Indian Economy: News and Discussion (Apr 1 2011)

somnath · Post by **somnath** » 26 Jun 2011 10:05

^^Some factual errors in that article - the benchmark pricing used to measure under-recoveries is trade parity pricing, not export parity (80:20 ratio of Import and Export parity pricing resp) - this is according to the C Rangarajan committee recos...

But the substantive point is this - ~50% of the price of petrol is taxes, central and state...Therefore, when crude prices rise, there is scope for the govt to reduce the tax "rates", keep revenues same and at the same time protect a level of price for the consumer...The issue however, is that principally this is distortionary...Globally, carbon taxes on oil add up to 50-60% of the price of petrol/diesel...It is a polluting, diminishing resource, and hence its use needs to be rationalised, and taxed..By trying to preserve an artificial level of petrol prices, there is no incentive for demand to get rationalised and investments flow into better energy techniques....

On the fiscal impact, people forget that indirect taxes and subsidies are two different animals...And to the extent that there is under-recoveries by oil companies -mind you the oil company only gets 50% of the value of the petrol as net revenue - and GRMs/marketing margins are 7-8%...So every time crude prices go up , the losses are very "real" to the companies, not notional at all....to that extent, the fiscal hit to the govt too is very real...

Yes, they still make profits, out of unregulated items like aviation, exports and (now) petrol - but their ability to invest in fresh exploration and refining capacity gets constrained by the under-recoveries...

nandakumar · Post by **nandakumar** » 26 Jun 2011 17:17

Theo_Fidel wrote:Nandakumar,

Supply side doesn't make sense anymore. We have had massive bumper food harvests yet the prices of food items is not going down. In fact food prices are surging again at 10% officially and increasing. One the ground it is much higher. Coconut prices have doubled despite a bumper harvest. Yet people are willing to pay the price.

A lot of money has been released into the system which the RBI acknowledges by raising interest rates and trying to squeeze some of it out. Who cares if investment and private sector borrowing is destroyed. Not important.

Theo Fidel, No issues with your proposition that money supply is a culprit. Much has been made of the 10 Repo/reverse Repo rate hikes. At the best of times monetary policy action by way of interest rate hikes may have some impact on aggregate demand only where cheap money is driving speculative demand at the margin.
Even this may not be adequate if the initial conditions are right. For instance, it is moot point if the real estate bubble would have been avoided even if the Central Banks had acted decisively in the US and parts of Europe. My guess is that they might possibly have survived a a rate hike thanks to the initial conditions. The system was characterised by lax credit appraisal reinforced by a skewed incentive mechanism (for mortgage brokers and others engaged in the retail estate industry) and a deep market for derivative instruments that existed at that point of time. Higher interest costs from a monetary policy action would have been absorbed as a pass through.

somnath · Post by **somnath** » 26 Jun 2011 17:37

nandakumar wrote:At the best of times monetary policy action by way of interest rate hikes may have some impact on aggregate demand only where cheap money is driving speculative demand at the margin

Not just speculative demand, investment demand too...there is a benchmark level of cost of capital beyond which most investment IRRs start becoming unattractive..

In India, we have the experience of 1997-98, when C Rangarajan's heavy hammered (and sure footed) monetary approach to tackling inflation meant that growth was killed off for 4 years..Though inflation too got licked for more than a decade...

Theo_Fidel · Post by **Theo_Fidel** » 26 Jun 2011 21:35

Nkumar,

You are absolutely right that once speculative activity takes hold interest rates become almost inconsequential. Though the effectively 0% interest money from the FED drove speculation to new heights as brokers chased higher returns on investment.

The question is about legitimate investment activity where cost to benefit ratios must be considered and justified. IMO most investment in India is still in this category, we don't have 'House Flippers' yet for instance.

If inflation had been low all these questions would be pointless. The point is inflation is roaring along in India and is no longer a temporary phenomena. Its been going at 10%+ or so for 3 years now. It hard to remember this but before that we went through a 10 year period where inflation occasionally spiked but always dropped back to 3%-4%. One must remember that the anticipated inflation for 2011 was about 5%, yet here we are. As posted the fuel price hike will now trigger even more inflation. This is going to be extremely destructive to peoples earning capacity. Even more destructive to savings. We can take a 1 year high inflation but the nation can't sustain this indefinitely. Instead of trying to make investment borrowing even more expensive RBI should attack the problem at the source which is the flood of new Rupees. There is a reason people are buying more and more gold even if they have to import. It is the only semi-liquid hedge against inflation they have.

The only way to bring this level of inflation under control is to kill the growth rate. The pressure on politicians to reduce inflation quickly is going to become unbearable soon. Reluctantly the RBI is gathering the weapons to do this in short order, the CRR and SLR are being kept for this purpose. This pisses me off no end. The wealth destructive spending of the Government is finally catching up with us. So now we have to destroy wealth creation to control the even bigger demon of inflation. This is exactly how we became poor in the first place. This why I and others have argued that we should grit our teeth and ignore the charlatans such a Dreze and focus on keeping the growth going and control wasteful ideological spending. So now we are not going to have growth and neither are going to have poverty reduction. Nice.

Prem · Post by **Prem** » 27 Jun 2011 00:03

http://www.businessweek.com/news/2010-0 ... -2015.html
India to Top China as Fastest Growing Economy by 2015
New Tigers of Asia’

Poor transport and lack of other facilities in India could cost 1.1 percentage points of growth, or $200 billion in fiscal 2017, McKinsey & Co. said in a report last year.
“There is a large deficit in our physical infrastructure which affects our economic development adversely,” Singh said in a speech yesterday. “The resources required to create good physical infrastructure are difficult for the government alone to mobilize. Therefore, we have endeavored to involve the private sector in our efforts.”India also needs to boost manufacturing in order to provide jobs for the expanding labor pool, according to Ahya. “We believe labor law reforms would be needed to support growth in labor-intensive industries,” Ahya said after Morgan Stanley unveiled it report “India and China: New Tigers of Asia, Part III.”

harbans · Post by **harbans** » 27 Jun 2011 05:38

Indian Oil Corporation : Posted highest net profit of Rs. 10,220.55 crores.
Hindustan Petroleum : Posted highest net profit of Rs. 1,301.37 crores.
Bharat Petroleum : Posted highest net profit of Rs. 1,537.62 crores.

I don't know if this line is right..but these don't seem great profits for giant oil concerns. I guess those figures probably reflect the amount of petrol/ diesel the company's sell. So a 1 Rs drop a liter will translate into loss? Any figures on number of liters sold same period by these corporations? Apart from that sales would also include other products, crude etc. Doubt these figures are really big..though they look really big. JMT/

somnath · Post by **somnath** » 27 Jun 2011 06:19

harbans wrote:I don't know if this line is right..but these don't seem great profits for giant oil concerns

They are not..In terms of margins, operating margins of PSU oil companies are in the 1-3% range, compared to 10-15% for global oil companies...Return on Equity is 10-15%, compared to mid '20s range for the global oil majors...

And most of it, in fact all of it is due to under-reoveries on LPG/diesel/petrol (till recently)..there are various calculations for how much they lose by selling every litre of diesel/LPG @ various levels of crude prices...

It has various adverse impact on the companies, besides topline profitability...It increases debt-equity ratios, thereby hobbling them from making fresh investments...Further, it constrians their capacity from bidding for new oil blocs, especially offshore..

The hypocrisy on this transcends the political divide - it is good that the govt has bitten the bullet and freed up petrol priing, finally...Instead of continuing with the curent subsidy regime on LPG/diesel, they should frree it up and transfer subsidies through cash transfers...

Singha · Post by **Singha** » 27 Jun 2011 09:28

the morgan stanley report (Aug 2010) is available here
http://www.prudentcorporate.com/upload/ ... R_2010.pdf

gurus can analyze it better, my superficial read of charts shows our infra spend in steadily increasing as % of GDP, and our demographic dividend in low % of non-working:working age people has started and will peak around 2040, before tapering off. China has been peaking in last 2 decades and the inflection point to taper off seems like 2010 itself.....so they need productivity related gains to balance that out now, if they want to retain same growth trajectory.

the next 3 decades are our chance to turn the curve into a developed country - its our only chance after a 1000 years of oblivion and weakness. resource shortages, geopolitics, lack of internal social and political cohesion, p-sikular tilting at windmills, dynasticism and criminalism in the indian political class cutting across party lines, korrupt media, lack of civic pride, lifestyle related illness among the elites... all loom as serious threats.

if we miss this boat, the country will likely be chewed up and have to serve another 1000 yrs on the sidelines.

somnath · Post by **somnath** » 27 Jun 2011 11:00

^^^These analyses have become a bit boring now...A few weeks back someone (I think Harbans) posted a more recent study by Standard Chartered along similar lines, on India...Given the tailwinds (of investment demand, savings rates etc), there is a certain degree of inevitability with India's growth at this stage..China on the other hand, will start grappling with the typical issues of a middle income country - a lot of countries have tended to falter at this stage...

There are a few big ticket policy reforms that can take the momentum up - GST, labour laws and Land Acquisition being the three biggest..Minus these, our hindu growth rate would perhaps be in the 6% range (extrapolating from the performance of the "crisis year", and reducing the pump priming impact from it)..With these reforms in place, the same would be in the 7-7.5% range, with favourably global economy contributing the extra 1.5-2% (or not, depending on the situation!)....

Theo_Fidel · Post by **Theo_Fidel** » 27 Jun 2011 21:33

Singha,

+1 for a new Bharat Varsh & all that.

Unfortunately there is not much new in that report that has not already been posted many times on this forum. Much of the data is hopelessly out of date as well many of the time series ending in 2005. Hopefully they will issue an update soon.

They do have 2011 nominal GDP at $1,761 Billion. The only ones to get that number correct. We will be a $2 Trillion economy next year 2012. Essentially doubled in 4.5 years.

Singha · Post by **Singha** » 27 Jun 2011 21:41

pretty amazing that 2 tr figure . I recall the days when we used to cower in our dark hovels around 2000, lungi shiver and count our meager $450b gdp....

Prem · Post by **Prem** » 27 Jun 2011 21:55

Just for memory sake

http://www.rediff.com/money/2000/jan/28gdp.htm

India's GDP growth rate in 1998-99 put at 6.8 pc
The economy grew by 6.8 per cent in 1998-99. There were fears of a slower growth due to industrial slowdown. Official estimates of national income attributed the growth in Gross Domestic Product to impressive performance in construction, agriculture, communications and banking sectors. The Central Statistical Organisation said the GDP at constant prices (1993-94) stood at Rs 1.081 trillion in 1998-99 as against Rs 1.012 trillion the previous year.

Theo_Fidel · Post by **Theo_Fidel** » 27 Jun 2011 22:01

Singha,

You ain't seen nothing yet. $10 Trillion by 2020 or so. Bottom 10% with Per capita under $2000 per annum. Everyone else above it. Investment of $5 Trillion per year. About $1 Trillion every year on infrastructure alone. And still another 20 years of demographic dividend left.

Singha · Post by **Singha** » 27 Jun 2011 22:11

the economist map compares the indian states to various nations in terms of per capita income ...

as expected a bunch of goras and chinis have made fun of the various "basketcasestans" our per-capita income in parts is equal to...very sdre only.

but the reason why world is feeling takleef enough to take the time to make fun is because unlike any other individual or coalition of basket cases, our institution building since 1947 has produced a vast number (relative to competitors) of people able to compete at the world level in any field - engineers, doctors, writers, teachers, nurses, welders, mariners, soldiers, philosophers ... and this is causing the takleef to those used to high fat low work living. so malaysia or thailand may have 3x our current per-capita income but take any field and compare the sheer number of brilliant indians worldwide and we leave them in the dust...thats why they are unable to break the middle income trap...we will have no such trouble when the time comes.

the institution building continued even during the "lost decades of 1960-1990" and has accelerated therafter with a raft of higher edu offerings.

Theo_Fidel · Post by **Theo_Fidel** » 27 Jun 2011 22:48

Many fall for that economist rag type propaganda. It is not based on PPP for instance.

Take for instance Maharashtra. $175 Billion. What they could have compared it to is say Israel but no tiny dot Singapore is chosen.

Or for that matter TN, $80 Billion, they could have compared it to say Vietnam. But Angola is chosen. The Angola of diamond, copper and oil but nothing else.

In fact give me some time to redo this map over lunch break and I'll make it more representative.

RamaY · Post by **RamaY** » 27 Jun 2011 23:13

^ Theoji

Pls use correct map when you redo it. The e-kon-o-mist rag is showing its true colors after the ban.

Theo_Fidel · Post by **Theo_Fidel** » 27 Jun 2011 23:22

Here we go. World of difference huh. The one that surprised me is Bihar.

Lets call the economist what it is - a Racist rag.

Note - Thanx for the map note RamaY.

RamaY · Post by **RamaY** » 27 Jun 2011 23:48

^ Theo-ji

You should have included Pakistan where it belongs

Theo_Fidel · Post by **Theo_Fidel** » 28 Jun 2011 00:10

^^^^^^
Done. But I dunno. I apologize to all Marathi's in advance. My wife would kill me if she saw that which is why I hesitated. That name stinks up the joint. Kinda like seeing Somalia. You know like...

At 70 a woman is like Pakistan.
Everyone knows where it is, but know one wants to go there...

RamaY · Post by **RamaY** » 28 Jun 2011 00:47

Apologies to Maratha brothers and sisters.

Prem · Post by **Prem** » 28 Jun 2011 01:03

In 2020-2022 ,
Calls for add in Ik-no-no-mist showing the similar map by replacing Poakahonta territories with with European Muncipalities like UK ,Belgium etc.

wong · Post by **wong** » 28 Jun 2011 02:03

You guys are mixing PPP with GDP (at least for Luxembourg) on that India GDP comparison map. Economist is using 2008 GDP for Madhya Pradesh ($37.3bn) and the same 2008 GDP for Luxembourg is 57.64Bn. That's a 54% difference.

Theo_Fidel · Post by **Theo_Fidel** » 28 Jun 2011 02:14

The Nominal dollar number for MP in 2011 is about $54 Billion.

Hari Seldon · Post by **Hari Seldon** » 28 Jun 2011 04:11

^^^Whoa, whoa! I see the past few series of posts between Theo-ji and Singhasur are reading more like 'Nation on the march' Dhaga than the Indian dismal-seance one only. Things that seem too good to be true usually are. Won't be long before alleged killjoys, some with unusual comprehensions, shall be forced to rain pee on this parade (reluctantly of course).... After all, how can India dare to do well without their explicit foresight and approval ...only.

*back to scamp & dhoti-shiver mode....*

Singha · Post by **Singha** » 28 Jun 2011 07:33

brr its 15C in blr today - time to lungi shiver , and look for some rice and fish in my hovel...

sugriva · Post by **sugriva** » 28 Jun 2011 07:37

Singha wrote:but the reason why world is feeling takleef enough to take the time to make fun is because unlike any other individual or coalition of basket cases, our institution building since 1947 has produced a vast number (relative to competitors) of people able to compete at the world level in any field - engineers, doctors, writers, teachers, nurses, welders, mariners, soldiers, philosophers ... and this is causing the takleef to those used to high fat low work living. so malaysia or thailand may have 3x our current per-capita income but take any field and compare the sheer number of brilliant indians worldwide and we leave them in the dust...thats why they are unable to break the middle income trap...we will have no such trouble when the time comes. the institution building continued even during the "lost decades of 1960-1990" and has accelerated therafter with a raft of higher edu offerings.

Yes. For that you have to thank what one maulana of the learned school here refers to as the "ISI/DSE commie ding-dong babu monkeys". It was their foresight that saw to it that we developed 5 world class IIT's and IIM's at a time when our GDP was much lower. Also wasn't some other worthy on the forum the other day saying that the only reason we invested in tertiary education was to ensure that the offspring of the elite could enjoy sinecures in the west while the rest of the nation enjoyed remained poor.

Arjun · Post by **Arjun** » 28 Jun 2011 08:19

singha wrote:but the reason why world is feeling takleef enough to take the time to make fun is because unlike any other individual or coalition of basket cases, our institution building since 1947 has produced a vast number (relative to competitors) of people able to compete at the world level in any field - engineers, doctors, writers, teachers, nurses, welders, mariners, soldiers, philosophers ... and this is causing the takleef to those used to high fat low work living. so malaysia or thailand may have 3x our current per-capita income but take any field and compare the sheer number of brilliant indians worldwide and we leave them in the dust...thats why they are unable to break the middle income trap...we will have no such trouble when the time comes. the institution building continued even during the "lost decades of 1960-1990" and has accelerated therafter with a raft of higher edu offerings.

Broadly correct, but I am not entirely sure how much of this is due to the governmental focus on building educational institutions vs an innate Indian bent towards excelling in education (at the higher end) or obtaining vocational skills (at the lower end).

Point I am driving at is - if the government had not built these institutions, Indian demand would have created its own sources of supply from the private sector / overseas education side - as is happening in a number of vocational and high-end areas today.

Also, while the numbers might be large relative to competitors, we need to look at a quantum increase in scale which governmental institutions have not been able to deliver so far.

Abhijeet · Post by **Abhijeet** » 28 Jun 2011 08:48

I hope I am not one of the "rainers on parade" when I ask this.

Despite all the growth that's happened in India recently, the average quality of life at present for even well off Indians is abysmal, mainly due to very poor governance. I've written repeatedly about this before.

In the collective opinion of people here, when will it be possible for Indians to have a moderately high standard of living?

By this I mean:

- Access to 24 hour, uninterrupted power supply with no voltage fluctuations and no need for a generator
- No water cuts -- 24 hour water supply from the municipality
- All sewage in at least the top 20 cities treated before disposal
- Well surfaced roads with lane markings; access controlled freeways between the major 5 cities at least
- The same density of world quality products -- at less than dollar price plus markup -- that's available in SE Asian countries

Let's say someone moving from Bangkok or Kuala Lumpur to a major Indian city should not experience a dislocating shock. When is this likely to happen?

Singha · Post by **Singha** » 28 Jun 2011 09:00

Arjun, I agree that indians were always interested in learning. but in those days no pvt sector was there to build up places like IITs/IIMs/ISI/IIsc/RECs/ISI/medical & state engg colleges unless the govt stepped in and supported it massively (and they roped in foreign countries for each iit capex). and except a few metro bred elites nobody had the contacts and money to go and study in oxbridge or harvard. instead of 15000 people/annum getting an education to compete at world level, we'd have 500 students who went abroad (and mostly stayed on there).

its only later that pvt sector is able to build competitive colleges and scale them up.

we still need a massive expansion in quality x quantity to ensure anyone who wants to study a particular field is not denied a reasonably good education at a affordable price.

somnath · Post by **somnath** » 28 Jun 2011 09:03

Abhijeet wrote:- Access to 24 hour, uninterrupted power supply with no voltage fluctuations and no need for a generator
- No water cuts -- 24 hour water supply from the municipality
- All sewage in at least the top 20 cities treated before disposal
- Well surfaced roads with lane markings; access controlled freeways between the major 5 cities at least
- The same density of world quality products -- at less than dollar price plus markup -- that's available in SE Asian countries

Some of this is already in place...Indian highways are pretty good now for most parts, thanks to NHDP..I did Delhi-Karnal sometime back - it was as good as any I have seen in SEA...Ditto with Mum-Pune...I havent done it myself, but Cal-Durgapur is also supposed to be very good...And will get better...

Consumer goods - its all there, in fact here there is absolutely no gap between India and SEA, in pricing or quality...Unless you are looking for the top-end luxury brands (those too are coming in)...

The issue is really about urban services - and the problem is about demand far outstripping expectations...Part of the problem of such sizzling growth...Hopefully things will get better in the next 5 years - seems Del has finally licked its power problem, so has Cal (in a manner of speaking)...

but no doubt, we have a long way to go on most metrices - we are still a "low income" country, a graduation to middle income itself will be an achievement....

somnath · Post by **somnath** » 28 Jun 2011 09:11

Singha wrote:but in those days no pvt sector was there to build up places like IITs/IIMs/ISI/IIsc/RECs/ISI/medical & state engg colleges unless the govt stepped in and supported it massively (and they roped in foreign countries for each iit capex). and except a few metro bred elites nobody had the contacts and money to go and study in oxbridge or harvard. instead of 15000 people/annum getting an education to compete at world level, we'd have 500 students who went abroad (and mostly stayed on there).

its only later that pvt sector is able to build competitive colleges and scale them up

Well, absolutely...Even today, there is not a single institution in the private sector that can be deemed as world class in anything...The last "world class" institution setup in India was the National Law School in B'lore, and that was a public sector effort...

Without pro-active efforts in setting up the IIXs, no private sector would have even ventured into the arena....

A scale up is required now, but not really at the top-end...Given India's resources, we can afford only so many "elite" schools if they are to remain "elite" - the expansion of IIXs was an incredibly stupid idea - they should first take the quality of the existing schools up...The scale-up is required @ the next level - the NIT/REC/equivalent...Both privae and public investment would be required for that...

The other thing to really go for is to get foreign unis into India - get only the best ones (Yales et al), and make them collaorate with Indian schools...

Abhijeet · Post by **Abhijeet** » 28 Jun 2011 09:12

I disagree on the consumer goods part -- there are many, many categories of products in India that are priced as much as or higher than in the US -- cars, electronics, toys, diapers(!) and many others. I really doubt that this is the case in SEA, although my experience there is second-hand -- otherwise you wouldn't have people still returning from Bangkok or Singapore with electronics.

There also isn't the same network of large retailers blanketing the country that would lead to vastly increased product accessibility in general.

Electricity, roads etc -- yes, they have improved, but from a very low base.

somnath · Post by **somnath** » 28 Jun 2011 09:41

Abhijeet wrote:there are many, many categories of products in India that are priced as much as or higher than in the US -- cars, electronics, toys, diapers(!) and many others. I really doubt that this is the case in SEA, although my experience there is second-hand -- otherwise you wouldn't have people still returning from Bangkok or Singapore with electronics.

Really? I have no idea about the US, but diapers I have a lot of experience of in the last 3 years

- Pampers costs as much in Mum as in SG, actually slightly lesser...

About people buying electronics from SEA, sometimes I feel that is just "hujug" as they say in bengali, or "tashan" as they say in Del

...

vina · Post by **vina** » 28 Jun 2011 09:43

Abhijeet wrote: otherwise you wouldn't have people still returning from Bangkok or Singapore with electronics.

I dont think anyone does that anymore. Earlier until the mid 90s atleast, the Singapore-Chennai flights used to be packed to the gills with TVs, VCRs, music systems and stuff. Not anymore I think. It doesn't make any sense to do so. You get the same stuff right outside your door here in India at pretty good prices and with warranty and service.

Arjun · Post by **Arjun** » 28 Jun 2011 09:48

Singha wrote:but in those days no pvt sector was there to build up places like IITs/IIMs/ISI/IIsc/RECs/ISI/medical & state engg colleges unless the govt stepped in and supported it massively

The private sector was always present in education. BITS and Manipal were setup in the 50s....the private sector could have easily scaled up to much more given the right backing.

I am not saying the government institutions (such as IIXs)were not an asset - they were a tremendous asset. But I am not so sure India's course as a knowledge superpower would have fundamentally altered without their presence.

Speaking of being 'world-class' that other posters talk about - I am firmly of the opinion that none of the governmental institutions setup have been world-class as well. The only world-class aspect about them has been the quality of students taken in....If these governmental institutions had not been setup - other institutions would have benefited from the same quality of intake.

Abhijeet · Post by **Abhijeet** » 28 Jun 2011 09:53

I forgot to mention one of the biggest things -- general cleanliness and hygiene -- efficient garbage collection and no visible garbage (not Singapore-level, but say NY level).

In Chennai I've seen huge open air lots piled high with garbage which are summarily burnt at periodic intervals. It's medieval.

vina · Post by **vina** » 28 Jun 2011 09:54

sugriva wrote:Yes. For that you have to thank what one maulana of the learned school here refers to as the "ISI/DSE commie ding-dong babu monkeys". It was their foresight that saw to it that we developed 5 world class IIT's and IIM's at a time when our GDP was much lower.

What does ISI/DSE & commie ding-dong monkeys have to do with institutional building ? If these institutions got built it was due to JLN's vision. He was an institution builder par excellence. I know from first hand family experience on his foresight in building them (I am talking about an absolute top end facility in Bangalore Kerala, which got built because of JLN, who invited the key person who put it up back from the US). In many ways IG did that as well (she personally invited back Prof Satish Dhawan back to IISc and to head ISRO and also if what I hear is right Naresh Trehan ..dunno about the Dilli things) .

Contrast that with the commie vandals in W. Bengal , who just about destroyed anything of value there and were destroyers of institutions par excellence (thank God for the IIT act, or IIT KGP too would have been vandalized beyond repair). What institution did the commies build in W. Bengal or even Kerala beyond the CPI-M ?

vina · Post by **vina** » 28 Jun 2011 09:58

Arjun wrote:The private sector was always present in education. BITS and Manipal were setup in the 50s....the private sector could have easily scaled up to much more given the right backing.

True, even IISc was a private institution (set up by Tata) before Govt take over. You left out BHU.

That said, it was important for the govt to set up the institutes it did and build those institutions. But what was the fly in the ointment was the commie/pakiness .. license permit raj, that got set up , which effectively put a cap on private initiatives in higher education and imposed a stalinist bureaucracy on top and put the govt institutions in "commanding heights".

putnanja · Post by **putnanja** » 28 Jun 2011 10:38

BMS Engineering college in Bangalore was the first private engineering college in the country!

Theo_Fidel · Post by **Theo_Fidel** » 28 Jun 2011 11:20

Abhijeet,

Those things will not change until social reforms are completed. All those TFTA streets that you see in Europe were diseased hell holes just 100 years back. Takes social priority to make things look TFTA. We are not there yet.

---------------------------------------------------------------------

WRT institution building, Indira Gandhi was an absolute disaster. Today's institutions have still not recovered from her clumsy and vindictive meddling. AMMA is a pale shadow of a kitten compared to IG.

The problem for India has always been one of Quantity while JLN focused completely on Quality, the few the proud and all that...
We finally have the quantity we need even if we are forced to drop our standards a bit. We can improve quality over time, focus on quantity.