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I I L M I N S T I T U T E F O R H I G H E R E D U C AT I O N

Vol-VI, No. 1, January-March 2009

FROM THE VICE-CHAIRMAN’S DESK What can we learn from G D Birla to run a B-School ? A lot, it seems.

I have been reading over the last few weeks a book titled. “The Emissary: G D Birla, Gandhi and Independence”, by Alan Ross. The book essentially looks at the close personal bonds that existed between Gandhi and G D Birla, at various levels: political, social, individual. While the book is fascinating as it is based on hundreds of letters that were exchanged between the two, that is not the reason I brought this up here.

The reason is what the book has to say on Shri Birla about the educational institutions he set up. The most important among these fairly numerous ones is the BITS, Pilani, the ancestral place of the Birlas.

What was the management style of Birla who was the Chairman of BITS? There is a fascinating first hand account by Prof. R C Mitra, the famous scientist who was Director of BITS. "Whenever I attempted to describe details of new programs, ….. he often remarked; I am not the Director, I am only the Chairman. …"

Mitra was left with the sense….that

despite a reputation of being imperious, arrogant and patriarchal, (he) allowed a considerable degree of freedom to those entrusted by him to act on his behalf. It is indeed a remarkable personality who fiercely sticks to his own lifestyle and yet nourished the birth of another life style in an organization over which he presides.

GD never interfered with the admission policy or recruitment methods, nor tried to argue against changes with which he may not have felt in sympathy….What he provided was support, even for the most unpopular courses."

GD used to quote Bhagavad Gita: A business man's karma is to amass wealth and his dharma is to provide for general welfare.

Ross concludes: "The realization of his plans for Pilani came nearer to a bid for immortality. Business men are not known for disinterested actions, but the development of Pilani appears to have been a labour of love. Except in so far as it became a useful recruitment area, it had little connection with Birla commercial interests."

B. Bhattacharyya

EDITORIAL BOARD

EDITORIAL TEAM

Design: www.art4design.info

Mrs. Malvika Rai Prof. B. Bhattacharyya Prof. Sapna Popli Prof. Badal Mukherji Shri Dina Nath Mishra Prof. Kailash Tuli Ms. Rohini Rode

Sonam Phogat Yashad Bajaj Isha Gadhok Shivang Mahajan Divya Sareen

Published by IILM Institute for Higher Education 69, Sector 53, Gurgaon-122003 Mobile: 9350860132 Printed by Avantika Printers Private Limited 194/2, Ramesh Market, Garhi East of Kailash, New Delhi-110065

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CONTENTS INHOUSE MAGAZINE FOR LIMITED CIRCULATION Vol-VI, No.1 January-March 2009

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THE DOWN SYNDROME

IT IS A DIFFICULT TIME

THE AFTER-MATHS

04 24 28 30 34 35 40 44

SHRI WAJAHAT HABIBULLAH DELIVERS FOURTH INDIRA GANDHI MEMORIAL LECTURE THIS LANGUAGE MEANS BUSINESS M-BANKING AN EMERGING AREA HEDGING RISKS JURY IS STILL OUT THE CASE OF EXOTIC CURRENCY BOOK REVIEWS PERSPECTIVE IN INDIAN EDUCATION

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STUDENT CORNER CAMPUS NEWS

OPENING SEQUENCE

16th I I L M F O U N D E R’ S D A Y 4th INDIRA GANDHI MEMORIAL LECTURE Wajahat Habibullah, in course of his long and distinguished career, has stood out as an exceptional professional and a great human being. At IILM, he delivered this year’s prestigious Indira Gandhi Memorial Lecture.

India’s only Green PM Mrs. Gandhi may have been known more for her political acumen than for her environmental friendliness, but so strong she was in her view that a strong ecology is the basic tenet for a strong Indian culture that she could well be called India’s only green Prime Minister

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Ceremonial lamp is being lighted (L to R: Ambassador K V Rajan, Wajahat Habibullah, Kapila Vatsyayan and Malvika Rai)

Welcome remarks by Ambassador K V Rajan, Convenor, IILM India Forum Good evening Kapilaji, Wajahatji, Mr. & Mrs. Rai, senior members of the faculty, dear friends, ladies and gentlemen. On behalf of the IILM family, welcome to all of you. This is a very special event in our Delhi calendar. This is the day when we celebrate the vision, leadership, exceptional achievements and human qualities of the founder of the IILM group, Shri Kulwant Rai ji.

His effort has been to develop students as responsible, socially sensitive and globally aware members of society who are able to contribute towards international development and transmit the ever so rich and deep-rooted Indian values to the rest of the world.

As everyone recognizes, what the IILM is today is because of his vision and guidance. We pray for his continued good health. This is also a day when we retrospect on the issues and challenges of our times, especially remembering the extraordinary leadership qualities of one of India's great leaders, Shrimati Indira Gandhi, to whom this lecture series is dedicated.

This series was started a few years ago with His Holiness The Dalai Lama, delivering the first lecture on achieving peace in our times. That programme was chaired by former Prime Minister Shri I K Gujral and, fortunately, we never had to look back in terms of the quality, standard and level of our lecturers and the dignitaries who had presided.

Every year, we have had great thinkers, leaders and innovators who have left footprints, as a poet once said, "in the sands of time as they march forward, for others to be inspired by.� Today again, we can celebrate our good fortune that we have Shri Wajahat Habibullah as our lecturer and Dr. Kapila Vatsyayan in the Chair.

Wajahat Sahab, in course of his long and very distinguished career, has stood out as an exceptional professional and a great human being.

He was never the stereotype of the Indian bureaucrat. Unfortunately, as a former bureaucrat myself, that stereotype does exist and is not always

off the mark — the stereotype of an insensitive, arrogant, distant from all those on the other side of the big office desk.

Wajahat Sahab has commanded respect for his thoughtful and understanding approach to every issue and his willingness to depart from his official line, if the country's interest or if his conscience so required. His total commitment to serve the nation and be true to its traditional beliefs and to the constitutional commitments to all our citizens is something which has been a consistent undercurrent in all that he has said and done. If the government and the opposition unanimously agreed on him as the chief election commissioner, despite their tendency to differ in just about every issue, it is not surprising. We are, indeed, delighted that Wajahat Sahab has consented to deliver this year's Indira Gandhi Memorial Lecture.

As for Dr. Vatsyayan, I dare not even begin to try and introduce her. For several decades, she has been the most eminent, the most nationally and internationally acclaimed expert on The

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16th I I L M F O U N D E R' S D A Y Indian history and culture, on Arts, on Indology, on Sanskrit studies and it will be fair to say that no one person has done as much as her to protect, promote and interpret the idea of India through her writing, speeches, conferences, seminars and the institution building that she has done.

I would like to say on your behalf and on my own how great a privilege it is for us to welcome her on this very special occasion.

This is the Indira Gandhi Memorial Lecture and there is one among many other qualities probably, which is common to both our distinguished dignitaries on the dais, that is their long personal association with Mrs. Gandhi.

I do not know which particular facet either of them will be touching on.

Wajahat Sahab will be talking a lot about Indira Gandhi and environment, which will be of great interest to many of you, particularly to my good friend Mark Runacres. I'm sure, in the course of their lectures, their remarks and their interaction that will follow, there will be an opportunity to gain insights on many facets of Mrs. Gandhi's remarkable personality.

I'm sure this is going to be a very rich, illuminative and highly educative experience. With these few words, I would like to welcome all of you and request Wajahat Habibullah to deliver the Indira Gandhi Memorial Lecture.

Thank you.

The Indira Gandhi Memorial Lecture delivered by Shri Wajahat Habibullah is reproduced below verbatim: Dr. Vatsyayan, Mr. Rajan, Thank you for your warm introduction. I'm a little overwhelmed at the rather distinguished list of persons who have come and spoken to you on this very important occasion and delivered to you the Indira Gandhi Memorial Lecture. I'm afraid, my only claim to be able to stand here is because I happened to work with the great person for a short time and had, therefore, the opportunity to observe what she attempted to do. Those were, of course, her last years. I was with her from 1982-84.

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Ambassador K V Rajan introducing the guests

I was with Mrs. Gandhi from 1982-84. During that time much of her thinking had crystallized and although her life ended in tragedy, the legacy she left behind has been lasting enough to be termed a kind of golden age During that time much of her thinking had crystallized and although her life ended in a major tragedy, the legacy that she left behind has been lasting and there are those who still look back at her time as a kind of golden age in many respects — in terms of stability, development and growth.

I, as you rightly said, would like to highlight one particular issue and that is her commitment to the environment. I don't only mean the natural environment but the environment in general — the cultural, the natural, and the international environment in which she found herself. That is what Dr. Kapila Vatsyayan and I have in Common Because during that time

and after when she passed away, Indira Gandhi National Centre for Arts was being set up; we did happen to work together and try to understand the great legacy that she left in that area.

We are meeting today in the shadow of a major tragedy that has beset our country, the tragedy that has thrown many challenges. I was asked to appear on an Al Jazira TV programme to talk about this and I said there that if these terrorists had hope to destroy India, they will obviously fail. Anyone can tell them that. This is a useless exercise. They will not destroy our economy and our unity is likely to grow even more stronger. Our diversity is going to grow richer and that kind of an assault brings us all together. It is not an assault that is going to, in any way, impair our progress or interrupt our leap into the future, which we are taking on the basis of certain strong foundations to which Mrs. Gandhi was a major contributor.

Coming to the area of our environment, where I'm talking about this dramatic progress that we can look forward to, that we are already in the process of, and that no danger of this criminal nature is ever going to divert us from. It is important to remember that she highlighted a particular area where she saw a major threat to our future. If you see the book written by her and published in 1984, Safeguarding Our Environment, published by New Age Publishers, you'll find much in it. I could see because I used to draft all her speeches and messages at that time and none of the messages passed without her scrutinizing every word and making changes all over the place and coming up with her own version. You can read her language in this book and this is how she starts: "I had the good fortune of growing up with the kinship with nature in all its manifestations — birds, plants, stones were companions, and sleeping under the star strewn sky, I became familiar with the name and movement of the constellations, but my deep interest in this Earth was not

16th I I L M F O U N D E R' S D A Y in itself but as a home fit for man…"

This, I think, was a gist of her approach to environment, the commonality between the evolution of human kind as a whole, specifically in relation to the cultural heritage, which grew out of that environment and which so greatly enriched us. She talks in this book of the great emperor Ashok. She speaks of an emperor whose policies were imprinted forever on his rock edicts which showed that he considered himself as the protector, not only of human beings but of all life — animal, trees, flowers and forests.

All these, in fact, she regarded as part of Indian heritage, part of India. Not only one area or one part; this made India as a whole in her view. Therefore, if India was ready to progress, then it must grow in all these aspects.

In this, her remarks were prescient: "In poverty, he — the mankind — is threatened by malnutrition and disease, in weakness by war and in richness by the pollution brought about by his own prosperity. We have transited from one through another to the third.

Therefore, it is necessary to re-look at our foundations, to go back in search of our foundations. No matter how dramatic our progress — economic, scientific, military may be, the foundation requires to be strengthened.”

This is something on which she was very strong and deeply committed. I can say this from my own experience. I used to sit in a number of meetings chaired by Mrs. Gandhi and the longest meetings were those that concerned the environment or culture. She never interrupted anybody, listened very carefully and contributed in the end. The other meetings were of business type that did not last very long.

This period brought us initially to Project Tiger, 1973. Project Tiger has something that all of us are very proud of. In 2007, there were more than 40 project tiger wildlife reserves covering an area of 37,761 km and it helped to increase the population of tigers, which, at the beginning of the century, had been estimated at about 40,000 but had come down to a little over

Dr. Kapila Vatsyayan

Those who have not and visited Shakti Sthal, please look out for the manner of its decoration.

It has rocks all over — stones from every part of India, as far as the Andamans, all brought by Defense trucks 1200. That went up over a period to about 3500. Unfortunately today, it is again under threat. Now, of course, the figure has apparently fallen to 141.

We are now rethinking the whole project, part of the reason why this reduction has taken place. The method of counting has become much more scientific. It was not so clear in the earlier days. The point is that this major project is under threat. This major project needs to be protected.

But not only this, she repeatedly in her speeches, talked about the extinction of animal life and how that was in many ways diminishing India. She specifically spoke about the Cheetah several times as to how in her child-

hood she was brought up to regard the Cheetah as the symbol of India.

That is no longer there. There is no Cheetah in our country. It is extinct.

These were things of which she was very concerned. As a result of that you had the Forest Conservation Act and the Wildlife Protection Act. In 1981, she had written a letter to the Chief Ministers of all the coastal areas particularly identifying the fragile ecology of our coastline and what needed to be done to conserve and restore it. We all know about the Silent Valley Project in Kerala and how she succeeded in protecting that. There are a number of other examples of how she succeeded in protecting the environment.

The direct result of this effort — initiated in her time and culminated in her son's time — was the Environmental Protection Act. I do know that in Mr. Rajiv Gandhi's time we had a particularly assertive secretary in the Ministry of Environment and Forests and this was Mr. T N Sheshan.

The Ministry of Environment and Forests had become virtually the bureaucratic system of the government. Without the approval from that ministry you could not initiate the development programme.

Then, Mrs. Gandhi passed away. In Shakti Sthal, which is her samadhi; many of you have visited her. Those who have not and visit it now, please look out for the manner of its decoration. It has rocks all over; stones from every part of India, as far as the Andamans, all brought by the help of the Defense Military trucks.

She felt alarmed that economic development could become an assault on nature. In her view, the best form of development was one that would come in harmony with nature. I spoke in terms of animals, stones and others.

What about human beings? She had a particular concern for tribals.

Recently, of course, you have had the Scheduled Tribes Rights Act in the forests and this has created a lot of controversy. If the tribals are allowed to settle in the forests, it will lead to The

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16th I I L M F O U N D E R' S D A Y decimation of tiger life. I happened to be in the ministry of the Panchayati Raj and this new Bill was under discussion.

The philosophy of Mrs. Gandhi was that human life, animal life and plant life, have to live in harmony. Her deep interest was to make Earth a fit home for man. She was not one of those environmentalists who felt that to protect the environment it does not matter how much is the human cost The purpose to protect the environment was to enrich human life.

That is, of course, one of the controversies regarding the Scheduled Tribes recognition of Forest Rights Act of 2005, where the tribal population will be one that will respect forest life. We do know that in 1865 when the British came up with their first Indian Forest Act, what they had done was they had expropriated the forestland from the tribals, stating that under the protection of the government, forests will be protected. But their intention was clear because the first time they interfered in forests was in 1806 when they actually took control of forests with the objective of being able to exploit Malabar teak. So, their interest was really commercial, clad with may be some nice sounding words.

For centuries, the tribals were the owners of forest produce and they respected forest produce and they never exploited them. Even today, if you go to the Andamans, you will find primitive tribes. They live with the forests and the forests live with them.

They cannot do without each other.

The Government has decided to set up a few islands and forests have disappeared from those islands. These huge rain forests that enrich that island territory and which enrich large parts of the world are now confined to very few areas.

But, in the case of the Andamans again, when I was visiting her, the Lt. Governor happened to tell her that, "Madam, look at these tribals, they are so backward." First of all he arranged a meeting in which all these ladies were forced to wear tops. Normally, these ladies go about bare breasted and The

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Question Answer Session

since Mrs. Gandhi was the Prime Minister and a lady herself, the officials thought that she might feel offended to see tribal women like that.

The Lt. Governor first arranged a gathering and he had them all wear shirts. Mrs. Gandhi got extremely annoyed about that. But then he said to her, "Madam, all these tribals are most uncivilized. I will see that each one of them is wearing jeans by the time you come next." Mrs. Gandhi was furious. I would not name him, you can research that but the poor LG was transferred shortly thereafter.

The conservation of tribe was there and we can take great pride in this. We

During one of her visits to the Andamans, the L-G paraded a group of tribals before her, making all the tribal women wear shirts. Mrs. Gandhi was so annoyed at his lack of tribal conservation that he was ousted

are one of the few countries in the world where primitive tribals have been able to conserve their ancient way of life even in the modern world despite assaults of what we may think is the civilized world — a civilized world which brings disease, disruption of life and conflicts in place of harmony and a diseases-free life. But we have preserved it. It has disappeared in Australia; it has disappeared in New Zealand and many other parts of the world. But we still have it, may be in a small part of our country but still preserved. And a lot of that credit goes to the work been done by Mrs. Gandhi.

Today, 20 percent of our land mass is supposed to be forestland. In fact, the figures are about 7-8 percent. If our forests go, our water will go, if our water goes, the great country of ours will become uninhabitable.

The vision that Mrs. Gandhi had laid out for us is still very valid. She had tried to work in bringing about this vision not through imposition there was no effort at thrusting this. She tried to develop this as a part of her overall development scheme at the heart of which was the inclusion of all sections of our people in this great

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A section of audience captivated by Shri Habibullah

democratic movement towards the future. There has been criticism of her because of the imposition of the Emergency. We said she was not committed to democracy, that she was authoritarian. Having worked with her, I can vouch for the fact that repeatedly she sought to go back and sought the support of the people of all kinds because this idea of conservation of nature was deeply rooted in her idea that this is a part of India's tradition out of which grew her culture.

Therefore, it is important not only to conserve the basic roots but also the cultural diversity that has grown out of it. It is in her time that we saw the foundation of the Indian National Trust for Art and Cultural Heritage that was something that I had worked on. She saw to it that this organization was independent of the government. A grant was made but that was a onetime grant. So, the government could not dictate INTACH. It was to be an independent organization working on its own on India’s art and cultural heritage and it still remains.

All this taken together, what does it mean? It means, that the government has a certain role but the people have

a more important role — the people in all their variety and the people who live in harmony with nature. So, we have had our evolution of our democracy, we have had the growth of an increasing reliance on our diversity to enrich us and of course now, as I regard as the flowering of that democratic process, the right to information.

This is part of the legacy which we have and because of her concern of conserving the environment, Mrs. Gandhi has been described as India's Green Prime Minister. This was repeatedly manifested in Delhi; part of the reason why you can thank yourselves that we have green Delhi is for the very

It is in her time that we saw the foundation of the INTACH. She saw to it that this organization was independent of the government. A grant was made but a one-time grant, so the government could not dictate INTACH

strong stand that she took. If the felling of any tree came to her notice, she took an extremely adverse view of it.

I was looking after Environment when she was Prime Minister and went on to do so at the time of Mr. Rajiv Gandhi. I was often making telephone calls to various people to know the reason why a certain tree had been brought down.

The idea of the whole of India being one was strengthened by her in this way. India is not one because of its geographical entity. It is one because its people share a rich cultural heritage. Its people also share a very rich heritage of nature which our civilization, our culture teaches us to respect.

Many of you, will go out to create a life for yourself in the future. When you go out, you must remain aware of what makes India great. What makes India unique? As we now move towards the future, it is bound to be bright, based on solid foundations.

What has made us unique in the past and what will make us unique in the future, is to learn to regard our nation not only as a collection of human beings but as an entity which includes nature, culture and civilization of heritage.

With these words I would conclude this discussion and I would welcome any questions that you may have in regard to this. Thank you.

K V Rajan: Thank you Wajahat Sahab for the beautiful lecture. It would leave a deep impact, particularly on our young friends in the hall and others too who might have something to say.

Do I have your permission to invite questions on other subjects also?

Wajahat Sahab has been kind enough to say that your question need not be limited to the subject of his talk. So, the floor is open for questions.

Questions & Answers Prof. S. Sundaram Q. Am I right in assuming that unfortunately at a time when Mrs. Gandhi was interested in starting some pioneering work on environment in this country, she did not have the right kind of guidance? There were not The

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16th I I L M F O U N D E R' S D A Y enough environmentalists to guide her with the kind of regulation that was required to protect the environment at that time?

Wajahat Habibullah: There were major legislation initiated by her. There was the Environment Protection Act, which was initiated but did not come into reality. But that was the time when she initiated a number of programmes. The kind of emphasis that she laid, which is why she was called the Green Prime Minister, because the environment then started playing a lower role, not a promissory role and the concentration of the government is not on that. Although, we still have a vibrant ministry of environment and forests, but I mentioned to you the Protection of Tribal Rights Act and the kind of controversy that had risen out of that.

The controversy would not have risen if it had been clear that the Act was right and helped create a harmonizing influence between the people who live in the forest and the environment therein. Her own ideas were quite radical but in actually formulating them, they did not turn out to be as radical as they could be.

Prof. Das Q. I have a question on a very pertinent issue. You have given a wonderful child to India that is the RTI Act. It has given immense benefit to the citizens, especially the aam janta. There are still grey areas which officials are misusing and directly or indirectly denying information to public. Right at this moment, it requires a lot of strategic intervention. What is the future plan on this issue?

Wajahat Habibullah: First of all, if I may say so, I'm not giving you the right at all. The right is given to you

by Parliament and law. I'm simply trying to ensure that you can enjoy it.

But fact is that, yes, there are grey areas. If you feel that there is delay or denial of information, which is unjustifiable, you have an institution like the Central Information Commission which is outside the government and not answerable to government. Very The

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often, I'm introduced as the Central Information Commissioner, government of India, which is not correct.

I'm simply the Central Information Commissioner of India and I'm not under the control of the government.

The government has certainly appointed me and has to bear me for 5 years unless I myself say that I want to push off. The commission is independent of the government and we are working towards making it even more independent.

The idea is if you feel that you are not getting the information from the government that you are looking for, you now have a source to turn to outside of the government. If you feel that there is some deep-rooted inten-

If you feel that you are not getting the information from the government, you now have a source to turn to outside of the government. If there is an intention not to give information, you can move the commission tion of the department not to give certain information, you can move and complain directly to the commission and the commission will not be affected by what the government feels should be given or not given.

The commission is only ruled by what is contained in the Act. I'm happy to tell you that the courts are going even farther than the commission. If we are breaking new ground, the High Courts to which writ petitions often lie against our decisions, have generally upheld our decisions but have urged us to move even further than we otherwise have. So, I don't see any grounds for apprehension. There are grounds of course for improvements.

Prof. Das: There is a need to tighten the system because there are reports

in the Press that some official has asked you to pay Rs 14 Lakh in order to get this information.

Wajahat Habibullah: The Act is already stringent in the sense that there are penalties prescribed by it.

Now, the question is that the penalties are not always imposed and this is the criticism that the commission has also faced. We have imposed more penalties than most other commissions and I personally have imposed many penalties than many other commissioners have. Yet, I too come under a lot of criticism for not having imposed enough penalties. From my experience, the organisations that have imposed most penalties have shown the least improvement. So, it doesn't really follow.

There are other departments where penalties have been imposed, warnings have been issued and they have shown great improvement. So, you have to give time. The Act is very new.

It is only three years and a time when it seems to radically change the whole concept of government. When I was a probationer, we were taught to believe that the information that we hold in government is absolutely confidential. Nothing must be given out.

Now, you have a Right to Information Act. You have to give the information to aam janta that belongs to aam janta unless there is some reason why you can't give it. So, there is a change but it will take time.

Q. Being part of the same service, it may sound a little skeptical, but let me put this before you because it troubled me for quite sometime. We have, as civil servant, got used to being thoroughly thick-skinned about answering questions because we face nine committees of Parliament to 21 people asking questions all the time and for six months of the year we are only answering questions in Parliament.

Yet, if you look back and see how much good arrived out of the receipt of such information, I think it doesn't leave one very happy. Given that fact and the ability of government servants

16th I I L M F O U N D E R' S D A Y to answer questions without giving information that are sought for, which we have developed as a fine art, how effective is it? No doubt that it is a good thing and needs to be done, I'm only pointing out that 1) Will it have only a very limited effect? 2) Should you not feel it important to appoint people other than retired government servants as information officers?

Wajahat Habibullah: The second question is easier to answer than the first. They are still present. The information officers are from different disciplines. They are people who are social activists like Mr. Sailesh Gandhi who is working with us now. Ms. Annapoorna Dixit, social worker in the UNDP, not a bureaucrat, you have retired justices, Justice Khan, Chief Information Commissioner of UP, unfortunately he is in little trouble at present. You have former lawyers but the bulk is bureaucrats. I don't know, my feeling is, as the transition takes place from complete confidentiality to complete openness, the bureaucrat could possibly be the good steppingstone through which it could be done in a balanced fashion. There are also people from the media in Lucknow and Hyderabad but a larger section is from the bureaucracy, which would gradually evolve in its own fashion.

On the first question, if you start with the presumption that the information that is held by the government is actually the property of the public, which in fact it is, it is not giving information or answering questions, it is a question of making the information accessible to the public in the easiest possible manner. For that you have Section 4(1) of the Act which states that all your records should be not just accessible but also computerized and connected through a network all over the country. The section also lays down what those specific areas are and what you should declare. That includes salaries of your staff and the concessions, their beneficiaries, etc, the areas which create the most scandals.

Ration card, for example, many

people who did not deserve the ration card were getting it and many who deserved were not getting it. I couldn't challenge a thing. Mastersheets, people were supposed to be paid for the poverty alleviation programme were not paid. They were not all employed. They did not even know what the project was all about. Their name was there, but somebody else had eaten up the money. All that kind of thing is now supposed to be declared suo motu. Anybody who is interested can go and have a look and get that information. That is the essence of the Act. The reason why you are not seeing that happening is because the move towards that is still very slow. The central government has

The bureaucracy and those in the government have to provide the actual instruments through which to defeat terrorism. Without the people, the government and the bureaucracy working together, it is impossible a major e-governance programme.

Once that comes into full fruition, you will start seeing the results.

Q. There are two questions relating to terrorism. One is specifically about the backdrop of recent attacks in Mumbai and people really want quick and visible results and not words and promises anymore. This poses a tremendous challenge for bureaucrats. We want to know your views on how the challenge can be met by the Indian bureaucracy to provide security to the country's vast population and another student wants to know your views on whether the real threat of terror is due to economic or religious reasons?

Wajahat Habibullah: In my experience of working in Jammu & Kashmir, I have faced this kind of thing, though

nowhere near the enormity of what has happened in Mumbai. In J&K, the source lay in tradition and the fact that it was nurtured, cultivated and encouraged by a certain political leadership not only in our own country, but also across the line of control and that is what is coming here also, not the LOC but Pakistan across the border. The point is, so far as terrorism is concerned, if you ask what the bureaucracy can do, one characteristic that you find here is that if you seek to nurture terrorism in order to defeat your own enemy, you will find that the terrorism turns against you.

There are too many examples of that.

I don't want to go into details. There have been repeated demonstrations of this. The classic case is that of Osama Bin Laden and there are many such cases. What has happened now unfortunately in Pakistan is far too long. Initially nurtured, then cultivated, then tolerated, then they have become a target. You have seen what happened in the Marriott Hotel. From there it is spreading across. It was again a tool that was used in Afghanistan. Once recourse is taken to it, then it goes out of control.

What can the bureaucracy do? The bureaucracy must simply work with people to try and control this. They cannot isolate themselves from the people. Their right to information and other things are facilitating measures.

In fact they strengthen security and not weaken it, in my view. The point is that the bureaucracy and all those within the government structure have to provide the actual instruments through which to control and defeat terrorism. Without the people, the government, and the bureaucracy working together, it is not going to happen. Bureaucracy will find one way of combating a kind of expression of terrorism which has happened in a particular incident and the terrorists will find another way.

In J&K, there was this huge demonstration which took place a couple of months ago over the allocation of land in Amarnath and it became a The

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16th I I L M F O U N D E R' S D A Y highly emotional issue. During that entire period, there was no intervention of terrorist activity. The people there have specifically abjured recourse to terrorism. Messages did come in from terrorist organizations like this one, that give us the word and we will intervene. They were told, "Please keep out". You must have seen in the recent elections in J&K, people felt that we have just had this major agitation over here, should we have elections? I must say, I was one of those who when asked always said, "Yes, we must have elections because people must feel that they

Kapila Vatsyayan Mr. Rai and Shri Kulwant Rai who is not amongst us, Mr. Rajan, Mr. Wajahat Habibullah, Board of Governor IILM, Institute of Higher Education, faculty members and students. It is a great honour that you have thought of me to chair this lecture. I don't think I deserve this at all.

I would also like to say how happy and touched I was to be called for a lecture dedicated to Shrimati Indira Gandhi and also because it was Wajahat Habibullah who was going to deliver this lecture.

As Wajahat said to you, we shared

Mrs. Malvika Rai presenting Shawl to Shri Habibullah

are participants in this government."

That is the strength of democracy.

We cannot be defeated because we are not an appearance of a democracy, but we are increasingly a true democracy. Perfect democracy there never will be. It will always be an evolutionary process. We are evolving fast towards a greater and greater freedom. These are the threats.

Terrorism is a challenge and we have to agree that we have to forego some of our freedom in order to combat terrorism. That can only be possible if the people and the civil society, including the bureaucracy is all working as one.

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some years together working but we share many other things apart from his very distinguished biodata from St. Stephens' College to Doon School to being member of the bureaucracy to a Director to being the Secretary of the Panchayati Raj to PM Secretariat, where he is now. We shared the same concern and commitment to that piece of land which we called Cashmere or Kashmir. It is that natural and cultural heritage which defines the nature of both the environment, the glaciers and the stones, the rivers that flow out of that and the communities from Ladakh to the Kashmiri Muslims or the Pandits or the Dogras or the Punjabis and Wajahat belongs

to that land and I also happen to be from there.

What we share is the natural environment which brought us up to love; to see the Peer Panchal or to see the Naga Parbat; to see the Hazratbal where he was attacked and had his accident; to know how people have lived together; to know how people have been divided both from nature and from each other.

Never in our childhood we have ever dreamt of this. Never had I forgotten those days of seeing Mrs. Gandhi's father and the great Frontier Gandhi move on horses in Gulmarg. Those are my childhood memories. Personalized they may seem to you today, they are no longer personal. Because they represent what Wajahat spoke about was first and foremost. Mrs. Gandhi's commitment to the environment She was brought up in the lap of nature whether it was in those sojourns in Kashmir, Himachal or wherever she went in the moment of great power.

And what is it that this country teaches? We are told 70 percent of the population living below poverty line.

And what does the philosophy of this country teach us from the Vedas, the Upanishads, the Geeta, the Puranas, the Islamic heritage, the Sufi heritage, the poetry of Rumi and so on? It is not Tennyson's nature read in tooth and claw but it is man in nature; the inanimate and animate; the stones that speak to us; and the stories of the Panchatantra, the Hitopodesh that tell us that wisdom is not the priority of human species. If Mrs. Gandhi internalized this and gave a contemporary relevance and concern whether it was in the remarkable speech that she made in Stockholm or in the action that Wajahat has so lucidly placed before us. It is unnatural for this country to think that environment is outside us.

We are one small particle of a major ecological universal system, in which man has played a very important but not a singular role. Because the manner in which our brain has been made to contain the other faculty that

16th I I L M F O U N D E R' S D A Y contains the mind and that mind has that other faculty called memory that can be articulated in yet another faculty called speech.

It is that which has given arrogance to man because he thinks he can dominate. It is these aspects and thus whether it is the tiger or the cheetah or the panda, with whom we have all played in Teen Murti along with Panditji, it is part of that inheritance of a very long tradition of vision of this country, of the culture and civilization of this country; and the moment we forget that, we are not only denying the legacy but we are also making ourselves vulnerable to destruction of the planet Earth. It may have been Gaur or Rajinder Pachauri who may have been identified today, but the greatest threats no matter what, are the achievements of man and science and technology. But we face a crisis of our own making which humanity has not faced earlier.

Whether it is from the school of management or business, or commerce or marketing, or higher education, I urge to the faculty members that address to this because this is the concern of the here and now and it is given to you to find that balance between what we call a developmental economy and an economy which will have the basis of an ecological balance for the survival of the earth.

A programme in all disciplines of higher education is required and I want to bring it down to your own institution. It is not a matter of group of environmentalists looking at it.

The initiative of the Ministry of Environment and Forests and specially the Forests Act and the Tribal issue, there is this understanding of what a) constitutes the environment and b) what was the Forest Act? Thank you, Wajahat for mentioning the 1865 Act and I could supplement that by saying most of our acts are 1864 Acts, by which independent India is running itself.

These were certain historical moments. The Forest Act as you rightly said was for timber, for the railways and it came from the perception from

an era of enlightenment across the Suez Canal with the other perception that these were lower civilization units and one has written about it but it needs to be identified in terms of your language and your presentation.

I want to restrict myself to that to make a footnote because the natives had to be civilized. Historians write books about them. I don't know how much it has impacted our own policies. Your case of Lieutenant General or Commissioner is not a singular case because we have inherited and restricted our perceptions in thinking that civilization means the education

caste that we are doing and class, and recognition of optimum skills and perceptions of different groups of people at different levels of development. This is India where, if I call him a leather technologist, he is in the developmental branch, and if I call him something else, he is a Dalit.

We have to sort out these contradictions in our own perceptions. That is what Mrs. Gandhi was trying to do. I can give you several such anecdotes. How the skills of a bronze maker or Kolapuri chappals are to be equated with other skills that we recognize.

Ambassador K V Rajan presenting photo sketch of Shri Habibullah, to him

process by which we come into what we have appropriated upon ourselves that we are the mainstream of India and those Andaman people and the whole of tribal India are not the mainstream. We read everyday that we are going to bring the Nagas and Mizos into the mainstream and at the same time we present them and I'm part of that history of being called by Mr. Nehru and Indira ji to do the Republic Day function in 1951. I think, therefore, we have to rethink that there is wisdom tradition in India, which goes beyond the articulated word, which sees man and nature in absolute symbiosis and diversity means not only recognizing upside down diversity of

That was the sensitivity with which she knew her India. That is why in one of her lectures she said that if you want to know India, first empty your mind of all perceptions and you have to understand that it is a dynamic system in constant flux and you have to have the humility to know what you can contribute. Wajahat has given us some wonderful glimpses and thank you Wajahat and thank you for inviting me.

Rajan: Thank you Wajahat ji and Kapila ji. That brings us to the conclusion of this function. I would also like to thank you all for joining the lecture, on this evening.

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GREAT DEPRESSION

THE

DOWN

SYNDROME Securitization has been the main culprit in changing what was essentially a US economic problem into a huge global menace

T

he crisis began with the burst- rowers became ing of the United States hous- unable or unwilling ing bubble and high default to make payments. rates on "subprime" and Adjustable Major banks and Rate Mortgages (ARM), beginning in other financial insti2005-2006. For several years prior tutions around the to that, an increase in loan incentives world have reported such as easy initial terms and a long- losses of approximately term trend of rising housing prices US$435 billion as of 17 had encouraged borrowers to July 2008. Owing to a assume difficult mortgages in the form of financial engibelief they would be able neering called to quickly refinance at securitization, more favourable terms. many mortgage lenders However, once houshad passed the rights to ing prices started to drop the mortgage payments moderately in 2006-2007 and related credit/default in many parts of the risk to third-party United States, refinancing investors via Mortgagebecame more difficult.

Backed Securities (MBS) Defaults and forecloand Collateralized sure activity increased Debt Obligations Habiba Abbasi dramatically, as easy (CDO). Corporate, indiAsst. Professor, Operations initial terms expired, vidual and institutionhome prices failed to go up as antic- al investors holding MBS or CDO ipated, and ARM interest rates reset faced significant losses, as the value higher. Foreclosures accelerated in of the underlying mortgage assets the United States in late 2006 and declined. Stock markets in many triggered a global financial crisis countries declined significantly. through 2007 and 2008. During The widespread dispersion of 2007, nearly 1.3 million U.S. housing credit risk and the unclear effect on properties were subject to foreclo- financial institutions caused reduced sure activity; up 79% from 2006 the lending activity and increased mortgage lenders that retained cred- spreads on higher interest rates. it risk (the risk of payment default) Similarly, the ability of corporations were the first to be affected, as bor- to obtain funds through the issuance The

14 Edge

of commercial paper was affected. This aspect of the crisis is consistent with a credit crunch.

The liquidity concerns drove central banks around the world to take action to provide funds to member banks to encourage lending to worthy borrowers and to restore faith in the commercial paper markets.

The U.S. government also bailed out key financial institutions, assuming significant additional financial commitments. The subprime crisis has adversely affected several inputs in the economy, resulting in downward pressure on economic growth.

Fewer and more expensive loans tend to result in decreased business investment and consumer spending.

The initial leveling off in the housing market has become a downturn in many areas due to surplus inventory of homes.

The reduction and shift in demand versus supply has resulted

in a significant decline in new home construction.

With interest rates on a large number of subprime and other ARMs due to adjust upward during the 2008 period, U.S. legislators, the U.S. Treasury Department, and financial institutions are taking action.

A systematic programme to limit or defer interest rate adjustments was implemented to reduce the effect. In addition, lenders and borrowers facing defaults have been encouraged to cooperate to enable borrowers to stay in their homes.

Banks have sought and received over $250 billion in additional funds from investors to offset losses.

The risks to the broader economy created by the financial market crisis and housing market downturn were primary factors in several decisions

by US. Federal Reserve cut interest rates and the economic stimulus package was passed by Congress and signed by President George W. Bush on 13 February 2008.

A systematic programme to limit interest rate adjustments was implemented.

Lenders and borrowers facing defaults were encouraged to cooperate to enable borrowers to stay in their homes.

Following a series of ad-hoc market interventions to bail out particular firms, a $700 billion proposal was presented to the U.S. Congress in September, 2008. These actions are designed to stimulate economic growth and inspire confidence in the financial markets.

REASONS FOR THE CRISIS The reasons for this crisis are varied and complex. The crisis can be attributed to a number of factors pervasive in both the housing and credit markets, which developed

over extended time. Some include: Inability of homeowners to make their mortgage payments; poor judgment by the borrower and/or the lender; speculation and overbuilding during the boom period; risky mortgage products; high personal and corporate debt levels; financial innovation that distributed and perhaps concealed default risks; central bank policies; and regulation.

MARKET DOWNTURN & IMPACT The crisis caused panic in financial markets and encouraged investors to take their money out of risky mortgage bonds and shaky equities and put it into commodities as stores of value. Financial speculation in commodity futures following the collapse of the financial derivatives markets has contributed to the world food price crisis and oil price increases due to a commodities super-cycle.

Financial speculators seeking quick returns have removed trillions of dollars from equities and mortgage bonds, some of which has been invested into food and raw materials beginning in summer 2008, all three major stock indices in the US (the Dow Jones Industrial Average, NASDAQ, and the S&P 500) entered a bear market.

On 15 September 2008, a slew of financial concerns caused the indices The

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to drop by their sharpest amounts since the 2001 terrorist attacks. That day, the most noteworthy trigger was the declared bankruptcy of investment bank Lehman Brothers.

Additionally, Merrill Lynch was joined with Bank of America in a forced merger worth $50 billion.

Finally, concerns over insurer American International Group's ability to stay capitalised caused that stock to drop over 60% that day. Poor economic data on manufacturing contributed to the day's panic, but were eclipsed by the severe developments of the financial crisis. All of these events culminated in a stock selloff that was experienced worldwide. Overall, the Dow Jones Industrial plunged 504 points (4.4%) while the S&P 500 fell 59 points (4.7%). Asian and European markets rendered similarly sharp drops.

OTHER IMPACTS Decline in Homeowner's Net Worth Housing prices had fallen approximately 20% from their 2006 peak. This reduction in housing prices renders consumers unable to borrow as much against the equity of their homes for spending, which places downward pressure on economic growth. The net worth of US consumers dropped by $1.7 trillion during the first quarter of 2008 due to stock market and housing price declines Decline in Minority Home Ownership There is a disproportionate level of foreclosures in some minority neighborhoods. Both legal and illegal immigrants are increasingly in danger of losing their jobs and their homes About 46% of Hispanics and 55% of African Americans who obtained mortgages in 2005 got higher-cost loans compared with about 17% of whites and Asians, according to Federal Reserve data.

Other studies indicate they would have qualified for lower-rate loans.

As many as 40% of all subprime mortgages nationwide are held by Hispanics. According to the NAACP, African Americans hold more than The

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half the sub-prime mortgage loans at risk of foreclosure. Decline in commercial real estate market: A combination of factors resulting from the subprime mortgage crisis have led to problems in the commercial real estate market. According to the National Association of Realtors (NAR) there is a slowing in commercial real estate due to the tightening credit and slowing growth, the former a direct result of the subprime mortgage crisis.

IMPACT ON JOBS Effect on jobs in the financial sector According to the Department of Labor, from August 2007 until August 2008 financial institutions have slashed over 65,400 jobs in US. How the US crisis became Global Financial Crisis? The reason behind that is as follows: Derivative phenomenon Securitization Derivative Phenomenon Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying). The underlying on which a derivative is based can be an asset (eg, commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (eg, interest rates, exchange rates, stock market indices, consumer price index (CPI) - see inflation derivatives), or other items (eg, weather conditions, or other derivatives). Credit derivatives are based on loans, bonds or other forms of

As many as 40% of all subprime mortgages nationwide are held by Hispanics. According to the NAACP, African Americans hold more than half the sub-prime mortgage loans at risk of foreclosure

credit.

Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect. This activity is known as speculation.

Derivatives are highly leveraged instruments which allow making high profit and high losses also. Here in the case of US crisis the derivative phenomenon was used to spread out the risk. The loan portfolio of the banks was formed as an instrument called as Collateral Mortgaised obligations (CMO). The housing loan was divided into two parts they are Straps and Strips. The principal amount and interest amount were divided into two parts The CMO's were used as instrument in the form of strips and straps. Straps are the principal amount and strips are the interest amount of the loan. This is depicted in Figure 1.

As slowly the payment stop coming, the strips, i.e. interest part, died and straps started getting worst.

Now the question arises how the crisis spread throughout the globe.

Let's say the straps were sold to Namura Bank and Strips were sold to Fortis Bank. This is how an American problem became a global menace.

Securitization is a financial reengineering term — the process by which most mortgage loans are sold to investors. In the mortgage market, securitization converts mortgages to mortgage-backed securities (MBS).

1. An MBS is a bond whose payments are based on the payments of a collection of individual mortgages.

The initial sales of the bonds are put together either by the two GSEs or by private fi nancial institutions, such as Countrywide Financial, Lehman Brothers, or Wells Fargo (all among the top six private issuers in 2006).

2 The MBS origination process

Figure: 1

STRAPS AND STRIPS AS COMPONENTS OF HOUSING LOAN

HOUSING LOAN

STRAPS (Principal) typically begins when the issuer purchases a collection of mortgages from the originators. As payments are made on the mortgages, they are passed through the trust to bondholders. As an example of an MBS issuance, assume that an issuer has collected 1,000 mortgages, each worth $100,000 with a 30-year maturity and a fixed interest rate of 6.50%.

This $100 million pool of mortgages can be used to back 10,000 bonds, each worth $10,000 with a 30-year term and a fixed coupon rate of 6%. Each bond shares the same coupon rate and other features, and importantly, each has a similar claim on all payments.

Participants in Securitization In addition to private firms, the participants in the mortgage securitization process are the government agency Ginnie Mae and the government-sponsored entities Fannie Mae and Freddie Mac. Ginnie Mae facilitates the securitization of home mortgages backed by federally insured or guaranteed loans, such as those issued by the Federal Housing Administration (FHA) or the U.S. Department of Veterans Affairs (VA).

Ginnie Mae guarantees the timely payment of mortgages' principal and interest, thereby reducing the risks for MBS investors. That said, it guaranteed the mortgages underlying only 4% of all MBSs issued in

STRIPS (Interest) 2006.The GSEs Fannie Mae and Freddie Mac accounted for a more substantial 40% of MBSs in 2006.

They purchase what are known as conforming mortgages from originators. Conforming mortgages are those that meet certain borrower quality characteristics and loan tovalue ratios and are smaller than the conforming loan size limit.

Putting it in Layman's language, Securitization is a financial reengineering process. As per this process, the US banks formed their Loan Portfolio. The Banks started selling this portfolio's to the Investors at some discounted rates. The investors started investing in these portfolios.

This is how the seller were saved from the risk of the loan portfolio's and the investor who have purchased it were finding the value of their investment start declining. Let us explain with example.

Citibank USA had a loan portfolio of $100 million. It felt the heat of defaulters and decide to sell its assets (Loan Portfolio) to the other investors (RBS) at $91 million. The RBS (Royal Bank of Scotland) find the proposal effective. After assuming 2-3 % defaulter rate the RBS was gaining 5% from this proposal. So they bought the loan portfolio of the bank. Now the risk of the US bank has been transferred to Europe through this deal. Now RBS find that the number of defaulters starts

increasing. So the RBS decided to sell it to, let’s say, Sumiton (Japanese Bank) at $ 85 million. So now the defaulter risk has been transferred to Sumiton who find that the number of defaulters has increased to 10 % and value of loan portfolio declined to $75 million. This is how the financial risk has been transferred and it has spread out to the world through securitization.

How it affected the Indian market?

The US crisis has affected the entire globe. In India the major impact were seen on the following: Impact on the Share Market The Indian share market has fallen from 21000 to 8000. That is all because of FII's withdrawal. The figure says that FIIs have withdrawn $4.9 billion from equity markets during 1 September 2008 to 23 October 2008 and the FIIs have pulled out about $12 billion from January to 23 October 2008. So we can say that the major impact on Indian economy was on Share market.

Impact on Real Estate Sector and Auto Mobile Sector The Real Estate and Automobile sectors are facing heat because of the liquidity crunch in the Indian market. The crunch has had an adverse impact on all sectors as people don't have money to invest anywhere. The interest rate hikes by banks have hit real estate and automobile sectors. Loans at higher interest is troubling Indian consumers and Indian economy.

Impact on employment in India The companies are downsizing for cost cuts. This crisis has affected MNC employees a lot. American Express fired 1500 employees recently. Other companies following downsizing are Kingfisher, Genpact, Citibank etc. other then that the Kingfisher has done 90% reduction in the pay scale of their employees then Jet Airways has given an option to its employees to leave the organization for 2-3 years and then come back and join the organization.

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LANDED BURDEN

I

t all started with the sub-prime US banks did not follow crisis of USA. A sub-prime crisis rules while lending occurs when the banks lend money on credit to customers money. Neither did they without verifying the details and the verify paying capacity. paying capacity of the customers.

American banks did not follow This led to a mismatch simple rules while lending money to between supply and customers. Neither did they verify the paying capacity of the customers demand in the housing nor did they lend it on government sector. Due to defaults, rates. This led to a mismatch between supply and demand in the the financial structure housing sector which eventually led began to collapse to more houses being ready than more people to buy them.

As a result of this mismatch, the banks which had given credit to customers did not receive payments on time. Because of default in payment, the basic financial structure of the banks began to collapse.

Lehman Brothers', one of the leading banks of America, filed for bankruptcy. After this, it was a rollercoaster ride for most of the leading banks who followed suit.

Once the banks started to file for bankruptcy, it led to a liquidity crunch in the market. The financial crisis is now spreading across markets and countries. There has been a breakdown of trust in inter-bank and HCL Technologies. These comand institutional lending. The RBI panies hold a major chunk of IT needed to revisit the roles of banks growth in our country. and regulators with respect to finanAs has been observed in the past, cial stability and perceive every time there is a the importance of the client-specific issue, it combination of liquidity shows up on the financials tools towards the impact of the company in the next of international turbuone or two quarters. lence.

Lehman Brothers seems to When Lehman have very little outsourcBrothers filed for Chapter ing as of now and the 11 bankruptcy after exposure remains with Barclays and Bank of Wipro and Tata America abandoned Consultancy Services RITU KHANNA talks to buy the com(TCS). Wipro has Assistant Professor, IT pany, the IT space all already given a stateover the world, espement that Lehman cially in India, felt a fair bit of pres- Brothers is not such a significant sure on their margins. We will con- client and they are not worried centrate on five major Indian IT about it. Extrapolating what Wipro companies — Tata Consultancy has said, TCS may not see much of Services, Satyam, Wipro, Infosys the impact.

IT

IS A DIFFICULT TIME

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But one needs to watch out for what happens with Merrill Lynch because Merrill Lynch was a significant client for both Satyam and TCS. The one which is going to suffer from Merrill Lynch's takeover is going to be Satyam because it was a significant top client for them.

Where TCS gains over Satyam is it has in relationship with the acquiring company, i.e. Bank of America which gets more outsourced work. Also Infosys and Bank of America have a very steady relationship, so Infosys may be one of the gainers.

The CFO of TCS, S Mahalingam, has said that the company has a very steady-state relationship with both Merrill Lynch and Bank of America. So he is expecting no impact coming from this part of work at least.

When one puts all of this together, there is some loss but given that most of our top four companies have over 40-45% exposure to BFSI space, the mood is definitely worried. And this has had an impact on the share prices of these companies in the recent weeks.

Some of these, like TCS, are quoting much below their initial issue price. And all are quoting near their 52-week low prices. Everybody is calling their relationship manager and trying to figure out what is happening officially because normally there is two-three months' time, by when the impact actually flows down to the off shoring vendors.

The financial crisis in the US continues to dampen the hiring sentiments with net manpower addition by top 5 Indian IT companies tanking 35% in July-September quarter.

According to TCS, while the company’s IT services attrition is stable, the BPO attrition has gone up slightly in the current quarter. Overall, TCS was the only in the top 5, to show a rise in attrtion from 11 to 13%.

The net additions by TCS, Wipro, Satyam, Infosys and HCL Technologies were nearly 17,000 professionals in the just-concluded quarter, against 25,000 professionals in the year-ago period.

Seen sequentially, the cumulative net addition is significantly higher

than 10,700 professionals added during the quarter ended June 2008, but HR honchos attribute that to second quarter being a traditionally strong one for freshers and campus hires to join, as also the impact of 'staggered onboard' in the industry.

While most companies have retained hiring targets, Satyam has already trimmed its hiring targets for the year by 33 per cent to hire between 8000 and 10,000 in the current fiscal. The global head sourcing of the company, Rajan Kanagasabai has said, "IT companies are still visiting campuses and handing out offer letters, but joining dates are getting pushed by a quarter or so."

The prevailing uncertainty also had a sobering effect on attrition — once considered the biggest nightmare of HR managers in these IT bellwethers. While Infosys' attrition dropped from 14.2 percent to 12.8 percent between September 2007 and September 2008 quarters, Satyam's fell from 13.89 per cent to 12.27 per cent in the same period.

According to TCS, while the company's IT services attrition is stable, the BPO attrition has gone up slightly in the current quarter. Overall, TCS was the only, among the top five, to show a rise in attrition from 11.5 percent to 13.2 percent. A TCS spokesperson said that the company has made gross additions of 18,664 in the first six months in line with its plans to add 30,000-35,000 people during FY09. Also, the company has not delayed any campus joining.

Significantly, companies have also increased utilization rates, i.e. the number of people billed per hundred, as against people on the 'bench' who are yet to find a client.

Including trainees, utilization rates for TCS and HCL Tech have seen improvement from 73.7 percent to 74.7 percent and 69.2 percent to 74.4 percent respectively. The fear in the market is that the volumes and pricing of IT companies would The

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now be under pressure.

The market expects a decline of 5-1 percent YoY in pricing, expects a decline in IT spending going into 2009, and a downside risk in the complete technology pack. Though a steady moderation in sequential growth for most technology companies is seen and also technology companies are been a lot more cautious due to some project delays.

The next big problem is what is being heard from the US corporate sector, the kind of job cut news.

Everything finally boils down in the market to corporate performance.

Whatever you forecast, think good or bad, eventually it has to trickle down to stock performance or corporate performance. And to that extent, the kind of moves that have been seen overnight over the last couple of weeks from the big giants in the US is very discomforting.

These moves are coming in from most of the large companies and that is making an uncomfortable move among not only the investors, government but also the IT companies themselves. The wind is blowing southward, without doubt.

The obvious problem for the markets is the global situation. The government has already pressed its panic button and had introduced two major CRR cuts. Very recently, the PM held a meeting with the giants of Indian corporate sector. All this is hope and never a conviction because such things do not improve overnight. Surprising that it would have been if things had just mended for a while, all that one was hoping for was that for the moment things calmed down a bit, at least that the panic subsided in the financial markets in the US. Then we can slowly absorb the economic news as it worsens over the next few quarters but its all happening at such a rapid pace this time round that no one is getting breathing space.

There is a big scare going around in the world. It is not just the credit The

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The next big problem is what is being heard from the US corporate sector, the kind of job cut news. Everything finally boils down in the market to corporate performance problem in the US anymore. Now, no one is talking about companies defaulting that phase have passed Bear Stearns, Lehman Brothers over. The problem is with more and more major names coming out to declare bankruptcy. There are companies which had, for years, given a false image to global markets about their companies' position, but with every passing day more and more corporate hunches are giving negative results. The crucial time will come in the next quarter, when these companies will show negative growth. Hence what is happening now will have an effect three months down the line.

Concluding, the key issues to be addressed are as follows: Domestic liquidity & interest rates: There should be a further reduction in repo rate by at least 50 bps and in CRR by 150 bps to ensure adequate liquidity and reasonable cost of funding. Also, there can be a provision of liquidity to mutual fund and NBFC sectors, to enable orderly operation of financial markets.

Exchange rate volatility & reduction in access to foreign currency funds: There is a need for focused exchange rate management to prevent volatility without reducing rupee liquidity. It is the view of CII that since inflation fears are not that high any more and the commodity price pressures are easing the RBI could un-sterilize interventions in the forex markets, in order to ensure greater availability of dollars in the system, while adopting further measures to attract foreign inflows and stabilize the exchange rate. This will ease out the profit margins on the IT sector.

Credit flow and impetus to growth: There is a need to shield the most vulnerable in the industry - the SME sector. Therefore, a corpus can be set up for lending to SMEs, as they will be disproportionately hurt by the non-availability of credit. The government should ensure that all money sanctioned for the various government-funded projects is spent quickly. It is critically important to give a huge boost to the pipeline of large investments at this stage to ensure that demand is kept alive and growth is not allowed to slacken significantly.

Decline in business and investor confidence and optimism: In collaboration with the industry, a comprehensive communication strategy has to be adopted by the Government and RBI to instill confidence in the economy. This could include definitive statements from the government which assures there would be no systemic failures allowed.

SPIRALLING EFFECT

THE AFTER-MATHS “I work for nothing but my own profit-which I make by selling a product they need to men who are willing and able to buy it....

We deal as equals by mutual consent to mutual advantage and I am proud of every penny I have earned in this manner.”

— Ayn Rand in ‘Atlas Shrugged’

I

n her path-breaking novel Atlas Shrugged, Ayn Rand successfully defended the virtues of selfishness and gave entrepreneurs and innovators a new way to be.

The book is a compelling drama set in the US economy which begins to collapse as a result of the mysterious disappearance of its leading innovators and industrialists.

Ayn Rand’s protagonists were the capitalists and, according to her, the Atlas on whose shoulders the world rests. Some 50 years after the novel became a huge rage (it still is), we are seeing the Atlas actually shrugging, and how.

Leena Kinger Hans Assistant Professor, Finance

This time, the capitalists, the innovators, are not the protagonists who would eventually be applauded for their selfishness, but rather the villains in the story. And here is why.

First, for the blessed ignorant, a brief introduction: We are talking about the sub-prime crisis that began to unfold some time in August 2007. As Professor Raghuram Rajan’s address at the Bank of Spain Conference on Central Banks on as early as June 8, 2006 pointed out, the genesis of

the problem lies in the 'search for yield' by institutional investors. Post-September 11, Allan Greenspan and his associates had a one-point agenda: To avert a financial crisis due to the burst of the new-economy bubble and also the September 11 events. As a concerted measure, enormous amount of liquidity was injected into the global monetary system, as a result of which interest rates plummeted through 2001-2005, reaching a 50year low of even 1%!

In such a scenario, institutional investors found it increasingly difficult to increase yields and this 'search for yield, combined with a lax regulation and supervision, drove them to buy subprime securitized assets.

Throughout this period, there was ample support from the US Government in 'keeping the economy strong'. Inflation was down, interest rates were low, wages were increasing, and all that America needed was more The

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homes. The abnormally low interest rates, thus led to a real estate boom that sent prices spiraling as never seen before (see Figure 1) The government supported Fannie Mae and Freddie Mac, the two major government-sponsored housing finance giants, in creating a market for the home loans sitting on the balance-sheets of various commercial banks. They purchased these mortgages, pooled them together and sold them off in various tranches as securitized paper.

This securitized paper had a much broader investor base because investors could invest in it either directly or indirectly (through mutual funds etc) and, hence, mortgage-backed securitization grew at a rapid pace (See Figure 2).

This further encouraged the commercial banks to keep on lending to even the poorest quality borrowers who willingly agreed to high interest rates to hide their imperfect credit quality. In the process of hunting for these subprime mortgages during 20012005, the financial innovators created a large number of exotic products (now being referred to as 'toxic'). Most of these products had deceptively provided for low EMIs in the initial years with ballooning

The treasury money which is bailing out the atlas is crowding out private investment, creating a liquidity crunch and making the chances of recovery even slimmer EMIs towards the latter years.

Continued lack of government oversight made it possible for innovators to sell these products at discounts to Fannie and Freddie and other large investment banks that were looking for high yields.

These enterprises would further sell the mortgage-backed securities (MBS) to investors, who would turn them into Collateralized Debt Obligations (CDO). The trouble was that each process was highly leveraged in order to increase the yield from the transaction and the total value of the product became a multiple of the value of the original home loan.

However, as the interest rates started climbing after the trough of 2005, delinquencies and foreclosures began to increase at an alarming rate, and precipitated in August 2007 when the sub-prime

_ 1000 _ 900 _ 800 _ 700 _ 600 _ 500 _ 400 _ 300 _ 200 _ 100 _0

Index or Interest Rate

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0 1880

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1900

1920

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Popolation in million

Figure 1 ABNORMAL RISE IN HOUSE PRICES IN NEW MILLENNIUM

crisis came to fore. Once the high risk, high return portfolios of large investment banks came under the scanner due to delinquencies, clients started asking for their money back, forcing the investment banks to seek fresh capital.

When the capital didn't come, there was panic!

Hence, the 'perfect storm' was created: Defaults and foreclosures hurt the investment banks who were holding the securitized mortgages in hopes of high return, their own investors began a run on their assets, not able to re-capitalize themselves they offered themselves for sale (or filed for bankruptcy) and that hurt the hedge funds who had sold guarantees against institutional investors defaulting. These funds had entered the credit derivatives market to collect premia from people buying the guarantees, thinking that there was a very small probability that the investment banks would default (because the home loan owner would default).

As the Atlas shrugged, the whole world felt the reverberations. To start with, the US economy had to shell out $29 billion for Bear Stearns; $700 billion to buy spoilt assets of various investment banks; $200 billion to buy stock in Fannie Mae and Freddie Mac; $85 billion plus another $37.8 billion for AIG insurance; $250 billion for bank stocks and hundreds of billions in guarantees to back up money market funds and to guarantee bank deposits.

The source of all this money is the US Treasury which already has a debt burden of $10 trillion. The budgetary deficit has its own story and effect. We are still grappling with just the bailouts. No one knows the impact of recession that has just hit the global markets. The treasury money which is bailing out the atlas is crowding out private investment, creating a liquidity

Figure 2

MBS SHARE OF TOTAL MORTGAGE DEBT OUTSTANDING Percent 60 50 40 30 20 10 0 I 1980

I

I ‘82

I I I I I I I I I I I I ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ‘98 2000 ‘02 ‘04 ‘06

crunch and making the chances of recovery even slimmer. Thus, the whole world is shaken up and in the throes of an ugly recession.

European financial systems, so far held as 'superior' due to the heavy government regulation, saw themselves as no less pitiable than the US financial mess. As pointed out

by The Economic Times in a story in October, the world's biggest lender to local governments, Dexia, had to be rescued for 6.4 billion Euros.

Fortis, one of the biggest European banks, had to be nationalized. Germany had to rescue West LB, a bank owned by a regional government and Hypo Real Estate, a mortgage lender. Italy had to suspend trading in its largest bank, Unicredit, to avoid a run.

The Irish government has guaranteed all its bank depositors while Iceland was forced to suspend trading in its top six banks and had to nationalize one of them.

As a major participant in the world economy, India too is not insulated from the crisis and has started feeling the heat. The liq-

uidity crunch created by the crisis has created an insatiable demand for dollars, with major foreign institutional investors (FIIs) asking for cash. In 2007-08, net FII inflows into India amounted to $20.3 billion. But from January to October 2008, they have pulled out $11.1 billion.

The Sensex is already unrecognizable from its closing peak of 20,873 on January 8, 2008, to less than 8900 on November 19, 2008, and is no mood to bounce back.

The rupee has seen its worst in 50 years, Between January and

Fortis, a big European bank, had to be nationalized. Germany had to rescue West LB and Italy had to suspend trading in its largest bank, Unicredit, to avoid a run

October 16, 2008, the RBI reference rate for the rupee fell by nearly 25 per cent, from Rs 39.20 to the dollar to Rs 48.86.

There is also a possibility of Indian banks or banks operating in India getting hit due to their exposure to the impaired assets resulting from the sub-prime crisis. Though there are no clear estimates of the extent of that exposure, with the RBI claiming that the exposure of Indian banks to impaired assets is small, the uncertainty has made banks wary of lending more and they have started cutting back on credit, both corporate and consumer.

According to RBI figures, the rate of growth of auto loans fell from close to 30 per cent over the year ending June 30, 2008, to as low as 1.2 per cent. India Inc's plans for capital expenditures have already started coming to a halt because there ain't any money coming, neither from domestic sources nor from outside. India's credit-financedhousing-and-consumption led growth is no longer going to achieve the 9% marks for some times to come.

A lot of analysis has gone into the once-in-a-century crisis of 2008, but the jury is still out as to how many trillions of dollars have been lost and how. Moving on, we are more concerned about how we are going to come out of the mess, whether the recovery is going to be V shaped or U shaped.

Governments across the world, especially after the G-20 summit, have started taking concerted, collaborated and comprehensive measures.

But what is unanimous is that we are bearing the fruits of atlas' greed, and greed is always followed by fear. Comfort is in the fact that fear doesn't last as long as greed!

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SMART TALK

language business

This means

XBRL is a language for electronic communication of business and financial data which is revolutionizing business reporting around the world. It benefits in preparation, analysis and communication of business information

X

BRL stands for eXtensible Business countries and implementations of XBRL are Reporting Language. It is one of a growing rapidly around the world. family of "XML" languages which All types of organizations can use is becoming a standard means of commu- XBRL to save costs and improve their effinicating information between ciency in handling business and businesses and on the internet. financial information. Because XBRL is a language for the XBRL is extensible and flexible, electronic communication of it can be adapted to a wide business and financial data variety of different requirewhich is revolutionizing busiments. All participants in the ness reporting around the financial information supply world. It provides major benechain can benefit, whether they fits in the preparation, analysis are preparers, transmitters or and communication of business users of business data. information. It offers cost Data Collection and Navneet Saxena savings, greater efficiency Reporting and improved accuracy and By using XBRL, compaAssistant Professor, reliability to all those nies and other producers of Finance & Accountancy involved in supplying or financial data and business using financial data. reports can automate the processes of XBRL is being developed by an interna- data collection. For example, data from tional non-profit consortium of approxi- different company divisions with different mately 450 major companies, organizations accounting systems can be assembled and government agencies. It is an open quickly, cheaply and efficiently if the standard, free of licence fees. It is already sources of information have been upgradbeing put to practical use in a number of ed to using XBRL.

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Once data is gathered in XBRL, different types of reports using varying subsets of the data can be produced with minimum effort. A company finance division, for example, could quickly and reliably generate internal management reports, financial statements for publication, tax and other regulatory filings, as well as credit reports for lenders. Not only can data handling be automated, removing time-consuming, error-prone processes, but the data can be checked by software for accuracy.

Small businesses can benefit alongside large ones by standardizing and simplifying their assembly and filing of information to the authorities.

Data Consumption and Analysis Users of data which is received electronically in XBRL can automate its handling, cutting out-time-consuming and costly collation and re-entry of information. Software can also immediately validate the data, highlighting errors and gaps which can immediately be addressed. It can also help in analyzing, selecting, and processing the data for reuse. Human effort can switch to higher, more value-added aspects of analysis, review, reporting and decision-making.

In this way, investment analysts can save effort, greatly simplify the selection and comparison of data, and deepen their company analysis.

Lenders can save costs and speed up their dealings with borrowers.

Regulators and government departments can assemble, validate and review data much more efficiently and usefully than they have hitherto been able to do.

The IASC Foundation (IASCF) has developed a high quality XBRL 'taxonomy' for IFRSs (in effect, a dictionary of data tags that explains what each tagged element is and how it should be treated under IFRSs) that will be maintained in line with the annual Bound Volume of IFRSs. In November 2002, the XBRL International Steering Committee (ISC) issued the IAS Primary Financial.

Statements (PFS) Taxonomy as an XBRL Recommendation and also issued the IAS Explanatory Disclosures and Accounting Policies (EDAP) Taxonomy as a Public Working Draft. Both the PFS and

EDAP taxonomies are available on the Internet from XBRL International's XBRL Resource Center.

The PFS Taxonomy includes XBRL representations of a classified balance sheet, an income statement, a statement of changes in equity, and a cash flow statement. The PFS Taxonomy encompasses the core financial statements that private sector and certain public sector entities typically report in annual, semiannual, or quarterly financial disclosures as required by IAS 1.7 and IAS 34.8.

Significant accounting policies and other explanatory notes are modelled in a separate XBRL taxonomy, the Explanatory Disclosures and Accounting Policies (EDAP) taxonomy, which has been released as a public working draft.

In XBRL, a taxonomy consists of the core part which is a schema (or more schemas) and linkbases. If you compared it to the physique of a crab, the schema would be its head and trunk (where all the major organs are situated) and the linkbases would be its limbs. Of course, a schema could exist without linkbases in the same way as that a crab could theoretically live without limbs but in order for crab to survive and for the taxonomy to be optimal both parts of the body are necessary.

Relating the XBRL taxonomy to the general taxonomy term explained above the schema is the part that contains definitions of elements (such as Assets) whereas linkbases provide relationships between them. In the example of the classification of living things, the explanation of what is an Organism, Domain, Kingdom, Division and Class would be placed in the schema while the hierarchical relationships between them would appear in the linkbases.

An XBRL schema stores information about taxonomy elements (their names, ids and other characteristics). It can be regarded as a container where an unstructured list of elements and references to linkbase files are described.

From the technical point of view the XBRL Schema is an XML Schema tailored to particular business and financial reporting needs. The schema itself represents a set of unrelated elements.

In XBRL, a taxonomy consists of the core part which is a schema (or more schemas) and linkbases. If you compared it to the physique of a crab, the schema would be its head and trunk (where all the major organs are situated) and the linkbases would be its limbs

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The reason for using names that look like www locators (URLs) is that they are unique and therefore appropriate to identify the elements that are unique to a schema. Instead of using the long address we can assign it a prefix

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Schemas are created using XML Schema technology and their physical form is a file with an extension .xsd. Together with linkbases it creates XBRL taxonomy.

The root element (the most general one) of all schemas is <schema>. It opens (<schema>) and closes (</schema>) every schema document. It contains some attributes describing it. Because the same element could be defined in many schemas each of which would assign it a different meaning (for example under various GAAPs the concept Assets may be defined differently), to distinguish between the elements we use namespaces. Namespace look like Internet addresses (for example "http:// xbrl.iasb.org/int/fr/ifrs/") but they are not.

The reason for using names that look like www locators (URLs) is that they are unique and therefore are appropriate to identify the elements that are unique to a schema. Instead of using the whole, long address we can assign it a prefix. If we define, for example, that ifrs="http://xbrl.iasb. org/int/fr/ifrs/" then, instead of quoting the whole URI before an element name, we can simply use ifrs (for example <ifrs:Assets/>).

The main purpose of XBRL schemas is to provide the computer with information on how it should represent and process accounting terms. As explained in the XBRL section, computers do not have built-in accounting knowledge so they have to be taught what a particular concept means and what its characteristics are. To learn more on how to explain accounting to a computer go to the element section.

Exposure Draft of ICAI on General Purpose Financial Reporting XBRL Taxonomy for Commercial and Industrial Companies The ICAI has recently issued an exposure draft of general purpose financial reporting XBRL taxonomy for commercial and industrial companies.

Keeping in view the rising importance

of XBRL and the advantages it has to offer, the Institute of Chartered Accountants of India constituted a Group on XBRL in January 2007, under the chairmanship of the President, ICAI. The main objective of the group is to establish a forum for the development of XBRL in India, including its promotion, and to develop taxonomy for XBRL-based reporting bearing in mind the peculiarities of the Indian Accounting Standards.

Recently, the group has finalized the draft general purpose financial reporting XBRL taxonomy for commercial and industrial companies. This draft taxonomy covers the financial statements, viz., Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement and the related non-financial information. The draft taxonomy has been developed conforming to Indian Accounting Standards and Company Law while adapting the architectural features of the IFRS general purpose taxonomy 2006.

While building the taxonomy, three broad reporting categories have been considered, taking into account the different reporting requirements. These are 1. Commercial and Industrial 2. Banking Companies 3. Non-Banking Finance companies All reporting entities would fall under any one of the above mentioned categories. The current version of ICAI XBRL taxonomy is a general purpose taxonomy, designed for Commercial and Industrial (C&I) groups, which would include trading entities, oil and gas companies, service providing entities, real estate and construction companies and all other commercially operated entities.

The ICAI XBRL taxonomy has been constructed to conform to the Indian Accounting Standards and Company Law while adapting the architectural features of the IFRS XBRL taxonomy 2006.

Structure of the Taxonomy Files The taxonomy for financial statements (GAAP elements) is covered in three different modules covering the Balance sheet, Income Statement and Cash Flow respectively. Each module contains a schema sheet as well as other sheets that depict, among other things, the relationships of the elements with each other

(the linkbases). The non-GAAP module contains the taxonomy for the Non GAAP elements (mostly accounting policy and notes to accounts information). This module also has a schema sheet apart from other sheets that depict the presentation and calculation relationships as well as labels.

The schema (essentially a dictionary of all the elements that are there in the taxonomy) contains the XBRL attributes for each element as well as the reference to authoritative literature (the reference linkbase) and a short explanation (documentation) of each element. There are about 2400-odd concepts in this taxonomy across financial statements and Non Gaap information. Each module also contains the details of three link bases, presentation, calculation and label. The presentation and calculation relationships are in multiple extended links (extended links are logical grouping of elements based on certain criteria).

Every sheet in a module is designed to contain a specific extended link. The names of the extended link suggest the categorization of the elements it contains which could be either a presentation or a calculation link. In the taxonomy for the balance sheet, all elements falling within a legal requirement such as the accounting standard or Schedule VI of the Companies Act are categorized as a specific extended link carrying the name 'Statutory'. This has both presentation and calculation sheets as extended links.

The calculation extended links contains weight in addition to the attributes defined in the schema file. Weights are assigned to the elements in such a way that they add or subtract in order to arrive at their parent level concept. The label linkbase contains period start labels, period-end labels, positive labels and negative labels in addition to the standard labels, wherever required.

Browsing the Taxonomy It is preferable to start from the calculation relationship, because that will help in understanding their inter-relationship.

The tree view or hierarchy is the best way to see the relationship; the elements at the top are known as parents of the ele-

ments appearing immediately below it.

The elements under a parent are called child elements. In the calculation linkbase, the child elements are either added or subtracted in order to arrive at the value of the parent level element.

In order to identify which elements are to be added and which are to be subtracted the "weight" attribute is used.

Elements having weight of +1 indicate that the element is added to derive value of its immediate parent, whereas weight of -1 indicate that the element is subtracted in order to arrive at the value of its immediate parent. The presentation linkbase defines the format or the display pattern of elements. The label linkbase includes all the types of labels that a particular item can hold.

Taxonomy Design: Underlying Principles The design and the structure is based on IFRS 2006-08-15 version, with the Indian regulatory requirements superseding in case of any discrepancy. The relationships between the elements are grouped into various extended links. The overall structure is defined in one extended link, while the detailed break up of elements is in separate extended links.

For elements which have multiple interrelationships, separate extended link for each of the relationship has been defined. Consideration is given to the common reporting practices followed across the industries. Since varied reporting patterns are followed by companies, the most commonly followed practices have been modelled in the taxonomy.

Many elements of the taxonomy have their origin from the reporting practices and hence there may not be exact reference in any regulatory statute.

Moreover, if elements are included only at a gross level, it will imply that the almost every time the taxonomy will have to be extended. In order to standardize the reporting patterns and reporting elements, the most commonly reported elements are captured in the taxonomy.

The tree view is the best way to see a relationship; the elements at the top are parents. The elements under a parent are child elements.

In the calculation linkbase, the child elements are either added or subtracted to arrive at a value

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MOBILE BANKS

M-Banking AN EMERGING AREA M-banking has emerged as a major requirement in the modern world. However, adequate measures are needed to protect the client from abuse

M Richa Dani Lecturer, Economics & Accountancy

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obile banking involves the use of a mobile phone or any other mobile device to undertake financial transactions linked to a client’s account. M-banking is one of the newest approaches to the provision of financial services through ICT and was made possible by the widespread adoption of mobile phones in developing and under-developed countries.

A mobile network offers a readily available technology platform on which other services can often be provided at very low cost to deliver an effective result. Mobile data channels are often under-used and, thus, may be offered at low cost by the network operator. The M-banking services often use channels such as SMS, which can be carried at a cost less than one US cent per message.

The low cost of using existing infrastructure makes such channels more accessible to customers with lower purchasing power and also opens up possibilities of access to services, which till now have not reached them, due to high cost of service delivery.

Although, M-banking is one channel in wider domain of e-banking, there are certain reasons to single it out for focus — especially because there are a lot more people with mobile phones than bank accounts in India as

well as other developing and under-developed countries in Asia and Africa.

Bringing more ‘unbanked’ people to the financial mainstream is important because without access to mainstream banks, they end up using fringe financial service entities to conduct routine transactions. The fringe service providers offer no opportunity to build a credit history, which then becomes essential for accessing other affordable financial products such as loans or low interest lines of credit. Without traditional credit, individuals are vulnerable to exploitation by abusive lenders offering high interest, shortterm loans and very expensive rent-to-own products.

Also of considerable importance, but often overlooked, are the public safety implications for the ‘unbanked’. These individuals are often the victims of crime because many operate on only cash basis and end up carrying significant amounts of cash on their person or store cash in their homes.

M-banking could provide cost-effective solutions to address some of these above disadvantages. The emerging models of Mbanking can be placed in different categories — based on the dominant roles played by the parties involved, including bank, mobile operator, customers and in some cases, a third-party product provider.

The models vary from one in which a bank adds on a mobile channel to its existing distribution channels through hybrid models where a mobile operator may bring

different branding, product set and distribution system to a bank-based product to a operator-dominated model in which the operator is responsible for deposits taken.

M-banking is new in most countries and outside East Asia, most of the M-payment models, even in developed countries, have operated at a limited scale. However, micro payment connected to the purchase of premium, rated services on a mobile phone has grown faster.

Among developing countries, The Philippines has around four million users of the mobile financial services offered by its two major network operators, Smart and Globe. Various M-payment and M-banking products are on offer in different parts of Africa today, but they have not reached a substantial scale. Similarly, Bangladesh is using the M-banking platform to grow its micro-finance and microcredit programmes under the Grameen Finance umbrella, to empower the lower strata of its economy.

The M-banking field involves the overlap of several regulatory domains â&#x20AC;&#x201D; those of banking, mobile operator and payment system supervisor and anti-money laundering agencies. The overlap substantially raises the risk of co-ordination failure where legislation or regulatory approaches are inconsistent or contradictory. Therefore, a comprehensive vision for creating an enabling environment involving policy makers, regulators and industry players is required to define obstacles, design proportionate responses to risk towards establishment of an efficient and cost-effective channel for the M-banking to take off in India.

However, the moot question that needs to be asked in this context is whether the framework to be developed is for enabling mobiles as another distribution channel for banking and payment, or is it being designed with the purpose of reaching banking services to the unbanked population in India?

In India, some mobile payment related plots have been conducted in the past but have not been very successful due to a host of systemic and regulatory restrictions. It is critical that there is sufficient certainty in electronic contracting and the responsibility for seamless service be with one identified party known to the customer among the var-

ious parties that are involved in the M-banking transaction.

A customer should be adequately protected against fraud and abuse in the Mbanking environment and in case of any complaints he should be expected to interact with only one party to find resolution to problems. The back-end technology solution should be robust for providing required response time as a single unsatisfactory experience could turn the customers and the banks/merchants away. Inter-operator level and bank-level meaning that customers of competing mobile operators should be able to transact and customers should be able to switch banks.

As the Indian mobile juggernaut rolls on, a majority of the next 250 million mobile customers are going to come from rural

A customer should be protected against fraud in M-banking. In case of any complaint, he should interact with only one party to find resolution to problems. Backend technology solution should be robust for providing required response time as a single unsatisfactory experience could turn customers and the banks/merchants away

India which also houses a majority of the about 135 million unbanked Indian households.

Thus, there seems to be a case of working out the synergies of providing simultaneous mobile and banking access towards an improved top and bottom line for the mobile operators, and for policy makers to aim at harnessing the positive externalities of a broader financial access agenda in rural India.

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HEDGE HOGS

HEDGING RISKS

I

t is being increasingly realized that the Indian economy, which had been treading the high growth path during the first two quarters of 2008-09, has begun to show faint signs of fatigue at the close of fiscal, thereby raising concern on whether the growth momentum is losing steam.

What has emerged is that while the economy is still in the high growth orbit, there are overall crucial weaknesses which, if allowed to continue, could hold back further growth and act as a drag on India's march towards progress.

The world economy is mired in the severest financial crisis since the Great Depression. The best of the financial institutions were seen succumbing to the economic pressure. Billions of dollars have been infused into the financial systems and many more billions would be injected to help resurrect the economies on the verge of collapse. All this to keep the capitalism flag high and fluttering!

For all those, who are still wondering what the hue and cry is all about, here is a recap. A regime of foreign exchange risk was introduced back in 1971 when the Bretton Woods system of administering fixed foreign exchange rates was abolished in favour of marketdetermination of foreign exchange The

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Deepak Tandon Professor, Finance

Anurag Arora

Manish Vohra

PGP Final Year Students, IILM Gurgaon

rates. Besides market-determined fluctuations, there is a lot of volatility in other markets around the world owing to increased inflation and the oil shock. Corporates are struggling to cope with uncertainty in profits, cash flows and future costs. It was then that Financial Derivatives â&#x20AC;&#x201D; Foreign Currency, Interest Rate â&#x20AC;&#x201D; and Commodity Derivatives emerged as means of managing risks facing corporations.

In India, exchange rates were deregulated and allowed to be determined by markets in 1993.

The economic liberalization of the early nineties facilitated the introduction of derivatives based on interest rates and foreign exchange.

However, derivative use is still a highly regulated area due to the partial convertibility of the rupee.

Currently Forwards, Swaps and Options are available in India and the use of Foreign Currency Derivatives is permitted for hedging purposes only. This article aims at providing a perspective on managing the risk that firm's face due to fluctuating exchange rates. It investigates the prudence in investing resources towards the purpose of hedging and then introduces the tools for risk management.

The motivation of this study came from the recent rise in volatility in the money markets of the world and particularly in the US Dollar, due to which Indian exports are fast gaining a cost disadvantage.

Nomenclature of Forex Exposure and Development of Derivatives Market in India Foreign Exchange Risk is linked to unexpected fluctuations in the value of currencies. A strong currency can very well be risky, while a weak currency may not be risky.

The risk level depends on whether the fluctuations can be predicted.

Short and long-term fluctuations

have a direct impact on the profitability and competitiveness of business. Firms dealing in multiple currencies face a risk (an unanticipated gain/loss) on account of sudden/unanticipated changes in exchange rates, quantified in terms of exposures.

Exposure is defined as a contracted, projected or contingent cash flow whose magnitude is not certain at the moment and depends on the value of the foreign exchange rates.

The process of identifying risks faced by the firm and implementing the process of protection from these risks by financial or operational hedging is defined as Foreign Exchange Risk Management.

The economic liberalization of the early nineties facilitated the introduction of derivatives based on interest rates and foreign exchange.

Exchange rates were deregulated and market determined in 1993. By 1994, the rupee was made fully convertible on current account. The ban on futures trading of many commodities was lifted starting in the early 2000s.

Since October 2007, even corporates have been allowed to write options in the atmosphere of high volatility. Derivatives on stock indexes and individual stocks have grown rapidly since inception. In particular, single stock futures have become hugely popular.

Institutional investors prefer to trade in the OverThe-Counter (OTC) markets to interest rate futures, where instruments such as interest rate swaps and forward rate agreements are thriving.

Foreign exchange derivatives are less active than interest rate derivatives in India, even though they have been around for longer. OTC instruments in currency forwards and swaps are the most popular.

Importers, exporters and banks use the rupee forward market to hedge their foreign currency exposure.

Turnover and liquidity in this market has been increasing, although trading is mainly in shorter maturi-

ty contracts of one year or less.

Hedging as a Tool for Managing Foreign Exchange Risk There is a spectrum of opinions regarding foreign exchange hedging.

Some firms feel hedging techniques are speculative or do not fall in their area of expertise and, hence, do not venture into hedging practices. Other firms are unaware of being exposed to foreign exchange risks. There are a set of firms who only hedge some of their risks, while others are aware of the various risks they face, but are unaware of the methods to guard the firm against the risk.

There is yet another set of companies which believes that the shareholder value cannot be

There are a set of firms who only hedge some of their risks, while others are aware of the various risks they face, but are unaware of the methods to guard the firm against the risk increased by hedging the firm's foreign exchange risks as shareholders can themselves individually hedge themselves against the same using instruments like forward contracts available in the market or diversify such risks out by manipulating their portfolio.

The existence of different kinds of market imperfections, such as incomplete financial markets, positive transaction and information costs, probability of financial distress, and agency costs and restrictions on free trade make foreign exchange management an appropriate concern for corporate management.

It has also been argued that a hedged firm, being less risky can secure debt more easily and this enjoy a tax advantage.

Hedging Strategies/ Instruments: Forwards: A Forward is a madeto-measure agreement between two parties to buy/sell a specified amount of a currency at a specified rate on a particular date in the future. The depreciation of the receivable currency is hedged against by selling a currency forward. If the risk is that of a currency appreciation (if the firm has to buy that currency in future say for import), it can hedge by buying the currency forward. e.g, if RIL wants to buy crude oil in US dollars six months hence, it can enter into a forward contract to pay INR and buy USD and lock in a fixed exchange rate for INRUSD to be paid after 6 months regardless of the actual INR-Dollar rate at the time.

In this example, the downside is an appreciation of Dollar which is protected by a fixed forward contract.

The main advantage of a forward is that it can be tailored to the specific needs of the firm and an exact hedge can be obtained. On the downside, these contracts are not marketable, they can't be sold to another party when they are no longer required and are binding.

Futures: A Futures contract is similar to the forward contract but is more liquid because it is traded in an organized exchange i.e. the futures market. Depreciation of a currency can be hedged by selling futures and appreciation can be hedged by buying futures. The advantages of futures are that there is a central market for futures which eliminates the problem of double Forecasts Risk Estimation Benchmarking Hedging Stop Loss Reporting and review coincidence.

Futures require a small initial outlay (a proportion of the value of the future) with which significant amounts of money can be gained or lost with the actual forwards price fluctuations. This provides a sort of leverage. The previous example for a forward contract for RIL applies here also just that RIL will have to go to a USD futures exchange to purchase standardized dollar futures equal to The

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Figure: 1

Two types of Currency Options

CURRENCY OPTIONS CALL OPTIONS (Purchase of Right to buy foreign currency At a Stated Price)

Purchase of Call Option

Selling of Call Option

the amount to be hedged as the risk is that of appreciation of the dollar.

As mentioned earlier, the tailorability of the futures contract is limited i.e. only standard denominations of money can be bought instead of the exact amounts that are bought in forward contracts.

Options: A currency option is a contract giving the right, not the obligation, to buy or sell a specific quantity of one foreign currency in exchange for another at a fixed price; called the Exercise Price or Strike Price. The fixed nature of the exercise price reduces the uncertainty of exchange rate changes and limits the losses of open currency positions.

Options are particularly suited as a hedging tool for contingent cash flows, as is the case in bidding processes. There are two types of Options â&#x20AC;&#x201D; Call and Put as shown in Figure 1.

Call Options are used if the risk is an upward trend in price (of the currency), while Put Options are used if the risk is a downward trend. Again taking the example of RIL which needs to purchase crude oil in USD in 6 months, if RIL buys a call option (as the risk is an upward trend in dollar rate), i.e. the right to buy a specified amount of dollars at a fixed rate on a specified date, there are two scenarios. If the exchange rate movement is favourable i.e. the dollar depreciates, then RIL can buy them at the spot rate as they have become cheaper.

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32 Edge

PUT OPTIONS (Purchase of Right and not obligation to sell currency at a Stated Price)

Purchase of Call Option

Selling of Put Option

In the other case, if the dollar appreciates compared to today's spot rate, RIL can exercise the option to purchase it at the agreed strike price.

In either case RIL benefits by paying the lower price to purchase the dollar.

Swaps: A swap is a foreign currency contract whereby the buyer

and seller exchange equal initial principal amounts of two different currencies at the spot rate. The buyer and seller exchange fixed or floating rate interest payments in their respective swapped currencies over the term of the contract.

At maturity, the principal amount is effectively re-swapped at a predetermined exchange rate so that the parties end up with their original currencies.

The advantages of swaps are that firms with limited appetite for exchange rate risk may move to a partially or completely hedged position through the mechanism of foreign currency swaps, while leaving the underlying borrowing intact.

Apart from covering the exchange rate risk, swaps also allow firms to hedge the floating interest rate risk.

Consider an export oriented company that has entered into a swap for a notional principal of USD 1

Figure: 2

Currency Option Strategies for Import Transactions in Bullish Market conditions CURRENCY OPTIONS FOR IMPORTERS (BULLISH MARKET)

Purchased Call Option

Sold Put Option

Purchased Call Option andSold Put Option

Figure: 3

Currency Option Strategies for Importers in Volatile Market conditions Currency Options for Importers (Volatile Market)

LONG STRADDLE Purchase Call and Put

LONG STRANGLE Purchase Call and Put

(Exercise Rates and Expiry Date same)

(Different Exercise Rates but Expiry Date same)

SHORT BUTTERFLY CALL SPREADS SHORT CONDOR SPREADS

mn at an exchange rate of 42/dollar. The company pays US 6 months LIBOR to the bank and receives 11.00% p.a. every 6 months on 1st January & 1st July, till 5 years.

Such a company would have earnings in Dollars and can use the same to pay interest for this kind of

borrowing (in dollars rather than in Rupee) thus hedging its exposures.

Hedging Instruments for Indian Firms The recent period has witnessed amplified volatility in the INR-US exchange rates in the backdrop of the sub-prime crisis in the US and

increased dollar inflows into the Indian stock markets.

All data for this has been compiled from the 2006-2007 Annual Reports of respective companies. A summary of the foreign exchange risk hedging behaviour of select Indian firms is given in Table 1.

Table1: Evidence of Derivative use for Hedging FX Risk in Indian Companies INSTRUMENTS

CURRENCY (Milliion)

Reliance Industries Currency Swaps Options Contracts Forward Contracts Maruti Udyog Forward Contracts Currency swaps Mahindra and Mahindra Forward Contracts

Currency Swaps Arvind Mills Forward Contracts

Option Contract Infosys Forward Contract Options Contract Range barrier options

Tata Consultancy Services Foeward Contracts Option Contract

Ranbaxy Forward Contracts

RS. (Crore)

1064.49 2939.79 5764.10

NATURE OF EXPOSURE

Earnings in all buisnesses are linked to USD. The key input, crude oil is purchased in USD. All export revenues are in foreign currency and local prices are based on import parity prices as well.

6411 (INR-JPY) 70 ($-INR) 124.70(USD-INR)

Import/Royalty payable in Yen and Exports receivables in dollar.

Interest rate and forex risk.

350 (INR-JPY) 2(INR-EUR) 27.3($-INR) 5390 (JPY-INR)

Trade payables in yen and Euro and export recievables in dollars.

152.98 ($-INR) 2.25 (GBP-INR) 5 (INR-$) 122.5 ($-INR)

Interest rate and foreign exchange risk.

703.67

Most of the revenue is either in dollars or linked to dollars due to export.

21.88 547.16

119 ($-INR) 4 ($-INR) 8 (INR-$) 2 ($-INR) 3 (Eur-INR)

529 18 36 971

15 (Eur-INR) 21 (GBP-INR) 830 ($-INR) 47.5 (Eur-INR) 76.5 (GBP-INR)

265.75 4057

2894.589

Revenues denominated in these currencies.

Revenues largely denominated in foreign currency, and Euro. Other currencies include Australian $, Canadian $, South African Rand, and Swiss Francs.

Exposed on accounts receivable and loans payable. Exposure in USD and Jap Yen

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Edge 33

WONDER YEARS

T

he bone of contention at every forum in any part of the globe is the effect of the financial meltdown on various economies. The world's most powerful nation â&#x20AC;&#x201D; the United States of America â&#x20AC;&#x201D; is trying to stabilize its economy by bailing out billions to some of the most sophisticated and sought after investment banks and insurance companies.

India is also experiencing the effects of the global financial crisis.

As a result of increased economic activity the world has become a huge trading platform, therefore, one part of the globe is bound to get affected as a result of a crisis in another part of the globe.

What are the probable effects of this financial meltdown?

To name a few, availability of cash in the markets, whether sourced internally or through foreign investment, millions of jobs, an unstable securities market, reduced exports, reduced efficiency of the credit allocation process, resulting higher costs and reduced availability of credit.

The Government of India is taking innumerable steps to regain investor confidence. Both financial and the securities regulator are taking steps to improve the value of rupee against the dollar. The Reserve Bank of India has urged the banks in India to lower the interest rates in order to regain public confidence.

The Prime Minister, Dr. Manmohan Singh has been continually urging the public not to pull out their money assuring that the economy is stable and that India has the wherewithal to sustain the effects of the global financial crisis.

The Prime Minister has urged the industry not to cut jobs as it might augment the problem at hand. The Government has been assuring the corporates that the interest rates will be lowered and that they should refrain from firing employees as a cost reduction measure.

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34 Edge

JURY IS STILL OUT

SUJATA SHAHI Associate Professor, OB & HRM

Banks are in the process of providing cheaper loans to businessmen and real estate developers to boost the economy. Although, some of the banks in India have reduced the interest rates some of the private banks like ICICI are yet to lower the interest rates are yet to consider this move.

Even the International Monetary Fund has cautioned the economies that there is a possibility of a global recession.

The steps taken by the Federal Reserve and the U.S. Treasury Department are towards regaining stability in the U.S financial system.

It is not certain whether the bailout

under the able guidance of the U.S Treasury will have favorable effects on the U.S economy and the other developing economies in the future as it is presently a step towards damage control.

The foreign institutional investors who were actively investing in 2007 have pulled out billions of investments from the stock markets due to the financial crisis resulting in a market crash by 53% in the Indian stock markets. Overall the financial crisis has led to pulling out as much as $12.5 billion from the Indian equity markets currently, after an investment of $17.2 billion in the financial year 2007.

As the developed economies are trying to stabilize their respective economies trade credit and investments have come to a standstill hitting the exports as the demand has gone down considerably due to lack of finances in the developed economies.

The G-20 summit witnessed a discussion among the world leaders on November 15, 2008 regarding the global financial crisis, its spiraling effects and containment measures. In the view of our Prime Minister, the "international institutions, the IMF, the World Bank and regional development banks must be strengthened to ensure that the fallout on the developing countries of the global crisis is minimal."

The only measure an investor can take at this point of time is to invest in fixed return schemes like a fixed deposit or in systematic investment plans to secure one's savings for future.

To sum up, even if effective measures taken by various economies are able to suppress the effects of the financial crisis at hand, there will be reduced business activity throughout the globe for a couple of years.

Nobody is certain when this financial rhapsody will come to a joyous end.

GAIN IN LOSS

CASE

THE OF EXOTIC CURRENCY W

hat are "exotic" investments?

This market has almost exclusively This is big game hunting, remained the playground of large Wall although I'm hesitant to use the Street Institutions. In fact, the vast majoriterm get-rich-quick because of the negativi- ty, probably as high as 99.9% of all individty associated with it, and as history sug- ual investors have never laid a single dollar gests, its more of a scheme than a strategy. in this market.

This is one case where there's simply no Because for one thing — most retail tradbetter way to say it. Why? Because if you ing platforms don't even allow it. Not to decide this is for you and choose mention, the only other publicato take action, then I predict tion that I know of (for exotic curthese "exotic investments" could rencies) costs well over Rs 25,000 make you very rich, very fast. a year - and is designed specifiSimply put, this is the only cally for those who have hunmarket I know of, which could be dreds of millions to invest. life-changing in less than 12 The truth is…once you undermonths. Where an investment of stand how this high-income Rs 10,000, Rs 20,000 or Rs investment works, you may never 50,000 has the realistic abiliwant to invest in another regDevinder Pathania ular stock, bond, or commodty to quickly balloon into a full year's salary in as little as a ity ever again. Even the Professor, P & O M few weeks’ time. fastest moving "developed" Giving you complete autonomy over your currencies move at a turtle's pace by comlife is the ability to do what you want when parison, and offer nowhere near the profit you want, with whom you want without potential of exotic currencies — for reasons worrying about money or getting permis- that will become clear in a minute. sion. I don't blame you for being skeptical.

Only recently, has this little-known, rarely I've been called the ultimate skeptic myself, travelled investment market started to get by my own mother. But facts don't lie. And some attention in the world's leading finanaccording to The Wall Street Journal, this cial publications, like Bloomberg, Reuters market is growing millionaires like weeds, and Barron's amongst others. five times faster than just last year. To prove Yes, you read those headlines correctly...

I'm not making this up, and that everything safety in the world's most volatile and profI'm telling you is true. I've clipped the arti- itable market! This probably sounds a bit cle below from the Wall Street Journal. strange, I know, but it just goes to show how Yes, I'm talking about emerging markets. misunderstood exotic currencies are to the But more specifically, emerging market cur- average investor and why so many have rencies — or what I call exotic currencies. been missing out.

And if you've never thought about investing Most traders think "big money" only in exotic currencies, you're not alone. comes with "big risk" — but in this market,

This market has almost exclusively remained the playground of large Wall Street Institutions. In fact, the vast majority, probably as high as 99.9% of all individual investors have never laid a single dollar in this market

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If you've never invested in exotic currencies before, don't worry. Itâ&#x20AC;&#x2122;s simple. You'll be shocked by the minimal time, effort and energy needed to put it to work.

But this isn't meant for amateurs. This is designed for those who detest sitting on the sidelines

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36 Edge

that's simply not true. If you've never invested in exotic currencies before, don't worry. Itâ&#x20AC;&#x2122;s simple. In fact, you'll be shocked by the minimal amount of time, effort and energy needed to put my recommendations to work. But this isn't meant for amateurs.

This is designed specifically for those who detest sitting on the sidelines and are sick of cookie cutter investments like stocks that

forever fluctuate uncontrollably and outside your control.

It sickens me to see how many hardworking folks let their retirement be held hostage, at the fate of the stock market or, worse, unethical executives. But, that's the beauty of exotic currencies. Recessions, terrorist attacks, market crashes and so on only provide opportunity for bigger and faster gains.

Naturally, you might be wondering if exotic currencies are risky. The truth is, every investment involves risk and anybody who tells you otherwise is a liar. But what makes exotic currencies the perfect market is that the biggest gains carry the least risk and occur more often than any other. This has nothing to do with games of chance. You see, while most investors remain disillusioned, running around chasing opportunity or trying to capitalize on the "next big thing".

We'll be playing by a different set of rules! This is big game hunting, where annual salaries can be made in just a few weeks, but in order to do it safely, every trade must be calculated with surgical precision. Strike only when opportunity comes to us!

Being a "go-getter" or a cowboy trader in this market is equivalent to tying your own noose. The flip side is, when done correctly, you can make more money on a single trade safely than most of your friends and family make in an entire year.

But please, if youâ&#x20AC;&#x2122;re new to trading currencies or are unsure of whether you think this is something you're interested in then don't bother. But before you decide, let me demonstrate how powerful this information really is.

Why exotic currencies are so profitable?

Reason #1: Predictability: Think about it.

How much would we know about the weather patterns of hurricanes if there were no hurricanes to study? Probably not much, but as it is and as a result of more than a dozen hurricanes in the last three years, meteorologists have been provided with mountains of data to study, decipher and decode and now, armed with the most cutting edge research available, hurricanes can be predicted (and tracked) with shocking accuracy. As unfortunate as hurricanes are, without them, we would not know how to predict the frequency, strength, movement or the root cause of these natural disasters.

Why Exotic currencies are no different?

Since 1990, there have been six major emerging market currency crises (effecting a dozen countries) as compared to only one in developed currencies, thus giving Harvard and MIT trained economists, with virtually unlimited budgets, all the data they need to research and discover the early signal indicators of exotic currency crises.

Most notable among this group of geniuses is MIT researcher Paul Krugman. Born on New York's Long Island and educated at MIT, he's one of the world's most eminent trade theorists and the most recent winner of the Nobel Prize. Krugman has come shockingly close to the exact conclusion.

Unlike developed currencies that are far more complex, there are only 3, maybe 4, main factors that lead to the predictability of exotic currencies.

In fact, it was Graciela Kaminsky, a professor of economics at George Washington University in Washington D.C., who first introduced the early warning indicator system for predicting exotic currencies.

For one, unlike developed countries, that by definition have built sturdy reliable political and economic foundations, emerging markets have not and, as a result, if one of the factor collapses exotic currencies crash while "developed" currencies wobble. It's this sudden, predictable and volatile shift that causes this market to be far more prof-

Mexican Peso .325

.225

.125 Jan 94

Jan 95

itable. Best of all, these indicators can be identified months in advance. Consider this as your legal blueprint to insider trading!

You see, with this information, we can transform the most volatile and profitable market in the world into a small, undersized pasture, ideal for Big Game Hunting. This is a traderâ&#x20AC;&#x2122;s paradise. Because when you know the early warning indicators, the trigger levels and how to apply this information, you have all the makings for a true getrich-quick strategy.

Consider the Mexican peso crash of 1994. After months of debate, and on December 9th when the last indicator finally triggered, the currency immediately lost 39% of its value in less than 42 days.

Unlike most investments, when the currency market crashes, it is your greatest opportunity to collect mammoth gains. To put this into perspective, a very conservative investment of just Rs 10,000 using standard leverage practices of 100-to-1 would've netted you Rs 38,000 of pure profit in just 42 days.

Turning every Rs 1 investment into Rs 38, that's a staggering 3,800 percent gain.

What's more, a Rs 5,000 investment using a much more conservative 50-to-1 payoff would've netted you Rs 92,500 in pure profit. Now, can you think of another market, where it's possible to bank profits like these from a single trade? Where is it possible to capture 1,850 per cent and 3,800 per cent type gains, repeatedly?

It sounds too good to be true, almost hypothetical, but it's not. In fact, when the science is available, it's very realistic and very attainable. To prove my point, the same chain of events happened in the Asian Currency Crisis of 1997.

After months of tracking the early warning indicators, it finally happened and when the last threshold was crossed on July 2nd,

Jan 96

When the currency market crashes, it is your greatest opportunity to collect mammoth gains. To put this into perspective, a very conservative investment of just Rs 10,000 using standard leverage practices of 100-to-1 would've netted you Rs 38,000 of pure profit

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Edge 37

Thai Baht .0425

.0300

.0175 Jan 97

Beware when exotic currencies fall — they really fall and they fall fast. After the first plummet of 23%, the Baht lost another 41% in six months providing traders with the ability to collect even bigger gains

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38 Edge

Jan 98

Jan 99

the Thai baht immediately lost 23% of its value in just 25 days.

Again, traders had the ability to cash in, turning every conservative Rs 1,000 investment into a Rs 23,000 windfall.

But be aware when exotic currencies fall — they really fall and they fall fast.

After the first plummet of 23%, the baht lost another 41 per cent in the next six months providing traders with the ability to collect even bigger gains.

Surprisingly, these are not isolated incidences. The same chain of events happened to the Brazilian real in 1996, the South Korean won in 1997, the Russian ruble in 1998 the Argentine peso in 2001 and a number of others right up to the Icelandic Krona in 2008.

The best part is these are just a few of the big headline events. There are also more than a dozen smaller, but major profit moves each year that never hit the front pages. With each event, is the ability to make an executive's salary on a single trade.

How is this possible? It's common sense, really. As exotic currencies try to recover even the slightest "bump", they can deliver a destruction of a 100 ft. tsunami causing these currencies to be susceptible to future crashes. If we look at the peso, just when you think it might get over the hump to recovery, it takes two steps back, providing opportunity for huge profits.

In 2002, a major crash gave traders, using a standard technique the ability to pounce on a 1,817 per cent gain. In 2003, you could've collected a 1,020 per cent gain, in 2004, 745 per cent gain, in 2005 a 659 per cent gain, in 2006 an 852 per cent gain and in 2008 a 332 per cent gain.

In every case, the early warning indicators were the key.

Exotic currencies are like teenagers —

they're predictable and you know exactly when they're about to do something stupid, and crash. But, when the indicators are absent, as was the case with the Brazilian real after its second crash in 2002, the currency saw rapid and steady long-term growth. Had one traded on this trend, as the real nearly doubled in value from 2004 to 2008, one could have made an astounding 9,804 per cent profit, turning every conservative Rs 1,000 investment into a Rs 98,400 windfall!

The same thing happened to the Turkish lira from 2005 to 2008, when it appreciated over 44 per cent as well as the Polish zloty when it appreciated 59 per cent from 2006 to 2008. Do not forget the Hungarian forint as it appreciated over 102 per cent, literally doubling from 2002 to 2008. Now, can you think of even a single "developed" currency that has come close to such profit potential?

Don't feel bad, I can't either. My point is, just because some of these are historical examples doesn't mean the science isn't every bit as valid today in providing traders with the necessary trigger-signals to make the same mammoth gains. Because, it works every time, without fail.

Bottom Line: This is the most profitable market you have known but never before considered. The scary part is, or let’s say exciting, is that I've yet to tell you the most profitable aspect of exotic currencies. If this next piece of this puzzle doesn't get your greed glands pumping then I can say with confidence this is not right field for you.

Reason #2: Tripling Your Profits Is Easy As 1-2-3: This isn't missile technology and you shouldn't overthink it. But, exotic currencies are like Dominos. If you've ever played Dominos as a kid then you might remember lining up one domino after another, in very close proximity, so when you pushed over the first… it knocked over the second, then the third and continued in an automatic chain reaction until the collapse of the final domino.

Remember? Of course you do. You can probably even picture it. The point is, each domino had a direct affect on those it interacted with, and exotic currencies are no different.

Exotic currencies are found in emerging markets which are surrounded by, and interact with, other emerging markets.

South Korea

Indonesia

Malaysia

.042

.042

.042

.030

.030

.030

.017

.017 Jan 97

Jan 98

Jan 99

When one of these politically and economically fragile countries experiences a financial crisis, it spurs a chain reaction, like a domino, creating turmoil throughout the region.

As crazy as this sounds, it's true and exactly why exotic currencies are so profitable. Every crises or bump in the road sets in motion an entire chain of profit opportunities. What's more, they're every bit as predictable as which domino will fall next.

Maybe, you think this is mere hype. I don't know but when it's all documented, and backed by millions of dollars in research it's hard to argue with history. In fact, this domino-like phenomenon has been so widely studied that researchers have given specific names to such incidences.

Take for example the "Tequila Crisis."

That was the name given, by researchers, to the domino-like effect that resulted from the Mexican peso crash of 1994 as it tore through the emerging markets of Brazil, Argentina and the southern cone.

In 1998, when the Russian Ruble lost three quarters (75%) of its value in less than a month, researchers coined the term the "Russian Virus" to describe the domino-like effect that sent the Baltic countries (and emerging markets) of Estonia, Latvia and Lithuania into recession, causing their currency values to follow suit.

Not to mention the “Asian Contagion” which correlates with the domino-like effect started by the crash of the baht in 1997, drastically affecting the emerging markets of South Korea, Indonesia and Malaysia. All of this provided traders with huge profit opportunities.

.017 Jan 97

Jan 98

Jan 99

Jan 97

To put this into perspective, when "developed" currencies move just a half of one per cent, traders have the ability to cash in on triple-digit gains.

So, when I say an exotic currency moved 67% like the ruble 45% like the peso or 24% like the baht, you should picture yourself on a beach in Hawaii, retired, with your own private island, because these are truly life-changing profit opportunities. Even a 15%, 10% or measly 5% change caused by the dominoeffect provides you with the ability to make mammoth gains and if you are a serious "Big Game Hunter" and you're willing to "get in the game" then collecting 10-to-1, 25-to-1 or even 50-to-1 payouts are not out of the question.

I know that sounds crazy. But the best part is, that this chain reaction doesn't happen at once but over 24 months, giving you the ability to repeat these gains between now and the next crisis.

This game of "Profit Dominos" works like clock-work and is every bit as certain as the countdown to the New Year. It’s not a question of ‘if’ but just a matter of ‘when.’ If you're one who "gets it," then it's not hard to imagine how easy it could be depending on your comfort level to turn every Rs 5,000 into Rs 25,000, Rs 50,000 or possibly even Rs 1,00,000 or more. ] And if you are who I think you are then you'll enjoy the adrenaline rush you get from consistent three and four-digit winners. But before I go on, let me ask you a question?

How much "additional" income would you like to make next year? Think about it and wait for next part!

Jan 98

Jan 99

Take for example the Tequila Crisis. That was the name given, by researchers, to the domino-like effect that resulted from the Mexican peso crash of 1994 as it tore through the emerging markets of Brazil, Argentina and the rest of the southern cone

The

Edge 39

BOOKMARK

Rid demons of your mind

T

hese are the days of uncertainty and betrayal.

Uncertain that you will come back to the comfort of your home, uncertain that did your family just bid you a final goodbye in the morning before you left for work.

Betrayal from your own brethren, your classmate, young boys, but turned terrorists, your own son who got trained with the wrong people for this willful war.

Where do we turn to, whose path do we follow? Somewhere a long time ago we chose to be agnostics, we chose to move away from the ways of the Lord and we chose ignorance. Now in this hour of chaos, the zephyr brings with it the message of hatred and the smell of fury. They say like hell hath no fury, we are looking towards the heavens for peace, redemption, deliverance and for that chimera where our loved ones are unhurt.

Go back to the ways of the Lord, to your Allah, your Ram, your Guru, your Sai and this is what will be aroused in you when you read The Fifth Mountain.

It’s the story of a 23-year-old Elijah, persecuted from his homeland for raising voice against the new God of Baal.

He hears the voice of angels who want him to restore the love of Gods in the heart of people of Israel. In his journey to seek solace and escape from the soldiers of Princess Jezebel, he takes refuge with a young widow and her son in the beautiful town of Akbar. The Fifth Mountain is a gripping story set in the Middle East in 870 BC. Elijah escapes from Israel to seek retribution and has to battle his thoughts and the voices of Angels.

“Man was born to betray his destiny, as God placed only impossible tasks in his heart”. Don’t we all feel the same? We seek the unattainable that which is not ours is what we pine for.

The

40 Edge

BOOK REVIEW Monica Mor Assistant Professor, Finance

Title: THE FIFTH MOUNTAIN Author: Paulo Coelho Publisher: Harper Collins, with India Today (2003) Pages: 245, Price: Rs. 295

Can we move away from the fact of life which is delivered to Elijah by the angels of God? When a man journeys towards his destiny, often he is obliged to change paths. At other times, the forces around him are too powerful and he is compelled to lay aside his courage and yield. But no one can lose sight of what he desires. Even if there are moments when he believes the world and the others are stronger.

The secret is this. “Do not surrender.” Strong words of encouragement and soulful are enough to keep you from straying when the going gets tough.

The story moves ahead with Elijah becoming an integral part of the inhabitants of Akbar. His prophecy is gradually accepted by the people who believe him to be a

man of God. He becomes counselor to the Governor of Akbar but is despised by the Head Priest. Soon Akbar is invaded by Assyrians who devastate the beautiful town. The entire town is left seething in the flames of vengeance by the Assyrians. Wounded, heartbroken and with his shattered soul Elijah escapes once again. But a wise shepherd compels him to go back to the confounded town.

Elijah does get infuriated with the Lord for the destruction; but he knew the truth: “Sometimes it is necessary to struggle with God. Everyone at some time had tragedy enter his life; it might be the destruction of a city, the death of a son, a sickness that left one lame forever. At that moment God challenged one to confront Him. Only those with the sacred flame in their hearts had the courage to confront Him. And they alone knew the path back to His love, for they understood that tragedy was not punishment but challenge.”

Slowly, Elijah rebuilt the town.

Often, he wished to go back to Israel to fight Princess Jezebel, but he knew he had to wait till God gave him a sign. Akbar soon rose from its ashes and once again became a prosperous trading nation.

The Fifth Mountain is an inspiring story that evokes pathos and poignancy, courtesy the tragedies.

Paulo Coelho, like in his previous books, leaves an indelible mark in the heart of readers. The book is rejuvenating and the reader feels like he has been to heaven and back. The chastity and purity of Elijah would leave a lot of readers wanting to worship the Lord and love their near ones with all their might. It could bring salvation for those fighting the demons in their thoughts. A must read for all.

A book with many answers

T

he Indian edition of Corporate Governance by Prof. Christine A Mallin who is professor of Corporate Governance and Finance and Director of the Centre for Corporate Governance Research at the University of Birmingham, provides the reader profound understanding of the subject and its issues, illustrated with current real global examples based on governance issues in Continental Europe, Eastern Europe, Southeast Asia and India, Australia, South Africa and Brazil.

There have been a number of high-profile corporate collapses that have arisen despite the fact that the annual report and accounts seemed fine. These corporate collapses have had an adverse effect on many people: shareholders and employees who have seen their financial investment reduced to nothing; employees who have lost their jobs and , in many cases, the security of their company pension, which has also evaporated overnight; suppliers of goods or service to the failed companies; and the economic impact on the local and international communities in which the failed companies operated.

The answers to these are all linked to corporate governance: Lack of effective corporate governance meant that such collapses could occur; good corporate governance can help prevent such collapses further and restore investorâ&#x20AC;&#x2122;s confidence. To illustrate why corporate failures might occur, despite the companies seeming healthy, the book provides an insightful review of recent case examples, each of which has sent shock waves through stock markets around the world.

Corporate governance is an area which has acquired considerable significance in wake of growing

BOOK REVIEW K M Mital Professor, Strategic Management

Title: CORPORATE GOVERNANCE Small Edition (Indian Edition), 2008 Author: Christine A Mallin Pages: 316, Price: Rs. 295

instances of corporate failures such as collapse of Enron, more recently Lehman Brothers, and Merrill Lynch, and in India problems in Satyam Computer Services. The Enron case highlights the overriding need for integrity in business: for the directors to act with integrity and honesty, and for the external audit firm to be able to ask searching questions of the directors without holding back for fear of offending a lucrative client. The latter situation is exacerbated when auditors receive large fees for non-audit service that may well exceed the audit fee itself, thus endangering the independency of the authors. The Satyam case highlights the need for independent non-executive directors who are experienced enough to be able to ask searching questions in board and committee meeting to

ensure that the business is operated appropriately.

Accordingly, corporate governance has emerged as a course module for UG and PG level degree programmes in management education. The books provides a comprehensive understanding of evolution of corporate governance beginning in 1990s and underscores its importance for the company board, executive management, shareholders, other stakeholders, and business community at large.

The author who is the Editor of the journal Corporate Governance: An International review and a member of several global corporate governance groups, uses examples, extended case studies and articles from the Financial Times to contextualise development of corporate governance throughout the text, familiarizing students with real world issues. A distinctive feature of the book is the accompanying Online Resource Center which includes â&#x20AC;&#x2DC;fill in the blankâ&#x20AC;&#x2122; type questions, crosswords of key terms and links and relevant websites for students and PowerPoint slides for faculty members.

The book is divided in four major parts. Part One contains the development of corporate governance and look at the various theoretical aspects, including the frameworks within which corporate governance might be developed, and development of corporate governance codes in various countries.

Part Two looks at the role of shareholders and stakeholders, identifies the various stakeholders groups, and discusses their role in companies and in corporate governance. Part Three concentrates on various aspects of directors and board structure. Part Four is devoted to corporate governance development around the world.

The

Edge 41

A buffet treat from Swami

U

nder 14 very catchy and creative headings, this book is an excellent literary and journalistic collage of 73 articles, already printed under the popular column ‘Swaminomics’ in The Times of India. The book covers an entire spectrum of Indian economics with fascination, bold, critical and definitely out of box mindset.

Swaminomics was conceived by the author way back in September 1990. One of the most read columns over the years, it is now in its late teens. In Swaminathan Ankaleshwar Aiyar’s own words, “I started writing Swaminomics in September 1990, at a time when socialism was so firmly ingrained in our political discourse that I had few hopes of changing anything in my lifetime. I had no idea that India was about to be transformed.”

Millions of readers wait with eagerness to read his next write-up.

But this book offers a buffet treat — as all well-read articles appear together in a single volume.

Creativity of expression, unique journalistic style, intelligent sense of humour and very deep insight has led to the creation of this absorbing work by the author, which was carried out with gradual inputs in the form of weekly column write-ups.

One catchy and fascinating feature of this book is the titles of the articles. Over a period of time, headings have remained a point of attention for many readers, especially when they see an article with very impressive titles. Some of these innovative, creative and which convey the meaning to content therein are listed below: ◆ The Advantages of Poverty ◆ Seven Commandments of Mr Singh ◆ General Dyer’s Gaurav Yatra The

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BOOK REVIEW Kailash Tuli Professor, OB & HRM

Title: ESCAPE FROM THE BENEVOLENT ZOOKEEPERS Author: Swaminathan S. Anklesaria Aiyar Publisher: Times Group Books, New Delhi, 2008 Hard Bound/Pages: 253, Price: Rs. 495

◆ The Virtues of Hawala ◆ Indians Succeed, India Fails ◆ Falling Governance, Rising Growth ◆ Nature is the Cruelest Killer ◆ One-Lakh-Holes-in-the-Wall ◆ Lion’s Looks, Rabbit’s liver ◆ From ‘Bhujiya’ to Rolls-Royce ◆ Tsumani: The Road to Extinction ◆ Ashok, Teri Ganga Maili Ho Gayee ◆ Poverty Reduction by Helicopter ◆ Brahmins, Banias and Vikram Seth Catching a glimpse of such fascinating headings, rarely would someone like to skip without reading at least a few lines and finally reading the full article.

Notably, the introduction section starts with his own family

biography and gives an interesting picture of his personal roots from an obscure village in Tamil Nadu to his family and children’s futuristic vision and affiliations. Their education, travel and nuptial ties are global in his case. Indeed, his is a very global family and in tune with the spirit of the global design of a modern world. His family is truly a globalist family in terms of zeitgeist, i.e. the spirit of time.

In the second section on globalization and empowerment, the author reflects a keen vision in his wordings — a vision soaked in optimism.

Politics and governance is the third unit, full of atypical satire by Swami.

Articles on ‘Communalism, the biggest threat’ focus on votebank politics, especially the divide on communal and religious lines. This section is quite relevant in the context of Indian politics, which our politicians twist according to their power benefits.

‘Economics for You’ has eight interesting topics which cover multiple dimensions of economics for the common man. One nicely titled topic is, ‘Trickle-up, not trickle down’. It is an interesting read about the scale of economics which we are witnessing in print and electronic media.

Another section is about ‘Knowledge Economy: India’s Star Achievement’ where the focus is on intellectual richness of Indians as a whole and also its star performers.

India, in the last two decades, has a made a benchmark on the global scenario because of its geniuses like Narayana Murthy.

Section eight is about ‘History and its Ironies’. The articles in this section explore the historical aspects of Indian economics, covering British

Raj and the following periods. earthquakes and hurricanes, but ◆ “So in the new millennium let us Poverty and its discontent, a we can reduce environmental raise a toast to the real reason why chapter titled in the style of degradation. Let us not behave as economic freedom is important. It Sigmund Freud’s ‘Civilization and badly as nature does.” enables the unknown to do the units discontent’ is a good exposure The ‘freedom of expression’ secthought of and become unstopto the serious problem of poverty tion deals with the media. His opinpable.” (Page: 128) in India. Here is one interesting ion is crisp and straightforward: “So, ◆ “Private universities must be chapter on ‘Poverty reduction by let a thousand TV channels bloom encouraged, rather than banned, helicopter’. The author shows his and let new technology constantly and foreign universities should be therapeutic economics in these erode monopolies. That will produce allowed to open campuses here. lines, which are a nutshell of what the greatest variety, quality and Such reforms will be just a starting he is emphasizing: “I suspect the empowerment of viewers. It will also point. We have a long way to go.” most sustainable way of reducing prove, yet again, that critics of mar(Page: 169) poverty is to provide all-weather kets are generally ignorant of the ◆ “Research shows that poor people roads, power (without subsidies) way markets work.” are unwilling to pay premiums and telecom to every village in The last section consists of four upfront or more than Rs 20 to Rs 60 India. Then the economy will take articles on ‘International per year. They typically want to pay off, thanks to the new economic Relations’. One fascinating article only when they are sick. They susopportunities.” is on, ‘Avoid unreliable energy pect they will get no benefit from In Section ten, ‘Social Uplift: suppliers’. His analysis carries advance payments, and they feel Ways out of the poverty they cannot afford to trap’, Swami combined Creativity of expression, unique journalis- cover entire families. the cultural basis along Each miracle costs Rs tic style, an intelligent sense of humour with new technologies.

7.50. We need more such He suggests the combinaand a very deep insight has led to the cre- miracles.” (Page: 189) tion of cycle rickshaws ◆ “That is surely the botwith mobile telephony to ation of this absorbing work by the author, tom line. Spending bilsolve the very serious which was carried out with gradual inputs lions on global warming Indian problem of poverrather than clean water in the form of his weekly columns ty. He is also very critical means killing millions in about useless migrations. poor countries to meet His analysis about cycle rickshaws is some weight and policy makers Western eco-imperialist priorities.” remarkable even with the single may prudentially be listening to (Page: 225) example of Delhi. his advice. In this section, Swami All the articles are interesting, In another section on covers India’s relationships with absorbing and very light reading, all ‘Education: A Sadly unreformed the US and other countries. Those of which keeps the reader engaged.

Sector’, the author has included having an interest in this topic Though Swaminomics is almost two four chapters. They touch the vital may find it a good read. decades old, most articles are from but miserable issue of education in The book has potential to catch the last five years.

India. The positive and solution the readers’ attention for hours For me, it was a great moment oriented example is about Camera together. However, a few lines to be present at the release cereSchools. There is an example set which caught my attention can be mony of this book in July 2007, in forth by an NGO, Sewa Mandir, shared with readers of this review. which many great luminaries from who with innovative technology ◆ “How do Indian Davids manage various fields were present. tries to solve the problem of eduto acquire foreign Goliaths?

They included stalwarts like cation in rural India.

Through leveraged buyouts, getthe then Finance Minister Seven chapters in the section on ting foreign loans for takeovers; P Chidambaram, former Finance environment make it a very interBanks, hedge funds, private equity Minister Jaswant Singh, esting read and touch a crucial funds and many other financiers Gurcharan Das, FICCI Chairman global issue. He touches the issue are eager to provide money. In Dr Amit Mitra, and other promirelating to the Ganges, tsunami, some cases, Indian companies nent men and women from jourclean water and consumerism and have raised money from foreign nalism, economics, politics, the environment besides El Nino. He capital markets by issuing Global bureaucracy, commerce and writes: “We can do nothing to stop Depositories Receipts.” (Page: 47) finance etc.

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CONVOCATION

Prof. V N Rajasekharan Pillai, V C of IGNOU Shares his Futuristic Vision of Indian Education

T

he 13th convocation address of the IILM Graduate School of Management was delivered by Prof V N Rajasekharan Pillai, VC of the Indira Gandhi National Open University (IGNOU) and Chairman, Distance Education Council (DEC) of India, on December 17, 2008.

In his inspiring convocation address to the 13th graduating batch, Prof Pillai emphasized, that the purpose of the education was to improve the quality of life; not only of the self but also of the society.

Management education enhances knowledge and life management system skills which, in turn, improve the quality of life in the society.

It is necessary to understand the core values of the society in order to apply the knowledge and skills gained during education for the betterment of the society. He said that education was the first step and life experiences cemented and furthered learning throughout an individualâ&#x20AC;&#x2122;s life. He shared his views on distance learning and technology, and stressed on the

Chief guest awarding the degree

pivotal role it would play in enhancing the literacy rate in the country.

Prof. Pillai mentioned that higher learning is singularly not about acquiring compartmentalized knowledge. Therefore, it is necessary to understand the interrelations amongst various disciplines and apply the gained knowledge successfully for the benefit of the society. He encouraged the students to participate in the literacy mission enthusiastically, and urged them to provide leadership.

Prof. Pillai was concerned about the progress in the three levels of education: primary, high school and adult education in India over

the years which was dismal in comparison to the developed world. To address this, the Knowledge Commission had recommended opening up of 1500 universities to strengthen higher education system and to improve the poor gross enrolment rate. To support the cause and to help India reach the standards of a developed country, about one million school teachers and half-a- million professional teachers are required and creation of this knowledge infrastructure would take a significant amount of time. Hence, there is a need to utilize new technologies to address this issue. However, as only teachers can teach, and technology alone cannot, teachers should use these technologies to execute quality teaching-learning process.

He congratulated the management of IILM Graduate School of Management for the achievements in the field of education and contributions made to the society by imparting holistic and integrated learning in the field of management.

Prof. V N Rajasekharan Pillai, V C of IGNOU delivering the 13th convocation address to IILM Graduate School of Management The

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STUDENT CORNER LETâ&#x20AC;&#x2122;S CUT COST OF INACTION 2. Banks could be required to hold extra equity capital for currency derivatives, which are not cont present, financial crises are a major prob- tracted through a clearing corporation guarantee. lem and we are half way through it. There 3. The RBI could hold regular auctions to swap is an urgent need to resolve it. Finance dollars with the market. This has been the commust stand back on its feet. In the history of finan- mon crisis response of dollar-strapped advanced cial crises, we often see that Government engage- countries, including Australia, Denmark, the Euro ment generally arrives late and, by then, the finan- area, England, and Japan. cial firms reach near the stage of insolvency. This Exchange rate policy generates larger costs for the economy. The key Almost all economists now agree that when aim, at present, should be to avoid the costs of conditions change, the central bank must not inertia and inaction through a rapid action, which stand in the way of adjustment by the would decisively bring back the stability to the exchange rate. Sustained exchange-rate misIndian finance. alignment is extremely damaging for the econFollowing measures can be taken to resolve the omy, either in terms of undervaluation or in financial crisis terms of overvaluation.

Increase rupee liquidity Adjustment by the currenIn the history of The demand for base cy is a shock absorber. When money has increased. In order financial crises, we see times are good, an INR to hold interest rates at tarappreciation is a stabilizing that Government geted levels, the supply of influence, and when times base money needs to be are bad, an INR depreciation engagement generally increased. is a stabilizing influence. arrives late. By then, the By allowing the exchange There are several measures that the Government and the rate to fluctuate, we reduce financial firms reach RBI can implement quickly the fluctuations of the near a stage of insolven- economy. to help restore liquidity in the system.

Conversely, exchange rate cy. This generates larger 1. Reduction of CRR to 5% rigidity forces the real econcost for the economy.

2. Reduction of SLR to 20% omy to adjust since the This should release substantial The key aim, at present, currency market was preliquidity in the system. vented from adjusted by the should be to avoid the central bank.

3. Given that the liquidity shortage could continue for The consequences of such cost of inaction through sometime, the RBI may also a policy can be worked out rapid action consider longer maturity in a few steps: repos of 1-3 months. At pre1. The market would see sent, repos are 1-3 days. On sustained selling of reserves 14 October, RBI announced a 14-day term repo by the central bank. facility. The maturity here needs to be extended 2. They would understand that the visible further to three months. price of the rupee-dollar rate is artificial.

Increase dollar liquidity 3. They would perceive a one-way bet where In addition to the crisis of rupee liquidity, Indian the rupee is likely to only depreciate in coming firms are faced with a crisis of inadequate dollar weeks, as RBI slowly allows the fundamental liquidity, given the collapse of the London money news to trickle into the exchange rate. market. Given that a large number of Indian firms 4. It would then be efficient for domestic and are now multinationals with a variety of interna- foreign economic agents to sell domestic assets tional activities, improving the safety of the Indian and take money out of the country to benefit economy requires improving their dollar liquidity from the superior exchange rate that is being also. This requires: given to them by the central bank. Once the full 1. Removal restrictions on capital account trans- depreciation is complete, they would bring actions for NRIs. money back into the country.

ANKIT JAIN & MEHUL THAKKAR PGP 2008-10

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STUDENT CORNER

INDIA’S BREAD BASKET Pitching in: (clockwise from top left) Sunder Singh finds the stork an amusing distraction as n the month of June, the State of Punjab he readies his field for transplanting. In the needs all the possible hands it can get to night, he will flood the field with water; Hari transplant rice saplings. But it is barely able Ram, a labourer from Majorganj in Bihar, looks to do so, even with the help of migrant labor, on at the darkening rain clouds as he works in coming mostly from Bihar, Jharkhand and Uttar the field; and Supinder Singh and his cousin Pradesh, who arrive in April Tejinder begin work at dawn to harvest wheat in the bread on the field he owns in basket of India and stay till Bhankapur in Mohali district.

August, for the rice harvest.

Unlike wheat, rice was not This year was the worst. traditionally grown in Punjab.

Labour was extremely diffiIt is ubiquitous in south and cult to find as many regular east India. Punjabis are more migrants preferred to stay fond of rotis made from back in their villages to work wheat flour, perhaps because under the rural employment it is more suited to the local guarantee programme. climate.

A farmer would usually The Green Revolution in charge Rs 750 to transplant the 1960s changed all that, rice on an acre of land. This when Punjab started to cultiyear, wages shot up to Rs vate rice in large quantities.

1,500 an acre due to labour The state today produces shortage, causing a crisis on more than 10 million tonnes the fields, and then stabilized of rice, most of which the at around Rs 1,200 an acre. government buys to sell at The shortage was so acute subsidized rates to the poor. that even state agencies Punjab is a small state, coverwoke up and rushed to proing a mere 1.7% of India’s vide alternatives. The Punjab land area, but it contributes state farmers commission 37% of the rice to the nationstarted demonstrations of al pool. automated rice Rice is a diffitransplanters. cult crop to cultiPunjab is a small State, covering a Two of these mainly mere 1.7 per cent of India’s land area, vate, machines, quietly because saplings rusting since have to be first but it contributes 37 per cent of the being imported grown in nursrice to the national pool from Japan a coueries and then ple of years back, transplanted in were pressed into service in fields. It is a labour-intensive the heart of rice planting crop and needs a lot of water. operations, in Ludhiana and This year, rice transplantaSangrur districts. tion was over in Punjab by The commission also the end of June. It was done imported three new in 25 days on 2.5 million HA, machines which, being smallwhich translates to er and more convenient, caught the fancy of 100,000 HA planted every day. During the Punjab’s farmers, who now admit that these transplantation, standing water and young machines are more affordable and could pro- seedlings are a common sight all over the State. vide an alternative to the labour crisis.

PUNEET ARORA PGP 2008-10

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MPUS CAMPUS CAMPUS EWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS

ACADEMIC ACHIEVEMENTS Deepak Tandon

Malarvizhi

Professor, Finance

Professor, Finance

❚❘❘ Published a book titled, ‘RETAIL BANKING--- A Practical Approach’ First Edition, Co-authored with Dr S C Bahri, Published by Skylark Publications (2009) ❚❘❘ Presented research paper titled ‘Corporate Restructuring via Amalgamation in Private Sector Banks A Case Study on HDFC Bank and Centurion Bank of Punjab’ at International Conference - IIRB 2008 IMT Ghaziabad on December 18, 2008. ❚❘❘ Chair Person for the technical sessions. The paper was presented amongst various delegates from China, Czech Republic and the Chairman was Shri M R Rao, Dean ISB Hyderabad (December 2008) ❚❘❘ Presented research paper titled ‘Basel II: An Empirical tool for Credit Risk Management - A sight to its implementation in a New Generation Private Sector Bank (Axis Bank)’ at International Conference on Banking Consolidation at IBS, Powai, Mumbai, on December 20, 2008 ❚❘❘ Interaction & meetings with GMs and other senior dignitaries of various banks like CBI, UBI, HDFC, IndusInd, Saraswat etc at ISB Hyderabad. IILM’s banner was also displayed at the conference. ❚❘❘ Research paper presented (in absentia) and published at the International conference on Financial Risk Management-Innovative tools & techniques entitled ‘Forex Risk Management -Hedging through Interest Rate Swaps’ A case study at Punjab National Bank at IBS,in Gopalapuram, Tamilnadu, on December 19, 2008.

❚❘❘ Appointed as State Level Expert Appraisal Committee (SEAC) Member for Environmental Accounting - Delhi Government, by the Ministry of Environment & Forests, GOI. ❚❘❘ Presented a research paper titled "Proponents of Responsible Environmental Disclosures by Indian Companies" at the 2008 North American Congress on Social and Environmental Accounting Research International Conference at Concordia University, Montreal, July 7 to 9, 2008.

Kailash Tuli Professor, OB/HRM

❚❘❘ Participated in a 4-day International workshop on training for Counsellors at National Council of Educational Research and Training (NCERT), New Delhi from December 8-11, 2008, conducted by Dr. Bruce Thompsom of Commonwealth of Learning Canada. ❚❘❘ Selected as reviewer for the abstracts evaluation for the 117th Annual Convention of American Psychological Association (APA), USA.

Diversity Management: HR Challenges and strategies’ in Gyan Management An International Biannual Refereed Journal of Management & Technology in January, 2008, Vol. 2 no.1 ❚❘❘ Published paper titled ‘Fuelling the growth of retail sector: HR challenges and strategies’ published in JIS Management Vista January, 2008, Vol. 2 ❚❘❘ Published paper titled ‘Materialism and Satisfaction with Life’ in Review of Professional Management (NDIM), July 2008 Vol. 8 ❚❘❘ Published paper titled ‘Rising Alienation among Government Employees in India’ in Management of Change July 2008, Vol. 6

Shweta Khanna Associate Dean, Hospitality

❚❘❘ Conducted a 2-day MDP on Cultural Change, Leadership and Communication for Senior Managers at India Trade Promotion Organisation, New Delhi in November, 2008.

Navneet Gera Lecturer, International Business

Richa Dani Lecturer, Economics and Accountancy

❚❘❘ Joined M Phil in International Business from Delhi School of Economics. ❚❘❘ Qualified UGC-JRF, a test for lectureship conducted by University Grants Commission.

Shuchi Agrawal Asst. Professor, OB/HRM

❚❘❘ Published paper tittled ‘Enhancing Competitive Advantage through

❚❘❘ Paper entitled, ‘Impact and remedy of Global Warming on nature’ presented at National Conference at Bharati Vidyapeeth University Institute of Management & Research, Delhi on December 13, 2008. ❚❘❘ Paper entitled, ‘International Currency Dollar versus young currency Euro’ presented at International Conference at IMT Ghaziabad on December 18 2008.

Professor, OB/HRM

❚❘❘ Paper entitled, ‘Contribution of SEZ in FDI and Exports of India’ at National Conference at IIT Kharagpur on December 30, 2008.

❚❘❘ Country Representative and reporter for Sloan Work and Family Research Network, Boston USA

❚❘❘ Participated in Export Workshop IIPM - Chhatarpur New Delhi on January 3, 2009.

Tripti Desai

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CAMPUS CAMPUSCAM NEWS NEWS NEWS NEWS NEWS NEWS NEW

VIVEKANAND MEMORIAL DEBATE

THE VIVEKANAND MEMORIAL DEBATE has been organized by IILM annually since 2000 and is hosted by SANSAD – IILM’s Debating Society. It is one of the India’s most respected and sought after debating grounds for debaters from prestigious education institutions in India.

It is named after Swami Vivekanand who is considered to be a master in literature and believed that language should be free flowing and words - written or spoken should be for making things easier to understand rather than showing off speakers or writer’s knowledge. Moreover, Swami Vivekanand himself was an excellent debater. In his honor, IILM Institute for Higher Education conducts the Vivekanand Memorial Debate annually at IILM. More than twenty teams from across the country compete for the VMD The

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Trophy every year. Over the last seven years, VMD has seen teams from prestigious colleges like St. Stephens, IIMs, IITs, LSR, MDI, SIBM, Sri Venketeshwara College etc. winning the coveted trophy.

This year SANSAD – IILM’s Debating Society again hosted the Eighth Viveknand Memorial Debate on December 20-21, 2008, which was a grand success and once again proved to be a hot debating ground to voice one’s opinion on debatable socio-economic issues.

The contestants were from the best colleges of Delhi University and the premier B- Schools. The debate comprised of three exciting round of discussions. The finalists for VMD finals were; Sri Venkateshwara, DSE, FMS and Kirorimal College who contested on the motion “The current US financial crisis has signaled the death knell of capitalism.”

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Karthik and Raghav of Venkateshwara college (DU) won the trophy

The VMD finals was graced by the cordial presence of Mr. Dilip Cherian, Prof. J.K.Mitra and other renowned and eminent personalities from fields of Academia, Media, Bureaucracy and the Corporate World. They highly appreciated the quality of discussion and applauded IILM for setting up such a platform for self-expression by young minds.

The winners of the Eighth Vivekananda Memorial Debate competition were Sri Venkateshwara College who bagged the VMD trophy. Close on heels were Kirorimal college, who won the Runners up Shield along with Silver Medals.

Those who spoke for the

motion were of the opinion that US was warned not to cut rates but it did. This is the thought process of decision making for private property which governs capitalism. Priority for developing countries is not growth but inclusive growth. So developing countries should follow Communist or Chinese model as china did best in G-20 summit.Developing countries canâ&#x20AC;&#x2122;t go for purest form of capitalism as they all will be dead. Those against the motion opined that Capitalism says there will be periods of boom and recession.

Economists say that capitalism will fail as there is nothing to compete with. Capitalist countries need to reconsider that they want to re-strengthen themselves.

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CAMPUS CAMPUSCAM NEWS NEWS NEWS NEWS NEWS NEWS NEW

2008 THE ANNUAL FESTIVAL of the IILM Institute for Higher Education was organized from the December 19-21, 2008, finishing off with the grand finale of the Vivekanand Memorial Debate.

This year’s fest was called the EMBLAZON, signifying the indomitable spirit of the youth. It was a great success judging by the level of participation it had from the various colleges of Delhi and the NCR. It also showcased the enormous talents of IILM students.

The fest started on the December 19, at the Gurgaon campus with the Saraswati Vandana and the lighting of the ceremonial lamp by the Executive Dean Dr. Padmakali Mishra. Girls from the PGP-Ist year gave a classical Odissi presentation. Dr. Mishra declared the fest open and the various events got underway in the beautiful sprawling IILM campus grounds.

The audience were in splits by the funny takes on the various advertisements seen on the television through the AD-MAD show in which the ICFAI

Institute for Management studies won the first prize. Subsequent to this started the Street Play contest and everyone was spellbound by the depth of performances from the participants, who took up issues from the day to day lives to pass on a social message. The team from the Gargi College won the first prize and the ICFAI stood second.

Simultaneously was conducted an HR conclave, creative writing contest, face painting contest, marketing quiz and rangoli competition, the theme of which was the changing seasons. The fest ended with the enthralling choreography dance competition in which the team from Kamla Nehru College won the first prize.

The fest continued at the Lodhi Road campus of IILM on December 20, with Musicology and PPT competition, in which six teams, participated and presented PPT on the topics of ‘India @75 — A reality check’, ‘Is our Media’s investigation, analysis and reporting a bane or a boon’? ‘Where

is our internal security ?— Enough is Enough.’ Three teams each participated from IILM Lodhi Road campus and IILM Gurgaon campus. All the presentations made were of fine quality with thought-provoking contents relevant to their respective topics. The IILM Lodhi Road team comprised Ms. Yogita Singh and Mr. Prasant Kala, were adjudged the winners. The IILM Gurgaon team comprised of Mr. Aditya Aggarwal and Ms. Nandini Bagait were the Runners-up. The Eighth Vivekanand Memorial Debate had simultaneously started with the prelims at the Lodhi Road campus and the Semi-Finals held the same evening at that campus itself.

The fest concluded on December 21 with the finals of the VMD in which the Venketaswera college team won the VMD trophy for the third consecutive year and cash prize of Rs 51,000.

Eminent journalist Mr. Dilip Cherian was one of the judges for the event.

Compiled bY KAVITA SHUKLA

Challenge to Presentation Skills ‘Masters of Presentation’ is a competition devised by Naresh Narula, a student of PGP 200810, which challenges professional communication skills of the students at IILM, Lodhi road. The first in the series was held on December 1, 2008, at the campus where students had to prove their talent in the presentation skills in a supportive yet competitive environment.

The topics for the presentation were, “Does the Current Global Crises mark the end of Capitalism”? Should Euthanasia

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(Mercy Killing) be legalized in India’? ‘Green Technology and policies are essential for survival of human beings’ and ‘Women are better managers as they do multitasking’ and ‘India is the future America of Asia’.

14 teams participated in the competition and majority presented on ‘Should Euthanasia (Mercy Killing) be legalized in India’? The student’s tropical interests were judged by Mr. Rahul Mishra, Dr. Sanyukta Jolly and Mr. Girish Ahuja, all the senior faculties at IILM, Lodhi

road.

Gunjan and Sheba were declared the winners while Gunjan, Sheba and Prashant were awarded the best speakers in the competition. As a token the winners were presented with two books: ‘Passion To Win’ and ‘Managers Not MBA’S’. The event proved to be a learning source outside the regular course work for the students, which made it an obvious success.

Inputs by PARUL KHANNA and SAHIL TANEJA, PGP 2008-10

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PRESENTATION ZEN As part of the iFest on the 20th of Dec. 2008, a Presentation Competition called “Presentation Zen” was held at IILM, Lodhi Road. The competition consisted of six teams. They had three topics to choose from; ie Where is our internal security - what is it ?, Is our media's investigation analysis & reporting a bane or a boon?, India @ 75 - a reality check.

The judge for the event was Dr. S.K.CHOUDHARY, an M.Tech in textile engineering from IIT Delhi.

Currently he is the global head of Interior textile, in Australian Wool Innovation Limited.

In the competition each team had 10 minutes to speak followed by a question answer round. The first topic was the most popular among the participants.

On the topic of internal security, the participants basically talked about what its causes are, security problems, loop holes & what exactly needs to be done. Three teams covered this topic in a comprehensive manner with each team having something new to add. Two teams covered the second topic about media. Here they were more inclined in showing media's negative role rather than the positive aspect which was pointed out by the judges too. They talked about media hype. ‘The Prince Case' came to the fore, which had been blown out

of proportion. One team chose to speak on India @ 75. They focused more on facts and figures and the economic aspects of where India will be in 2020.

After the competition Mr. Choudhary gave feedback. He appreciated the effort put in by all the participants and the organizers. He found the presentation style of all the participants worth applaud.

However, he also pointed out that the body language of participants could be worked upon. He also mentioned that the overall presentation standard was good and all the subjects were treated extremely well. After carefully analyzing all the teams he announced the awaited result.

YOGITA SINGH and PRASHANT KALA of IILM LODHI ROAD were declared the winners. Giving them close competition were Aditya Agarwal & Nandini Bhagat of IILM GURGAON who were the runners up.

The winners had an edge with their positive body language & good command over the English language.

Their efforts in terms of data collection is what gave them edge over the others. The runners up scored most points in their detailed analysis of facts and figures. The Judge and our senior faculty Mr. Sujit Sengupta appreciated this effort put by them.

By SONAL KHANDELWALP,

Musicology, an integral event of the i-fest, started with lighting the lamp and Dean Mrs. Sapna Popli & Mrs. Bhatia did the honours. The three categories in the event were: Solo instrumental, Solo vocal (western) and Solo vocal (Indian).

The participants were from different colleges of Delhi & NCR region such as St Stephens, Delhi School of Arts and Commerce, Jesus and Mary College, PGDAV, Amity, IILM (Gurgaon) and IILM (Lodhi Road).

All the participants were talented and full of enthusiasm because of which the event was a great success.

Faculty members Mr. Sandeep Kapoor and Mrs. Meena Sareen gave a new life to the event by their marvelous performance. Then, the winners were awarded with the cash prizes by Mr. Sandeep Kapoor.

Sunny Sachdeva of IILM, Lodhi road and Ranojay of St Stephens won the solo instrumental category.

Solo vocal, Indian, declared Chandni and Bhavya of JMC to be the winners. Solo vocal, western, saw Rupin of Amity and Shradha gupta of PGDAV winning.

By SUKRITI HARIT, PGP 2008-10

PGP 2008-10

Pratibha: Display of Enormous Talent Kala, the cultural club of IILM Lodhi Road, organized a talent hunt on November 20, 2008 at IILM. The students from first and second year participated with great enthusiasm. They came out with a great display of talent. The competition included solo dance, solo singing and group dance judged by Dr. Sahana Dey and Ms. Sujata Khandai.

25 students had put their efforts to

Musicology, an Integral Event

create a fun-filled and an exciting talent competition. Shalini Tomar, Sakshi Khanuja, Apali Mohanty, Surabi Nigam, Vishal Kumar, Puneet Rai, Shishir, Suraj Rana, Niharika Dhuper were some of the participants. There were 8 solo dance performances, 2 group dance performances and 8 vocal artists for solo singing competition.

The brilliant performances by the

students not only added colours to the event but also made it difficult for the judges to choose the winners.

The winner for the solo dance performance was Puneet Rai, of the second year while the runner-up was Niharika Dhuper of the first year. The solo singing competition was won by Suraj Rana, and Shishir was the runner-up. Group Dance competiton was won by Anshul and troupe.

Inputs by PARUL KHANNA and SAHIL TANEJA, PGP 2008-10 The

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TALENT MANAGEMENT: HR CONCLAVE The HR Conclave was held at the IILM, Gurgaon, on December 19, 2008, and the topic was ‘Talent Management’.

Mr Kamal Seth, President Local Committee- AIESEC, Delhi-IIT was the Guest Speaker.

AIESEC is a global, non-political, independent, non-profit organization run by the students and the recent graduates of institutions of higher education. Its members are interested in world issues, leadership and management. AIESEC does not discriminate on the basis of race, colour, gender, sexual orientation, creed, and religion, national, ethnic or social origin.

The guest speaker presented his views regarding Talent Management, which is considered as an important topic nowadays. He clarified that the concept of Human Resource is different from Talent Management, which is about strengthening talent pool and managing the talent in your team. It is about doing the right things, whereas Management is about doing things right.

According to him, Talent Management is the ability to manage the talent that is present in your team. He also said that it has a key role to play in the organisations. Organisations are looking at ways to strengthen their talent pool in the organisation.

Dr. Padmakali Mishra said that talent is required everywhere in all organizations irrespective of the current situation, and for the growth of organization. She

talked about ‘managing the millionaires’ and also said that whatever might be the current situation (recession), talented people are always required in the market and are great assets to the company.

Dr. Tripti Pandey Desai, HODHR department said that the focus has shifted from attracting new talent to retaining the present talent in your organization.

Retention is the main area of focus. She shared the personal experience that her son had to face with Lehman Brothers. The session turned out to be source of knowledge with talented and confident speakers.

The fact that the guest speaker, Mr. Kamal Seth merely 22-yearsold, was a team leader of 150 members, was proof of Talent Management. His presence motivated the students to become great leaders, who do not wait for the things to fall in place for them, rather grab the opportunity irrespective of the age factor.

Inputs by HIMANI AVASTHI The

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COLOR & DESIGN WORKSHOP FOR ARTISANS OF KHURJA Dastkari Haat Samithi & IILM SCHOOL OF DESIGN ‘Dastkari Haat Samiti’, based in New Delhi, organized a fourday workshop from November 17-20, 2008, in Khurja, Uttar Pradesh. This was delivered by the students of ‘IILM School of Design’, Gurgaon and facilitators were Puja Anand, Alisha Arora and Divya Parnami.

The main objective of the workshop was interaction between the practitioners and artisans of pottery and also to train them about design and colour, so that they could apply this knowledge to their craft and get sensitised towards Colour and Design. The workshop was organised at Central Glass and Ceramic Research Institute, Khurja centre, UP. The workshop commenced with a welcome address by Dr. L K Sharma, chairman, CGCRI, followed by inauguration by Mrs. Rekha Shankar from Dastkari Haat Samiti. The facilitators from IILM made a visit to the UP Ceramic Potters, owned

by Saurabh, a participant of the workshop.

The visit was held to help them increase their knowledge about the current work that was being done in Khurja, like Product types, their designs, colour schemes. A

presentation on colours was delivered by the facilitators of IILM, post the visit. The presentation was to make the participants aware about the origin of colour, various colour schemes, derivation of colours from nature and about colour psychology.

Day one concluded with a factory visit, to ‘Zareef Pottery’ owned by Mr. Sarfaraz Ahmed (Pappu Bhai).

The second day began with more factory visits by the facilitators to see the process of clay making from raw material, as well as the making of products and the method of colour application.

The factories visited were Silico and Chemico Porcelain Works, owned by Mr. Jaswant S

Minhas and Mr. Guljeet S Minhas, Chatwal Ceramics, owned by Mr. Darshan Chatwal, Pratap Ceramics, owned by Narender Yadav. A presentation on different patterns (calligraphic patterns, symbolic patterns etc.), floral and abstract motifs and tessellations was then delivered.

The participants were asked to make new patterns using tessellations.

Day Three began with a visit to Pratap Ceramics, where the facilitators gave the inputs on re-colouring the existing products. The participants came with some work done on tessellations and calligraphic patterns.

After which feedback was given to them for their presented work.

Before ending the session, the participants were told to apply the selected motifs and patterns with selected colour scheme on products of their choice and present them on the final day.

The final day involved presentations by participants, interaction and feedback by facilitators.

Everyone was enlightened by Mrs. Jaya Jaitley’s presence, the founder of Dastkari Haat Samiti who spent a couple of hours at the venue before concluding this workshop on an educational and pleasant note.

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IILM Students At India Economic Summit

THE CII INDIAN Economic Summit provided the students of IILM PGP a platform to get a proper glimpse of the world of work. The summit included myriad range of activities that enabled us to collaborate and coordinate in an amicable manner.

Our interaction with the Global Leaders who are symbolic of this globally interconnected World, enabled us to dwell on some of the key economic issues concerning the world at large. The summit focused on the accelerated rate of political and economic transformation that is characterizing the contemporary world and renewed our interest in the ongoing process of globalization and its social and cultural consequences.

The summit gave students a forum to apply management princiThe

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ples into practice honing their talents and creating new opportunities and avenues for them to develop inter-communication skills and to be articulate in their views. The summit gave them an emancipatory space to carve a niche for themselves, making them aware of their potentialities and developing a clear thought process. Students as management trainees looked forward to the summit as their first step in the business world, to make them aware of the concerns dominating the current economic scenario of the developed and developing world. The summit not only groomed their personalities but also provided an exposure in the political and business fields.

Students as trainees dealt with issues like conflict management,

stress management and understood the core importance of time management which would thereby help them to grow in this complex and competitive world. Interaction with the global leaders enabled participating students to be assertive and precise in their approach and helped them in understanding the deep importance, in their first major step in the corporate world.

Working with the World Economic Forum was an experience in itself as it opened new vistas of opportunities and helped everyone to discern the implications of three Cs i.e. Competition, Collaboration and Cooperation in the business world.

Inputs by RUCHI KALRA PGP 2008-10

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IAS Officer's Training "Management of Environment and Natural Resources" A 5-day training program for officers of Indian administrative service (IAS) on "Management of Environment and Natural Resources" was held at IILM (Lodhi Road campus) from the 15-19 December, 2008. The programme was sponsored by Ministry of Personnel, Public grievances and Pensions, Department of Personnel and Training, Training Division, Government of India, New Delhi.

The training batch comprised of 26 high ranking officers coming from various states of India Like; Manipur, Himachal Pradesh, Punjab, Kerela, West Bengal, Chattisgarh etc.

Training was imparted during an hour and half interactive lectures.

Speakers, leaders in their own right, in various areas related to energy, conservation and academics spoke on the various facets of environmental management.

The training programme commenced with an address by Mr. K R Nair in the presence of Prof. B. Bhattachharyya, who presided during the opening ceremony. Many prominent people in their disciplines spoke about these topics. Officers were addressed by following experts and scholars.

Prof. Barin Ganguli Distinguished Professor of IILM Institute for Higher Education spoke about various topics pertaining to 1) Environmental Impact

Assessment Process in India, 2) Environmental Governance- The Indian Perspective, Public Policy and 3) Management of Environment and Natural Resources. Dr. Bindeshwar Pathak, Founder, Sulabh International Social Service Organisation spoke about, "Affordable Solutions to Urban Sanitation Problems: The Sulabh Case". Dr. Pathak is a renowned person in his pursuit for clean environment and especially for the Sulabh Shauchalya movement in India.

Ms. Aditi Dass is a Consultant Cities & Regions of the Climate Group.

She spoke about "Climate Change to Climate Prosperity". Mr. Gagan Mehra, Managing Director of Osram India Pvt Ltd. Emphasized about the CDM Methodology for Energy Efficiency with Compact Fluorescent Lamps. The role of these innovative technologies is outstanding in energy conservation.

Mr. Ashok B. Chakraborty, Group General Manager,-Head Carbon Management Group talked about Carbon Management -- Imperatives in Context of Climate Change and Sharing ONGC experience of M2M US EPA Programme.

Prof. B. Bhattacharyya, Director General, IILM Institute for Higher Education gave a very informative lecture entitled, "Issues on Trade and

Group photosgraphs of IAS officerâ&#x20AC;&#x2122;s training program

Environment" Dr. (Mrs.) P. Malarvizhi, Professor, Accounting & Finance, IILM Institute for Higher Education talked about significant topic of "Environmental Accounting & Reporting" Mr. Subhas. K. Dey, Secretary General, Global Tiger Forum, gave a talk on "Environment related crime, which covered a very interesting dimension of environmental problems." Mr. Amit Jain, Managing Director, IRG Systems South Asia Private Limited spoke on a topic of "Energy & Environment: Energy Diversification - Key to Sustainable Growth and Addressing Issues & Climate Change", which was very well appreciated by the trainees.

Mr. Girish R. Mahajan, Environment Officer, Asian Development Bank, India Resident Mission made an analytical of Capacity Building for Environmentally Sound Sustainable Development Projects in India. Mr. R P Mattoo, President, Natural Resources India Foundation delivered his lecture on "Effective leadership and conflict resolution with particular reference to natural resources."

At the conclusion of the programme a feedback session was organized with the participants, where they came up with various comments and suggestions. They however were consistent in their praise for the quality of training imparted and appreciated its interactive nature. They also hoped that such meaningful initiatives would continue in partnership with IILM so that more administrators could benefit from the same.

The program was very well received and participants had a sense of learning many useful matters, which they felt would help them when they will be back to their work.

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IILM’s International Linkages IILM, Institute for Higher Education and Deakin University, Australia signed an MOU on December 4, 2008, New Delhi. The MOU was signed by Prof. Sally Walker, Vice Chancellor, Deakin University and Prof.

B. Bhattacharyya, Director General and Principal, IILM. Other members present on the occasion were Prof. Philip H Clarke, Pro-Vice Chancellor, International affairs; Mr. Wayne Lewis, Director Government, Liaison, Ms. Ravneet Pawa, Country Head, India Office from Deakin University and Dr. Shuchi Agrawal, Associate Dean, Academics from IILM. Deakin University is one of Australia’s largest universities, with more than 32,000 students.

There are more than 5,000 international students studying at Deakin. It has four campuses: one in Melbourne, two in the port city of Geelong and one in Warrnambool. Deakin University has country office in India for last 12 years.

IILM in collaboration with Deakin University will be offering its students, options of student exchange and advanced entry to its Masters programs. Both institutions will also be involved in organizing collaborative research, lectures and conferences. IILM has

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Prof. B. Bhattacharyya, Director General and Principal IILM, Prof. Sally Walker and Philip H. Clarke, Pro-Vice Chancellor, International affairs, of Deakin University

“Going to India for study was a decision I will never regret. As a European, it is like entering a world full of diversity and disparity which provides a great opportunity to develop oneself. The experiences I made in India and at IILM will always have influence in my future.”

- EVA KLINGLER (Austria)

“Studying abroad is an enriching experience. Living in India for 6 months and studying at IILM, I witnessed the spirit of a generation that optimistically faces a dramatically changing society. Back in Germany I will definitely benefit from the crosscultural experiences gained.”

- SANPRIT SINGH (Germany)

also signed MOU’s with: ■ Texas A & M International University, USA ■ Pontificia Universidad Catolica Del, Peru ■ Voralberg University of Applied Sciences, Austria ■ Cologne University of Applied Sciences, Cologne, Germany.

Persently students of IILM are going to Austria and France.

Students under exchange program from Grenoble Business School and Burgundy Business School, France, Management Centre, Innsbruck, Austria, University of Applied Sciences, Luneberg, Germany are studying at IILM.

Inputs by Dr. SHUCHI AGRAWAL & Ms. PRERNA MADHOK

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Undergraduate Hospitality Management Program

Hospitality is the mother of all services, the world’s oldest profession with a universal demand. Every type of operation, whether it be smart basics or the high-end elite and finest, hospitality and allied services industry requires professionals with global competencies and skill sets. This people-oriented industry which provides memorable experiential services makes or breaks depending upon its quality service providers. Professional education and training holds the key to success in this sector. A tremendous opportunity awaits those who seek to pursue a career in hospitality.

IILM, Gurgaon offers an excellent hospitality education option to the students in collaboration with IGNOU. The Undergraduate Hospitality Program is a full-time 3year Degree Program in International Hospitality Administration (BA-IHA), incorporating courses of American Hotel & Lodging Educational Institute (AH&LEI). The program consists of Tourism courses from IGNOU,

“I am doing the course Bachelor in International Hospitality Management (BAIHM). In a short span of time, IILM for me has become a home away from home. IILM has helped me discover myself. A great faculty, modern facilities and a comfortable environment have turned my dream college into a reality.”

- DHRUV TARA, BH, IHA 1st Year

Industrial Exposure Training in the hospitality industry, Industry Project and AH&LEI courses.

Hospitality is an ideal career opportunity for those who enjoy a people interactive occupation and willing to make a commitment to a service vocation. The challenges & rewards are commensurate and are very promising in the long term. The immense investments being made in the hospitality industry require a huge number of skilled professional, not only at the

base of the pyramid, but also at the middle and top levels. Indian hotel industry is expected to double its room inventory within the next 4-5 years. With the popularity of the Indian and International branded hotels, there is a scaling up and professionalism is gaining importance.

IILM Gurgaon has set-up an excellent infrastructural facility with state-of-art equipment for imparting quality education in hospitality. The hospitality program aims to equip young minds with the requisite technical skills and a professional attitude imparted by experienced faculty, and a focus on the right blend of practical and theoretical sessions. Interactive learning, holistic development and practical industry exposure are the forte of the IILM hospitality program.

Apart from the academics, students participate in numerous hospitality fairs and exhibitions and enjoy a happening campus life, while also drawing experience from other management students.

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Lecture on ‘Role of IT in Hospitals’ for PGPHA Students POST GRADUATE Program in Hospital Administration (PGPHA) is a very sought after program at IILM Lodhi Road, which is run with collaboration of Max hospital, New Delhi. On 16th October, 2008, fifteen students of this course attended a lecture by Ms. Monga of Apollo Hospital for giving an exposure to students about the “Role of IT in Healthcare Management”. This lecture is a part of the series of previous visit to Max Data Center, of Max Healthcare, New Delhi, who are partner of IILM in conducting this course.

Ms. Pujaa Monga, IT Manager of Indraprastha Apollo Hospital gave a very meaningful and absorbing lecture to students of PGPHA. The focus of the lecture was to create awareness for the students about significance of IT in healthcare sector. During her lecture, Ms. Monga highlighted that in modern times the Healthcare sector can not flourish

without the increasing use of Information Technology. IT in Healthcare provides: ■ Services to utmost satisfaction of the customers (which include both internal and external customers) by achieving optimum productivity in all the activities.

■ Optimization of cost and timeliness in the organizations.

■ Improvement of application and reporting tools.

■ Evaluation of functions of organizations steps for improvement and implementation of changes FUNCTIONS OF IT IN HOSPITAL SETUP INCLUDES: ■ HIS (Hospital Information System) Management. HIS includes TIS (Transactional Information System), MIS (Management Information System) and (DSS) Decision Support System.

■ TIS help to keep demographic details of patients. It specializes in maintaining patient inflow,

A demonstration by Ms. Monga and Q & A session

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monitoring bed occupancy, revenue analysis.

■ MIS enables management to make decisions depending upon reports of TIS. ■ Decision Support System (DSS) helps in Data Analysis and Data Mining to identify patterns and co-relation in the chosen area of strategic planning.

Another upcoming field in Health Sector is Telemedicine.

Telemedicine is a rapidly developing application of clinical medicine where medical information is transferred via telephone, the Internet or other networks for the purpose of consulting and sometimes remote medical procedures or examinations The lecture proved to be very enlightening for students, as they learned about various aspects of the significant role of IT in Health care. This was a rich exposure for students of PGPHA of IILM. One significant learning outcome of this lecture was that students could compare the IT systems of Max Hospital with other hospitals.

This was further followed by Question and Answer Session in which Ms. Monga had an interactive session with the students.

The session was well appreciated and the students enthusiastically raised various queries at the end of the session.

At the end of the Guest lecture, students were provided with an assignment to do research and write a report based on the gist of guest lecture.

Inputs by: DAMINNI GROVER & SAHANA DEY

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The Bradford Experience

Standing - Ankita Walia, Srishti Bhagat , Garima Sharma, Sween Joneja, Daminni Grover, Isha Gadhok, Divya Sareen, Yashad Bajaj Seating - Prof. Arthur Francis, Dean of the School of Management and his wife with James Keith Hanning, Director of Studies, International program

The visit to the School of Management, University of Bradford, was a great and enriching learning experience. It has a vibrant, exciting multicultural community, providing a home for students from all parts of the UK and across the world. Bradford is one of the 10 largest cities in England and has all the shops, clubs, entertainment and cultural activity of a major urban centre.

The purposes of this academic exchange for me was to develop my skill in teaching information technology related courses; to create long term links between the academic staff, students and research of our two departments .

It was also to understand the tradition of a university in another country with its special culture and concepts of teaching. These benefits seem to have followed from the exchange, and they will hopefully continue to do so in a meaningful way.

My experience from this exchange proved that it is possi-

ble to fulfill those purposes. This exchange has provided me with a fairly deep understanding of the organization and structure of teaching and courses at Bradford University.

I had the opportunity to teach E-commerce to the third year students and conduct E-commerce sessions with my counterparts Craig Johnson and Bob Lomas. I also took part in planning and designing of new OIS coursework with the counterpart Dr. Zahid Hussain.

Shiv Khera's Lecture at IILM

IILM campus at Lodhi Road had the privilege of hosting a lecture

by Mr. Shiv Khera renowned motivational speaker on 3rd January, 2009. He addressed executives of Reliance Capital as well students and faculty members of IILM. The focus of his speech was that in trying times and economic uncertainties, the age old values like commitment, integrity and hard work will create lasting success for an individual.

He exhorted everyone to give more to whatever you are doing.

At workplace, you need to give more than what you get. This creates value for the organization and also lasting success.

Elaborating the virtues of loving one's country and the sacrifices of armed forces, he exhorted people to stand up and be counted on all important issues which India is facing.

His lecture was very well attended by a hall full with students and faculty. There was an interesting Question-Answers session at the end and it was really a motivational and learning time for all those who were present for this lecture.

Inputs by: RAHUL MISHRA

Inputs by: DAMINNI GROVER The

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❚❚ GUEST LECTURE

Strategic Control on eGovernance Project

Security Breaches and Measures in Ecommerce Mr. Anil Sagar, Additional Director, Cert-In had engrossed the students in his hour long lecture on “Security Breaches and Measures in Ecommerce” at IILM, Lodhi Road campus on Friday, October 24, 2008. This lecture aimed at developing student knowledge and awareness on various Internet Security breaches and measures.

Mr. Golok Kumar Simli, Principal Consultant, Ministry of External Affairs had students spellbound in his hour long lecture on ‘Strategic Control on eGovernance Project’ at IILM, Lodhi Road campus on December 15, 2008. The lecture aimed at developing student knowledge and awareness on the role of online Information Systems in Indian Government.

Mr. Simli provided valuable insight into the vision and mission of Government of India under the NeGP Project. He sensitized the attendees to the Ministry of External Affairs, Passport Seva project and its benefits.

The Passport Seva Project is intended to transform the delivery of all passport-related services across the country, with accent on process efficiency, citizen focus, employee productivity and system transparency. This transformation is sought to be achieved by introducing information and communication techThe

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nologies in citizen-facing processes identified for aggregation in the proposed Passport Facilitation Centers (PFCs) and in service-oriented processes streamlined for efficiency at existing passport offices. The project is being implemented in the publicprivate partnership mode.

Mr. Simili provided examples of the role of Information Technology in Indian Government and talked about the key concerns while making Government services online. His enthusiasm about the prospects of a growing India could only be matched by the interest with which the participants heard his views.

His pedigree was evident in the ease with which he handled some difficult questions from the audience. His sharp and witty tongue kept the audience on their toes and engrossed in the speech. This motivating visit added value to the learning of the students of IILM.

Mr. Sagar provided valuable insight into cyber security and highlighted the consequences of insufficient security such as Identity theft, Compromised customer confidence, Legal penalties etc.

While sharing his experience with students, he highlighted various financial frauds and crimewares such as Phishing, Pharming, Bots, SPAM etc. He concluded the lecture by providing us information on various industry and end user security solutions.

Inputs by: DAMINNI GROVER

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National Institute for Smart Government - an Industrial Visit The students of the third year of the undergraduate programme accompanied by Ms. Daminni Grover, Ecommerce faculty went to NISG (National Institute for Smart Government) on December 16th 2008. The focus of the visit was to help the students to understand the IS management cycle and new trends and technologies in ecommerce.

The aim of this tour was to give students an opportunity to see the technological innovations of Indian government.

During introduction session Mr. Saurabh Kaura, shared his experiences and knowledge about e-Governance as well as on the different aspects of it. A NISG initiative at strategic planning area was explained in the presentation and their organizational structure was also been described. Mr. Kaura explained concept of "e-government" or electronic government as the use of ICTs by government agencies for exchange of information with citizens, businesses or

other government departments, speedier and more efficient delivery of public services, improving internal efficiency, reducing costs or increasing revenue and re-structuring of administrative processes.

While sharing his experience with students, he highlighted some NISG initiatives in Project development This presentation was followed by a site visit in which various NISG applications were showcased which was followed by questions and answers Session.

It was a very enlightening experience for the participants as they got exposure to new trends and technologies in ecommerce. Students after this visit became aware of the technological innovations and the Indian scenario of Information Systems in Government of India.

Students prepared a comprehensive report based upon their visit.

Inputs by: DAMINNI GROVER

IGNOU Approval for IILM Institute for Higher Education THE CONVERGENCE SCHEME of IGNOU is giving an opportunity to Higher Education Institutions to collaborate/study with IGNOU simultaneously for the Certificates/Diplomas /Degrees offered by IGNOU through distance education mode.

IILM Institute for Higher

Education has obtained DEC approval to offer various programmes at PG level as well as UG level. IILM Institute for Higher Education is also offering MBA, PGDM, B.Com/B.Com specialization in Finance and Accounting Degree awarded by IGNOU, under convergence scheme.

WORKSHOPS AT IILM SCHOOL OF DESIGN A workshop on Design Research was conducted by Prof.

Shashank Mehta, Principal Designer, NID Ahmedabad for Product Design and Interior Design and Communication Design students from the 3rd to the 7th November 2008.

Representation Techniques were taught by Prof. Vikram Panchal, Principal Designer, NID Ahmedabad to the students of Product Design & Interior Design students from the 10th Nov to 14th November 2008.

"Synergies and Context" - A Creative workshop was conducted by University of Arts, London for Product Design & Communication Design students on the 14th and 15th of November 2008.

Colour and Form for Khurja pottery workshop was conducted for for Artisans by the 7th Semester Interior Design Students on the 17th and 18th January, 2009.

3rd WORKSHOP ON â&#x20AC;&#x2DC;DEVELOPMENT OF SELFLEARNING MATERIALSâ&#x20AC;&#x2122; Two days workshop was organized at IILM Lodhi Road Campus on January 17-18' 2009.

Workshop was conducted by Prof. Santosh Panda and Prof.

Madhu Parhar, eminent faculties/trainers form Staff Training and Research Institute of Distance Education (STRIDE), IGNOU. It was attended by 30 IILM facultiy members from Gurgaon and Lodhi Road Campuses.

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THE BANYAN TREE IB WORLD SCHOOL â&#x20AC;&#x2DC;Education liberates and sets you freeâ&#x20AC;&#x2122; The Banyan Tree World School follows the IB philosophy of nurturing inquiring, knowledgeable and caring young people who help to create a better and more peaceful world through intercultural understanding and respect.

The teaching learning experiences in the school encourage students to become active, compassionate and lifelong learners who can empathize with the problems and pain of others and have the courage to stop and take them along.

The school follows an international curriculum having a student body comprising of both Indian and foreign students. They learn to share and respect each other including their culture and traditions.

The school celebrates national and international festivals with equal gusto in keeping with its global philosophy.

It has special language classes for those students who are not familiar with English, as the medium of instruction. The school believe that education is for all and

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thus provide an inclusive atmosphere where children with different needs can learn together.

The overall development of each child is the ultimate aim of every faculty member. The purpose is to enable understanding and application of academic knowledge. This goes hand in hand with co-curricular activities. Each child is encouraged to participate in all activities and excel as per his/her potential.

Learning is not confined to the classrooms but can take place any-

where in the large campus. The children are encouraged to question, inquire, experiment and research to gain knowledge.

Teachers, students and the parents share equal responsibility in the learning process.

The school started at Gurgaon, in 2006, with a mission to provide quality education. Since then it has come a long way and has obtained an authorization from the International Baccalaureate Organization (IBO), to run the Diploma Programme (DP) for the senior years. It is in the final stages of obtaining authorization for the Primary Years Programme (PYP).

The school is also affiliated with the International General Certificate of Secondary Education (IGCSE), for grades IX and X; Cambridge International Examinations (CIE), running the A and AS levels for students aged between 16 and 18 years. It is also in the process of starting the Indian Certificate of Secondary Examination (ICSE) for the middle years from the next academic session.

Inputs by MEERA SAIN

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Mohandas Karamchand Gandhi (1869-1948) is considered as the greatest person in shaping the Indian history. Albert Einstein wrote, these lines about Gandhi, "We should strive to do things in his spirit: not to use violence in fighting for our cause, but by non-participation in anything you believe is evil." Here are some of the quotations by Gandhi, which have the potential of immense understanding and practicing in any arena of life and more specifically in management.

We must be the change we wish to see.

The spinning wheel is itself an exquisite piece of machinery.

My head daily bows in reverence to its unknown inventor.

Do not concentrate on showing the misdeeds of the government, for we have to convert and befriend those who run it.

The renunciation is the central sun, round which devotion, knowledge and the rest revolve like planets.

Organizations, like men, if they are to command respect and grow, must have a sense of honor and must fulfill their promises.

Woman is the embodiment of sacrifice and suffering and her advent to public life should, therefore, result in purifying it, in restraining unbridled ambition and accumulation of property.

Corporate cleanliness can only be ensured if there is a corporate conscience and a corporate insistence on cleanliness in public places.

Lack of finances never represented a real difficulty to a sincere worker. Finances follow, they dog your foot-steps if you represent a real cause.

Yajna is duty to be performed, or service to be rendered, all twenty-four hours of the day. Progress is impossible without inflexible determination.

Fraud itself is a species of violence.

Conditional co-operation is like adulterated cement which does not bind.

Complied from few Internet resources and booklets,

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Institute for Higher Education