06-05-2017 (Important News Clippings)
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Date:06-05-17
Engage others within one belt, one road
China’s One Belt, One Road (Obor) initiative, an ambitious infrastructure and connectivity project, has economic and security implications for India. The geopolitical implications of a project that would encompass almost 100 countries with 70% of the world’s population, 55% of its output and 24% of global trade are significant. India must join in, mobilise allies and ensure that the economic infrastructure built remains ‘open access’ and under the sovereign control of the countries in which it is built.
Beijing seeks global leadership and sees Obor as an instrumentality. At the same time, the initiative can build vital infrastructure, boost growth and develop market access. India needs to act in a strategic manner, as it did joining the Asian Infrastructure Investment Bank and the New Development Bank. Only by joining Obor can New Delhi work, along with like-minded other members, to thwart its use for Chinese domination.
Obor envisages partners, in finance and project implementation. Partners can restrain as well as build. With the US withdrawing from the Trans Pacific Partnership and the Donald Trump administration’s as yet unclear relationship with Asia, the best option for India would be to work with other countries to ensure that the Obor does not become a vehicle for Chinese hegemony while taking advantage of economic benefits that the initiative promises. This does not preclude, of course, India’s independent engagement with the countries concerned.
Keeping away from the initiative will not address geopolitical concerns. Instead, New Delhi should develop the capacity for principled clarity on the desired nature of assets created with foreign investment and diplomatic engagement to realise that clarity on the ground.
Date:06-05-17
Time to Tweak Capitalism
A wide gap between a company’s lowest and highest salaries is problematic
N R Narayana Murthy rec ently called the compensa tion increase for Infosys COO U B Pravin Rao unfa ir and “not proper“. His complaint is that a 60-70% rise for the COO, when the hikes for most of the company’s employees were no more than 6-7%, will erode the faith employees have in the management and board. Former company executives V Balakrishnan and T V Mohandas Pai joined the Infosys chairman emeritus in criticising the resolution.
Infosys disagrees. It has defended the pay award, explaining that Rao’s compensation is benchmarked to best-practice standards. The rise, it countered, works out to be a lot less: just 1.4% for 2017-18 after accounting for a four-year vesting period of stock, a10.6% drop in cash component, and performance-based pay going up to 63%, from the earlier 45%, of total compensation. Assuming similar grants are made in subsequent years basedon company and individual performance, the hike could go up to over 33% in Year 4, the rebuttal insisted.
Rao has been with Infosys since 1985. In 2013, he became COO and joinedthe company’s board. Murthy’s question is not whether Rao deserves the pay award. He is concerned with the principle of fair play . He has called upon the Infosys senior management to strive for a reasonable ratio between the lowest and the highest salaries in the company . His worry is that unless it becomes compassionate, capitalism won’t survive.
Murthy’s long missive about the pay culture in Infosys echoes the pay reforms debate in advanced economies, where disproportionate rewards for top managers are increasingly being frowned upon. The mood against overpaid CEOs in rich countries can be traced back to the financial meltdown of 2008 for which excessive risktaking by top managers is blamed.Passed by the Barack Obama administration as a response to the crisis, the Dodd-Frank Act requires companies in the US to disclose the ratios of CEO-to-average employee pays. (A high ratio denotes unfair pays.) One of President Donald Trump’s campaignpledges is its repeal. Britain is contemplating fair-pay legislation.
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The world’s largest investor, BlackRock, recently wrote to the chairpersons of all the companies in the Financial Times Stock Exchange (FTSE) 350 Index, saying it will not approve salary increases for top executives unless worker wages, too, are increased proportionately .
CEO pays are yet to stir public debate in India, although listed companies here started disclosing pay ratios in 2015. Pay ratios data was compiled recently by the ET Intelligence Group (ETIG) from 2015-16 annual reports of top Nifty companies. The CEO topping the list is Infosys’ Vishal Sikka, whose total remuneration of ` . 48.7 crore was 935 times the median pay of the rest of the company’s employees.Tech Mahindra’s C P Gurnani followed, taking home ` . 45.2 crore, or 867 times the median pay in the company .The average pay ratio of the 38-company list is 237, lower than that for listed US companies, at over 300.It may seem that the steep labour market inequality is a result of dispa rities in value creation abilities. CEOs are paid significantly more than low er-level managers because they are less easily replaceable. It can be argu ed that the high pay ratios reflect not injustice but greater accountability at the top. This is especially true of star CEOs. Demand simply outstrips the supply for them.
The markets for managers are usu ally imperfect, though. More than pro ductivity gains, standards of govern ance practised in corporate boards de cide who gets to be CEO and at what pay . Disparity in corporate compens ations mirrors the disparity in initial endowments. The one picked for the corner office doesn’t necessarily work harder, but probably went to a super ior college, made better connections and bagged the right internships.
This is especially valid for the Indi ancorporate culture. Promoter-cont rolled companies still hold sway here.Compensation figures of top bosses drawn from promoter families do not tell the whole story . Being substanti al shareholders, they receive many times over in dividends.Reliance Industries chairman Mu kesh Ambani’s salary remained capped at ` . 15 crore for years. But he and his family received annually more than `. 1,000 crore in dividends.Infosys, in contrast, has pursued Murthy’s philosophy of compassionate capitalism. Lately , though, he has been unimpressed with the governance standards and pay policies being practised in the company .
Pay Attention
The company’s board is unconvinced, and has overruled his questions. Infosys remains one of India’s most admired companies. But the question that it must ask itself is this: is its explosive growth since inception driven by , or despite, Murthy’s principles?The question is fundamental to the debate in the West on capitalism.The rise of protectionism is one political consequence. Another is the idea of a universal basic income for all being tried out in several countries.India has coped far better than the rest of the world with the global downturn. But the slow jobs growth since 2008 has already entered the political narrative here.
उपग्रह कूटनीति से बनेंगे एशिया में नए समीकरण
Date:06-05-17
वित्त वर्ष में बदलाव के क्या हैं मायने?
आजादी के पहले से ही वित्त वर्ष का समय बदले जाने की उठती रही है मांग। बता रहे हैं विवेक देवरॉय
Date:05-05-17
Marx for the future
Two hundred years later, his philosophy has new significance
The advent of Karl Marx and Marxism constitutes a revolutionary epoch in the history of humanity. Marxism provided a philosophical understanding of human history and a practical method to liberate human beings from the chains of exploitation and enable them to realise essential human worth. The comprehensive scope of Marxism, which encompasses not only the materialistic basis of production, but also other finer dimensions of life, makes it a wholesome and holistic method to understand — and transform — the social, economic and cultural aspects of human consciousness.In studying history and its dynamics through the matrix of dialectical materialism, Marx brought out the false consciousness determining exploitation, extraction of surplus value and the resultant dehumanisation of society. He offered not just a comprehensive analysis but also a remedy to liberate human beings from the bondage of exploitation. It is grossly unfair to reduce Marxism to a mere study of the economic dimensions of life. Indeed, Marx took into account the finer aspects of life, such as aesthetics, ethics, music and so on. Pope John Paul II once remarked that Marx’s theory of alienation constituted a singular contribution to humanity for explaining the alienation of human beings from the means of production, the surplus value created, human worth and nature, and all that is loftier to human life.
Marx’s philosophy and analysis remains relevant for the 21st century, marked by a market-driven society and growing inequality of incomes. While Marx acknowledged the liberating impact of capitalism on human beings in relation to the bondage imposed by feudalism, he deeply analysed the exploitative capitalist structure and the endless suffering it caused to human beings. The dynamic nature of Marxist concepts and their dialectical character are of enduring significance for humanity, caught in a whirlpool of global warming and climate change.
In fact, the dialectics of nature is a critical imperative for our age marked by environmental degradation: A reckless capitalist economy and predatory market forces threaten the very existence of the earth. The capitalism which Marx analysed has today transformed into crony capitalism, leading to more exploitation and causing grave dehumanisation. Marx was prophetic about the destructive nature of capitalism and offered scientific socialism as the alternative. It is the task of the working classes to realise it.
The present-day world needs a philosophy and practice to herald non-exploitative social and economic structures based on compassion, equality, liberty, fraternity and equal opportunity. In terms of both philosophy and practice, Marxism combines in its scope both the dimensions and thereby, provides a comprehensive approach for dealing with complex social and economic issues of our time. Marxism, founded in the 19th century, continues to be equally valid and pertinent for society and economy in the 21st century. This is all the more striking in the context of Europe, where every 20 years, a new philosophy emerges and influences human action and consciousness.
The salience of Marxism for the countries of Asia, Africa and Latin America is a proven fact. The national liberation movements in those countries were taken forward by the liberating doctrine of Marxism. In our own country, the philosophy and practice centered around Marxism was best understood and reflected by B.R. Ambedkar, when he juxtaposed it with Buddhism and reconciled both to emancipate those who suffered from rigid social structures such as caste and gender. This has brought together communists and followers of Ambedkar to fight economic and social oppression.At a time when there is growing planetary consciousness for a more equitable world order, we require a philosophy and practice which does not divide people along the lines of nationality, religion, language, ethnicity or any such primordial categories. Terrorism and right-wing conservatism, new forms of fascism, global warming and
climate change are threatening to take us back to the dark ages of the medieval period.Never has the liberating and emancipatory philosophy of Karl Marx, whose bicentennial birth anniversary falls on May 5, been of more relevance. After all, the evolution of civilisation, from one stage of consciousness to a higher stage of consciousness, is inevitable.
Date:05-05-17
Road to bankability
Six ways to strengthen the Indian banking sector even as the NPA crisis billows
Karl Marx could have been writing about the bad loan problem in India when he said “Men make their own history, but they do not make it as they please… but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living.” Today, every Indian banker recognises that the bad loans (NPAs) created by previous generations weigh like a nightmare on the brains of the living!The NPA problem is urgent and grows every day. The conflict between the political narrative (the government cannot bail out the rich industrialists) and economic necessity (the need for a haircut by banks and the fact that interest compounding itself would have added 80 per cent to the corpus of bad loans in the last four years) makes choices hard and the way forward complicated. A lack of resolution continues to slow the GDP growth rate and is reflected in the insipid IIP numbers. It needs courageous attention.But there are six other substantive areas that need attention and which may be easier to move on.
One, financing micro enterprises. There are about 50 million MSMEs contributing to about 38 per cent of India’s GDP, 40 per cent of national exports, 45 per cent of manufacturing output and 20 per cent of employment. Of these, 45 million are unregistered micro enterprises that have almost no access to formal credit. Digitisation (ubiquitous connectivity, unlimited data storage, advanced analytics, savage computing power, artificial intelligence, robotics and smart handheld devices) can change the paradigm here. For example, with Aadhaar, a purposeful push in CIBIL, data availability post-GST and advanced analytics, this space is ripe for massive innovation.
The new paradigm can fundamentally change the attractiveness of making low ticket-size loans profitable and challenge the hegemony of money lenders in this segment. Micro enterprises need to be pushed to register and become a part of the credit bureau to facilitate this change. Formal credit will make their businesses more stable.
Two, old private sector banks (OPSB). We have 13 OPSBs with 4 per cent share of banking assets. Compare this with the 14 new private sector banks, none older than 22 years, with 21 per cent share of assets. Federal bank, the biggest OPSB, has half the asset size of Kotak Mahindra Bank and only 15 per cent of HDFC Bank. KMB started 15 years ago while Federal Bank has an 85 year-old history. Imagine the positive impact on the sector if these 13 OPSBs operated at the same level of efficiency as the new private sector banks. To be fair to the RBI, the first steps of change are evident in the recent sale of the Catholic Syrian bank to Fairfax or in the transformation underway in RBL with a new management. Instead of daily media speculation about mergers amongst new private sector banks, there should be a plan to facilitate the takeover of OPSBs by new private sector banks, or to encourage private equity firms to take majority ownership to change the ambition and management of these banks. Their transformation will greatly aid the modernisation of Indian banking.Three, non-bank finance companies (NBFC). The sluggishness and constraints of public sector banks provide a space for the NBFCs to operate in India. Due to the modest capital requirements of just Rs 2 crore to start an NBFC, there are 12,000 registered NBFCs in India. Yet, the top 25 account for about 80 per cent of total NBFC assets. While getting bank licences in India is very difficult, starting an NBFC is very easy. Yet such proliferation is risky. I would urge the RBI to offer more bank licences and tighten the NBFC regime. The RBI should raise minimum capital requirements of the NBFCs to, say, Rs 100 crore and impose some listing requirement for the NBFC or its holding company within three to five years. Bigger NBFCs will be able to reach unserved segments better and will also be more robust.
Four, public sector banks. Over the past 10 years, I have commented on public sector bank reform. We all know the problems and the potential solutions. There is a need to change the concept of government ownership away from 51 per cent to becoming the single largest owner, as was even recommended in the Narasimham Committee report. This will address the triple issues of governance reform, HR reform and capital constraints. We could debate the method by which we achieve this goal but it is necessary. However, to start with, we could take the modest step of corporatising these banks and bringing them under the Companies Act.
Five, cooperative banks. The entire cooperative bank experiment needs a relook. So far, they have not made a meaningful dent on financial exclusion. In fact, the JAM (Jan Dhan accounts, Aadhaar, mobile phones) push by the current government has done more for financial inclusion than 70 years of cooperative banking. The problems of cooperative banks are well understood but reform is hampered by politics and the consequent dual regulation. They lag in technology, skills and have a tough time raising capital from members. We need to push the JAM trinity and relook at the need for the cooperative bank sector.Six, payments banks. The RBI created two new bank categories — small banks and payments bank. In my view, the history of small banks in India is a history of failure. Payments banks, however, are an interesting innovation but, in their current form, they are an unviable business proposition. They are allowed to only accept deposits of.Rs 1 lakh or less and invest these in government securities and make money by participating in the payments business. To make them viable, the RBI should consider allowing them to make loans of up to Rs 1 lakh. They can then also address the gap in funding to micro enterprises, currently dependent on the traditional money lenders.
A final pet peeve of mine is the National Housing Bank (NHB). It serves no clear purpose. The NHB should be merged with the RBI, like the FMC was merged with SEBI. If we can move on the areas of reform highlighted in this piece, our banking sector will become more modern, competitive, inclusive, digital and robust. It could enable the Prime Minister’s slogan of “sabka saath, sabka vikas” by making the provision of finance easier for all Indians.
The writer is Chairman, Asia Pacific, Boston Consulting Group. Views are personal
The scale of progress, so far
Agenda 2030, a comprehensive development agenda, was adopted in the United Nations General Assembly by member states on September 25, 2015. It is ambitious enough to address several socioeconomic concerns and make the development process inclusive. However, since it’s not binding on member nations, there is apprehension that it may end up becoming another of the Millennium Development Goals, which were only partially achieved. The High-level Political Forum comprising the political representatives (heads of states or ministers) of the members meets every July at the UN in New York to review progress on Agenda 2030. The Voluntary National Reviews (VNR), — voluntary and country driven — form the basis of this review.
The UN website says: “The voluntary national reviews aim to facilitate the sharing of experiences, including successes, challenges and lessons learned, with a view to accelerating the implementation of the 2030 Agenda.” In 2016, 22 presented their performance review on sustainable development goals (SDGs). This year, 44 nations including India have volunteered. The themes of review this year are Goals 1, 2, 3, 5, 9, 14 and 17 of Agenda 2030, respectively.
The process in India
Pradeep Baisakh works with a global civil society organisation, Global Call to Action Against Poverty (GCAP).
भारत को करनी होगी अगुवाई
हम इतिहास के उस असाधारण मोड़ पर हैं, जहां पुरानी व सुपरिचित व्यवस्था की विदाई हो रही है, और जो नई व्यवस्था दस्तक दे रही है, वह अस्थिर व अनिश्चित है। यह अस्थिरता ही वह चीज है, जो भारत जैसे देशों को वैश्विक शासन की नई तस्वीर गढ़ने में अहम भूमिका निभाने का अवसर दे रही है।सही है कि यह अंतरराष्ट्रीय व्यवस्था में तेज उथल-पुथल का दौर है, लेकिन वक्त की सुई यहीं नहीं ठहर जाने वाली। एक अपेक्षाकृत अधिक स्थायी वैश्विक व्यवस्था का जन्म निश्चित है। अब यह जल्दी होगा या देर से, हिंसक तरीके से होगा या शांतिपूर्ण तरीके से, फिलहाल कुछ कहा नहीं जा सकता। संभव है कि इस नई व्यवस्था की बागडोर किसी एक देश या समूह के हाथों में हो। यह ताकतवर देशों की एक ऐसी बहुध्रुवीय व्यवस्था भी हो सकती है, जिसमें पुराने देश भी होंगे और नए भी। इसमें तमाम कायदे-कानून बदल दिए जाएंगे, संस्थानों में भी रद्दोबदल होगा या वे नए रूप में गढ़े जाएंगे। मुमकिन यह भी है कि कोई देश सर्वशक्तिशाली बनकर उभरे और अपनी प्रभावी आर्थिक व सैन्य ताकत के बूते एक नई अंतरराष्ट्रीय व्यवस्था का निर्माण करे। उसे दूसरे तमाम देश स्वेच्छा से या फिर अनिच्छा से कबूल करेंगे। यह कुछ-कुछ दूसरे विश्व युद्ध के बाद अमेरिका के उदय जैसा परिदृश्य भी हो सकता है।मौजूदा हालात का आकलन करें, तो तीन संभावित तस्वीरें उभरती हैं। पहली तस्वीर यह कि चीन अपनी आर्थिक व सैन्य ताकत का विस्तार करता रहे और इतिहास का सबसे ताकतवर मुल्क बन जाए। कई विश्लेषक तो अभी से ही चीन की इस भूमिका को स्वीकार करने लगे हैं, मगर मैं इससे सहमत नहीं हूं। मेरी नजर में यह कहना अभी जल्दबाजी होगा। इसकी बड़ी वजह यह कि चीन की अर्थव्यवस्था नीचे की ओर जा रही है और वहां की राजनीतिक-व्यवस्था भी नाजुक तो है ही, आत्म-केंद्रित भी है। दूसरी तस्वीर सच के ज्यादा करीब लगती है; वह यह है कि चीन और अमेरिका, दोनों की संयुक्त-व्यवस्था (जी-2) होगी और दोनों एक-दूसरे से प्रभावित हिस्सों को चुपचाप कबूल कर लेंगे। मगर इसमें दोनों एक-दूसरे से होड़ लेते हुए भी दिखेंगे। हालांकि, इस तरह की संयुक्त-व्यवस्था में यदि कोई निर्विरोध प्रभुत्व जमाने की दिशा में आगे बढ़ता है, तो फिर इसके अस्थिर होने की आशंका भी उतनी ही होती है।तीसरी तस्वीर बहुध्रुवीय व्यवस्था की उभर रही है, जिसकी संरचना बहुत हद तक वैश्विक नेतृत्व वाली हो सकती है। यह व्यवस्था सन 1815 में वियना कांग्रेस में बनाई गई थी और इसने लगभग 100 साल तक (1914 में पहले विश्व युद्ध की शुरुआत तक) दुनिया भर में अमन-चैन बनाए रखा। अंतरराष्ट्रीय परिदृश्य के मौजूदा बदलाव 21वीं सदी की बहुध्रुवीय व्यवस्था के ज्यादा मुफीद दिखते हैं, और यह भारत के हित में भी है।हम अभी अपनी आर्थिक व सैन्य ताकत बटोरने में जुटे हैं और कतई नहीं चाहेंगे कि किसी नई सर्वशक्तिशाली या संयुक्त-शासन वाली व्यवस्था के उदय का नुकसान हमें उठाना पड़े। लिहाजा दूसरी तमाम बड़ी ताकतों के समर्थन से हमें एक बहुध्रुवीय व्यवस्था की दिशा में आगे बढ़ना चाहिए। आकलन यही है कि यह व्यवस्था कहीं अधिक स्थिर होगी, और वैश्विक शांति व सुरक्षा बनाए रखने के लिए, खास तौर से ग्लोबल वार्मिंग, महामारी, साइबर अपराध, नशे की तस्करी, अंतरराष्ट्रीय आतंकवाद जैसी समकालीन व उभरती समस्याओं का एकजुटता से समाधान निकालने को प्रेरित करेगी। यह सही है कि एक सर्वशक्तिशाली व्यवस्था दूसरे तमाम राज्यों को मजबूर कर सकती है, मगर यह व्यवस्था एकजुट प्रयास को शायद ही कभी बढ़ावा दे, क्योंकि ऐसे प्रयास तमाम पक्षों से सलाह-मशविरे व सहमति के बाद ही संभव हैं।अमेरिका ने एक सर्वशक्तिशाली मुल्क के तौर पर उस वैश्विक व्यवस्था पर अब तक राज किया है, जो पश्चिमी प्रभुत्व में सदियों तक आकार लेती रही। मगर असलियत में अमेरिका पश्चिमी प्रभुत्व का जनक देश नहीं, बल्कि एक वारिस है। अब कोई देश यदि सभी का आका बनने की इच्छा पाल भी लेता है, तो उसे वैसी विरासत नहीं मिलने वाली, जैसी अमेरिका को मिली। हालांकि चीन एशिया में पूर्व की अपनी श्रेष्ठता के आधार पर यह दावा जरूर कर सकता है, मगर यह हकीकत की अपेक्षा काल्पनिक ज्यादा लगता है।लिहाजा, चीन अकेले उस मुकाम तक नहीं पहुंच सकता, जिस पर फिलहाल अमेरिका काबिज है। उस जगह को भरने का काम केवल ताकतवर मुल्कों का एक समूह ही कर सकता है, जिसमें स्वाभाविक तौर पर चीन भी शामिल होगा। यही गुट उभरती अंतरराष्ट्रीय परिस्थिति को मजबूती व स्थिरता दे सकता है। लिहाजा भारत के पास तमाम मौजूदा व उभरती ताकतों को एकजुट करके एक प्रभावी, स्थायी और नियम-कानूनों पर टिकी व्यवस्था बनाने में उल्लेखनीय भूमिका निभाने का मौका है। ये मुल्क किसी एक देश का आधिपत्य स्वीकारने या संयुक्त-व्यवस्था की वकालत करने की बजाय बहुध्रुवीय व्यवस्था को तवज्जो देंगे, क्योंकि ऊपर की दोनों व्यवस्थाओं में उनकी स्थिति दूसरे दर्जे की होगी। अगर किसी देश की ताकत में अपेक्षाकृत गिरावट भी आती है, तब भी वह इस व्यवस्था में कहीं ज्यादा प्रभावी होगा।हम आज एक ऐसी दुनिया में रह रहे हैं, जो न सिर्फ कहीं ज्यादा वैश्विक है, बल्कि एक-दूसरे से ज्यादा संबद्ध भी है। परस्पर निर्भरता इसकी सबसे बड़ी विशेषता है। यह दुनिया एक सार्वभौमिक रवैये की मांग तो करती ही है, बहुलतावादी व लोकतांत्रिक शासन संरचना और सहयोगी नजरिये की वकालत भी करती है। कहना गलत न होगा कि भारत ऐसी कोई नई व्यवस्था गढ़ने के लिए नेतृत्व की भूमिका निभाने के सारे गुण रखता है। भारतीय कूटनीतिज्ञों को यह चुनौती स्वीकार करनी चाहिए और इस ऐतिहासिक मौके का लाभ उठाना चाहिए। कोई दूसरा देश इस परिस्थिति का लाभ उठाए, उससे पहले आइए हम इस दिशा में आगे बढ़ जाएं।