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Saturday, November 15, 2003

Export of cultural products from India

I am afraid it is a rather long post.

A few weeks back Edward posted a dynamite interview with Sekhar Kapur in Rediff. It is something I wanted to comment on. But unfortunately, it took me a while to get to it.

I have always been a big fan of Sekhar Kapur's films. But I did not know that he packs so much intellectual firepower .....

I am with him on the size of the prize at stake. But I have serious reservations about the ability of Indian entertainment industry to exploit it. I think Kapur is seriously underestimating the ability of Western advertising-image making-entertainment complex to co-opt and influence local pop culture and sensibilities to meet its programming needs.

The effect of Western visual culture on Asia is subtle and incremental. Occasionally, its impact on an unsuspecting and otherwise unprepared people can be devastating. I read a depressing account of it in The Guardian sometime back. The kingdom of Bhutan was the last Shangri La of South Asia. The king has not allowed television into Bhutan till about a year back. Some people contend that what happened after cable got unfettered access is not a direct effect of TV. It was bound to happen anyway. But an increasing number of people are tying the ensuing wave of crime, drug problems and unexplainable violence to the pent up unmet wants created by cable.

In Butter Chicken in Ludhiana, Pankaj Misra narrated the tragicomic stories of the wants created among the noveau riche of suburban India in the eighties. This was right after Mofussil India got 'Dallas' and 'Santa Burbara'. In the decade preceding that, Pico Iyer went looking for Asian culture and instead found Video Nights In Kathmandu.

Now, I am not claiming that similar cultural export from the east is impossible. Just consider Japan's gross national cool. Its worldwide influence can be seen in everything from animation to religion. But it is rather hard and too often it results in superificial iconization for Western consumption rather than resulting in a dialogue.

My question is more over the ability (or even the creation) of an Indian entertainment complex that can successfully exploit the market for Indian entertainment products in the diaspora and at the same time cater to a larger International market. My doubts are because of two different reasons. One is the increasing creative bankrupcy of mainstream Bollywood filmmakers to develop products that the market wants (which should not be construed to mean Indian creative bankrupcy). "In 2002 Bollywood lost $50m and in the first four months of 2003, another $15m has gone" (link).

Then there is the question of building an infrastructure that can create such products. One of the reasons, Bollywood can continue to churn out such an amazing number of loss making films is because there is so much underworld mafia money going into the film industry. In a story published some months back, Hindu Business Line found that despite RBI's best efforts, less than 5% of financing in the vast majority of mainstream films are coming from institutional, organized financial sources. As it says, structural difficulties of streamlining the filmmakig financing in India is considerable. Unless that is sorted out, Bollywood would continue to be in a mess.

In the mean time, television has been growing at the expense of cinema and music. And where do you think that growth is going?

Enter Mr. Rupert Murdoch. He runs the second largest media company in India now. Most of the popular soaps are on Star. It is now stuck in the middle of all sorts of regulatory wrangles in India (The Economist has good ongoing coverage of the fight over StartTV and the perennially emerging Indian broadcasting regulations. But those stores are all priced. But here is an angry Hindu editorial ).

So, yes, I would like to believe in the vision that Sekhar Kapur showed us. But India is simply not prepared. And I find his optimism slightly scary.

Lastly, I am not even sure about the desirability of such an entertainment complex. The changes that we see in India now are not because of any deliberate attempt by an organized band of cool merchants to influence public taste. It kind of happens. The US is different. I am not sure that popular taste here is really bottom up. It gets influenced in myriad small ways by various arbiters of popular taste. Are we sure that we want that to happen in India?

This is one of those areas where I have not sorted out my thoughts. But the subject is of enormous importance and will determine more than anything else the future shape of South Asia.

Growth of Private Schools in India

Extensive piece today in the NYT about education in India. As one parent is quoted as saying: "Since ages, we are doing manual work..........Why should they........They should have a good profession." I smell Pele-Ronaldo. I'd be interested to know what Atanu thinks.

In this democracy of more than one billion people, an educational revolution is under way, its telltale signs the small children everywhere in uniforms and ties. From slums to villages, the march to private education, once reserved for the elite, is on.

On the four-mile stretch of road between this village in Bihar State, in the north, and the district capital, Hajipur, there are 17 private schools (called here "public" schools). They range from the Moonlight Public School where, for 40 rupees a month, less than a dollar, 200 children learn in one long room that looks like an educational sweatshop, to the DAV School, which sits backed up to a banana grove and charges up to 150 rupees a month, or more than $3. Eleven months after opening, it already has 600 students from 27 villages.

There are at least 100 more private schools in Hajipur, a city of 300,000; hundreds more in Patna, the state capital; and tens of thousands more across India.The schools, founded by former teachers, landowners, entrepreneurs and others, and often of uneven quality, have capitalized on parental dismay over the even poorer quality of government schools. Parents say private education, particularly when English is the language of instruction, is their children's only hope for upward mobility. Such hopes reflect a larger social change in India: a new certainty among many poor parents that if they provide the right education, neither caste nor class will be a barrier to their children's rise.

Thursday, November 13, 2003

Over 40% of IT Development Work Now Outsourced

India is the preferred offshore provider
According to the META Group, about 41% of all information technology development work for U.S. businesses is now being outsourced, with India continuing to be the preferred offshore provider. The number is up from a year ago, when about 36% of development work was outsourced, META said. The firm said that Russia, the Philippines, Ireland, Israel, and China are "the up-and-comers to watch" in the offshore IT development market.

Question: As per Nasscom total software & services exports (including BPO) was US$ 9.5 billion during 2002-03, out of a global IT services market of more than US$ 600 billion (this doesn't include software products or hardware). So, what does that 40% mean?

Wednesday, November 12, 2003

10 Reasons to Invest in India

Rediff is carrying a slideshow full of feel-good factoids on why India is a great investment destination. They include...

-->Among the highest rates of returns on investment. Profitability of US investments in India: 19.33% in 2000 (according to US Department of Commerce).
-->2nd largest English-speaking population.
-->Abundant, high-quality, cost-effective, competitive manpower. Over 100,000 IT professionals added each year.
-->India rated as the most attractive destination for offshore business processing by global consultancy A T Kearney.
-->IT Industry $14 billion; growing at 50% p.a. Exports $12 billion; 2008 exports target: $60 billion, to be 35% of India's total exports.
-->Prevalence of foreign technology licensing - Rank 1 in the world.
-->Availability of scientist and engineers - Rank 2.
-->Quality of management schools - Rank 9.
-->Firm level innovation - Rank 12.
-->Firm level technology absorption - Rank 16.
-->Company spending on R&D - Rank 32. (Source: Global Competitiveness Report, 2003)
-->India rated best destination for outsourcing and 6th most attractive destination for FDI, according to AT Kearney.
-->Global competitive report ranks India at first place in terms of prevalence of foreign technology licensing.
-->Among top 10 tourist destinations. Major destination for foreign venture capital funds.

etc etc...

A few observations. I don't think rank 32 on private R&D or 12 for firm-level innovation is any good. It has to be much higher for real innovation to be spurred in India.

The top 10 tourist destination is probably a reference to the CondeNast story on India being one of 10 best destinations to visit. However, if you actually looked at tourist arrivals (or revenues), I am guessing you'll see a very picture. India gets about 3 million tourists a year, I think. Compare that with tourist arrivals in France at over 60 million or even Egypt which gets over 5 million. Everyone in the govt seems to talk about tourism as a growth area, but even today, NRI's and foreigners have to play a HUGE premium (60%+) on everything from airline tickets to hotel rooms. Citizens of practically every country on earth require a visa to visit India (even Sri Lanks offers waivers to 49 countries, including India). Unless such absurd artifacts of the socialist era are removed, I don't think tourism is going anywhere.

This tourism story is very similar to SME sector which is full of entrepreneurs who cannot scale up because of the absurd incentive regime in place for the sector. The Indian govt lowered entry barriers post 1991, but doesn't seem to understand the importance of exit, which if not present can become an entry barrier by itself.

I leave you with the World Bank's Doing Business Index. It takes 88 days to start a business in India, compared with 46 in China and 4 days in the U.S.
India has highest pay raises in Asia

InformationWeek quotes a Hewitt Associates study that indicates that high-tech jobs have led to Asia's highest pay hikes -- average raise of 14% -- in India.

Companies in the Philippines came in second to India, registering average pay increases from 7.1 percent to 8.6 percent. In South Korea, pay hikes ranged from 7 percent to 7.3 percent, while in China, employees saw salaries jump from 6.7 percent to 7.3 percent.

While India ranked highest in salary increases, it still remains one of the lowest-paying countries in Asia. A 14 percent pay raise for a systems engineer for an Indian company in Bangalore, where such jobs earn $24,000 per year, will pull in roughly as much cash as a 5 percent raise for an employee in Tokyo earning $64,000 doing the same job.

The study measured actual and projected salary increases across five job categories: senior management, manager, professional/technical/supervisory, clerical and support, and manual workers. It included 991 companies in 11 countries surveyed between July and September 2003.

In Singapore, a more developed economy, the average salary increase for 2003 ranged from 2.1 percent to 2.4 percent. Hong Kong and Japan, Asia's most mature markets, had workers with pay jumps of 1.3 percent to 1.5 percent and 1.6 percent to 2.1 percent, respectively. The other countries surveyed--Thailand, Malaysia, Taiwan, and Australia--averaged increases of 3 percent to 5 percent.
Trade in Education - Where does India stand?

Hello everyone, I'm delighted to join this blog. A bit about me can be found here. Education has been one of my main interests over the years and I will try and highlight issues relating to Education, starting with my first post below.

Education exports is a booming business around the world.

According to the Open Doors 2003 report released by the Institute of International Education (IIE),

international students contribute nearly $12 billion dollars to the U.S. economy in money spent on tuition, living expenses, and related costs. Nearly 75% of all international student funding comes from personal and family sources or other sources outside of the United States. Department of Commerce data describe U.S. higher education as the country's fifth largest service sector export.

This led me to a quick back of the envelope calculation. According to the IIE's country fact sheet on India, the percentage of Indians among all foreign students entering the US over the past 4 years was 12.7% (2002-03), 11.5% (2001-02), 9.9% (2000-01) and 8.2% (1999-00), which averages to 10.6% over the past 4 years.

So of the $12 billion contributed by all foreign students in USA (I'm assuming this is an annual number), Indians contributed roughly $1.27 billion (10.6%). Of this, about 75% (which works out to $950 million or Rs. 4,280 crores) would have been contributed from personal/family sources or other sources outside the US. So the annual education exports from USA to India is about US$ 950 million?

For perspective, the figures of US exports to India for calendar Year 2002 (figures for 2001 are in brackets) show

US merchandise exports to India = $ 4.1 billion ($3.8 billion)
USA services exports to India = $ 3.1 billion ($2.8 billion)
Total USA exports to India = $ 7.2 billion ($6.6 billion)

Is the back of the envelope calculation in the ballpark or am I missing something here? Is Education one of the main services exported by the US to India?

Australia does in fact earn more from exporting education than any single primary commodity. IDP Australia (an independent not-for-profit organisation owned by 38 of 39 Australia's universities and representing all education sectors) reports,

Australia's eighth largest export sector, international education was worth $4.2 billion to Australia in 2002 (presume all figures are in AUS$). There are approximately 1.8 million international students around the world - and Australia is their third most popular choice, after the USA and UK.

More than 188,000 international students studied at Australian institutions in 2002, with more than 100,000 at campuses onshore. Foreign students comprise about one in five of the 850,000 degree-seekers enrolled in Australia's 38 universities.

Australia now earns more from foreign students than it gets from exporting wool, or any other single primary commodity. And that income could expand ten-fold over the next two decades to $40 billion a year. On average, every international student spends around $9,000 on goods and services each year they're in Australia. Latest statistics on international student expenditure, from a survey by Australian Education International, show that students spend more than $118m on entertainment, $100m on overseas travel, $ 77m on clothing and footwear, $ 59m on daily transport, $ 53m on household goods and, $ 41m on car costs.

Estimates of education exports from UK are in the region of around 8 billion pounds a year ($13.3 billion).

How can India get into this game?

IIT is a reputed and established Indian brand and we should certainly be looking to leverage our investment in the IITs over the past 50 years and look at exporting IIT education. There is apparently already a proposal under active consideration by the Government of India to set up IITs abroad. This would call for sizeable investment (don't know if the government has decided to invest) and involve other logistical issues as well. The easier step would be to start out by marketing the existing IITs in India (as education destinations) to foreign students and gain some traction in the export market. We could look at setting up more IITs within India as well as outside as the export demand grows.

On a slightly different note, given that demand for IIT education far exceeds supply right here in the Indian home market, the IITs would do well to leverage their brand and expand supply starting in the Indian market. An earlier post of mine looks at possibilities.

Tuesday, November 11, 2003

The benefits of Cross-Fertilisation

Preparing a post for Living in China (which I don't) I came across this comparative piece in China Biz which you all might not otherwise see: the lesson, China and India can learn from each other, and Indian bloggers can learn from Chinese blogs and vice-versa.

Capitalize Chinese Economy

Paris - by Zhang Jun

An article appearing on Wall Street Journal this summer tries to compare Chinese growth with Indian growth in the last decade. The authors find there is no big growth difference between China and India in the past 10 years, though China grows a little faster. The big difference between these two big countries, before anything else, is that India lacks hard infrastructure for fast growth and China lacks soft infrastructure for efficient growth.

India has relatively well-developed financial market, but China hasn't. China has a national saving rate of 40% that is almost two times that of India. Not like China, India rarely takes in foreign direct investment (FDI). Every year China targets FDI and tries all the best to reach the targeted amount, because FDI engines the growth, but the national saving doesn't. Observers of China economy are always puzzled by the continuously rapid inflow of FDI to China. Why does China need FDI so much though China has the saving rate that is comparable to that of South Korea and Singapore in 1970s and 1980s? When I was repeatedly asked such question, my answer has been quite obvious: FDIs are much more productive than Chinese savings.

Why are Chinese savings not so much productive as FDI? Because it is the governments, not Chinese entrepreneurs at all, who control and allocate the national savings via the state banking system. Under the state controlled allocation, Chinese savings are injected into state sector which consists of both Chinese state enterprises and government-sponsored capital intensive projects every year. The efficient and dynamic Chinese domestic entrepreneurs are not allowed to get access to the huge money. Because of the nature of Chinese financial system, Chinese savings are not really something more productive and profitable, simply, are not something called capital at all.

Capitalization is not simply money but an ability to make more money through enhancing productivity. Economics teaches nothing but explains how to distribute the factors in an efficient way. Nobody can control labor productivity but the owners of labor themselves, and who control the money factor makes great difference to money productivity. Only in the market is it possible for highly productive people to meet the amount of money they wanted. Banking system has no such mechanism to screen out the entrepreneurships. That's why the development of capital market has been so important to economic growth.

Chinese economy has been growing fast in the past 2 decades but the capital hasn't grown. The market capitalization of Chinese enterprises only accounts for less 1% of its GDP, and this ratio is dropping. In stock markets, the capitalization has been downsizing from over 200 billion yuan two years ago down to something like less 50 billion yuan today. The 98.7% of financing is through banks today. Last year Chinese GDP increased by 650 billion yuan, but the saving increased by 3.9 trillion yuan. How to capitalize the huge amount of savings is the big challenge to Chinese financial system. China needs financial transformation.

Capitalization, or the ability to make more money, must be privately owned. In this sense, the financial transition from banking-based to market-based is a legal transition process away from governments dominance over property rights on to the pervasive protection of private property rights. Capitalization is the recognition of private property rights over decision-makings in production and productivity growth. Without clearly defined private property rights, capitalization is not well developed, so are Chinese private businesses--though Chinese economy has been growing, but not its enterprises.

Monday, November 10, 2003

Who Paid for my Education

A warm welcome to Satya.

Edward in his post to welcome Satya touches on a topic that is very close to my heart. I wrote about the topic of funding of higher education in India a couple of years ago and asked Who Actually Paid for my Education. Here is an excerpt that is remarkably close to what Edward has proposed:

... It [the migration of educated Indians] is totally
indistinguishable from a gift of $100,000 from India to the US when an
engineer trained in India migrates to the US. Just like capital flight
from poor nations to rich nations, it is human capital flight from the
poor nation to the rich. It constitutes a subsidy that is hard to
estimate but my rough calculations put it around $2 billion a year.
(References available upon request.)

Why a resource drain? Because we are short of money that is used to
educate people. We are not short of people. So if an educated person
leaves, we lose what we have invested in his or her education. This
would not be that great a loss if he or she had paid full price for the
education received. But we don't charge full price. We subsidize higher
education. That is also not that great a crime. The problem is that we
differentially subsidize higher education and neglect primary education.
The beneficiaries of this 'caste' system is that higher education is
only available to upper socio-economic classes.

A brief solution to the problem of full-cost pricing is easy to state:
Price all higher education at full cost. If a year of engineering school
costs Rs 3 lakhs, price it at that. Then give loans to every student
that needs it to pay the price. The loan is repayable upon employment
and in terms commensurate with the level of employment. If you earn big
dollars in the US, pay in big dollars. If you work as a doctor in a
small rural village in India, pay small amounts in rupees. Essentially,
once the loan system is put in place, you do away with subsidies as it
becomes self-sustaining in 4 or 5 years.

Welcome to Satya

Just to say welcome to Satya who runs a blog called Prayatna, and who will be posting here from time to time. Satya has an interest in education, so I have picked an item from his education page by way of presentation.

Economic Times reports on the increase in the number of student loans disbursed by banks (largely the public sector banks) over the past three years.

Bank of India (BoI) saw a jump of 88.2% from 603 in March 2000 to 5,115 in March 2003. The corresponding percentage increase for State Bank of India (SBI), Canara Bank (2001-03), Union Bank of India (2001-03) and Bank of Baroda (BoB) was 55.8%, 61.9%, 79.9% and 66.3% respectively.

The outstanding amount of education loans for SBI rose from Rs 115 crore in March 2000 to Rs 660 crore in March 2003. The corresponding figures in March 2003 for Canara Bank, BoB, BoI and UBI were - Rs 401 crore (Rs 188 crore in FY01), Rs 115.5 crore (Rs 19.8 crore in FY00), Rs 105.8 crore (Rs 27 crore in FY00) and Rs 85.3 crore (Rs 9 crore in FY01). Regarding the actual volume of educational loans, BoI saw a jump from about Rs 2 crore in FY01 to Rs 66.5 crore in March 2003; education loans from Canara Bank rose from Rs 40 crore in FY01 to Rs 158 crore in March 2003; while the corresponding figures for PNB were Rs 34.3 crore in FY01 to Rs 256.6 crore in March 2003.

The education loan market took off with the announcement of new norms for this sector in June 2000. Prior to that, the sector had witnessed sluggish growth. Under the relaxed norms, banks are not expected to demand any security for loans up to Rs 4 lakh, beyond which, collateral security - such as share certificates, government bonds, IVP, KVP, NSC, mortgage of land - is required.

Interest rates have also fallen substantially. From 14% pa in 2000, SBI now charges 10.85% pa up to Rs 4 lakh, and 11.75% pa for loan exceeding this amount. BoI charges 9% pa up to Rs 50,000, and 11.5% pa for educational loans between Rs 50,000 - 15 lakh. Other nationalised banks charge rates ranging from 11-12.5% pa, depending on the loan amount.

Educational loans vis-a-vis retail loans given by banks have also witnessed a substantial jump over the years. In FY01, only 1-2% of BoI's retail loans comprised educational loans, which rose to 9% in March 2003. Educational loans as a percentage of retail loans given by various banks in March 2003 were 3.9% for PNB (1.6% in FY01); BoB 5.5% (3.6%) and UBI 1.7% (0.3%). For SBI, educational loans as a percentage of personal loans given by the bank rose from 1.4% in FY01 to 2.7% in March 2003.

Though the percentage increase over the past few years seems to be substantial, in terms of absolute numbers, the amounts disbursed still seem to number in the hundreds of crores, a very small fraction of the overall retail loans (home, car and other personal loans) disbursed.

Educational loans could help boost higher education in the country without relying on the government to fund or subsidise higher education. Consider the example of an IIT education - the most subsidised education around in the country today. Clearly there is high demand for an IIT education, but the supply is extremely limited due to lack of funding from the government (The University of Roorkee was converted into an IIT and a new IIT was set up in Guwahati recently, but that's far from enough to meet the demand).
Here's what can be done.

- Let the IITs raise their fees to more realistic levels to recover at least the annual operating costs from the student fees.

- Let every student who is unable to pay the fees be given an educational loan at an interest rate on par with the home loan interest rate, if not lower, with only simple interest charged for the duration of the study and the payback beginning as soon as the student lands the first job.

- Every student graduating from IIT has good job prospects and can certainly hope to pay back the loan.

- An outstanding loan is also likely to help by making students take their education more seriously.

Private sector investment to set up more IITs or similar institutions will become more attractive since the operational costs can be recovered immediately and so the supply of higher education can increase without government subsidies. The government can then direct all the funds that were going to higher education towards funding primary education.

Just like housing loans, where the default rate is said to be extremely low (there is sound collateral and housing is a fundamental need), the default rate on education loans is also likely to be very low since education is also a fundamental need. One could also look at legislating that every employee has to give an undertaking to his/her employer at the start of employment declaring if there is any outstanding education loan and if there is, part of the salary can go towards paying off the loan.

Educational loans could also be an excellent new growth area for banks and other lenders especially during times of economic downturn when uptake of other loans may be on the lower side due to drop in consumer demand, since a downturn is typically the time when people consider going in for further studies due to a shrinking job market. The banks can also start building a strong customer relationship with the student community from a very early stage.

A heart warming editorial in the Indian Express

Pre-poll promise

Prime Minister Vajpayee spells out a large idea. He must stay the course

In the run-up to a crucial round of assembly polls and with the next general elections already looming on the horizon, it's an uncertain time for the nation. In this tentative moment, the prime minister has sent out some reassuring signals. Be it what he has said on Gujarat or his views on the equation between democracy, coalition governments and economic reform, in an interview given to Britain's Financial Times, the message from 7 Race Course Road is a heartening one. It is: that the government is sensitive to the continuing need to live down last year's shame in Gujarat. It is also: that the government has charted a course for itself on economic reform which does not permit those easy digressions into alibi-hunting.

The prime ministerial assertion that justice will be done and will also be seen to be done in Gujarat is immensely comforting. It comes at a time when grave doubts persist about the Gujarat government's resolve to see that the guilty are brought to book and Narendra Modi has been drafted as the BJP's star campaigner in the assembly polls. The prime minister has also acknowledged the role played by the "public, media and judiciary" in "following it closely". Institutions and organisations of civil society have been insistently pointing out that there is a crying need for reparations in Gujarat and that acknowledging this need is the first and crucial step to moving on — one that Modi's government is still unwilling to take of its own volition. Hopefully, Prime Minister Vajpayee's assurance will be heard — and respected — by the chief minister of Gujarat. The prime minister's articulations on the policy and process of economic reform are also significant for several reasons. He has reiterated faith in democracy, with all its untidiness and delay. He has emphasised that the democratic processes of consultation and reconciliation of diverse and competing interests must mediate all durable economic reform. He has gone a fulsome step further. He has said that "our new experience of successful coalition governments" has been "ideal" for democratic governance. The prime minister's comments are a fitting answer to all those who rail loudly at "too many elections" and "too much democracy". And, of course, at that new fashionable villain, the "unstable coalition governments".

In other words, Prime Minister Vajpayee has promised that his government will not pass the buck. His government is committed to deliver justice in Gujarat and a progressive and accountable economic policy to the nation. As for elections, they come and go. The nation will hold the prime minister to his vision in all its breadth.


Sunday, November 09, 2003

More on Oil Company Disinvestment

The last few days there has been a lot of news on oil companies. First, the government has okayed the sale of cross holdings of IOC, ONGC and GAIL. The buoyant stock market gives the government a chance to make a buck. Besides, all three companies need the cash for massive expansion plans they have chalked out. Interestingly, NDTV reports today that India is building a strategic crude oil reserve on its eastern coast. Indian Oil Corporation (IOC)has been given the task of managing the reserves and the locations have been handpicked to maximise the geographical spread. Could this be one reason why the government has allowed the three oil majors to unload their cross holdings in the market?

TN Ninan writes about the power of one

In all likelihood, you would not have heard of Parth J Shah. But as you may have guessed from his use of a middle initial, he spent many years in the US — after getting a degree in pharmacy in Baroda.

He realised that getting economic policy right did more to increase human welfare than discovering a new drug or two, and switched to economics, got himself a doctorate and taught the subject at Michigan before he decided to return to the mother country and started a modest NGO, which he called Centre for Civil Society.

Devoted to what one might call market liberalism, and inspired by such think-tanks in the US as the libertarian Cato Institute, Shah launched the Centre on the 50th anniversary of India’s independence in 1997.

He also roped in a bunch of familiar worthies to sit on his advisory boards, with the chairman being Kanwal Rekhi of TiE fame (he is also one of the primary financiers, the other being the Ratan Tata Trust).

When you meet him, Shah comes across as earnest and well meaning. He is obviously quite effective, because the Centre has a pretty good record for just six years of existence.

It has published some 15 books —some of them admittedly slim, and modestly priced, and some essentially reprints, like Milton Friedman's memorable minute on Indian planning and economic policy.

This was written back in the 1950s but its practical wisdom and economic common sense were officially ignored, to our great cost, and would have been lost to history if the Centre had not brought it to light all over again.

The Centre does other things too. It maintains a medium-sized library which is open to everyone; it analyses every Bill presented to Parliament; and it gets into public interest litigation (to support the privatisation of Balco, and to stop the harassment of ordinary commuters in the name of VIP security).

Predictably, of course, it also organises seminars. I attended one where those who would not be convinced could not be convinced.

The Centre has now brought out what it calls a 'Delhi Citizen Handbook 2003', perfectly timed to focus on governance in the capital just ahead of state elections.

Well I highly recommend you take a look at the Center for Civil Society Website. They are liberatarian, and therefore I often disagree with they have to say. However, I still think it does a very good job of getting information out into the public domain.

Editors of The Hindu and Murasoli Arrested

This isn't exactly an economic issue, but it does seem to be a freedom of the press one. (Come to think of it it is an economic one too, if you think about the importance of 'institutions' for growth). Prashant has written to me about the arrest of the editors of The Hindu and Murasoli. Prashant and a number of others have written to Kalam. you can find articles from the Hindu, the Times of India, India Express and Rediff.

Dear Mr. President:

This is an urgent appeal to you to intervene in the Tamil Nadu Government's outrageous assault on the press and to overturn its actions against the editors of The Hindu and Murasoli.

The actions of the Tamil Nadu Government come hard on the heels of the Gujarat Government's attempts to punish Dr. Mallika Sarabhai for her outspoken criticism of the post-Godhra riots. They form part of a deplorable pattern of attacks by elected officials on free speech and ultimately on the free exchange of ideas.

India has long been distinguished from other developing and, indeed, many developed countries by its strong commitment to free speech, and a free press is central to our image of ourselves as a civilized country. The right to free speech is enshrined in the constitution and courts have repeatedly upheld the implicit rights of a free press. These include a right to publish its opinions and those of its correspondents. All of that is rendered meaningless if criticism of public officials results in harassment and intimidation using the power of the State.

It is imperative that such proto-fascist tendencies on the part of elected officials are stopped with an unambiguous message that their actions are unconstitutional and unacceptable. Intimidation of critics and the press is the hallmark of dictators and other absolutist weaklings. It has no place in a pluralistic free society.

We, the undersigned, are all professionals of Indian origin living in the US who are proud of India and its freedoms and are horrified by the recent events. We urge you to act immediately.


Vijay Dandapani
Raghu Sundaram
Sanjiv Das
Prashant Kothari
Marti Subrahmanyam