a simple way to create jobs in india

what do you expect would trigger organic job creation? increased economic activity? and for this increased economic activity do you want new enterprises to come up or the existing ones to expand? if this is the case, you may be at fault while pursuing the goal of job creation.

our country, india, is a typical example of how population rise outpaces creation of new economic activities. you may come up with best measures – liberalisation or incentives to new enterprises – but the impact of these measures wouldn’t be enough to result into creation of as much employment opportunities as the country seeks.

a simple and untapped way out to this problem is expanding the existing economic activities in such a manner that already existing enterprises see an increase in their appetite to absorb more unemployed youth.

take an example. a public sector bank in india works from 10 am to 5 pm and remains shut on alternate saturdays and all sundays. while banking services are mainly accessed by the working class, this section feels handicapped when they see the establishment closed at a time when they are off from their work responsibilities.

this gives an alternate opportunity to create more jobs in the already established economic activity and without even any expansion in product list. the same public sector bank can function from 7 in the morning till 7 in the evening and could operate on all 365 days of the year.

another target achieved by this exercise will be eradication of income disparity and inequality in living standards of the populace. by cutting short the working hours from 8 hours/ day to 6 hours/ day, 2 people instead of 1 will employed in the same job for the day. indeed, the compensation for the job has to be rationalized and in the process equitable distribution of wealth will automatically be achieved.

the same exercise would cover all establishments in the country, public or private. the only tough stance that the government needs to take is to rework maximum working hours for employees/ workers so that more people get the opportunity that is presently rewarding only a few.

india is also a typical example of a country where an employed person becomes rich on the expense of the other.

early retirements (of course with social security), extension of working hours of enterprises and a 24x7x365 working environment are the measures that would create enough jobs without having to rely on new economic activities and setting up of new enterprises.

answer to india’s financial distress is ‘wage restraint’

wage restraint as a policy action can be traced back to germany, a european country that has trumped china (the so-called ‘factory of the world’) in terms of positive balance of trade. germany is a net exporter and its economy is one of the most stable and commanding. the edge was attained on the back of curbing any imprudent rise in wages of the working class.

on the contrary, asia’s third largest economy, india, never cared about the rising government bill on account of salaries.central government employees or those of state governments or public sector undertakings, including banking companies, are paid salaries that are not proportionate either to their labour or to the financial capability of the employer.

why do we have a current account deficit? simple, our exports are less and we import more. let us go in some detail. since our wages are high our exports become expensive than those by other countries where wage restraint is exercised. also, since the spending capacity of the middle class has seen an upward trend, all owing to rash pay hikes, we import more to satisfy our consumption needs.

this means the senseless hikes in salaries (and we talk here of public servants since they set the benchmark for the private sector) is dealing a blow to both, exports as well as imports, thus comes the current account deficit that calls for frequent high-level meetings and unattained commitments.

the recently adopted 7th pay commission recommendations have only upped the bill of the government and the states have followed suit. what you have done is you have only increased the spending capacity of public servants, which was totally uncalled for. and then you have assigned a foolish task to the central bank to limit inflation within the agreed percentage.

the effect is the rbi is struggling with the policy rate-inflation maths. what needs to be a simple policy action of rationalizing salaries of public servants (since private sector is run on market economics) and shunning the practice of setting up of pay commissions or at least mandating them to follow prudent economics while suggesting any hike has gone to become a puzzle that the cabinet, central bank and policy think tanks have been unable to decode.

indeed, india cannot be expected to copy exactly the same german wage restraint model; it has to be tailored according to our national scene and priorities, even political compulsions.

instrument to end npa crisis – ‘irreversible debit order’

country’s banking system is reeling under non-performing assets and a solution is being sought by way of forced bankruptcy, takeover of management and rulings by national company law tribunal. this basically means that the disease is being cured after it has managed to inflict irrevocable damage. a simple tool, in the form of ‘irreversible debit order’, can however bring an end to this by immunizing banking companies against loan defaults.

an ‘irreversible debit order’ or ‘ido’ can work as an instrument of repayment of debt facility availed by the borrowing entity from the lender.

in the present setup, the borrower, who either pays through cash/ cheque or an instruction in form of automatic monthly debits from bank account toward repayment schedule, has an upper hand. the borrower can either choose not to make the cash/ cheque payment on the pre-decided date or he can instruct his bank to not allow further automatic debits from his/ company’s account toward loan repayment.

it is entirely on the desire of the borrower to delay repayments, after which the lender resorts to reporting such cases as stressed/ bad debts. in most of the cases where the borrower delays repayment to the lending entity, it is only his ‘will’ that lacks, not his ‘capacity’.

this is where the law needs to be strengthened. unlike in cases where the borrower is genuinely facing financial crisis, instances where only his willingness to repay lacks, he must be ‘compelled not requested’ to repay on the very date as per the schedule and this agreement must be backed by an irreversible debit order.

ido will not work as standing instruction or anything of that sort, but as a guarantee to the lender that the borrower will abide by the contract of repayment at least until he has the capacity of doing so. the ‘irrevocable’ nature of such contract between the borrower and lender will ensure that companies which deliberately delay repayments are barred legally from doing so.

to make this a reality, a separate bank account for a borrower company can be set up which should be linked to company’s current account/s and all other places where the revenue received is stored. the repayment of credit availed by the company from the banking system should have ‘first preference’ over all other liabilities.

this way, the need to move courts and tribunals for receiving back the amount extended as credit by banks will virtually no longer exist. any npas will only be due to genuine financial incapacity of the borrower and can be recorded in real-time. if worked out wisely, there shall exist no need to liquidate company’s assets, which entails a lengthy and cumbersome process, for repayment to creditors.

institutionalisation of higher education failed us

question is simple, ‘why do we need a multi-year program for engineering, management or like streams?’. most of the lessons imparted to students in these programs comprise of already established formulas and techniques. consider this – a school pass-out would give most crucial years of her learning and development phase to a program that in the end will certify her knowledge of methods that were invented long ago.

the same stint could have been utilized in furthering the child’s ability to formulate novel techniques that can replace the obsolete ones, for we have near-fully exploited them to their usefulness. even when you need someone to possess this knowledge and employ it in the same manner as done over decades and centuries, a few months on-the-job training is enough.

the global economy is awaiting innovations that can drive growth for coming centuries. the setback is that people from whom these inventions are awaited are pursuing rather irrelevant goals – learning mathematical, scientific and managerial principles for sake of a certificate that will augment their chances to grab a job, the entire structure is so built that only college pass-outs are viewed as capable, on the contrary they are the most inept.

institutionalization of education was nothing but glamorization of studies with its proponents claiming that lessons learned while at an institute of higher education will make the child knowledgeable enough to play a part in economic growth. the result is that we have a stubborn number of jobseekers while job creators have remained confined to a few risk-takers or scientists who invent new models, for say electric vehicles.

only solution to the persistent problem of ever-rising number of jobseekers is to drastically, although rationally, reduce the number of years a school pass-out devotes to higher education institutions.

we need a new system based on rationality. a paradigm shift is needed in the way we have planned and developed our education systems where around 22 years of one’s life are consumed in an environment that produces a meagre number of job creators and a gigantic, unbearable number of seekers.

the slowing economy, recurring recessionary cycles, slowing gdp growth rates and even low inflation are all the fallouts of the archaic education system that needs overhaul in not one but all countries. accessibility to information and lessons has much revolutionized in this digital era in a manner that seeking compulsory admissions in institutions is nothing but a failed, regressive idea.

why the world economy stagnated

only two events are responsible for where we stand today, agrarian advancement that allowed non-agri populace become manufacturers and traders, and industrial revolution that increased availability of goods for which people worked to satisfy their wants. these two had a long-lasting impact on world economy, the rest, of which digital revolution is a part are only flashy successes.

other factors included competition which kept prices in check, allowed employment growth and fortified the supply side, thus keeping the demand side in continuous motion; innovation that was real such as invention of motorized vehicles, telephones and consumer electronics, which tempted buyers who could only make purchases by lending their labour.

in the past few decades, the world economy grew on the strength of services sector including banking, communication and information technology. and this is where we made mistake. consider each of this and you will notice that these aspects only compliment manufacturing, banks enable credit for business growth, communication and information technology increase efficiency, nothing more beyond this.

tv commercial of one of leading webhosting providers mirrors the errors we are committing. the advert asks businesses, small or medium, to shift to building websites to promote their products and services and denounces conventional promotional activities. now do you believe that millions of businesses showcasing themselves online will actually be able to garner the public interest they intend to?

same is the case with other information technology services. how many mobile apps can we sustain, how many e-commerce portals does the public need, is online video streaming adding to the economy, does the society need so many software?

the irony of today’s world economy is that businesses like google, facebook and netflix have outshined those that are truly the driving force. as simple as this, people would not want to give their labour to earn for accessing google maps, websites, facebook pages or netflix videos; but they will do so to own a refrigerator, television, computer, car and other tangible goods.

it is time we realise that technology and other businesses in the services sector aren’t the main driving forces of economy, they only compliment the manufacturing sector.

another problem is the education flaw that has enabled a person with acquired knowledge on business administration to run companies. a few among these may hold qualities of a capable leader, the rest are mere degree holders, unable to gauge the real mood of market. what we need is a redefined criteria for appointment of managers and leaders, a beeline outside b-schools will only further deteriorate the already ailing economy.

the simple solution is – treat services sector as inferior to manufacturing, and alter the hiring criteria for managers.

the lost gst opportunity – ‘job creation’

goods and services tax is being hailed as the most far-reaching tax reform ever in independent india. gst will curb ambiguity in indirect taxation, will ease compliance and can augment tax collection of the government, all agreed. but has gst delivered on the front that is all more critical than these, did the government factor in  job creation while planning for gst roll out?

in bits they did. they foresaw automatic creation of jobs once the tax reform comes into play, for businesses will need tax consultants to understand the new complexities and to steer clear of penalties for wrong/ delayed filings. but what the government did was to leave it to the market forces for creation of new jobs, and this is where they made a blunder.

in a recent letter to chartered accountants across india, pm modi has requested for their cooperation in honest and effective implementation of gst. this is where the problem lies.

the already well-off community of chartered accountants, where the number of professionals is deliberately kept low to enable the existing ones make windfall profits owing to the ever-high need of taxation consultants in the country, has emerged as the only winner. by inviting their support, the prime minister has only undermined the interests of non-ca fraternity, comprising of simple commerce graduates.

the need was to create a pool of gst professionals by picking up fresh graduates from rural/ undeveloped parts of the country and training them for a year or even 6 months on what gst exactly is and how businesses, small and large, have to comply with new tax reform. in one go, the government would have created lakhs of jobs for fresh graduates and in the process would have decreased the unwanted dependency of businesses on chartered accountants.

the pm, finance minister and the think tanks failed to notice the pressing need of creating new jobs for lakhs of youths joining the unemployed bunch every year. skill development by various ministries is only adding to skills, but where are the jobs? factory growth is dismal, it sector has lost its sheen and there isn’t much hope in agriculture.

so where does the government feel this newly skilled youth will be absorbed?

gst reform could have delivered on multiple counts, job creation, equity in income distribution, augmented spending by households, lessening the workforce presently employed in agriculture, cutting well-known malpractices undertaken by chartered accountants to enable businesses evade taxes by replacing them with a fresh pool of tax professionals, and much more.

gst, sadly, remains an untapped opportunity but can be a lesson for future reforms. there can be no question raised on the intent of the government to usher in true reforms, however, holistic planning is required to fetch maximum benefits out of a single move.

sbi vs. mcdonalds-reasons why sbi is failing

here, we shall discuss how the operations and human resource framework at sbi and other public sector banks of india contrasts with that of mcdonalds, a prominent restaurant chain. in the end, we shall be able to comprehend why sbi is struggling to maintain its profitable operations despite being a bank of almost every indian.

let us start with the recruitment process at the two establishments. to be able to work with sbi, one needs to be a graduate and clear the competitive exam that the bank conducts to fill positions of clerks and probationary officers. for a mcdonalds job, one gets selected without any such exam, however, only those with good communication and other skills can expect to be hired.

do sbi and other public sector banks actually need a competitive exam to fill vacancies. the answer is ‘no’.

and this is backed by the rationale that a clerk or a probationary officer would not undertake any scientific explorations or innovations, the task allocated to them would only comprise of basic computational and computer skills. why then ask lakhs of aspirants prepare and sit for an exam that will only subsequently need you to perform simple accounting tasks?

still, this exam is undertaken by many, reason? the lucrative salaries that come along with job security, perks and repute.

while a mcdonalds employee, who has almost same skills as the bank clerk or probationary officer, is not paid more than inr 15,000 a month, a public sector bank employee takes home more than double this amount for performing more or less identical tasks.

so were you wondering why sbi and other psbs are reeling under npas, low productivity, dipping operating ratios, poor customer service? blame the high salaries of their staff and the employment security they enjoy, not the economic stagnation or loan defaulters.

on the other count, a mcdonalds outlet starts operations from early morning and functions at least till 10pm. reason? when there is demand, you need to supply (this is a fundamental economic theory). sbi functions from 10 to 5, is closed on 2 saturdays and all sundays of the month.

so if one needs to open a savings account or get a fixed deposit or apply for a loan, you can only approach the bank from monday till friday, strict 10am to 3.30pm, which is when almost every bank customer is out to earn bread and butter for her own.

the bottom line is if the government, the central bank and public sector banks want to improve on their operating ratios, they need to do away with sham competitive exams, rationalize salaries of their staff, re-think the working hours (hire more staff to work till at least 8pm and to keep at least some branches open on saturdays and sundays) and infuse work ethics in employees.

liberalise medicine, other studies to generate employment

practicing medicine is a job, same is with practicing chartered accountancy, cost accountancy or company secretaryship. there is, however, a difference when we talk of a law practitioner. and this difference is the one practicing law does not have to fight her way out to become a lawyer, a 3 or 5 year study programme with easy enrolments enables one to do so.

engineers too have the prospect of employing their skills at work after a 4 year programme. but what about practicing medicine or being a ca, cwa or cs; for these professions, one has to struggle with getting admitted into much-coveted medical colleges or appearing repeatedly in competition-styled exams where only a miniscule percentage of aspirants is awarded a pass certificate.

it is a known fact that our country lacks the number of doctors as per the world health organisation norms. chartered accountants and other finance professionals, owing to their small fraternity have formed a cartel which indulges in abetting tax evasion and other corporate irregularities.

when it is compulsory for a company to get its financial statements audited by a ca and a compliance certificate from a company secretary is an obligation, why then are institutes, the icai, icsi, allowed to decide on the number of professionals to be released into the market every year, which they deliberately keep low?

is diagnosing a viral fever and recommending basic antibiotic such demanding a task that just a few doctors are operating for such a large population? access to quality healthcare has become a costly affair. with availability of information on all subjects being so handy today owing to technological advances, making procuring a degree or a certificate of practice a tough and coveted task is only equivalent to license raj and red tape, a practice that has fueled the growth of unimaginably rich doctors and chartered accountants.

the example of law practitioners and engineers, both of whom are being supplied in the market in abundance, which has mandated skills and discipline to be pillars of one’s success, tells us that unless medicine, ca and like studies are deregulated to an extent that market is at least adequately served, income disparity and joblessness in india are to here stay for long.

lower the superannuation age of state employees to use demographic dividend

india is being positively looked upon by the otherwise aging world economies owing to its ever-high proportion of population in the working age group that is expected to spur economic growth. you may find endless bonuses of this, the bottom line is this group needs work, while the sad contrasting picture is dismal job growth rate of the indian economy.

while infrastructure spending spree of the current government has given the hope for some occupation opportunities in roads, railways, ports, energy and similar sectors, would this state-backed, public spending-fueled exercise be able to serve the millions staring at work in coming days?

the most rational solution is freeing the government sector employment space by lowering the age of superannuation, be it in central, state, autonomous bodies, public sector enterprises or state-owned banks. from current 58 or 60 as the age of retirement, it has to come down to at least 55, or even 52, and as a compulsion, not as a voluntarily exercisable option.

the logic behind this is that most of the indian workforce possesses skills that cannot be categorized as specialized or exceptional, hence the economy will not be able to produce jobs through market determined factors.

banking and many other state jobs require at least 90 per cent of the staff to perform general accounting/ transaction tasks and an employee with even 20 years of such experience and drawing unrealistically high salary is no better than a fresh graduate.

the current government is facing a dilemma where a proportion of population employed as government servants is well-off and can lead a modest life after retirement, while on the other end is the so-called demographic dividend, the youths, that seeks urgent job creation.

and the bitter truth is that the information technology sector is fading, 3d printing is further threatening livelihoods of factory workers, industrial growth rate isn’t encouraging enough and infra projects cannot employ them all.

the only possible way out to stall any hostile outcomes owing to unemployment that will only produce frustrated and disheartened youth is to free space in government jobs by lowering age of superannuation, providing reduced pay benefits to these retired employees and placing the young generation in these roles.

believe it, neither this demographic dividend will all become entrepreneurs, nor the present job-intensive sectors like information technology, bpo, textile, leather, steel or agriculture can provide ample prospects for this impending trouble (yes, trouble, if not taken care of wisely and rationally).

has conventional recruitment practice failed us?

if the economy could produce enough jobs on its own, the government would have been relieved of pumping funds into programmes like mgnrega and other sops to support low income groups. that sadly isn’t the case. let’s see how conservative recruitment norms inspired indian industries’ incompetence.

economists and analysts will talk of low industrial growth, rising non-performing assets of banks and the losing sheen of indian information technology sector owing to lack of skill upgradation in indian engineers, but rarely does anyone talk of how human resource failures fueled these downturns.

india may be inching closer towards a place amongst top 5 economies in the world, we may be the fastest growing major economy, stats including worst credit growth, dismal private sector investment, failure of indian industry in matching up with global competitiveness and technological prowess and inadequate job growth show the ground beneath is hollow and vulnerable to collapse; not to say of our so-called demographic dividend that is eying jobs, not india’s gdp growth rate.

it is never the bank, a company or any business that peddles the bicycle, it is always humans who drive these through decision-making. and the qualitative difference between these decision-making skills of humans is what makes one company profitable and the other a loss-making venture.

let’s talk more basics. while a regular bank employee does not need to demonstrate higher skills than that used by a regular accountant with a mid-sized enterprise, the former is paid more by employers like sbi and pnb (a major reason behind their deteriorating ratios). the reason to worry is the selection process of both private and public sector enterprises that has failed prudent economic theories.

for a bank job, a written test is conducted to know candidate’s knowledge of language, reasoning and basic arithmetic. is that all you need when you function as a banker, what about effectively managing queues during demonetization drives? at managerial positions, b-school graduates, who pass out with theoretical lessons on leadership and organization, are biasedly preferred.

while it is logical that a medical graduate must be someone who shall undertake practicing of medicine, totally irrational is a naïve, a learner of simple leadership skills hired at a managerial position owing to an utterly unreliable b-school degree. in 4 years of engineering, what the passed out engineer is taught is something that can easily be acquired within 6 months by a person with inclination toward engineering and science.

in the entire process of hiring against the backdrop of communication skills and degrees, we are ignoring a fundamental equation that real world scenarios demand not the acquired (or forcefully injected) know-how but operational dexterity.

the only way possible to judge any applicant on this is to float an assignment during job interviews, for recruiting only through predictable tests and verbal one-on-ones has not only resulted in losses to corporates but has also made it hard to achieve and sustain efficiency and competitiveness for the economy at large. the sole road ahead is therefore a prudently conceived and designed assignment to assess real capability of any candidate.