Friday, 27 May 2011

Landmark Events of last 40 years in my country

Technological Advances
TV in India-Mid Seventies
80's-Color TV, VCR
90's-2000's-Cyber Space,Mobile, DVD, Androids
Departmental Stores, Malls, TV Channels, Luxury Cars, Speciality Restaurants but also elite dabhas, cafes, bars....
Sports-World Cup 83, 2011, Olympic Medals in 21'st century, Sachin Tendulkar
Cinema-Amitabh-Action in 70's and 80's folowed by 90's, 21'st century:Khans-Romance, Akshay , Sunny, Hrithik-Action
Politics-Confusion, Madams of various hues and not to speak of bhenjis, now Baba Rahul?, 80-2010:Epoch of Confusion.
Tender Mercies-Independent, Strong, Non Interfering, Impartial Constitutional Bodies,Military, to some extent judiciary, Freedom of Speech, Social Spirit, Activist Media, Liberal(by and large) society
.....More of the forty years? ....or better......

Thursday, 26 May 2011

Favourite Movies

My earliest recollection of seeing movies were yaadon ki baaraat and don, i must have been about four then, after that i remenmber seeing Hum kisise kum nahin, kaala patthar, mr.natwarlal, suhaag, Sholay i saw much later. On a trip to Italy i saw Grease and loved it, i also saw my first animation super robot film and loved it too. I was very fond of Amitabh Bachchan and those were his days..the seventies. Other movies watched in the early eighties were Force Ten from Navarone(guns of Navarone watched much later), the hindi "Love Story", the first movie of Kumar Gaurav, (Sunjay Dutts Rocky not untill much later).Then Satte Pe Satta, Hero, Jaanbaaz, folowed by Maaine Pyar Kiyaa, QSQT, and then during colege days Dil, Jo Jeeta Wohi Sikander, Henna, Hum, folowed by Coolie No.1 , Raja Babu(Sarkailo Khatiya).Then as i reached the twenties, Hum Aapke hain kaun, DDLJ, Saajan Chale Sauraal, Hero No 1,Dil To Paagal Hai and then towards the thirties with kuch Kuch Hotaaa Hai, Biwi No.1, and then shifting to Ahmedabad in early to mid thirties(2000-20005) with Mohabatein, Kabhi Khushi Kabhi Gham, Munnabhai MBS, Main Hoon Na, Lage Raho Muna Bhai, and finally late thirties with Goilmaal Series and of course Dabbang,
Now i am ready for READY.....

Tuesday, 24 May 2011

Favourite Books

As far as reading is concerned i started with amar chitra katha, Archie and Richie Rich, progressed to Enid Blyton-Five Findouters, Famous Five and Secret Seven, I was enthraled by Frederick Trotevile"Fatty", progressed further to Agatha Christie and PG Wodehouse, in Agatha particularly liked Curtain-Poirot's last case, and Wodehouse was fascinated by Psmith and enjoyed Uncle Fred and Muliner tho took sometime to get to Jeeves, some Ludlum's like the Bourne Series and racy Sheldon's (Other side of midnight) later i proceeded to Non-fiction with Ideaof India(stil to read Idea of Pakistan, wonder if ever will?), Shashi Tharoor's "From Midnight to Milenium", Edward Luce's "Inspite of the Gods" , Francine Frankael, Ramachandra Guha, Bipan Chandra's India After Independence and India's Strugle for Independence(tho not in full).Other books which i read substantially tho not in full were books on behavioral eco like nudge, fooled by randomness and animal spirits.Meanwhile since school days text books like NCERT Books on History and Maths(tho i did not do justice to Maths in School) and in BA-Chiang's math eco and Gujarati's basic econometrics and Masters Dornbusch and other reference reading on topics like Welfare Eco-Nath, Mishan, Bruce and Boadway, I particularly enjoyed a monograph of Manohar Rao for Indian Economic Journal on Money Deficits and Inflation(me and a student worked on it later,while teaching i basically worked on Mankiw's Economics basic text, tho progressed to Dornbusch and Case and Fair in last two years at AES now i am progressing to reading speeches from RBI websites and completing my reading of Chiang, Gujarati and Froyen's MacroEconomics among other readings, ofcourse articles on oped of Eco Times, Financial Express, Hindu, Indian Express, Times of India and magazines like India Today, Frontline, Outlook are read quite often.........

Monday, 23 May 2011

Sports and munstheindian

Like a typical Indian guy, i have had my experience of playing and watching sports:
Playing Sports
My experience of playing started when i was two year old with my three pedal cycle which i used to ride fast in between the rooms, soon i started graduating to play with the neighbourhood boys, I remember how in Ahmedabd the society boys used to have their own lingo -HOWZATT! etc, we used to play cricket and i remember one match specially where i scored the winning runs, pure luck-the bowler missed the stumps at a distance of one foot with me and the runner at the same end!, In Drive In Area we built a team of friends playing serious gully cricket-calculating averages and all, in school in early years, i was a very good fast bowler with a tremendous yorker, but i lost my length and shifted to wicket keeping which i was good at till i picked up height, where i remember one match where my best friends were the bowlers and we conceded extras by the dozen, even the umpire did not know whether they were wides or byes, anyway my time of glory came when Ajay Jadeja organiseda cricket match between a team of "boys " in the neighbourhood(pandara park) and his team scored 76 with  him top scoring when our team got turn to bat most players got out early leaving me to score the required 70 runs i came within snifing distance and then Ajay "ordered" me to get out and through some kind of hypnotic efect i got stumped. Anyhow in schooln i did nothing of much note in sporta apart from once qualifying for a certificate in long jump. In colege i used to run 10 km but never participated in the main competition, gouing of for vacation during the Championship. In my masters i won my hostel 800 metre race, because of my practice of jogging everyday. Other sports i played were hockey, football, with some ability, Voleyball, badminton and table tenis with less ability and hand cricket and what is caled wall squash(hitting a tennis ball with your hands to the wall and scoring points) with a lot of fun, i learnt chess, carrom and cards and promptly forgot and drafts, monopoly and ludo i thankfuly did not forget
Watching Sports-The 1984 World Cup was my great moment and so has been 2011 world cup tho i started watching cricket with the 79 Kapil Kirmani series against Pakistan, I grew up with Vengsarkar Gavaskar and later Azhar Tendulkar and still later Ganguly Laxman Tendulkar Dravid, I alsos enjoyed Shahid, Zafar Iqbal, Pargat Singh, MP Singh and later Dhanraj Pilai, not to mention Mahesh and leander and Sania(Mirza).I particularly remember the Los Angeles Olympics missing out a medal in Hockey and PT Usha by a whisker this was before recent medal finishes in Shooting and Boxing!!!I remember MP Singh getting our team from 5-1 down in hockey to 5 all against germany, i also remember Ramesh Krishnan and Vijay Amritraj getting us to the finals of the Davis Cup

Sunday, 22 May 2011

Walking around and discovering cities

Let me say first of all that whichever Metro City in the world I visit I like to remain stationed there for at least five days so as to soak in the atmosphere
Ahmedabad-Walk on Judges bungalow, turn into SG road, visit the ISCON mall-the Landmark Book Store there is a favourite, walk ahead to Crossword, catch a movie at Fun Republic, Cinemax or Wide Angle, have a Chocolate Sundae at Marriots Cofeeshop or a vegetarian meal at Shakahari at Marriot, walk ahead to the Hyderabadi Biryani place or turn into judges bunglow again to visit Cafe Upper Crust at Vastrapur and Himalya Mall near Drivein eat a MCSwirl at the Mc Donalds there or catch a movie at big cinemas or take your car to the Drive In Cinema.Mainland China, Mirch Masla, Hyderabadi Biryani, Country In and Suites are all good food options in the area.

Paris-The Touristy Area of Arc De Triumph is well visited but while in Paris visit the latin quarter on the left bank of the river seine, it is very historical, full of students, artists, architecture, and small cafes-Pl St Maichael and the left bank next to the river Sienne, Rue De Suger, on the other side as u walk to the Eiffel Tower, on the other side of the River is The Sorbonne University and further ahead the Louvre Museum, which is very historical opposite to that walking further on is the Eiffel Tower

Washington DC-made in same architectural style as Paris-Walk from Dupont Circle to Georgetown Univerity past Rock Creak Park, on the other side walk to the white House or Reiters Book Store where you'l get best economics books including study guides.

Manhattan-Walk from 42nd street New York Public Library, beautiful to Study and seee architecturaly, walk past Macy's Empire State Building to Central Park, New York University and the quaintness of West Vilage and East Village, number of book store and Restaurants there

Singapore-Ofcourse Orchard Street and Hill Street-Department Stores, Malls and Restaurants.

New Delhi PVR Priya, PVR Saket Malls near JNU, malls near Saket Ansal Plaza Mall near Asian Games Vilage, Metropolitan Mal near Gurgaon, India gate, Conaught Place, Greater kailash.

Canada-Waterloo-Walk from waterloo University, past Laurier University to Waterloo Public Library, number of Shops on the main Road from Kitchener to Waterloo Borders Book Store and on either side be prepared for a long walk if you are with me tho.....

Friday, 20 May 2011

Food-the best places to eat in the world!!

The best meal i have had in India is at The Trattoria in Hotel President, particularly the T-bone steak followed by the chocolate cake, the Thai Restaurant there is also pretty good provided you order well, but you can't go wrong with the thai chicken red curry with rice, in the konkan cafe, the sea food thali gives good value for money, talking about good goan food(insert a section on goan food in Bombay and Goa).The taj Holiday Village food is quite average in Goa but the Taj Exotica gives good Goan food, other Taj properties giving good food include the Taj Kumarakoram in Kerala and the Taj Machaan  in Delhi gives a mean club sandwitch folowed by a chocolate cake again to die for(ask for lots of ice cream). Other places in India were you get really good meals include Punjabi by Nature in Delhi-lovely humungous portions of Mutton Burra and Chicken Burra Kebab,the same is also good at chicken inn and pindis in pandara park where ichiban the chinese restaurant is pretty good where you won't go wrong also is with the mutton korma at karims in jama masjid folowed by the phirni, or try the Saagar at diferent places in Delhi for south Indian food or Bengal Sweet Mart in Bengali market or South Extension for Chole Bhatiure , Chaat and Kulfi,(I used to go to Bengal sweet mart at south ex with my grandmother). For Chinese food the chinese restaurant at the Taj mansingh is pretty good, cheap chinese food can be had at Yo China  at the Metrropolitan Mall at Gurgaon, that mall is anyway good for a visit, as far as a good bar is concerned nothing can beat the Geofrey's at Ansal Plaza Mall, Pastry lovers try Wengers at Cp, for good cold milk try Keventers at CP Inner Circle, Flavours near Moolchand Flyovers gives good pizza, Nirulas used to be pretty good particularly the one at yashwant place. If you want good old diners nothing like NY Manhattan all american diners but visit cafetaria at west 18th street for deliciously huge burgers while in NY or Cafe Orlin in West village or the cafes at the East village including the lovely bakeries in a quaint atmosphere, or go to Dupont Circle in Washington for lovely deliciacies, including ethiopian food.In Paris, try the Left Bank near the river for quaint restaurants.
As far as Ahmedabad is concerned good food can be had surprisingly at the Mosaic Restaurant at Country INn where Chef Jena is the best chef in Ahmedabad, try the tandoori chicken or the Chicken Steak Valencia or the Chinese Lobster there. Or try the Chicken Steaks at Upper Crust cafe followed by the chocolate Trufle or Chocolate Brownie or Black Forest with Icce Cream and the Lemon Cooler. Sports Club near Sardar Patel Circle gives good food catered by  Rushad of Mirch Masala/Tomatos fame(Two other good restaurants in Abad).If u r talking of clubs then IIC in Delhi( for those lucky enough to get in) is prety good.

Sunday, 15 May 2011

A Synoptic View of Business Classics since 1980:Munish Alagh

(Reference: Ultimate Business Library:The Greatest Books that made Management, Stuart Crainer, 2003.)

In this presentation we summarise the great management books of the last thirty years. While doing so we attempt to throw some light on the contemporary issues of management which can be further researched by our students. We divide the great management classics into subject themes and invite suggestions from the faculty regarding topics which can be further researched on those themes, besides we make some suggestions of our own for issues of study.

Book 1-
Ohmae, Kenichi, The Mind of the Strategist, McGraw Hill, New York, 1982.

Ohmae argues that Japanese strategic thinking, is ‘basically creative and intuitive’.According to Ohmae, unlike large US corporations, Japanese businesses tend not to have large strategic planning staffs like large US Corporations, Japanese companies often have a single, naturally talented strategist with ‘an idiosyncratic mode of thinking. Another area of fundamental difference explored by Ohmae is the role of the customer who is at the heart of the Japanese approach to strategy and key to corporate values. The central thrust of the book is that strategy as epitomized by the Japanese approach is irrational and non-linear. The mind of the strategist is not an unquestioning eulogy to the Japanese approach to strategy. Indeed, Ohmae notes the decline in naturally strategic thinkers in both Japan and the West. Both systems, he says, encourage orthodoxy to the extent that innovative strategic thinking is neither encouraged nor possible. The mind of the Strategist began the process of questioning the then pervasive Japanese mythology through providing interpretations of strategy which were not hidebound by habitual cultural or traditional behavior.

Book 2
Porter, Michael, Competitive Strategy, Free Press, New York, 1980.

Michael Porter’s Competitive Strategy:Techniques for analyzing industries and competitors involves a solution to a strategic dilemma. At one end are the pragmatists who contend that companies have to respond to their own specific situation. At the other end of the spectrum is the line taken that market knowledge is all-important. Porter proposes a logical compromise, arguing that there are three ‘generic strategies’, ‘viable approaches to dealing with…competitive forces’. Strategy in porter’s eyes, is distilled down to a choice on how to compete expressed in the three generic strategies; differentiation, competing on the basis of value added to customers so that customers will pay a premium to cover higher costs; cost based leadership, offering products or services at the lowest cost; and thirdly focus. Companies with a clear strategy outperform those whose strategy is unclear or those which attempt both differentiation and cost-leadership.

However less than a decade after Competitive Strategy was published in 1980, companies had to compete on all fronts. They had to be differentiated, through improved service or speedier development, and be cost leaders, cheaper than their competitors.

Porter’s other contribution in Competitive Strategy has proved more robust.
‘In any industry, whether it is domestic or international, or produces a product or a service, the rules of competition are embodied in five competitive forces, ‘he writes. These five competitive forces are:
The entry of new competitors.
The threat of substitutes.
The bargaining power of buyers.
The bargaining power of suppliers
The rivalry among existing competitors.

Book 3
Hamel, Gary and Prahalad, CK, Competing for the Future, Harvard University Press, Cambridge, MA, 1994.

C  K Prahlad and Gary Hamel’s work can be considered as a blue print for a new generation of strategic thinking.

As per them, the real barrier of strategy is at the top, not at the bottom and middle.
They believe the corporate world is following mechanistic view of the strategy. Rather, it should be analytical, concerned with meaning purpose and passion. As per them one should not rely on only core competencies, it can be a powerful weapon in some cases but should not be a sole basis.

They gave two extremes of it.
  1. arch-rationalist—i.e. insisting on a constant stream of data to support any strategy
thriving on chaos—a free-wheeling organizations where strategy is a movable feast.

Book 4

Packard, David;  HP Way, 1995

Fundamental Principles
No long term borrowing to secure expansion of the business
For growth—our products should be leaders in the market
People are assets---should trusted and treated with respect and dignity
Commitment to people fosters commitment to company

Book 5

Champy, James and Hammer, Michael, Reengineering the Corporation, Harper Business, New York, 1993.

Cutting away the hype and hyperbole, the basic idea behind re-engineering is that organizations need to identify their key processes and make them as lean as possible. Peripheral processes (and, therefore, peripheral people) need to be discarded. Champy and Hammer defined re-engineering as ‘the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance such as cost, quality, service and speed’.

Book 6

Kaplan, Robert S; Norton, David,   Balanced Scorecard, 1996

Harold Geneen took management by financial measurement, and the obvious conclusion drawn from it was that sole concentration on financial measures, can achieve only short-term or medium term success, but it is unlikely to link long term prosperity. While the other parameters like customer loyalty, employee satisfactions are difficult to measure. They gave four elements need to be balanced.
-Customer perspective- Companies must ask how they are perceived by customers
-Internal Perspective- Companies must ask what it is that they must excel at
-Innovation and learning perspective- companies must ask whether they can continue and improve
-Financial perspective-how does company looks at shareholders

Book 7

Semler, Ricardo, Maverick, 1993

Ricardo Semler was elected business leader of the year by a poll of 52000 Brazilian Executives. His book Maverick became an international best seller. For his family’s company Semco, he based revolution on three values: employee participation, profit sharing and open information system. As per Ricardo the leader should play his/her role as a catalyst. The book says about dramatic shift of Semco during the 1990s crisis time.

Book 8

Peters, Tom, Liberation Management, 1992.

The central idea of Tom Peters’ research is Structure.  By structure, he does not mean traditional hierarchical and functional sense. Taking inspiration from success of CNN, ABB and Body Shop, he derived that these organizations could thrive because of their flexible structure and so was able to change to meet the business needs of the moment.  As per him, free-flowing, impossible to pin down, uncharitable, simple yet complex, these are paradoxical structures of the tomorrow. New corporate structures will be networks with suppliers, customers and with all those who can deliver the business. Again, the new model of organization should move fast and continually seek new areas so that it can be unique in its markets.

Book 9

 Ohno, Taiichi; Toyota Way, 1978

Taiichi Ohno worked as a consultant with the Toyota writes that the roots of the Toyota system lie in the immediate post war period. The Toyota production system is strikingly difference from the approaches used in a west when an average American worker produced around nine times as much as a Japanese worker. For Toyota the emphasis was on reducing costs rather than increasing the selling price.
There simple principles were put in practice by Toyota System. 1. Just-in –time production, 2. Everyone is responsible for quality and any defects of quality should be rectified as soon as they are identified. 3. Value System.

The MIT research for the Toyota concludes that while American car manufacturer focused on mass production techniques, Japanese system focused on a lean management and this resulted in to increased production, high quality, lower costs and happy customers.

Lean production is a superior way for humans to make things, but the trouble is to get it right.

Book 10

Goleman, Daniel;  Emotional Intelligence, 1995.

Emotional Intelligence is based on the notion that the ability of managers to understand and manage their own emotions and those of the people they work with is the key to better business performance. It is the ability to handle one’s emotions, deal with frustration, self-awareness, self-discipline, persistence, empathy and being able to get along with people. Goleman has gone on to explore the issue of personal and professional effectiveness. He argues in one of his book “Working with emotional Intelligence” that workplace competencies based on emotional intelligence play a far greater role in star performance than do intellect or technical skill, and that both individuals and companies will benefit from cultivating these capabilities.

Based on his survey, he identified six different types of leadership skills. These are Coercive, Authoritative, Affilitative, Democratic, Presenting and Coaching leaders.
According to him, EI can be learned by five dimensions. These are Self Awareness, Managing emotions, motivating others, Showing Empathy and staying connected.

Book 11

Collins, James; Porras, Jerry; Built to Last, 1994.

It tells about the values in the context of business and corporations. Core values are organization’s essential and enduring tenets-a small set of guiding principles; not to be confused with specific cultural or operating practices; not to be compromised for financial gain or short term expediency. As per Collins and Porras, companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.  Key factor in the success of companies like HP, Johnson & Johnson, P&G, Merck and Sony is their vision and it has two components-core ideology and envisioned future. Core ideology provides glue that holds an organization together through a time. Central to the book is the distinction between being good and great.

Book 12

Covey, Stephen, The Seven habits of highly effective people, 1989.

The book discusses three main techniques: one minute goal setting, one minute praising and one minute reprimands. Again, the advice is to develop trust, generate positive energy and avoid negative energy.

Book 13

Porter, Michael; The competitive Advantage of nations, 1990.

Based on his study of ten countries (UK, Denmark, Italy, Japan, Korea, Singapore, Sweden, Switzerland, Germany and US), he concluded that the intensity of domestic competition often fuels a success on a global stage. He found that the principle goal of such a nation is to produce a high and rising standard of living for its citizens. The ability to do so does not depend upon the competitiveness but on the productivity with which a nation’s resources are employed. Productivity is the prime determinant in the long run of a nation’s standard of living.

To make sense of the dynamics behind national strength in a particular industry, Porter develops a national diamond and is made up of four forces like factor conditions, demand conditions, related and supporting industries and firm strategy, structure and rivalry.

Book 14

Kotter, John; Leading Change, 1996.

John Koter has worked on leadership, change management, culture and then careers.
While writing down a book on the Leadership Factor-he found out majority of the people doing management stuff thought that it was leadership. As the system do not support leadership—he studied on culture, then he took at environmental and economical changes.
The central theme of Kotter’s work is change.
Successful change requires the effort of a critical mass of key individuals---a group of the two-fifty people depending upon the size of the organization-in order to move the organization in significantly different directions. Leadership is the critical ingredient for driving change.
For that he suggested following steps
-Establishing sense of urgency
-organizations need to create powerful coalition
-develop vision and strategy
-communicate the change vision
-empower broad-based action
-celebrate short-term wins
-anchor the change in the corporate culture

Book 15

Peters Tom, Waterman Robert; In search of excellence, 1982.

Even though the book published in the year 1982, its legacy has become clear after approximately 20 years of its publication. It has marked a fundamental change in management emphasis from rationalist and mechanistic style to a human and humane approach. It is resolutely people centric and looks beyond rational analysis to explore social complexity. The intellectual cornerstones are eight principles identified by Peter and Waterman as characteristics of excellent companies. These are: a bias of action, being close to the customer, autonomy and entrepreneurship, productivity through people, being values driven, networking, simple form, lean staff.

Based on these principles, they identified 62 companies and divided them in to three categories. 1. 18 companies were categories as excellent but did not meet all criteria, 2. 30 companies excellence and met the criteria, 3. 14 companies were the exemplars of excellence.


“Strategic thinking is the art of outdoing an adversary, knowing that the adversary is trying to do the same to you”(Dixit, Avinash and Nalebuff Barry, Norton 1991).Strategic Thinking has been studied in various books, notably in Michael Porter’s Competitive Strategy (Porter, Michael, Free Press, 1991). However our focus is on Dixit and Nalebuff’s classic “Thinking Strategically-The Competitive Edge in Business, Politics and Everyday Life”
A). Ten Tales of Strategy
1. The Hot Hand: People including commentators and bettors believe that players experience the “hot hand, while observing basketball players scoring baskets, they believe that there exists a positive autocorrelation between successful baskets when there is infact no empirical evidence of that..Sports announcers see long streaks of consecutive successes and proclaim that the athelete has a “hot hand.” Yet according to certain psychology professors, this is a misperception of reality.(Gilovich, Thomas, Vallone, Robert and Tversky, Amos, 1985).
They propose a more rigorous test. In basketball, they look at all the instances of a player’s baskets, and observe the percentage of times that player’s next shot is also a basket.A similar calculation is made for the shots immediately following misses.If a baket is more likely to follow a basket than to follow a miss, then there really is something to the theory of the hot hand.
They conducted this test on a basketball team. The results contradicted the ‘hot hand’ view. When a player made his last shot, he was less likely to make his next; when he missed his previous attempt, he was more likely to make his next. Does this mean we should be talking of the ‘stroboscopic hand,” like the strobe light that alternates between on and off?
Game theory suggests a different interpretation. While the statistical evidence denies the presence of streak shooting, it does not refute the possibility that a ‘hot’ player might warm up the game in some other way. The difference between streak shooting and a hot hand arises because of the interaction between offensive and defensive strategies. Suppose a player does have a truly hot hand. Surely the other side would start to crowd him. This could easily lower his shooting percentage.
That is not all. When the defense focuses on this player, one of his teammates is left unguarded and is more likely to shoot successfully. Thus we might test for hot hands by looking for streaks in team success.
A player may even assist himself when one hot hand warms up the other. The Boston Celtics star, Larry Bird, prefers shooting with his right hand.
What happens when Bird spends his off season working to improve his left-handed shooting? The defense responds by spending more time covering his left-handed shots. The result is that this frees his right hand more often.
Going one step further, we show that when the left hand is stronger it may even be used less often. If your backhand is much weaker than your forehand, your opponents will learn to play to your backhand. Eventually, as a result of all this backhand practice, your backhand will improve. As your two strokes become more equal, opponents will play more evenly between forehands and backhands. You get to use your better forehand more often; this could be the real advantage of improving your backhand.
2. When it pays to move second-In two competitor sailboat racing an interesting reversal of a “follow the leader” strategy is seen. The leading sailboat usually copies the strategy of the trailing boat. If you have the lead, the surest way to stay ahead is to play monkey see, monkey do. So we come to our second tale-
                                             “To lead or not to lead.”
After the first four races in the 1983 America’s Cup finals, Dennis Conner’s Liberty led 3-1 in a best-of-seven series. On the morning of the fifth race, there was anticipation of having prolonged the United States’ winning streak to 132 years. It was not to be.
At the start, Liberty got off  to a 37-second lead when Australia II  jumped the gun and had to recross the starting line. The Australian skipper, John Bertrand, tried to catch up by sailing way over to the left of the course in the hopes of catching a wind shift. Dennis Conner chose to keep Liberty on the right-hand side of the course. Bertrand’s gamble paid off. Conner was criticized for his strategic failure to follow Australia II’s path. Two races later, Australia II won the series.
The leader imitates the follower even when the follower is clearly pursuing a poor strategy. Why? Because in sailboat racing: only winning matters.
3.Do what you want we will not bribe you-Consider two companies both in a position where they have to bribe a Government department, now one company will think the other company is going to bribe so I will benefit by bribing, he can also think even if the other company does not bribe I will benefit by bribing.The other company will also think in a similar manner so both will end up bribing the government department. However both companies would have benefitted by making an agreement not to bribe. This is an example of Prisoners Dilemna
4. Be selectively inflexible-there is a power in intransigence , but how can one achieve the necessary degree of intransigence? There are various means by which commitment can be achieved and sustained.
5. Hostages dilemma-a prisoners dilemma with more than two people-Why is a planeload of people powerless before a single hijacker with a gun? The question is who is going to bell the cat?
6. Look at the whole picture-Decisions made on a case by case basis can lead to undesireable results overall.In fact a sequence of majority votes can lead to an outcome that everyone regards as worse than the status-quo.
7. Be wary of a commitment-once you get into a situation it is difficult to get out of it. Strategists who foresee such consequences will use their bargaining power while it exists, namely, before they get into the commitment.
8. Mix your plays-If you do the same thing all the time, the opposition will be able to counter you more effectively by concentrating its resources on the best response to your one strategy. It is unpredictability that is important when mixing.
9. Use information to guide your own action.-The strategic insight is that other people’s actions tell us something about what they know, and we should use such information to guide our own action. Of course, we should use this in conjunction with our own information concerning the matter and use all strategic devices to elicit more from others.
10.Pride and irrationality cannot be ignored-It is foolhardy to deal with people who are not rational in terms of bargaining, negotiations and strategy. Even if you deal with such people do not pre-commit yourself.
B)A few Morals:
The Hot hand-we cannot assume that when we change our behavior everything else will remain unchanged.
When it pays to move second-In technology races no less than in sailboat races, those who trail tend to employ more innovative strategies; the leaders tend to imitate the followers.
Be selectively inflexible-“The stuck wheel gets the grease”
Belling the cat-the difficulty of obtaining outcomes that require coordination and individual sacrifice.
Look at the whole picture-the danger of solving problems piece by piece.
Mix your plays-tennis and tax audits point out the strategic advantage of being unpredictable.
C.) Moral of Case Study 1-In games it is not always an advantage to seize the initiative and move first. This reveals your hand, and the other players can use this to their advantage and your cost. Second movers maybe in the stronger strategic position.
Dixit, Avinash, Nalebuf Barry, “Thinking Strategically-The Competitive Edge in Business, Politics and Everyday Life” Norton 1991.

Gilovich, Thomas, Vallone, Robert and Tversky, Amos,”The Hot Hand in Basketball:On the misperception of Random Sequences,” Cognitive Psychology 17,1985:295-314.

Porter, Michael, Competitive Strategy,Free Press, 1991.

Using Short Movie and Television Clips in the Economics Principles Class-A Presentation for Students To Begin Economics 100

Reference:Using Short Movie and Television Clips in the Economics Principles Class. (Sexton, Robert L. (2006)  The Journal of Economic Education Volume 37, Number 4 / Fall 2006 pp 406-417

Movies in Economics-The authors  describe a teaching method that uses powerful contemporary media, movie and television clips, to demonstrate the enormous breadth and depth of economic concepts. Many different movie and television clips can be   used to show the power of economic analysis. The authors describes the scenes  and the economic concepts within those scenes for a number of movies.
          Concept: Ceteris Paribus; Film: For the Love of the Game (1999)
In this movie,  an aging baseball pitcher is pitching in his last game. The scene begins with him being heckled:  To concentrate, his coach repeats the phrase "clear the mechanism." it allows the pitcher to clear out all the outside noise—it is now just him and the catcher. We need to do this in economics—that there is sometimes noise that gets in the way of seeing the relationship between key economic variables. This is why we use the ceteris parihus condition to hold these other variables constant to focus on the relationship between variables such as price and quantity demanded.
Concept: Incentives Matter; Film: Captain Ron (1992)
          Martin Harvey his wife. Katherine Harvey and their children decide to take an extended vacation to sail an inherited boat to Miami, wherethey plan to sell it. However, they need to hire someone to sail their boat—so they hire Captain Ron. The scene begins when they are checking out the engine, and they notice that it was losing considerable amounts of oil on a daily basis. Martin harvey’s's son, Ben, says he would like to check the oil every day, but Captain Ron tells him the job is too important and that his Dad should do it. Ben objects. Captain Ron says,  Now, the way it works is, you do your job. You do it good, you get a better job. Maybe you get Promoted. Because almost all of economics can be reduced to incentive stories, this is a fun clip to begin.
Concept: Tradeoffs; Film: Rudy (1992) Rudy has his heart set on one goal; he wants to play football.Rudy is small and has little raw talent, but he is driven by his heart and conviction. His father and brother, who work In the steel mills, think he is crazy for pursuing his dream. This clip is filled with choices and tradeoffs that Rudy faces—whether to go to college or work in the steel mills, whether to go to the junior college to get the grades to get into the team or just give up on the dream, whether to quit the team, whether to go back to the team. Students leam very quickly that choices, costs, and tradeoffs are everywhere. Many films can demonstrate choice and costs, but this one seems to be a student favorite
Concept: Opportunity Cost; Film: Space Jam (1996)
          There is a scene in this movie that shows Michael Jordan after he left basketball to pursue playing professional baseball. This is a great introduction into my discussion of opportunity cost. Ask the students; How much did it cost Michael Jordan to quit professional basketball and play professional baseball for the year? Be careful not to say it was the wrong decision—-just a costly one.
Concept: Exchange; Film: Shawshank Redemption (1994)
          The scene is when Andy (Tim Robbins) meets Red (Morgan Freeman) in the prison yard and asks him if he could get him a rock hammer. The scene continues and shows how the rock hammer is smuggled in through the laundry and then through the prison book distribution program. And all along the way, cigarettes are used for payment to those involved in the transaction. It is a nice example of exchange and can also be used to demonstrate barter—trading cigarettes for services.
Concept: Resource Allocation; Film: Castaway (2000)
          When Chuck Noland's (Tom Hanks) plane crashes and he finds himself on a deserted island, he has to find a way to survive. On the island, he must find answers to the what, how. and for whom questions. The how question is where this scene becomes interesting. Chuck has salvaged several boxes from the plane crash.
He uses the blades of the ice skates as a knife: to open coconuts, to cut and convert a dress into a fishing net. and to sharpen a stick to use as a spear for catching fish. He uses the laces from the skates and the bubble wrap in the package to dress an injury he incurred on the island. He uses the raft as a lean-to for his shelter. He builds a fire and even "makes" a friend with a volleyball—Wilson. This film provides a nice introduction to the classic island economy, where Chuck must use his entrepreneurial talents to make the best use of the scarce resources on the island.
Concept: Tastes and Demand Shifts; Film: Hudsucker Proxy (1994)
          The scene starts with the owner of a toy store trying unsuccessfully to sell a new product—a hula hoop. In the store window, he puts up the price of the hula hoops with a sticker. The scene shows him waiting and waiting with no customers and then he starts to lower his price from $1.79 to $1.59 and eventually all the way down to "free with any purchase." He becomes so disgusted that he throws a number of hula hoops out the door and they roll into an alley. One rolls out onto the street, where a young boy (Arthur Bridgets) picks it up. He is a natural, in the meantime, the school down the street lets out and about 30 kids gather around in astonishment, watching the young boy swing the hula hoop—around his hips,ankles, and neck. You then see the students attack the store in droves to buy hula hoops, and the sticker price zooms up to $3.99. This is a good example to show the importance of taste as a demand shifter.
Concept: Shortage; Film: Jingle All the Way (1996)
          In this film, mattress salesman Howard Langston (Amold Schwarzenegger)asks his son Jamie if there is anything he wants for Christmas. His son, Jamie says, "I want the Turbo Man. Howard soon realizes it is the hottest toy in years, and there is no Turbo Man available anywhere. Howard is trying to find the Turbo Man on Christmas Eve.This scene provides a fun introduction to shortages.
You can also talk about differences between anticipated and actual demand and the eventual adjustment process.

Concept: Consumer and Producer Surplus; Film: Pretty Woman (1990)
(Richard Gere) Edward meets an energetic, carefree woman—Vivian(Julia Roberts).Gere walks in and says, "Vivian, I have a business proposition for you. I would like you to spend the week with me.Vivian says, —$4,000." Edward then counters with $2,000, and Vivian says $3,000, and Edward says, "Done." Then Vivian says. "I would have stayed for $2,000" and Edward says "I would have paid you $4.0(X)." I ask the class:How much consumer surplus is Edward receiving if he was willing to pay $4,000 but only pays $3,000. and how much producer surplus is Vivian receiving if she is willing to stay for $2,000 but receives $3,000?
Concept: Inflation; Film: Austin Powers (1992
          In this scene, Dr. Evil (Mike Myers) is meeting with NumberTwo and the rest of the board of Virtucom. Dr. Evil, who has been frozen for 30 years, has no idea how much inflation has occurred over that time span. He says, "I have a plan. Its called blackmail.. .we get the warheads, and we hold the whole world hostage for ONE million dollars!" Number Two says, "Don't you think you should ask for more than a million dollars? A million dollars isn't exactly a lot of money any more."
          Conclusion:Many introductory economics textbook authors state that a benefit from the course is to better understand human hehavior. It is a very valuable lesson that instructors can get across more strongly if they can show students how economics is relevant to virtually every aspect of their everyday lives—even a trip to the movies. Movie clips ean vividly illustrate economic issues and supplement the real-life examples that instructors present in the classroom. They can be used to spark discussion, to help students remember certain concepts, or to just make the class more fun. so students will look forward to attending the next class. Of course, .some movies will not be totally accurate but that too can provide a springboard for discussion.
          Reference:Using Short Movie and Television Clips in the Economics Principles Class. (Sexton, Robert L. (2006)  The Journal of Economic Education Volume 37, Number 4 / Fall 2006 pp 406-417

Thursday, 12 May 2011

Micro Finance and Behavioral Eco

A.Importance of Micro Finance
A good definition of microfinance as provided by Robinson is, ‘Microfinance refers to small-scale financial services for both credits and deposits —that are provided to people who farm or fish or herd; operate small or microenterprises where goods are produced, recycled, repaired, or traded; provide services; work for wages or commissions; gain income from renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to other individuals and local groups in developing countries, in both rural and urban areas’.

The goal of microfinance is a world in which as many poor and near-poor households as
possible have permanent access to an appropriate range of high-quality financial services, including not just credit but also savings, insurance, and fund transfers.(CGAP, 2004)
Seen from a broader perspective, the development of a healthy national financial system has long been viewed as a catalyst for the broader goal of national economic development (see for example Alexander Gerschenkron, Paul Rosenstein-Rodan, Joseph Schumpeter, Anne Krueger ).
Gerschenkron (1962)postulated that the more backward an economy was at the outset of development the more certain conditions were likely to occur during growth: consumption would be squeezed in favor of investment (i.e., savings) in countries starting from farther behind, and there was likely to be a greater reliance on banks, state entities, and other means of directing investment, among other conditions. He never exactly defined how 'backwardness' was to be measured, though he alluded to a northwest-to-southeast axis within Europe, with the United Kingdom at the most advanced extreme and the Balkan countries at the least developed extreme.
Rosenstein Rodan(1943) is the author of the 1943 article "Problems of Industrialisation of Eastern and South-Eastern Europe" - origin of the “Big Push Model” theory - in which he argued for planned large-scale investment programmes in industrialisation in countries with a large surplus workforce in agriculture, in order to take advantage of network effects, viz economies of scale and scope, to escape the low level equilibrium "trap". He thus developed a theme laid out by Allyn Young in his 1928 article "Increasing Returns and Economic Progress", in which the latter himself expanded a theme formulated by Adam Smith in 1776.

Schumpeter  (1934) thought that the institution enabling the entrepreneur to purchase the resources needed to realize his or her vision was a well-developed capitalist financial system, including a whole range of institutions for granting credit. One could divide economists among (1) those who emphasized "real" analysis and regarded money as merely a "veil" and (2) those who thought monetary institutions are important and money could be a separate driving force. Schumpeter was among the latter.

According to Anne Krueger liberalization of trade and payments is crucial for both industrialization and economic development.(Krueger, 1997)

B.Microfinance and Behavioral Economics

A growing body of research into decision-making reveals that people, rich and poor,consistently save less than they would like to. The problem is not simply impatience and a lack of “future orientation.” Instead, new explanations point to limits to complex decision making and weak internal self-control mechanisms on the part of individuals. The theory translates into innovative practice and products. Field studies, for
example, show the power of mechanisms like structured savings accounts that require regular deposits toward a fixed goal. Having the right mechanisms can make the difference between saving a little and saving a lot.( Armendáriz and Morduch 2010 p.17)

Mulainathan and Krishnan(2008) conclude in their article on Psychology and Economics:

“The psychological evidence presented suggests that planning for the future and sticking to that plan is difficult. The behavioral economic framework of these facts supports the idea that debt discipline is a good mechanism for microfinance clients. Given the liquidity constraints that many of the poor face, many are unable to save enough on a regular basis to meet their needs. For this reason, having relatively affordable access to credit can allow many clients and their families access to a range of items that will enhance their quality of life, from new consumer goods to the ability to pay for children’s school and college fees. The commitment to make weekly repayments to the MFI is something that many clients see as fixed, which helps them psychologically realize that saving for such payments cannot be delayed. In any case, given that mistakes are easier to make for the poor and carry much more weight, repayment discipline, implemented either through product design or group trainings, helps mitigate these self-control problems when it comes to debt.

At the same time, a behavioral perspective can be useful when thinking about common
accusations leveled at the microfinance sector, including the fact that clients borrow at high interest rates and may not be fully aware of the conditions to which they agree when borrowing from MFIs. With the example of the “leaky bucket,” where clients often find themselves unable to save up a large enough sum of money to purchase consumer durables for their homes, given the array of temptations and events responsible for the savings leakage, it is easy to see how microfinance clients are borrowing at relatively high interest rates because of behavioral reasons,rather than simply the lack of credit. In fact, this common behavior could be more of an illustration of the failure of savings markets, given that the cost of savings, at the expense of immediate need, may be so high that clients continually turn to both MFIs and moneylenders to meet their need for credit.

Lastly, in terms of consumer finance and policies to regulate the microfinance sector, it is
important to realize that development economists tend to emphasize the presence of institutions:
for instance, banking may need to be privatized to guarantee a more streamlined credit system that also ensures better savings facilities and smoother consumption. Behavioral economists take these ideas and examine them through a psychological lens, which often shifts the focus to how important the effects of human behavior are when thinking about how the poor deal with all aspects of their lives, from managing their finances to providing for their families. We see through the behavioral lens that institutional design in microfinance is not just about providing access to financial services but about solving these issues that microfinance clients—the poor— face on daily basis. Within the scope of this piece and the few examples presented here, it is the hope of the authors that principles of psychology as well as economics will provide greater intuition when formulating development policies that affect the poor in their everyday lives.”

Having given an introduction to the theme we plan to study we next look at the basic issues which we need to consider with regard to behavioral aspects of microfinance.
Mode/Mechanism of Microfinance

Are their certain behavioral anamolies specific to the poor? Does that affect the products relevant for them?Does that affect the mode of financing them?

A.)Are their certain behavioral anamolies specific to the poor?

Bryan, Karlan and Nelson (2010) define a commitment device as an arrangement entered into by an agent which restricts his or her future choice set by making certain choices more expensive, perhaps infinitely expensive, while also satisfying two conditions: (a) the agent would,on the margin, pay something in the present to make those choices more expensive,even if he or she received no other benefit for the payment; and (b) the arrangement does not have a strategic purpose with respect to others.

Much of the empirical work on Behavioral Anomalies in Credit Markets centres on the poor.This reflects a simple reality: behavioral anamolies may be costly to individuals, but the poor have less slack, ie; disposable income with which to absorb errors(Bryan, Karlan and Nelson, 2010;Mulainathan and Shafir, 2009)

Banerjee and Mullainathan (2009) formalize this idea in the context of commitment, putting forward a temptation model that helps explain the existence of poverty trapsAt higher levels of income, however, only a small portion of marginal saving will be spent on temptation goods. Therefore, those with low income donot save and those with high income do save, leading to polarization of income. If this model is correct and temptation does in fact represent a smaller cost to the rich, then commitment devices may provide a means of pulling the poor out of poverty.

B.Do the behavioral features of the poor affect the products relevant for them?

Ashraf examine savings products in developing countries designed to promote commitment behavior. The desire for clients who require liquidity and also want help committing to a savings plan, but these two desires are often at conflict with each other.

Summarising from this paper:
Savings products with a commitment property can be more suitable to meet long-term goals and anticipated events, such as purchasing a house or paying school fees. Whereas simple flexible savings products aims to offer low-income and poor communities safe and convenient access to their funds to meet non-discretionary spending needs.( Ashraf

C.Do the behavioral features of the poor affect the mode of financing them?

“Group liability” and “Group lending” both are very distinct from one another." “Group liability” refers to the terms of the actual contract where individuals are both borrowers and simultaneously guarantors of other’s loans. “Group lending” merely means there is some group aspect to the process or program, like the sharing of a common meeting time and place to make payments.
Giné and Karlan (2010)

Group liability in microfinance purposes to improve repayment rates through peer screening, monitoring, and enforcement. Sometimes it may create excessive pressure which may discourage reliable clients from borrowing.( Armendáriz and Morduch, 2000)

Group liability is often described as a key innovation responsible for the expansion of access to credit for the poor in developing countries. Under group liability structure clients have an incentive to screen other clients so that only trustworthy individuals are allowed into the program.(Adverse Selection avoided) In addition to that clients have incentives to make sure that funds are invested properly and effort exerted.(Moral Hazard mitigated). Finally the enforcement could be enhanced because clients face peer pressure, along with legal pressure to repay their loans. Thus shifting the responsibility of certain tasks from the lender to the clients, group liability claims to overcome information asymmetries typically found in credit markets, especially for households without collateral. Giné and Karlan (2010)

The basic question about the relative merits of group versus individual liability has still remained unanswered for many reasons. Merely comparing performance of one product with another within or across lenders does not establish a causal relationship between the contract terms and outcomes such as repayment, selection, or welfare. There are countless unobserved characteristics that drive individual selection into one contract or the other, as well as institutional choices on what to offer, and how to offer. Lenders typically chose the credit contract based on the context in which they operate. Giné and Karlan (2010)

Quoting Armendariz de Aghion and Morduch (2005),
“The best evidence would come from well-designed, deliberate experiments in which
loan contracts are varied but everything else is kept the same.”
This is precisely the goal of the paper by Giné and Karlan.(2010)

Quoting from their conclusion:

“The choice of group or individual liability is perhaps one of the most basic questions lenders make in the design of loan products in credit markets for the poor… The results are striking, however, in three respects. First, we find that individual liability compared to group liability leads to no change in repayment but did lead to larger lending groups,
hence further outreach and use of credit, for pre-existing groups. Second, in new areas, we found bank officers less willing to open groups despite no increase in default. Thus the supply constrained the growth of the lending program, whether for good cause or unwarranted fear by the employee is outside the scope of our data to assess. Third, we do find statistically significant evidence of some of the mechanisms discussed in the group liability literature, such as screening and monitoring, but we simply do not find that it adds up in an economically meaningful way to higher default…… In sum, the recent trend of microfinance institutions expanding their individual lending products (or in some cases, shifting from group liability to individual liability but maintaining group meetings) may help deepen outreach and provide more flexible microfinance products for the poor.” Giné and Karlan (2010)


 1. Robinson, Marguerite S, ‘Microfinance: the Paradigm Shift From credit Delivery to Sustainable Financial Intermediation’, in Mwangi S Kimenyi, Robert C Wieland and J D Von Pischke (eds), 1998, Strategic Issues in Microfinance, Ashgate Publishing: Aldershot.
2.Gerschenkron, Alexander (1962), Economic backwardness in historical perspective, a book of essays, Cambridge, Massachusetts: Belknap Press of Harvard University Press.
3.Paul Rosenstein Rodan“Problems of Industrialization of Eastern and South- Eastern Europe”, Economic Journal v 53, No. 210/211, (1943), p 202-11.
4.Joseph Schumpeter"The Nature and Necessity of a Price System", 1934, Economic Reconstruction.
6.The economics of microfinance / Beatriz Armendáriz and Jonathan Morduch.—2nd  ed. 2010 Massachusetts Institute of Technology
7.Psychology and Economics: What it Means for Microfinance,Sendhil Mullainathan & Sudha Krishnan,April 2008, The Financial Access Initiative and Innovations for Poverty Action.
8.Armendariz de Aghion, B. and J. Morduch (2005). The Economics of Microfinance, MIT Press.
9. Group versus Individual Liability: (May, 2010),Long Term Evidence from Philippine Microcredit Lending Groups, Xavier Giné and Dean S. Karlan

10. A Review of Commitment Savings Products in Developing Countries, Economics and Research Department Series Number 45.Nava Ashraf, Nathalie Gons, Dean Karlan and Wesley Yin; Asian Development Bank, July 2003.

Wednesday, 11 May 2011

sixty years of Independence-India at an intersection: some dilemnas and contradictions”

An India that denies itself to some Indians would no longer be the India Mahatma Gandhi fought to free.1
In the case of an Indian villager, an age-old culture is hidden under an encrustment of crudeness.2

The Political Sphere

We begin with a quote from Sunil Khilnanis “The Idea of India” where he sees in India’s democratic experience evidence of something that James Madison and his Federalist colleagues well understood more than two hundred years ago. “Large republics with diverse and conflicting interests can be a better home for liberty, a safer haven against tyranny, than homogenous and exclusive ones. Within them, factions and differences can check one another, moderating ideological fervour and softening power.”

India’s emergence as a secular state despite the native religiosity of its people is significant. Indeed India stands apart from its immediate neighbours Bangladesh and Pakistan specially in having forsaken an ethnic religion as the basis of its national development. With its large size India presents a natural case as a country which should be given its due in world affairs but our case is that its very much for the features that accompany India’s large size that it should be given importance specifically its adherence by and large to secularism and its independent chartering out of its economic path. Despite ambivalence over its federal structure and a strong centre India continues to have ideologically contrasting parties at the helm in many cases at the centre and the states. Despite prophets of doom warning against disintegration regional parties continue to bloom.. It is the democratic structure of India’s nationalist movement which has bequeathed to us an egalitarian structure of governance, in these days of abuse of the nationalist movement and its icons it would serve us well to remember a quote from a popular book on modern Indian history. “A nationalist movement has to be disciplined and organizationally strong and united; yet it cannot afford to be monolithic or authoritarian”3

As Bipan Chandra writes-
“Starting off with a broad social consensus on the basic contours of the India that was to be built-on the values of nationalism, secularism and democracy and the goals of rapid economic development and radical social change-was a great advantage.These values and goals, and the road to their achievement had been mapped over seventy years by the national movement.Yet, there was a realization that this consensus had to be continuously widened and built upon. Crucial in this respect was the role played by Nehru and the ideas he developed and propounded.”(Bipan Chandra, page1)

The Economic Sphere

As Welfare measures continue to be taken up for their citizens by India  this large country has charted its own course of Economic reform independently to a large extent of outside influences. The nationalist movement bequeathed an India that was to chart out its own course after independence-The Indian economy, even while being  an integral part of the world  economy, was to be based on self-reliance, free of subordination to the metropolitan interests or domination by foreign capital4

As Shashi Tharoor writes in his book “India:from midnight to the millennium”-“India is the most important country for the future of the world …for Indians stand at the intersection of four of the most important debates facing the world at the end of the twentieth century:
  • The bread-versus-freedom debate.
  • The centralization-versus-federalism debate
  • The pluralism-versus-fundamentalism debate.
  • The “Coca-colonization” debate or globalization versus self reliance.”

However in order to get a true flavour of these debates they need to be studied in their historical context and by looking at Nehru’s role in setting up the context against or for which most Indians position themselves making Nehru vilified but never possible to ignore.

If we take the issue of socialism versus liberalization first, the first and the fourth debates are simultaneously discussed. A slightly different contradiction was seen before Independence in India-that between the socialists and the conservatives.The Socialists included the communists and Nehru was sympathetic to them, the conservatives positioned themselves to the right of the political spectrum and were supported by Patel
However as Francine Frankel brings out in her book “ India’s Political Economy 1947-2004” growth and democratic social transformation were two separate but related goals of economic planning-In the early years of Independence, these two contradictory tendencies were also well advanced inside the Congress party-Gandhian Village Economy  principles and liberal western model Capitalist economic policies. However the position was slightly more complex than this simple dichotomy brings about .

    • Socialism versus liberalization

As Fancine Frankel writes “ …the new trends in economics and politics are logical outcomes of the failures of the national majority Congress party to carry out agrarian reforms and institutional changes at the core of the great Nehruvian experiment. These aimed to simultaneously achieve rapid economic growth and more equitable distribution.” 5
She also writes“The second vastly larger economy, on which 70% of the population depend for their livelihood is agriculture. About 80 percent of this population have yet to benefit from economic reforms. On the contrary, in the two decades ending in 2000-01, public investment in agriculture and irrigation declined, as did production and yield growth rates of all crops. This was accompanied by a slowdown in total employment growth in the 1990’s.Demographers have concluded that during this decade agriculture almost stopped absorbing labour; and they have characterized economic growth as a jobless variety.Handicapped by a decline in real assets, and few opportunities to improve their education and skills for non-farm employment, male workers are caught in a growing trend towards casualisation of jobs in the rural labour force.” (Frankel,Preface page xii)

As far as Nehru’s views on the question are concerned “In the long run, the role of the market forces and profit motive were to become less significant.At the same time, Nehru was quite clear that over time the public sector must generate additional resources.According to the Industrial Policy resolution of 1956, which he helped draft, the public sector was expected to ‘augment the revenues of the state and provide resources for further development in fresh fields.’ Taking a pragmatic view of the question, he also held that where public sector performed well, it should remain , and where it did not, it was to be replaced.” (Bipan Chandra page 180)

    • Pluralism versus fundamentalism
The process of strengthening India’s unity was considered to be the most important.It was realized that India’s multifaceted pluralistic culture had to be protected and made to bloom “Indian unity, it was realized, was not to be taken for granted.It had to be strengthened by recognizing and accepting India’s immense regional, linguistic, ethnic and religious diversity. Indianness was to be further developed by acknowledging and accommodating the Indian’s multiple identities and by giving different parts of the country and various sections of the people an adequate space in the Indian union.” (Bipan Chandra page 1-2)

As Bipan Chandra writes “Nehru’s commitment to secularism was unsurpassed and all pervasive.Communalism went against his grain, and he fought it vigorously throughout his life.He helped secularism acquire deep roots among the Indian people; and he prevented the burgeoning forth of communalism when conditions were favourable for it.Though on almost all issues he believed in consensus and compromise, communalism was the exception for as he said in 1950, any compromise on communalism ‘can only mean a surrender of our principles and a betrayal of the cause of India’s freedom.”(Bipan Chandra page 180)

But Chandra also brings out the weakness in Nehru’s approach “Believing that planning and economic development and the spread of education, science and technology would automatically weaken communal thinking and help form a secular conciousness, he ignored the need for struggle against communalism as an ideology” (Bipan Chandra page 181)
    • Centralisation versus Federalism
As Frankel writes “the structure of government provided mainly for coordination between the Centre and the states rather than for central control over state policies, programs and administration.” (Frankel, page 82). However the emergency provided a major departure from this general framework. In general from the early seventies Indira Gandhi began centralizing power in herself, followed by a similar style adopted by Rajiv Gandhi, however  subsequent to 1989 Indian politics have taken a different turn with a fragmentation of the vote and no clear majority for any party.

1         Shashi Tharoor , India-from midnight to millennium, Penguin Books India 2000, Millenium Edition.
  1. M.K.Gandhi, The India of My Dreams, p.44.
  2. Bipan Chandra, Mridula Mukherjee, Aditya Mukherjee, India after Independence 1947-2000, Penguin, Fourth Impression , 2002.
  3. Sunil Khilnani,The Idea of India, Penguin, 2003
        5.       Francine Frankel ,India’s Political Economy 1947-04, Second Edition, , Oxford.