it is this resilience that has been captured in this argument which thus proves that as monthly income falls, the expenditure on entertainment, for the hand cart pullers to be economically resilient also falls. Taking X (the driver) as monthly income and Y as entertainment expenditure the regression equation obtained was- Y = 0.0981X – 61.1 and R square is equal to 0.7551. The positive value of B1 proves that monthly income and monthly entertainment expenditure share a direct relationship and the R2 value further substantiates the hypothesis. The graph showing the relation between the two variables is shown below. iv Out of the hand cart pullers surveyed, a 100% response was in favor of taking loans from the employer implying that being in the informal sector none of them take loans from the bank. Complex administrative procedures are beyond the understanding of the pullers and also banks are selective regarding their clientele so as to avoid clients who make petty deposits and whom they cannot trust regarding repayment of loans (often lacking collateral). Also loan request procedure is complex resulting in long delays before rejection or approval. Thus, in majority cases they are not given loans by banks and in the rest they do not prefer so. Hence, they have to be at the mercy of their employers who make them succumb to the high rates of interest which often, which lands them in heavy debt, thus leading to more working hours and a vicious cycle therefore. Moneylenders whose loan transaction costs are low but repayment rates are high also act as a source of liquidity in times of need. v

The distance of place of work and living is not a cause of concern, the concern is earning money. The closest area where a

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puller came to Crawford market to work was Malad, the rest came from villages outside Mumbai. This sociological form of resilience is in fact, an initial step for economic resilience. The employment opportunities in villages are far less than a city like Mumbai. So, the sole motive of earning money makes the pullers migrate from places where there is essentially not much transport work to the city, where manufacturing and informal transport are complementary to each other.

Currently studying in the second year of undergraduate course at St. Xavier's College, Mumbai, Vatsal Khandelwal studying Economics, Math and Political Science. He wish to pursue Economics in future, a subject that intrigues and interests him the most. The Author believes writing this paper is anattempt at learning how opinions and arguments can be phrased in orderto give shape to sound economic analysis.

Part 3: Conclusion and Applications Economic Resilience, equivalent to compromise in this case cannot definitely compete with immense crises till a long time. If food prices rise consistently beyond a certain limit it may be impossible to compromise on food habits at a certain point wherein the resilience ability is null. If wage rates fall beyond a certain point the corresponding working hours may not be able to suffice the basic consumption needs. At this point, probably the point of economic devastation, these individuals will have no ability to be economically resilient. In such an adverse approaching situation only two concepts will be able to alleviate the hand cart pullers- Government Intervention and Innovations. Government aid can then, at such a point, help the hand cart pullers by either providing them with sufficient food subsidies, providing credit at lower interest rates or enforcing a minimum wage to be compulsorily followed. The barrier of informalformal sector will have to be overcome if the government has to intervene. Innovations on the other hand can also lead to economic resilience. The sheer innovation of “vada pao” made the cotton mill workers survive stages of economic crises. Similarly, certain innovative measures could be helpful to make these workers more resilient to economic crises. Maybe, innovation could mean other means of employment and thus may seem farfetched in theory but practically, such innovation can provide them with accessible, available and more lucrative sources of employment. However, these extreme strategies of resilience can be useful only after the point of economic devastation (where all other basic forms of resilience abilities mentioned in the research render no use). The entire concept of informal transport sector and its treatment as a liability goes for a toss when we consider their contribution to the Indian economy as a whole. The hand cart pullers do contribute essentially to the economy of Mumbai and thus, should certainly attain rights such as food subsidies, minimum wages and proper working conditions. (Please note that due to space constraints the given paper was truncated.) Bibliography a

Hand cart pullers (Crawford Market) for primary data collection and survey cooperation.

“Informal Sector and Informal Workers in India” by Ajaya Kumar Naik.

Chris Bonners report entitled “Organizing Informal Transport Workers. Overview Report”

“The Informal Transport in the Developing World” by Robert Cirvero.

Introduction To Economics, Lipsey and Chrysal.

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Ecoknowlege: The Gap

As soon as I heard about the soon-to-be-published magazine, a million ideas exploded in my head. What could I write about? Inflation? Maybe! Recent economic events? Probably...Suddenly, I recalled an incident where a friend of mine had referred to Mr. P.Chidambaram as our new RBI governor! I could only gape at her in disbelief! And then it clicked! Why not conduct a survey, and find out the actual level of economics awareness of the general public. This survey would have questions which were a mixture of basic economic terms, and current economic events; all of which had been front page news for at least the last 2 months. To make it simpler, I made it into a multiple choice format. The questionnaire could be answered either by mail or by hand. The Survey, along with the answers can be accessed at a given link in the end. A total of 85 respondents took the survey. The interviewees were from diverse educational and professional backgrounds, ranging from designers to doctors to students of economics. The respondents were divided into 2 age groups- the first was 16-30 years, and the second was 31 and above. Results at a glance There were 45 respondents in the 16-30 age group

R e s p o n d e n t s

No. Of Questions The lower end of the bar (the blue strip) indicates how many got it right. The upper side shows how many didnâ&#x20AC;&#x2122;t know the answer. The other group was of people aged 31 and above. Hereâ&#x20AC;&#x2122;s how they fared:

R e s p o n d e n t s

No. Of Questions As compared to the earlier age group, we see the awareness level increasing here. The break of the same is given below :

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While conducting this survey, the overall feedback from the respondents was that the questions were quite tough. Many admitted that they were not as well versed with the recent news as they should have been, this despite almost all topics being front page news in all leading newspapers like Times Of India, Hindustan Times etc. From the answers received, it was a little disheartening to find that many of my peers & immediate seniors in the age group of 16-30 years were also unaware of recent happenings. These are the people who should be better informed (in my opinion) since they are either students/ students-fresh-out -of-college/newly employed people. So buck up people! Time to raise the level of general economic awareness amongst all of us, as a whole. Keep reading! Take the survey for yourself At https://docs.google.com/forms/d/1pUELROqqoMsfdXSN8poIp5FFax4qDUA_INqzYk-zH6E/viewform (Readers may email the author at kharemanasi12@gmail.com for more detailed survey results) Manasi Khare, a student of Ramnarain Ruia college has keen interest in Mathematics and Economics which has driven her to pursue a degree in Business administration (finance) .In her free time, rest assured, she’ll be walking her dog. Once her pet is attended to, she chooses to spend time with her friends, read books (the suspense of which will be divulged to you the next day) and relax! She is presently studying for her

Oil Economics Indian economy today is facing a number of problems including a slowdown in economic growth coupled with high inflation, burgeoning fiscal and current account deficits resulting in currency weakness and a threat of credit downgrade to junk. While it will be wrong to blame any single factor for the mess, Indian government’s fuel subsidy policy has played a key role. India has always held a controlled price regime for the petroleum based fuels such as diesel, LPG, kerosene and, until mid-2010, petrol. This means the consumer never paid the real cost of these products, which make up nearly 60% of the total petroleum consumed within the country. In other words, this cost is borne by somebody else- the government and its petroleum companies. Over last ten years, nearly Rs 7.25 lakh crore that should have been recovered from the consumers have been lost in this manner. More than half of this burden fell on the government’s finances widening the fiscal deficit, while nearly 45% of the burden fell on the state-owned petroleum companies squeezing their balance sheets. In FY13, the government had to shoulder a record Rs 100,000 crore of petro-subsidies, which singlehandedly equalled 1% of India’s GDP — a huge amount when calculating the government’s fiscal deficit. India is the world’s 4th biggest oil importer with nearly 85% of domestic needs catered through imports. India, along with (Authors creation using data from Ministry of Petroleum and Natural Gas)

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China, are today the main driving force behind the growth in global oil demand. By year 2020, economists expect India to emerge as the single largest driver of oil demand in the world thanks to its growing population and the economic growth. With little oil available domestically, India’s dependence on imports will continue to grow in future. This dependence on imports, rise in domestic consumption as well as the spurt in international crude oil prices have resulted in a pressure on India’s trade balance and current account deficit. Government’s decision to carry on subsidies has encouraged wasteful consumption adding to the problem. This is reflecting in a weak rupee, which lost more than 13% during 2013 alone. In other words, crude oil is a key ingredient in India’s problem with twin

deficits – fiscal as well as current account. To its credit the government has taken a few steps to correct the subsidy problem. It decontrolled petrol effective June 2010 and started raising diesel prices in small doses of Rs 0.5 per liter every month starting January 2013. It also put a restriction on the number of subsidised LPG cylinders to 9 per annum for every household. All these measures are yielding results. Domestic con- (Authors creation using data from Ministry of Petroleum and Natural Gas) sumption of diesel, which was between 6%-9% in the previous couple of years, actually fell in the April – October 2013 period against the year ago level. But they have proved to be too little and too late. During 2012, the petroleum companies were losing Rs 450 crore every day on an average on selling products below cost. In January 2013 it stood at Rs 389 crore per day. However, even as the year came to an end the daily losses were actually higher at Rs 430 crore per day. The loss on selling diesel, which was Rs 9 per litre at the start of the year, stood at Rs 10.48 per litre as the year came to a close. It is noteworthy that much of this was owing to a weakness in rupee, rather than spike in crude oil prices, which used to be the situation earlier. Barring some intermittent volatility, the crude oil prices have remained range bound around $105 per barrel. The government’s oil subsidy policy has also hurt the valuation of its listed oil companies. The Indian Oil, Bharat Petroleum, Hindustan Petroleum, Oil & Natural Gas Corporation, Oil India and Gail have remained laggards for last several years due to the subsidy burden. The government’s recent attempts to sell stake in Indian Oil as part of its "After having completed MBA divestment drive came to naught thanks to tepid response from in Finance in 2004, prospective investors, who sought clarity on the subsidy issue. Ramkrishna has worked in India’s sovereign credit rating is already under threat due to the expandthe Financial Analytics field for ing fiscal deficit, which is raising the debt burden on the government. The over 8 years, particularly government has already spent 84% of its targeted fiscal deficit in the first tracking the petroleum sector. six months of FY14, while the revenue growth appears to be slower than expected. This has caused experts to doubt whether India will be able to He is currently working with the research wing of the Ecomeet its target to restrict fiscal deficit at 4.8% of GDP. nomic Times, India's largest In such a scenario, when things are going from bad to worse, the government needs to shore up its finances. Checking the ever-growing oil subsicirculating financial daily". One dies should, therefore, be a key measure to address the issue with urcan reach him at ramkrishna.kashelkar@gmail.com gency. Nevertheless, with the elections coming up within next 6 months, He’d be happy to hear from readers. the government is likely to stick to its current policies.

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Guest Author

(Author’s creation using data from Petroleum Planning & Analysis Cell)

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Domestic Workers and their

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-Be Calm-Kaam wali bai hai na! This statement clearly shows the extent to which we city people are dependent on domestic workers. With extended families being replaced by nuclear families, there is an ever- increasing demand for domestic workers. Domestic workers are generally locals or migrants in the city where they are employed. They mostly live in slums and work in different houses/single house to earn their livelihood. What they provide to us is a service that reduces our burden. There are 90 million domestic workers in India. They provide services such as sweeping, dusting, cleaning, washing utensils, cooking, watching over kid and looking after the elderly etc. Methodology In this project, I have made an attempt to study only Part time domestic workers, doing work such as sweeping, cleaning, washing utensils and looking after children/playing with them and cooking. The project was conducted by having a sort of structured chat with 20 domestic workers around the vicinity (9-Top maids, 4-cooks, 3-house nurses and 4-aaya’s). Findings A. Nature of the Profession: It is clear on the onset that there is great injustice done to them in terms of social status. Domestic workers are mostly self – employed, or are a part of an agency that employs them. This profession is to a large extent governed by women belonging to lower classes of society. This affects the way their profession is looked at (rather looked down upon). There is a sort of degradation associated with the work that they do. The resulting low self esteem was very evident while interviewing them, where most of them would shy away and refrain from answering. In India, the stigma for domestic work is heightened by the caste system, as tasks such as cleaning and sweeping are associated with low castes. B. Nature of the Work: Domestic workers can be classified into two major categories: Part time workers and Full time workers. 1.Part time workers: They work all day for one employer, doing the same job or repeatedly perform the same/different tasks for a number of employers. There is a certain level of interdependence between the workers. For example, if they cannot make it for the work they send someone in their place; there is an understanding between them. They cooperate with each other and help each other out. They help each other find jobs. 2.Full time workers: They work with one employer and perform all the tasks for only that one employer. There is a greater degree of dependence here as they live with them and all their needs are taken care of by the employer. RATES Top Maid: Rs.500 per job Cooking: Rs. 3000 – Rs. 5000 per house/per month Looking after small children/ayah : Rs. 4000 – Rs.6000 per house/per month; Looking after elderly and bedridden/home nurse: Rs. 3000 – Rs.6000 per person/per month. A very important criterion w.r.t domestic worker is whether they are sole earners or part earners in the family. Their situation improves or worsens accordingly

C. Nature of Job: 1.Low Salary: Ideally, with more demand, prices i.e. salaries, should be higher; however with each passing day more people are being pushed to taking up domestic help, as a source of livelihood. Thus there is more supply which reducing the prices i.e. salary. Also if they are not sole earners the work burden is shared. 2.Job Security: There is generally, no contract at the time of employment, they can be hired or fired at any time. 3.No Age Limit: 20-to whatever age they can continue. 4.Community based: All of them live in the same place and are all from lower class. 5.No formal benefit: Legal, social and economical assurances like insurance, paid leave, pension etc. 6.Migrants: Most of the domestic workers I interviewed were migrants, and had come to the city after marriage from villages. D. Nature of the Pay Moving on to some empirical evidence, I hypothesize that income is driven by number of jobs. Note that X-Variable is the monthly income and the Y-variable is the number of jobs done in each house. The following hypothesis is valid only while considering top maid jobs i.e. sweeping, dusting, cleaning utensils, etc. These jobs are done in different combinations from house to house as per the requirement. For each of the job done, Rs.500 is charged (which is a sort-of accepted norm) in this vicinity. Here R-square equals 1 indicating that the hypothesis is valid. However the same is not observed in the case of those who cook and those who look after children.

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Note: The hypothesis does not hold true if we consider cooking, looking after children and house -nurses as in these cases, the payment differs from house to house. This could also indicate that the number of domestic workers doing top maid jobs is higher than the others.

X 1000 2000 5000 4000 2000 3000 2000 3000 5000

Y 2 4 10 8 4 6 4 6 10

E. Reasons for choosing this profession: Domestic work is one of the few employment opportunities open to poor women. Cleaning and cooking, Looking after children and the elderly is almost universally regarded as the womenâ&#x20AC;&#x2122;s work. Socio -economic situations are the main causatives for choosing this profession. These causative factors could also be the push factors involved. It is quite often out of desperation that they take up these jobs: 1.Socio eco setting: Most of the domestic workers are single parents, widowed, estranged or with alcoholic husbands. They are required to work for the survival of their children. Most of them mentioned that their husbands do not work and are at home, and it is out sheer desperation to run the family that they have to start doing work. This work is something they can relate to, and is easy to do in terms of knowledge and ability. 2.Easy way out of poverty: As most of them are migrants, illiterate and do not know anything else to do, it comes across as an easy way to alleviate their

current difficulties. 3.Deepening Poverty: Failure of government programmes to make an impact on poverty reduction and the adverse impact of globalisation has further impoverished the poor. Possibly there has been a tremendous increase in the cost of living, due to which they have to try and adjust with what they have and learn to be content. 4.Lack of skills: Lack of skills to do anything else arises mainly out of poor education levels, where most of them do not have basic primary education. 5.Familial: This profession is confined to a particular caste, community of people and it is passed on to one generation to the next. This sort of passing -on is a sign of perpetuating poverty. However, it is discontinued when children of domestics pursue their career. 6.Sole earner: Being the sole earner, there is immense pressure to sustain the family, and hence they have to take up more than one job, as the salary from one house is not enough to sustain the family. 7.Cost of living: Increase in the cost of living pushes them to take up more jobs to sustain themselves Economic problem/issues like inflation; globalisation can really have adverse impacts on them. However, often they are unable to take up more than one economic engagement. This is because of the following reasons: 1.Part earner: Being in a family where there are other earners alleviates the burden, so they can afford to stop at perhaps one or two jobs. Serving Maid from 1880 2.Age: This is one factor that prevents them from doing more than a particular job. It may (Source: http://commons.wikimedia.org/wiki/ also be due to poor health and different health issues. File:Servingmaid1880s.jpg, Author:Unknown) 3.Time crunch: Although they may be willing to work more, there is a time crunch due to which they cannot afford to do more jobs. Therefore, due to the shortage of time, their ability to supply/do work is inelastic. 4.Language Barrier: One of the workers I interviewed is a migrant from Tamil Nadu. She could not afford to do more than one job. So she works in a Tamil speaking household. F. Importance of time element in the life of domestics: Time is a very important commodity for the domestics. They are invariably in a hurry, scurrying from one job to the next. While speaking to them, my first question had to be if they could spare me 5 minutes. Time is a major element that decides if they can earn

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more money or not; almost every one mentioned that they were not fully satisfied with what they were earning but there was nothing else that could be done to increase their salary. Falling ill, like Dr.Neeraj Hatekar expressed, is found to be very expensive; however in case of domestics, they do not lose their jobs but there is a salary cut. G. Stress They are always in a frenzy to make it on time from one job to the next, as they would like to maintain the job and not upset their employer. Thus, there is a very real risk of job efficiency being affected due to the need to do multiple jobs.

Seeing them talk

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The author, Shallaka Sajji Loves to Write... Loves to Dance... Loves to Cook!!

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Knowledge, Economics and War

Experiences Through Economics

In Our Shoes and Chappals...

An experience from the ICICI Fellowship

Muria Tribal Dance, Bastar, Chattisgargh (Source : http://commons.wikimedia.org/wiki/File:Inde_muria_0509.jpg, Author : Yves Picq http://veton.picq.fr/ )

A quest for a hands-on experience of working at the grass root level in the social sector led me to the ICICI Fellows programi , a 15 month program that allowed me to stay in the villages of India to work, learn and unlearn through various everyday experiences. The program threw at me challenges like living in remote tribal villages, working with a corrupt bureaucracy, mobilizing a community to ask for their rights and entitlements, doing social work in a place where I did not understand the language and conflict dynamics, to name a few. Many of these challenges stemmed from the fact that I was a novice in the social sector and did not know how and where to begin. But one incident helped me overcome many of the challenges and helped me understand not only the social sector but also life a lot better. Celebrating “Not Knowing” The Fellowship took me to

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Mundaguda, a tribal hamlet in the Koraput District of Southern Odisha. Koraput is among the most backward districts of Odisha and also affected by the Maoist insurgency. I was to work with tribal communities from 16 adjacent hamlets to improve the Public Distribution System (A govt. scheme to supply essential items like rice, wheat, sugar and kerosene at affordable prices) in the area. The language of the people there changed every five to ten kilometers and they did not speak any Hindi. I was not able to get my point across when I went to meet people in the hamlets and they weren’t able to convey their feelings either. However, one of the tribal headmen told me that I should still come to their hamlet as often as possible so that he could learn Hindi from me and I could learn Desiya (local dialect) from him. This was a turning point in my outlook towards life. I had been approaching

the situation as a major obstacle in my work, while the tribal headman saw in it, the immense possibility to learn. It was for the first time that I realized the importance of celebrating “not knowing”. Understanding Tribal Economies With this new learning, questions began to arise in my mind. I began to wonder if I had understood their needs before stepping into their lives and attempting to guide them to a better life. It suddenly occurred to me that I should not attempt to change and to alter their lives in any way unless I have understood their real needs and aspirations. As I spoke to people there I found out that the illfunctioning Public Distribution System which I had set out to correct was not of major concern to them. They were able to grow suf-

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ficient food in their farms and forests. In spite of holding small pieces of land, the tribal communities were living in such harmony with nature and each other, that they wouldn’t let a community member go hungry. Money hadn’t filled their hearts yet. Their greed hadn’t taken over their need. An increase in their income was not something that brought a great deal of joy. They drew greater happiness from a wedding in the village, a celestial event that called for a dance under the full moon or the sight of golden fields of ripening grain. They had a gift economy that worked almost perfectly!! Their only concern was the war! Whose war is it anyway? With Maoist and the Paramilitary forces fighting each other aimlessly, the tribal populations in war zones like southern Odisha and Chhattisgarh have been quick to understand that it is the race for money that has led to all the madness. With both the Mao-

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ists and the Government exploiting the tribal communities, the only war that meets an outsider’s eye is the tribal fighting for a future of happiness. Happiness - the only thing that these so called primitive communities have ever treasured. Develop or Un-develop As I look back at my experience in Koraput, there are still many questions that remain unanswered. One major question among those has been “With the world economy becoming increasingly capitalistic and consumerism sky-rocketing, do we really need a development sector or do we need a un-development sector?” I am glad I don’t have an answer for this one yet, because it allows me to celebrate “not knowing” and continue to learn, just like I did during the Fellowship. Reference: I http://www.icicifoundation.org/

icicifellows/ Adarsh has a B.A degree in Economics from Jai Hind College, Mumbai and has recently completed the ICICI Fellows program. Currently, he is leading a project with I-Volunteer to explore livelihood options for people affected by the floods in the Kedar Valley in Uttarakhand. Having had most of his valuable education outside the classroom rather than inside, he likes learning through exploration. Trekking, adventure sports, freestyle football and playing mind games are some of the mischief he indulges in!

He can be contacted through- adarsh.tribal@gmail.com

An OMG EXPERIENCE Do you enjoy a challenge? Or want to understand a different culture? Does the thought of becoming a part of a unique crowd enthrall you? Then a student exchange like OMG1 (Ontario Maharashtra Goa) is for you. Living away from home, on the other side of the world, has impacted me in ways that will stick with me for life. I have come out of my shell, so to say; I've become more independent and confident in myself and the choices that I make. I've learned to take in everything, as it comes, not judge things by their first impression. Being here and experiencing a different culture, a different lifestyle, and a different language has changed my perception of life. Being put outside of your comfort zone is a scary thing, but I've realized now that it is quite unquestionably, opportunity to try new things.

This journey has changed me in so many indescribable levels, ones that I would never have imagined even in my wildest dreams. Around eight months back, when it started to finally sink in, that I was going to a country, which was probably several thousand miles away from India, I was gripped with uncertainty. I was excited yet terrified right down to the bones. I was almost tempted to behave like a recalcitrant child, who clings to its mother’s shoulder, with his fingers bunched up into a fist. I didn't know what to expect.

So many 'what ifs' flew through my mind. At the beginning of my journey itself, fate threw me a curve ball. Having been left to deal with my lost travel luggage, along with a good dose of jet lag, which felt like it would be accompanying me for centuries together, I did not feel like embracing Canada with open arms. For obvious reasons.

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The university journey started off uncomfortably, with me having to meet too many people, in too brief spaces of time. Being an introvert by nature, giving up my inhibitions and trying to adjust as best as I could, felt like a herculean task. But as the days passed by, the culture shock started to fade. It felt like I finally started to make a niche of my own, acclimatize to my new surroundings. Moving away from an education, which could be best, described, as “monotonous rote learning” to very applicative and technical way of learning is transformatory! I had an opportunity to explore various courses in different streams from my majors in Economics to Geography and Psychology. It certainly gave me a few harsh lessons, by testing my basics in every way possible. It helped me to deal with the subject in a very different and indepth perspective, which broadened my horizons greatly. I learnt to prioritize and manage time in an efficient manner, when my week seems to be brimming with extracurricular activities and so many deadlines, wherein, all of them seemed to be equally important. It

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helped me boost my confidence and helped me evolve as a disciplined individual. I found my own circle of friends and now, many months later, we still are unbelievably close to each other. Pictures may last longer than they usually do in this time and age, but what really counts as ageless are some friendships that are forged when you travel a great distance away from home, and place yourself in a position where you leave your apprehensions behind, and learn to love the friends you make. This journey certainly brought out the traveler in me. Going for short travel trips to places unknown, with my circle of friends carved out precious memories in my mind, which will stay afresh. Trying out different cuisines (some of which were certainly inedible), learning different words in different languages and experiencing the Canadian way of life have left me with memories to be nostalgic about forever. To conclude the exchange turned out to be one of the most unbelievable experiences of my life and I believe I was extremely fortunate to have had this experience. One sentence certainly

provides me the words to the gist of what this engaging programme taught me-“You get out of the exchange what you put into it. If you approach it with a positive attitude, willing to push yourself and try new things then you will undoubtedly have the most enriching and enthralling time of your life”. 1

http://omg.ouinternational.ca/

Priya Ramesh I am currently an undergraduate economics student. The grave developmental issues and working towards bringing about changes in the society is one of my greatest spheres of interest

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A TEACHER’S DIARY

dents and ask what their mother In the traditional teacher- centric new skills and ideas. As a Social Science does in the kitchen when she has class rooms, the teacher is the Teacher, introducing the concept of extra members to feed all on a sud‘know- all’ of the subject and the Market, Demand and Supply, Media, den. The logical reasoning by th students are at the receiving ends. Advertising etc at the 7 grade in CBSE the students enables me to diThe main aim is to deliver the curriculum is really challenging. Making rectly come to the topic and knowledge and the learner is the students understand these concepts draw the conclusion that all treated as an object. As I go down with hands- on experience just makes a mothers though did not turn memory lane, I can recall this world of difference. the pages of economics book teacher -centric class room of my are great economists proving Introduction of the subject by name school days. Social science as a ‘Economics” in the ninth standard brings the importance of the subject subject was too difficult to think, in our day to day life. whether History, civics or (Source : Wikimedia Commons, Author : Arunankapilan ) Introducing the concepts geography. And slowly comof land, labour, capital ing to the 8th standard a and organisation is really sixth subject called interesting and it’s worth ‘Economics’ was introduced. enjoying the time with Although I was under the the students and anstrict guidance of Mrs. swering their variety of Chaddha, my Economics questions. Understandteacher, I found it too tough ing the implication of to score. Though I felt that globalisation in terms of the subject was easy and livelihood patterns is would fetch marks, I could indeed too abstract. never keep up to the expecLearner centric educatation of the teacher and tion system tells me the often had tears rolling down difference between my my cheeks when marks involvement in the class were declared after the while I was a student in examination. But I still did the school and involvenot lose heart and went along with ment of today’s student in a seriousness among the students. the subject till I qualified as a postThough it’s called a dismal science, I as a class .Today, as a teacher I find, if I graduate in Economics from a reccan give my students a chance durteacher of economics don’t want my ognized university. ing the class and outside to discover students to be afraid of the subject. I Today, with everybody’s blessings, I and transform complex information want them to embrace it because it will am that Economics Teacher make them better citizens, rational con- into concepts, it would develop self around whom thousands of stusumers, better producers and ultimately regulated learners who learn a varidents revolve at the grass root ety of learning skills and know how a better economy for all. It’s a subject level. It’s seen that today the that helps one to understand the impact and when to use them. I, as a teacher centric classroom has a teacher, encourage my stuof the economy in one’s life and the paradigm shift to learner centric dents to learn by integrating concept of decision making that not classroom. Students are the centre their reality with content, enonly has benefits but also costs. To of activity in the classroom. What hancing complete participation in think about those decisions critically, it role my teacher played, today I in enables a person to make the right deci- the class. Introducing and making her place adorn a new role and the students understand various sion. Talking about the optimum utilizaembark on a collaborative exploration of resources, choice, decision mak- concepts through group activities tion of knowledge; share the joy of enables them develop communicaing etc, I often converse with my studiscovery and satisfaction by using

Guest Author

Many years have passed sailing in the boat of teaching and learning but none did ask me to jot down my experiences in this arena. When I was a child, I used to admire my teachers teaching and how they carried themselves. Never in my dreams did I have a thought that one day I would also be admired, loved and honored to such an extent that my student would acknowledge me and invite me with a page to pen down my experiences and my affinity with economics . I am overwhelmed.

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tion in terms of using the vocabulary of Economics and integrate various theories and concepts of economics. Sometimes these group activities serve multiple subject needs. Encouraging the students to collect data on recent poverty trends in India or global poverty trends etc from the newspapers, journals or interpret a graph or complete a table increases the appetite of the students to go nearer to the subject. The only disadvantage of learner centric class is that at times the class becomes noisy but itâ&#x20AC;&#x2122;s worth it when I see my students understanding and enjoying the subject. Today, being in the teaching profession for about fifteen years, I feel immense joy to pen down my experiences about my love with Economics as a subject and my students. As a facilitator and a regular learner from the

daily experiences, I try my best to create active learners. Feeding with notes is just self defeating and the truth of learning in this case is just delivered and not discovered by the students. I feel students should learn to become self learners. To conclude, I would say that I look at Economics as a very important subject and am grateful to the Education Department for incorporating the subject at the school level. This subject provides a fundamental outlook for all of us in our personal lives, at work and even as responsible citizens while exercising the fundamental right of Universal Adult Franchise.

Survey display credits to www.wordle.net and fontsquirrel.com

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(M.A- Economics, B.Ed) (Department of Social Sciences} DAV International School, Kharghar Takes interest to guide the students in various activities like debate and joins the students in various field trips. A lover of art and music and various other creative work.

Guest Author

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Mrs Tapati Dey,

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HOW NSS CHANGED MY WORLD

When I began my life as a student in college I was deeply intimidated by the wide array of choices that lay in front of me with regards to extracurricular activities. I aspire to pursue UPSC in the future; and using this as a yardstick to make my decision, I chose to join NSS. In my opinion, working for social sector would help me to gauge the society and today’s world better. During two year stint with this benevolent and kind lot, I undertook the task of educating the young. Our college had adopted chunabhatti, Sion as its sphere of influence. We pursued our goal of betterment of slums in these blighted areas. Throughout the term we conducted surveys on various social issues like malaria, AIDS etc and under- Childhoods spent in slums took several communica(Source: http://commons.wikimedia.org/wiki/File:Two_boys_in_Dharavi.jpg, author: Wen-Yan King) tive activities like plays to spread awareness. we were accustomed to. However, we Chunnabhatti houses small room spent a substantial amount of time in beside the Leprosy colony for the there and developed a bond with the slum based children. With several students there, who we now referred children simply unable to afford to as ‘our’ students. I began taking education, the situation here was chocolates to boost their motivation to quite woeful. gain education. We treated the chocolates as an incentive to the hard work Thus, we as volunteers reached out to these underprivileged poput in by them. tential youth and administered lectures. We encountered students I started to celebrate every occafrom pre-primary up to 7th std. sion- Christmas or Diwali- with Flexible time slots from 10 am to those kids. It was an absolute 12pm or 2pm to 4pm enabled us pleasure being there. I enjoyed the to perform the duties we had signed up for. At first, every mem- time spent with them so much so that ber of NSS was afraid to step into even my birthday was spent in their company. Together we explored the the dingy tenement as the level of hygiene was lower than those what performing arts; dance, drama, with the

aid of audio-visuals, I was able to bring the class alive. Throughout my course of action I found that these students were exceptionally intelligent but lacked the moral and financial support that was needed to bridge the gap between dreams and achievements. If anything, I have learnt from these children as much as I tried to teach them. I encourage and hope this sector sees the participation of many more individuals. I aspire for a day when no child loses out on the kind of opportunities and exposure that we have been fortunate enough to have solely because of the families we were born into, by chance.

Pooja K.S is a student of TYBcom at R.A.Podar College of Commerce and Economics

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Are you wondering what happened to the ‘O’ in the title, “ECONOMICS”? Why I have highlighted the two letters ‘CA’ in it? For me, CA (which stands for Chartered Accountancy) and Economics are two interesting subjects/courses that can be lethal when learnt simultaneously. If the former gives one a wide knowledge of accountancy, law, taxation, and the latter brings excitement and fantasy to the vast worlds of micro and macroeconomics. If one gets tired of the dry nature of Economics sometimes, the practicality and complications of the CA course keeps him on his toes. If one feels like a bonded labour-person in the articleship years of CA, then the innovative & research based approach of Economics relieves you and wraps you in the mystical ways of the economic world. CA is like Rahul Dravid – filled with dedication, focus and lot of grinding & practical efforts. On the other hand, Economics is like Mahendra Singh Dhoni – more innovative, street smart approach and application. But very few may be aware about doing these two things in tandem and still fewer may be aware about the learning experience from it. Doing my articleship from a financial firm, and graduation in Economics, I have come to enjoy and experience a whole lot of wonders throughout this short journey. And more importantly, it has taught me how these two fields which look different from each other, are so linked to each another in reality. For example, during an audit, there is verification of the financial records maintained by a company, but one can take a step ahead and perform various analyses to learn more. A little glimpse of the various aspects which can be experienced via E’CA’NOMICS:

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E’CA’NOMICS Cost Analysis: Microeconomics is a field which focuses on Cost Analysis. An economics student is very well aware about Average Cost and Marginal Cost. But for a company, minimizing the cost of its product is a vital strategy to have a cutting edge over its peers. Thus, for any manufacturing company, a monthly analysis is done regarding the cost structure and the company then decides various strategies to improve its performance. There are quarterly performances of every company which have to be verified by an audit firm and further analysis of quarter v/s quarter performance is done. This is not something which an auditor does, but this can surely be done by someone pursuing CA for enhancement of his knowledge

level (Company Analysis) or Macro level (Economy/Country Analysis)

Statutory Compliance: Taxes!! One of the major sources of revenue for the government (after corrupt practices). There is Excise, Customs, Sales/Vat, Service Tax and a very long list. Complying with it is a tedious job and verifying that it is done on time is the job of an auditor. Every economist will know what direct tax is, but a CA will know the law, the section and the applicability of it. The interesting thing is: An Economist will want more taxes to be collected for development, while the job of the CA is to save tax (yes mind you, not to evade it). Economic Theories do (Sources: http://commons.wikimedia.org/wiki/ not emphasize much on law or File:Raghuram_Rajan,_IMF_69MS040421048l.jpg, http:// commons.wikimedia.org/wiki/File:Ben_Bernanke_official_portrait.jpg any statutory compliance which Authors : International Monetary Fund, United States Federal Reserve) is the additional of doing both these courses together.

and linking it with Economics concepts of Cost. But both have controlled its cost to maximize its return. Variance Analysis: Variance is a statistical tool which is used to measure changes in revenue and cost structure and thereof to find the reason behind it. In audit, this tool is used to find any major discrepancies which can be found out for the purpose of reporting to the shareholders of the company. There is quarter v/s quarter, half year v/s half year and year v/s year comparison done. This tool is also used at broad macroeconomic levels for IIP (Index of Industrial Production) numbers, inflation, growth etc as it helps to analyze the performance of the entire economy in comparison to another period. Hence variance analysis can be done at micro

Planning and Management: Doing both things together helps one develop these vital qualities as time progresses. One has to plan and manage all the resources in hand when a particular job is assigned in audit. And that is the very definition of Economics – to manage one’s scarce resources efficiently. This aspect of Economics is applied in all fields, and thus linked with this as well. The practical experience helps in doing so and can be utilized even while preparing for theoretical examinations and research works. Risk Assessment: Risk!! Danger!! Inflation!! Loss!! These words are almost synonymous with each other. These red colour words are applicable at the micro level as well as the macro level. If inflation is the risk for the government, poor management decisions are the risk for the company which will lead to losses. Poor verification of records can lead to loss of goodwill for an audit firm (The Satyam Saga). Assessing this risk and managing a way out of it makes an entity tower

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over the other. Stock Price Analysis: Stock prices are related to a company’s financial performance and the macro environment data surrounding it. With the help of E’CA’NOMICS, one can make use of the various financial ratios like Earnings Per Share, Debt-Equity Ratio to analyze the stock price of the company. But more importantly, one can analyze how the macroeconomic data can have an impact on the stock prices of a company, industry or the whole

Stock Exchange Index as such. Say, how the increase in the price of diesel can have an impact on the stock price of Tata Power (as it uses Diesel to generate power).

Process and have a long way to go, but ceteris paribus, I would surely like to be a developed ”Finished Good”, as soon as possible.

E’CA’NOMICS is actually a well prepared bhelpuri of the two subjects, but as mentioned above, it makes an individual understand various aspects from the costing of a small product to macroeconomic policy made by Raghuram Rajan or Ben Bernanke. I am still Work-In-

Presently studying CA cum BA. In short, studying ABC in reverse order!! Avid newsreader cum sports enthusiast. Sushant . S. Hede TYBA, Ramnarain Ruia College,

मेर पहल इींिनथशशप ग्रीष्मावकाश हर ववद्यार्थी के जीवन का सबसे अनोखा समय होता है I इस दौरान न ह ीं पढाई का बोझ होता है और न ह ीं पर क्षा की चिन्ता I होता है तो केवल आराम I दौरान एक अठारह वर्षीय लड़की के मन मे यह वविार आया की इस बार वह अपनी छुटिट्यों को व्यर्थथ नह ीं जाने दे गी I इस बार वह इींिनथशशप करे गी ,

जजससे उसे वास्तववक दनु नया का स्वाद शमलेगा I वह लड़की मैं हु और यह मेर

पहल इींिनथशशप का वववरण है I

३ मई २०१२ को जब मे सुबह

ठीक १० बजे अपने दफ्तर पहुींिी , तब में रोमाींचित भी हुई र्थी और डर हुई भी Iमेरा दफ्तर IRIS KNOWLEDGE FOUNDATION ( IRIS SOLUTIONS

ग्रीष्मावकाश मेरे शलए एक यादगार अनुभव र्था , मुझे इस बात की ककया

और दै ननक समािार शलखे I वैसे तो मझ ु े इन सभी कायथ

करने में बहुत आनींद शमला , परन्तु मेरा सबसे वप्रया कायथ र्था , ववशभन्न

अत्यीं प्रसन्नता है की मैंने इस

सीखने के अवसर को व्यर्थथ नह ीं जाने टदया I

अल्पववकशसत दे शों की सींसदों के

ऐसे ह एक ग्रीष्मावकाश के

BUSINESS

की

कामकाज की ननयशमत रूप से खबर रखना I इस कायथ के कारण मझ ु े इन दे शों की राजनीती और समस्याओीं में अींतदृजष्ि पाने का अवसर शमला I इस इींिनथशशप से मेरे सामान्य ज्ञान में ववृ ि तो हुई ह , और सार्थ ह सार्थ मैंने कुछ कायथ नैनतकताएीं भी

सीखीीं Iयह कायथ नैनतकताएीं मैंने अपनी गलनतयों के माध्यम से सीखीीं I जैसे गलत वतथनी की डाींि ने मुझे शसखाया की हर छोिे से छोिे कायथ को भी

ध्यान पव थ करना िाटहए I सहकमी ू क

के मजाक पर बहुत जोर से हसने पर जब डाींि पड़ी , तब मैंने कायाथलय की व्यवहाररकता सीखी I

पहल ) का प्रधान कायाथलय र्था I समय के सार्थ मैंने वहााँ कई कायथ करने सीखे और कई भूशमकाएीं भी

ननभायें Iजैसे की ई-सोशल-साइन्सेस नमक वेबसाइि के प्रबींधक के रूप मे कम ककया , पुस्तको का समीक्षण

ऐसे तो अनेक ककस्से है मेरे

पास इस इींिनथशशप के :परन्तु में इस लेख की शब्द सीमा से बाध्य हूाँ

और इसशलये , इस लेख का यह ीं समापन करते हुए यह कहूाँगी की यह

Born in the spring of 1994, Vagish Vandana Pandey, was never really able to decide what interested her till she stumbled upon economics in her eleventh standard. Since then, she has perused the study of economics, finding great pleasure in quantitative economics. She is currently undergoing a bachelor’s course for Economics and Statistics.

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Homoeconomicus is INCEPTIONed!

HomoeconomicuS is iNCEPTIONed!

In keeping with the spirit of the magazine, this is a (half baked) attempt of objective observation through economic lenses. My muse: Homoeconomicus itself, and the entire rigmarole of bringing it to life! There are four things the author aims to achieve with this article; 1. Document the results of using behavioural economics to rope in writers, 2. Address some of the ethical dilemmas of working with intellectual property, 3. Deconstruct the student idea-sphere 4. Make sweeping statements about the youth at general. E-Conning (Contributors, you may want to skip this section. Here, the author discusses the evil ways we tried to Nudge1 you). We used “social norms” as opposed to “market norms” to call for articles. That is, we personally invited students and guests using our own email IDs over and above the usual marketing efforts. Theory dictates that social norms work better with higher expected reciprocity (Heyman and Ariely 2004). This worked too, and we credit the number of articles we received to this very approach. Secondly, we asked writers to set a deadline for themselves rather than administer one (Ariely and Wertenbroch 2013) . This was in the hope that authors will feel more obligated to the dates they set for themselves. This fell flat on its feet as most writers had other commitments to keep and didn’t feel too threatened by our hard deadlines! Perhaps next time we will customize deadline routines for each author. Behavioural Economics also states that labour leads to love (Norton et al 2011). It is often easier to edit articles by ourselves than to do a back-and-forth correspondence with the author. Intentionally, we adopted the latter approach so that writers could feel more involved. Did we make our writers fall in love with the project? The jury is still out on that! Ed-ical Dilemmas Plagiarized writings keenly resemble the “market for lemons”. They cheapen the deal. As the “Regulators” in this situation, frankly we lived up to the stereotype of not making laws clear and adapting our reaction on a case-by-case basis. The market for student writings is so deeply flawed even in the real world that it is quite natural that students feel no great guilt pangs in plagiarizing. They do not perceive it as a “costly action”. Think of the incentive structure in place for student assignments; the payoff from writing i.e. grade/points (for quoting better marks in your CV) for CV is often dependant on whether the submission is made rather than how its content was sourced. Secondly, is it really reasonable to expect student to spout original thought on demand of semester submission schedules? We still don’t know what the “netiquettes” of referencing are and surely this magazine too has erred in that. The situation reminds me of Kaushik Basu’s argument for legalizing “the giving of a certain class of bribes” (Basu 2011). I.e. maybe there is no “fault2” on the part of the student community for engaging in plagiarism as much as there is in creating an environment where they are not categorically discouraged/enabled/forced to do so. In all fairness, teachers and college management are quite helpless as well. Purchasing plagiarism detecting software and putting in place an online infrastructure for assignment is a difficult affair. Is it actually worth all the hassle? Think of electric cars, which have recently come under a lot of scrutiny for its “uneco-

1. 2.

See http://nudges.org/ Unless seen in the perspective of an individual’s ethics

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friendliness”. The claim is that they are not all that good for the environment either, unless we all start driving them and use only renewable sources to produce the electricity3. In short, the efforts have to be at SCALE and MULTIDIRECTIONAL, which is typically the case with any collective action problem. Same with students and IPR. Till then one wild idea that could work, for our magazine’s next issue, and may be in general is “Peer Review4”. Every writer/student could be asked to submit one entry as well as check another’s’ for academic integrity, anonymously5 Having tried this out with a handful of participants at a college level event, the author was surprised to note and happy to report that peers were extremely kind and resourceful to one another (umm 10/11 participants) despite having a strong incentive to tank one another’s papers/confidence. Writers Bloc It has been an overwhelming experience to see students’ interest in writing. Graciously, all would accept editions, additions, rejections and most of all, the challenge to ideate! The student idea-sphere is perhaps the most fascinating and inspiring space to be and study. Think of it like an economy where the products are ideas, the production process is “opinion formation”. Consider the production function P = f (N, L, K, T) Where, Land = Cafes, canteens, campus, virtual forums...∞ Labour = Classmates and extended student community...∞ Capital = Teachers, Internet and Library....∞ Technology = MSOffice, Facebook, Twitter....∞ Demand = Opportunities, Competitions and Credit based Assignments....∞ This economy suffers from one LARGE problem. Resources are actually INFINITE. And thus optimal allocation is even more daunting, more intimidating than in the case where resources are limited. We just don’t know how far to go with anything!

P = f (N?, L?, K?, T?) The consequence? 1.We tend to worry and subsequently ideate about issues popularized by popular media (internet), which in turn is a function of what readers like to read about. For example, it may just be that inflation is not as important as the fact that we still haven’t stopped using plastic bags! 2.We over reference. Having been intimidated by the

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expertise out there already, scared that our idea can’t stand alone (This article is a case-in study). 3.We do just enough for the grade/credit/publication in magazine 4.We’ve become over-dependent on the internet to write 5.We don’t know whether it is better to be multidisciplinary or as specialized as possible? The best part of this all is that students are not oblivious to this information overload. And that’s why they have become more proactive, going to the grassroots themselves, volunteering, interning and working their ‘buts’ off to form their own opinions, their own insights. But what does economics dictate? (Fighting the urge to Google “economics of infinite resources”) perhaps we need to create an artificial scarcity so that we optimize what we do have. No internet on some days6, no teacher’s help on others, no MS spell check once in a while and finally ideation for no good reason. Scatter Brains We are scatterbrains and scatter brains are we, We see too much, read too less, try to do too much, eat too less, But in the madness, what we remain, Is ready to be inspired, influenced, Ready to be moved and pushed and moulded Willing to hear each other out, argue, fight, discuss And shamelessly procrastinate But in a sense, what we remain Is the best hope for the madness. A perfect Economic Asset. Bibliography Ariely, Dan, and Klaus Wertenbroch. "Procrastination, deadlines, and performance: self-control by precommitment." Psychological Science, 2013. Basu, Kaushik. "Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal." Finance Ministry of India, 2011: http:// finmin.nic.in/workingpaper/act_giving_bribe_legal.pdf . Heyman, James, and Dan Ariely. "Effort for Payment - A tale of two markets." Psychological Science, 2004. Norton, Michael, Daniel Monchon, and Dan Ariely. "The 'IKEA Effect': When Labor Leads to Love." Social Science Research Network, 2011

Melony Snickette7 and Les Editrix Extraordinaires!

3. See http://www.huffingtonpost.com/jason-haraldsen/electric-cars-its-not-eas_b_3552429.html 4. The author credits this idea to the awesome world Massive Open Online Courses! 5. Of course the risk of collusion lingers, but perhaps, just perhaps the social pressure (to prevent your classmate from naming and shaming your assignment) may pull through. 6. The author credits this idea to friends who have described how de-toxifying it is for the mind, to go without internet and a phone. 7. Inspired by Lemony Snicket