March 27, 2006

In Poor Health

Doctors bear the brunt of collapsing system
The media has been covering a spate of recent attacks on doctors by disgruntled patients. More recently, this has led to a strike by doctors in Maharashtra, calling attention to their working conditions. A section of observers seems to feel that doctors, for their arrogant and heartless behaviour, deserve what they get. Others have argued that given the appalling working conditions — not enough people, not enough money, not enough drugs or equipment — doctors can hardly be expected to perform miracles. While the debate is legitimate, what is ignored is the systemic failure staring us in our faces.
There has been a sharp decline in the state's commitment to public health over the last 15 years. As a percentage of gross domestic product, India’s public health expenditure is the fifth lowest in the world. As the National Health Policy (NHP) admits, this is, at 0.9 per cent of the GDP, lower than the average even in sub-Saharan Africa. Along with cutbacks in state spending on health, policy measures have encouraged the growth of the private sector in healthcare. We have the largest and least regulated private healthcare industry in the world.
The policy of levying of user fees has impacted negatively upon access to public health facilities. With the sharp rise in healthcare costs, as the NHP acknowledges, medical expenditure has emerged as one of the leading causes of indebtedness.
Half our rural population has food intakes below that of the countries of sub-Saharan Africa. The rate of decline in IMR, which was significant in the 1970s and 80s, decelerated remarkably in the 1990s. The percentage decline in IMR between 1971-81 was 14.7; between 1981-91 it was even more marked at 27.3 per cent. However, in the period 1991-99, there has been a marked stagnation, with the rate of decline in IMR a mere 10 per cent. Similarly, the pace of decline in the under five mortality rate has come down.
Decline in public investments was matched with growing subsidies to the private sector. Concurrently, marked shifts have occurred in healthcare utilisation. Among people who sought out-patient services in 1995-96, more than 80 per cent did so in the private sector, a sharp increase in even the poorer states.
In 1995-96, 55 per cent and 57 per cent in rural and urban areas respectively were hospitalised in the private sector compared to 40 per cent in 1986-87. NSS data indicates greater inequality in use of health facilities in both rural and urban areas in the mid-90s compared to mid-80s. In urban areas, inequality in use of public facilities did not worsen significantly, but inequality in use of private facilities did. In rural areas, inequality in in-patient use of public hospitals increased over this period. The steep fall in rural hospitalisation rates, along with increasing use by the better-off, indicates that the poor are being squeezed out. World Bank policies on health succeeded in doing exactly the opposite of what was ostensibly its raison d’etre — reduce utilisation of public services by the better-off to increase access to the poor.
Costs of both out-patient and in-patient care increased sharply in both rural and urban areas, compared to the mid-80s. Private out-patient costs increased by 142 per cent, against 77 per cent in the public sector in the rural areas. In urban areas, private outpatient costs increased by 150 per cent compared to 124 per cent in the public sector. The increase in costs in in-patient care is even more striking: Average costs rose by 436 per cent in rural and 320 per cent in urban areas. At the same time, the proportion of people not availing any type of medical care due to financial reasons increased between 1986-87 and 1995-96 — from 10 to 21 per cent in urban areas, and from 15 to 24 per cent in rural areas.
The prevailing pattern of illness cannot be fundamentally altered by a doctor-dependent healthcare system. Yet what has occurred is the production of unemployed doctors, while the number of para-medical workers is woefully inadequate. The number of medical colleges has increased, producing about 16,000 medical graduates every year. These professionals are unwilling or unable to work in rural areas, where despite high maternal mortality, over 40 per cent of pregnant women receive no ante-natal care, and only 16 per cent of women obtain institutional delivery. As many as 59 per cent of doctors and 85 per cent of hospital beds are concentrated in urban areas, which cover just over 25 per cent of the population.
Given the collapse of the healthcare system, it is not surprising that irate patients take out their grievances on doctors. But the private sector is no better. This calls for fundamentally rethinking neo-liberal shibboleths. In Sri Lanka, about 97 per cent of inpatient care and 83 per cent of out-patient care is in the public sector. We don’t hear stories of doctors getting beaten up regularly either.
The writer is professor, Centre for Community Health and Social Medicine, JNU.

March 25, 2006

India's Far From Free Markets

June 16, 2005

Indian Prime Minister Manmohan Singh is due to visit Washington in a few weeks, and editorialists and commentators have already started writing about the emerging economic power of India. New Delhi's decision to start liberalizing its economy in 1991 is touted as a seminal event in India's history, the moment when it threw off the shackles of Fabian socialism and embraced free markets. It is the stuff of myth -- and to a large extent, it is exactly that.

While part of India has benefited from being opened up to foreign products and influences, most of the country is still denied access to free markets and all the advantages they bring. India opened its markets in 1991 not because there was a political will to open the economy, but because of a balance-of-payments crisis that left it with few options. The liberalization was half-hearted and limited to a few sectors, and nowhere near as broad as it needed to be.

One would have expected India's growth to be driven by labor-intensive manufacturing but, almost by default, it instead came in the poorly licensed area of services exports. The manufacturing sector, ideally placed in terms of labor and raw material to compete with China, never took off. India's restrictive labor laws, a remnant of the socialist infrastructure that India's first prime minister, Jawaharlal Nehru, put in place in the 1950s and 1960s, were politically impossible to reform. It remains excruciatingly difficult for most Indians to start a business or set up shop in India's cities.

This is painstakingly illustrated in "Law, Liberty and Livelihood," a new book edited by Parth Shah and Naveen Mandava of the Center for Civil Society in New Delhi, which documents the obstacles in the way of any Indian who wishes to start a business in one of India's big cities. Messrs. Shah and Mandava write: "Entrepreneurs can expect to go through 11 steps to launch a business over 89 days on average, at a cost equal to 49.5% of gross national income per capita." Contrast the figure of 89 days with two days for Australia, eight for Singapore and 24 for neighboring Pakistan.

But often, even this figure is just a notional one, and entrepreneurs find it next to impossible to get a legal permit to start a business at all. Street hawkers and shop owners in the cities often cannot get a license at all. (Even those who do have to comply with draconian regulations that offer so much discretion to the authorities that corruption is inevitable.) They survive by paying regular bribes to municipal authorities and policemen, which are generally fixed in such a way by this informal market that they can barely survive on what they earn, and cannot expand their business or build their savings. They are trapped in a cycle of enforced illegality and systematic extortion by authorities, which results in a tragic wastage of capital. It serves as a disincentive to entrepreneurship, as well as to urbanization, the driving force of growing economies.

Another disincentive to urbanization is how hard it is for poor people to get legal accommodation in the big cities. In Bombay, for example, an urban land ceiling act and a rent-control act make it virtually impossible for poor migrants to rent or buy homes, and they are forced into extralegal housing. The vast shantytowns of Bombay -- one of them, Dharavi, is the biggest slum in Asia -- hold, by some estimates, more than $2 billion of dead capital. For most of the migrants who live in these slums, India hasn't changed since 1991. As that phrase from India's pop culture goes, "same difference."

India's policymakers are aware of these anomalies, but it is an acute irony in India that any proposal to reform the bureaucracy has to first wind its way through the bureaucracy. Arun Shourie, a former disinvestment minister and a respected journalist, wrote in his recent book "Governance" that, "proposals for reforming [the] system are adopted from time to time, and decrees go out to implement the measures 'in a time-bound manner.' But in every case, the proposal is put through -- some would say, it has to be put through -- the same mill."

It is in the nature of bureaucracies, Mr. Shourie points out, to endlessly iterate. He charts how the apparently simple task of framing a model tender document took the government more than 13 years, as drafts of it circulated between different committees and ministries. Anything even slightly more complicated, and with pockets of political opposition to it, like economic reforms, becomes almost impossible to implement. Dismantling state controls is only possible if there is political will and a popular consensus. None of these exist. On the contrary, there is a popular belief that the economic inequalities in India are caused or exacerbated by free markets.

The socialist left, a natural proponent of such views, believes that free markets are the problem and not the solution. India's communist parties have blocked labor reform, opposed foreign investment and prevented privatization of public-sector units. They naturally have a vested interest in the "license-permit-quota raj," as the web of statist controls is called. On all these issues they are supported, surprise surprise, by the religious right.

The Hindu right wing, led by the Bharatiya Janata Party and collectively known as the Sangh Parivar, also fears globalization. Its sustenance comes from identity politics, the impact of which is diluted by the opening up of the cultural mindspace to "foreign influences." If people are busy chasing prosperity and gaining Western liberal values, they will naturally have less time to focus on "the Hindu identity," and suchlike. Rabble rousers need the masses to be disaffected.

In between the socialist left and the religious right is the Congress, a party which occupies the center of the political space almost by default. Its position on issues is always malleable, and although it is currently the party of government, it leads a coalition that depends on the left for survival. The pace of reforms has not increased since it came to power last year, and is not likely to do so anytime soon. While the world focuses on the metaphorical bright lights of Bangalore, most of the country -- indeed, much of Bangalore itself, which has been plagued by power and infrastructure problems recently -- remains in darkness.

Mr. Varma is based in Bombay and writes India Uncut, a popular Indian blog (

March 24, 2006

The Walmart Debate

The typical Wal-Mart entry-level worker stays on the job less than a year—not nearly long enough to qualify for the profit sharing that helped cement the loyalty of earlier generations of employees. While many longtime "associates" (as employees are known in Wal-speak) still believe devoutly in the Wal-Mart Way and tend to break spontaneously into the company cheer at the annual meeting or other large company gathering, their numbers have dwindled sharply at a company that hires new workers at the unheard-of rate of nearly 800,000 a year.

Today, the typical Wal-Mart someone like Jonnie Monroe, a 22-year-old rock musician who went to a Wal-Mart store in Olympia, Wash., to buy a can of spray paint one day and applied for a job instead, intending to work only long enough to buy an amplifier for her band. She sailed through two interviews and a drug test and was hired in February 2004, as a full-time cashier making $7.91 an hour. Her training consisted of shadowing another cashier and watching a video that included scenes of a sinister-looking union organizer working a parking lot. "It was weird, like an after-school special," said Monroe, whose supervisor made her cover up the small tattoo on her arm after a customer complained.

Monroe soon made friends with a co-worker, but within a few weeks the Customer Service Managers, or CSMs, separated them, making sure they worked in different sections of the store and eventually on different shifts. Wal-Mart discourages associates from forming friendships with the people around them, apparently because it both fears such fraternization will result in lost productivity and because there is a greater chance such bonds will facilitate unionization. If Monroe made even the smallest computation error, she had to call a CSM to fix it while customers waited impatiently. "Customers scream at you and there's nothing you can do," she said. Monroe was told not to joke around with her fellow workers or to make political comments, even on her breaks. Monroe came to particularly dread the "opening ceremony," otherwise known as the Wal-Mart cheer: "You guys treat me like crap, you won't let me switch shifts, you won't let me dress like myself, won't let me act like myself, and now you want me to be, like, 'Yay, Wal-Mart'?" Monroe quit on the spot after 11 months when her boss refused to allow her time off to attend her brother's wedding in Chicago.

Every worker soon learns there are two unforgivable sins at Wal-Mart: stealing from the company and consorting with a union.

March 23, 2006

Hobbes in Sudan

March 23, 2006; Page A16

At places like Davos and Harvard, the world's sages rarely stop fretting about the dangers of a too powerful America. Well, if you want to know what the world looks like without U.S. leadership, Exhibit A is Darfur in Sudan.

Today's leading authority on Darfur is the political philosopher Thomas Hobbes, who prophesied a world "nasty, brutish and short." At least 200,000 civilians have been killed in the past three years and two million more have become refugees. The source of the problem is the Arab rulers in Khartoum, who have pursued an ethnic cleansing campaign against black Muslims in western Sudan. They've equipped the Janjaweed Arab tribesmen to do the dirty work, and that militia is now attacking civilians across the border in Chad, creating 20,000 more refugees.

To his credit, Kofi Annan started shouting about the problem two years ago, and former Secretary of State Colin Powell labeled it "genocide" not long after that. The U.N.'s mighty peace-making machinery then started to roll and . . . nothing. The Chinese (who have close commercial ties to Khartoum) and Russians have blocked any serious intervention. Arab members of the Security Council have also opposed any attempt to single out Khartoum.

The Arab League -- so quick to denounce Danish cartoons -- has also stymied any global intervention to stop the murder of their fellow Muslims. Here's League Secretary General Amr Musa earlier this month: "In Sudan, there is a problem related to Darfur. We will listen to the Sudanese state minister to explain to us the developments in the issue of Darfur . . ." The League plans to hold its meeting next week -- in Khartoum.

The African Union has at least sent 7,000 troops to the region, but they are under-funded and under-equipped to enforce a truce that Sudan blatantly flouts. But the African failure is also political. In January the Union held its own summit in Khartoum, and next year it plans to award Sudan its presidency. The rule seems to be never to say a discouraging word about other African leaders, no matter how murderous.

As for Europe, France would be ideal to lead an intervention force. The French have military bases in neighboring Chad and could establish a no-fly zone to stop Janjaweed bombing. However, Paris is already occupied with another intervention in the Ivory Coast, and with its own business interests in Sudan isn't volunteering in any case.

Amid this global abdication, Mr. Annan finally decided last month to call in the American cavalry. He visited the White House and, with media fanfare, all but begged President Bush to do something. Despite U.S. obligations in Afghanistan, Iraq and many other places, Mr. Bush responded by proposing an expanded U.N. peacekeeping force under "NATO stewardship."

But Sudan President Omar al-Beshir quickly played to type and withdrew support for a U.N. force. He also threatened that "Darfur will become the graveyard for the United Nations and foreign intervention." And rather than stand up to such threats, U.N. envoy to Sudan Jan Pronk has wilted. He's now talking up intelligence about al Qaeda terrorists in Khartoum who could retaliate against U.N. peacekeepers. And he's warning against any NATO intervention without Security Council approval -- as if that would be forthcoming. All of this is a repeat of the same feckless U.N. pattern we've seen in Bosnia, Kosovo and Iraq.

So that leaves . . . guess who? The cowboy President, the American unilateralists, the Yankee imperialists -- or, to put it another way, the only nation with the will and wallet to provide order in an otherwise Hobbesian world. However, that will and wallet are being stretched today in Iraq and elsewhere, and Mr. Bush is rightly wary of committing more American blood and treasure to a conflict in Sudan that the rest of the world doesn't seem serious about ending in any event. One lesson of Darfur is that there really are limits to American power, and in its absence the world's savages have freer reign.

March 21, 2006

The Decline of France

March 21, 2006; Page A14

The right to assemble is a pillar of free society. But in France it's the only pillar its citizens seem to take seriously. So much so that any public debate of import gets conducted in the streets rather than through the ballot box or institutions of a purportedly mature democracy.

In less enlightened societies, as opposed to the birthplace of the Enlightenment, that's usually called mob rule. But the violent street demonstrations roiling France's cities today, and the unhappy career prospects of Prime Minister Dominique de Villepin, are the latest symptoms of an ailing democracy.

The troubles began with student unhappiness about a new "First Job Contract" law, adopted by the National Assembly two weeks ago. They grew into a protest movement once the unions joined in. A nationwide strike has been called for next Tuesday. The merit of the new law isn't the issue here. One can hate the new law as well as the tactics employed by the mobs to kill it. The bill is designed to reduce the youth jobless rate of 23%. But if France wants to reverse a 30-year pattern of low growth and high unemployment, it needs to tear down labor law barriers across the board, not just for people under the age of 26.

Reasonable people could have had a spirited debate about this policy. So why didn't they before the jobs contract became the law of the land? Parliaments and elections exist so complicated issues can be digested and decisions calmly taken. France went from little discussion to protests in central Paris, blockades at the Sorbonne and a rampage through a McDonald's restaurant. That's "civic discourse"?

The masses on the streets reply that this is the only way to fight a sclerotic political system, and the claim isn't without merit. MPs and the president face voters only every five years. The National Assembly is notoriously unresponsive to voter concerns, though the chicken-and-egg problem is that citizens don't bother even to try to sway their representatives. The jobs bill was pushed through using a special procedure that allowed for little debate or amendment. It is the brainchild of Mr. de Villepin, an official chosen by party rule and heir apparent to deeply unpopular Jacques Chirac.

The roots of the problem go back further. The French have never shied away from guillotining aloof rulers, from Louis XVI to, more figuratively, Charles de Gaulle. Lesser men have fallen to nationwide protests, and Mr. de Villepin may be next. All these small revolutions were inspired by the French Revolution, but France never managed to establish a political system both durable and flexible.

How instructive it would be to send Alexis de Tocqueville through France today. He'd find dependence on the state and the absence of individualism, symbolized by the low levels of private charity and civic engagement. He would not find the bounty of groups and lobbies of healthier democracies. "In every case, at the head of any new undertaking, where in France you would find the government," Tocqueville's "Democracy in America" asserts, "in the United States you are sure to find an association."

Yes, the banners of student groups add color to the street demonstrations. But look closer. The force with real bite is the public-sector employee unions. Blue-collar workers long ago abandoned the union movement, leaving civil servants who, like Charles de Gaulle once said of France's cosseted farmers, are desperate to hold on to their "mediocre but secure" posts.

The government workforce -- one-quarter of the population -- can terrorize the majority by stopping the trains or turning off the electricity. In other words, the state funds its own opposition, which torpedoes even modest efforts to modernize France. By marching with the public-sector unions to defend this status quo, the boys and girls of the Sorbonne are saying they want to be "mediocre but secure," too. What a dream for a 20-year-old. And a useful warning to Americans about the danger of giving public-sector unions too much power as well.

In its post-Revolutionary history, France has been characterized simultaneously by instability and immobility. In the 217 years that America has lived under a single Constitutional order, France has been ruled by 10 different regimes. Yet the France of de Gaulle's "Fifth Republic" has had fewer leaders -- five -- than the Soviet Union did by the time of its dissolution in 1991. Stability and dynamism are surely a better formula for a successful state. And the only proven way to get there is a stronger democracy.

Nicolas Sarkozy, a presidential candidate, wants to make the president more directly accountable by removing the rule against his speaking before the Assembly. Others are calling for a new constitution to replace the current one, which was designed in the troubled days of 1958. A real parliament would help. France's growing protests make the case for a constitutional rethink. When the thousands on the street assert the right to make laws for the millions, a country loses its right to call itself a "democratic republic."

March 18, 2006

In India, the Path To Growth Hits Roadblock Slums

This is the state of Indian airports and the country as a whole. The difference in attitude between the chinese and indian lies in this statement "First I want my job and my home to be safe," she says. "Then the country can benefit." And people question why India is lagging so much compared to China.
Huge Squatter Settlements
Hem In Development Sites;
A Potent Political Force
Mrs. Pawar's Runway View
March 17, 2006; Page A1

MUMBAI – When Pushpa Ramesh Pawar moved to the teeming Vakola Pipeline slum on the edge of Mumbai's airport in 1989, she spent most of her time fighting off snakes, insects and disease in a makeshift plastic tent.

Today, her struggle to avoid eviction from her illegal dwelling represents one of the central challenges facing India's booming economy: How does the world's biggest democracy bulldoze the homes of voters who are squatting squarely in the way of progress?

Pushpa Ramesh Pawar and her son, Mahesh, above, stand in front of the Mithi River, which serves as the garbage dump for her slum's residents.

An urgently needed upgrade to Mumbai's moldy airport threatens to uproot the precarious life the 49-year-old has built only 100 feet from a runway. For four sweltering days in February, the normally unassuming Mrs. Pawar joined 3,500 fellow airport employees -- many illegal slum-dwellers like her -- in a strike opposing the sale of the airport to private investors.

As violence flared, a policeman pulled her to the ground by the hair. She returned the next day even more determined. "My job and my house could disappear," she said, as union leaders with bullhorns denounced the selloff to a crowd including hundreds of women in sky-blue sari uniforms. "We'd lose everything."

The standoff highlights the tension between India's go-go growth and the hundreds of millions of citizens on the margins who feel left behind. They have the power to derail the best-laid plans of investors and the government with votes, protests and the courts. India desperately needs to fix its archaic infrastructure -- potholed roads, rundown airports and decrepit power plants -- if it wants to seriously compete with China for investment. Yet getting it done often runs counter to the interests of those just beginning to share in the new prosperity.

In China, the other billion-person economy struggling to square rapid growth with colossal infrastructure needs, illegal squatters like Mrs. Pawar are dealt with decisively and unceremoniously. One day they are there; the next they are not. Democratic India is a different story.

A Jet Airways plane flies over the river, which is flanked on both sides by slums, on its way to the Mumbai airport where Mrs. Pawar works as a cleaner.

In Mumbai, the city formerly known as Bombay, the paupers have real political clout. Slum-dwellers constitute half of Mumbai's 12 million citizens, and they are faithful voters. That makes them an important bloc for local politicians, most of whom promise to fight efforts to relocate them.

Last year, Sonia Gandhi, president of the Congress Party and the most powerful politician in India, grew wary of a voter backlash and intervened to stop demolitions in Mumbai. She reappeared early this year to check up on the situation. Mrs. Pawar always votes Congress, head of the coalition government, because she thinks it is the most slum-friendly party. "We are a very important vote-bank," she says. "People who live in the buildings don't vote; slum-dwellers do."

Even in the nation's capital, New Delhi, the provincial government recently had to back down in the face of protests against its demolition of slums to make way for wider roads. In Bangalore, the epicenter of India's world-class information-technology industry, slum-dwellers have taken the government to court to stop demolitions.

Moving Mrs. Pawar also promises to be tough. She came to Mumbai nearly three decades ago to escape the poverty in the rural village of Chanderi 130 miles away. There, as a low-caste Hindu she had few prospects for decent jobs. Today, the widow earns enough as a salaried government worker on a cleaning crew at Mumbai's international airport to educate her two children. She also built a concrete house where her tent -- little more than a tattered plastic tarpaulin -- once stood. As her living conditions have improved, those at the airport have deteriorated.

The Mumbai airport is bursting at the seams. Private airlines have blossomed and foreign carriers now have free access to the market. That's good for India's economy. But there's no space to park all the new aircraft. The airport needs to expand but is surrounded by 90,000 slum households that illegally occupy 160 acres of airport land that would otherwise be tarmac and hangars.

Waiting to Land

Planes routinely circle for 40 minutes before landing because there's only one main runway. Animals wander from the slums onto the tarmac. The airport dispatches special teams to shoot stray dogs. Children jump the fence to retrieve balls and kites, while adults forage for scrap metal near the hangars.

Failure to clear India's economic runway of this chaos will have important implications for the country's ability to sustain its strong growth rate, which is expected to hit 8% in the fiscal year ending March 31. "The Indian economy could be doing a whole lot better if we could get infrastructure going," Montek Singh Ahluwalia, deputy chairman of the Indian government's planning commission and a key architect of economic policy, told a conference in New Delhi recently.

The latest effort to bridge that gap is playing out on Mrs. Pawar's doorstep. Until recently a global laggard in aviation with fewer than 200 locally owned jetliners for its one billion citizens, India has thrown open its skies to private airlines and foreign carriers, boosting passenger volumes by about 20% a year for the past few years. Mumbai is India's commercial capital and its airport handles one-third of the nation's traffic.

When monsoon floods closed the airport for two days last July, slums were blamed for clogging up waterways with garbage. Flights were further delayed when a plane skidded off the runway while landing, blocking traffic for hours. Waters receded to reveal the single runway for international flights littered with boulders and dead water buffalo.

But change comes slowly in Mumbai. It took more than five years to shift some 10,000 shanty families away from the railway line that runs down Mumbai's spine. The shanties had so crowded the line that trains had to slow down, delaying service. The chief problem with moving the slums is that they're filled with people whose votes keep politicians in power.

"Slum votes are very crucial for any politician," says Suresh B. Thakur, a representative in Mumbai's municipal government whose ward consists entirely of shanties on land owned by the airport. Mr. Thakur has lived in one of them since leaving impoverished Bihar state in eastern India 40 years ago. He makes a decent living from his barber shop and a phone booth he owns and operates. He also pushed through a government project to build a public toilet for people at his slum, only yards from a new hangar for the country's biggest private carrier, Jet Airways.

"Any bulldozer will have to pass through my body," he says. Slums provide the drivers, maids and mechanics that keep Mumbai running. The tough part is housing them all. Rent control and strict building codes make low-cost housing a high-risk, low-return business.

Passengers walk past Airports Authority of India employees in New Delhi during a February protest against government plans to privatize the country's two largest landing facilities.

With India's growing middle class buying homes, cars and cellphones like never before, developers need space for malls, apartments and parking lots. Land prices have jumped 40% in Mumbai during the past year. Developers are hungrily eyeing big tracts of slum land and are willing to put up millions of rupees to resettle inhabitants.

Getting them to move isn't easy. In 1996, the state government promised longtime slum-dwellers in various places across the city 225-square-foot homes, with bathrooms, kitchens and electricity. But India's bureaucracy never delivered.

The Slum Dwellers Association of India, a nonprofit advocacy group, opened a new residential block for slum-dwellers in Mumbai last month that has been hailed as an example of what should happen. But the intended residents had to wait 11 years in a transit camp before moving in. "Slum-dwellers know stories where people have been in transit camps for 20 years," says Vinit Mukhija, an assistant professor of urban planning at the University of California in Los Angeles. "Given that, how can they trust anybody?"

Praful Patel, India's civil aviation minister, is confident that slums can be cleared by the consortium chosen to upgrade Mumbai airport as part of a $1.5 billion redevelopment plan. A Mercedes-driving industrialist, Mr. Patel says slum-dwellers will be compensated. "If someone has been given alternative accommodations or has been paid, he has to go."

But the rising quality of slum life and booming cost of housing elsewhere is making residents dig in. An Indian government survey in 2002 found that 92% of slum-dwellers had electricity, compared with 75% a decade earlier, even though the slum population had grown by about eight million households nationally. Two-thirds of slum-dwellers had access to public toilets.

A policeman stands guard at the Mumbai airport during the strike.

The winding alleys of Mrs. Pawar's slum are freshly paved -- courtesy of the Congress Party -- and electricity is finally available all day. Mrs. Pawar gets up at 4 a.m. to stand in line for water that gushes from community taps for a few hours a day -- another service brought to the slum by doting politicians. Strapping teenage boys stroll to cricket practice in white uniforms.

Nearby, workmen erect a temple to the Hindu saint Sai Baba. The temple isn't only about faith. Peppering slums with temples is also a standard ploy to ensure that Hindu nationalists will rally to fight any threat of demolition.

Mrs. Pawar's struggle to attain a life of relative comfort illustrates how entrenched squatters have become throughout India's big cities, and how difficult they will be to uproot.

Seventeen years ago, when she first arrived at the Vakola Pipeline slum, named after a water pipeline, Mrs. Pawar knew she couldn't afford a regular apartment so she simply picked a vacant spot near the airport. For weeks she, her husband, Ramesh, and daughter, Gita, lived on open ground, finally scrounging enough money for some plastic sheeting and gathering sticks to make a tent.

She recalls weeping uncontrollably and being unable to sleep. She was sick much of the time, enduring monsoon rains that turned her dirt floor to fetid sludge. She also missed her young son, Mahesh, who was at a hostel for the deaf. "I felt like running away," she says.

Meager Salary

A part-time cleaning job at the airport earned her a meager salary, but she had to borrow money just to eat. For light, the family burned oil lamps. Her husband, an ailing drunk, died soon after coming to Mumbai. She and her daughter lived in the tent for five years, during which time Mrs. Pawar started building a house with a small bank loan.

She supplemented her earnings by selling lentil and rice lunches to neighbors and washing their dishes. In the mid-1990s, she and her neighbors pooled their savings to get water piped to a community tap. She also signed up for a phone connection. Reliable electric service followed. These services were provided even though her dwelling is illegal.

Life really began to improve when she landed a permanent cleaning job nine years ago with the Airports Authority of India. Once on the government payroll, an Indian is usually there for life, backed by strong unions and traditions of civil service. Indeed, her salary quickly doubled and has been going up ever since. Today, she makes the equivalent of $285 a month -- well above what a bathroom cleaner working for a private company would make.

Free Lunch

As a public-sector employee, she gets free lunch, allowances for Hindu festival days, unlimited free medical care and a $15 monthly stipend for bus fare to work.

The changes enabled her to add a bedroom upstairs (she rents it out for $7 a month as a preschool for slum kids), white marble flooring downstairs and a bathing area out back. A color television with a DVD player recently replaced her old black-and-white.

She watches DVDs and Hindi soap operas on cable TV over the roar of planes taking off. Her favorite drama concerns a young woman named Kumkum who battles to keep her family together, which she says reminds her of her own life.

She has to wait in line to use the nearby public toilet; private toilets are rare in the slums. There is no garbage pickup. "We just toss it there," she says pointing to the fetid river near her home, which has been slowed to a trickle by millions of plastic bags.

Mrs. Pawar says she likes her job. But all the new passengers and the new management have her working harder and worrying more. "With more passengers there is more litter and more juice and tea spills everywhere," she says. "My boss keeps warning us that we could lose our job with privatization -- so stop sitting around."

Likewise, her grip on the home she has struggled to build is tenuous. When she first moved to the slum, she says, the airport made her sign a piece of paper authorizing it to evict her whenever it wants.

Paper or no paper, she's not going to go quietly.

It won't be long, she senses, before she's back at the airport protesting. "First I want my job and my home to be safe," she says. "Then the country can benefit."

March 14, 2006

Wall Street Journal Poll- Bush and Iraq War

This is taken from the "Question of the Day" at I was guessing Bush would get a D with many
C's as readers of the wsj are generally conservative but boy, is this poll is a real eye-opener or what?
Bush really has his work cut out.
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March 13, 2006

Godrej on socialism

IF 63-year-old Adi Godrej could have Alladin’s lamp, he’d wish to be a 20-yearold again today. The chairman of the 108-year-old Godrej Group explains why, “It’s the times we live in now that enthrall me. Today’s youth is much more forward looking, confident and dynamic.” That, coming from a man who got inducted into the company at the tender age of 21… the same young man who has been with the group since its Rs 10 croreturnover days and has steered it with his family members to its current mark of Rs 5,500 crore!
Golden words from this wise man linger. “We, as the older generation, are stupid to have believed in socialism. The free economy that has been introduced into the country in the last 15 years has made us a proud nation. The government has no business to be in business.

March 12, 2006

The Trillion-Dollar Pothole

CORPORATIONS AREN'T THE ONLY ONES wrestling with surging health-care costs for retirees. America's state and local governments have exactly the same kind of problem, only worse -- and investors in municipal bonds could start feeling the impact next year.
Cities, towns and states are on the hook for as much as $1 trillion to fund the health care of retired workers, with the tab rising daily. And unlike corporate CEOs, who are increasingly willing to renege on promised benefits, government officials face dire re-election consequences for doing the same.
The actual liabilities of particular states and towns have been largely invisible, hidden by accounting conventions. But this will soon start to change -- with new rules to take effect this coming December that will require governments to disclose what their retiree health-care costs are likely to total over the next 30 years.
The numbers are sure to be eye-opening.
Michigan already has discovered that its future costs could total $23 billion, according to Chris DeRose, director of the state's retirement system. Maryland is estimating a $20 billion tab.

Investors are sure to see some eye-popping numbers when states start forecasting their retiree health-care liabilities for the next 30 years.

New York City Mayor Michael Bloomberg recently proposed setting aside $1 billion each year for the next two years to help meet future retiree health costs. In Mountain View, Calif. -- one of the first smaller cities to discuss its liability candidly, and also home to celebrity corporate citizen Google -- the liability is $35 million, or nearly half of what it costs annually to run the city, says City Councilman Mike Kasperzak.
As the new accounting rules are phased in, localities disclosing especially high liabilities could become vulnerable to downgrades of their credit ratings, says Joe Mason of Fitch Ratings. John Mousseau, a portfolio manager and tax-exempt bond expert at Cumberland Advisors of Vineland, N.J., thinks that yields on bonds from issuers with heavy retiree health costs could rise noticeably, compared to those on other bonds, as prices fall. He adds that insured bonds could fare better than uninsured ones, since the insurance could ease investors' anxieties about retiree costs.
"And this is just the tip of the iceberg," he says. "They'll have to rein in some of those benefits, or else they'll have a big hole on their balance sheets."
At the same time, Mousseau says, revenue bonds issued by sewer and water authorities might become an attractive alternative to general-obligation bonds. That's because they have smaller payrolls and retirement liabilities than state and local jurisdictions, making their future costs more palatable to investors.
UNDER EXISTING ACCOUNTING RULES, the current cost of retiree benefits is lumped together with the cost of benefits for active workers, with no hint that the retiree number will mushroom in the future. The new approach calls for breaking out retirees' health-care costs and then projecting them over 30 years. The results are to be disclosed in footnotes to the governments' financial statements.
The accounting-rule change, adopted in 2004 by the Governmental Accounting Standards Board, is known as "Gasby 45'' by the bond-market literati. The standards board had been working on it on and off from 1988. The rule will be phased in starting with reporting by any government with annual revenues of $100 million or more after December 15, 2006. Governments with annual revenues of $10 million to $100 million must comply by Dec. 15, 2007. The smallest cities and towns have until Dec. 15, 2008.
"Many governments will be measuring the liability on an accrual basis [considering future payments] for the first time," says Karl Johnson, project manager for the standards board.
The bond market is sure to take notice. David Hamlin, a managing director and tax-exempt bond expert at Putnam Investments, says it is natural to expect a rise in yields of uninsured muni bonds, relative to uninsured counterparts, at least for the first year or so. But since states and cities ultimately address rising health costs by increasing taxes, he sees no lasting divergence in yields.
"It's good in the long run, because it will improve state finances," says Hamlin. He doesn't expect any knee-jerk reductions in ratings by credit agencies. "They'll wait to see how these jurisdictions will handle it," he says.
Another angle for investors: the stocks of bond insurers. Mousseau of Cumberland says that demand for uninsured munis could make the insurance of munis more dear, lifting the bottom lines of outfits like Ambac Financial Group (ticker: ABK) and MBIA (MBI).
HEALTH-CARE COSTS for state and local governments -- just as for private corporations -- clearly have been getting out of hand, with double-digit increases annually. "There is no exemption for any employer from this," says Steve Kreisberg, director of collective bargaining for the American Federation of State, County, and Municipal Employees.
In fact, states are much more generous than the private sector when it comes to employee health care. In 2004, more than half of the state plans for retirees paid 80% of the cost of medical and surgical procedures; and 36% paid 100%, according to Segal Company, a consulting firm specializing in employee benefits and human-resource plans.
As the baby boomers grow older and the pool of retirees increases, the financial strains on state and local governments will only worsen. The contributions required from active workers will, at some point, become untenable.
In Michigan, school workers now see 6.55% of each pay check go to finance the health care of current retirees. If Michigan were to begin accumulating reserves to retire the retirement liability over 30 years, it would have to take 16.55%, which would cause an uproar.
However, if nothing is done to control the retiree costs, then the state will be forced to take even more than 16.55% from school-employee paychecks in about 15 years, just to cover annual expenditures.
Already, the total liability for state and local governments for funding the health care of current retirees may be as large as $1 trillion, says Steve McElhaney of Mercer Human Resource Consulting. He bases this rough estimate on census data indicating that there are 5 million to 6 million retired public workers with health-care coverage.
STATES HAVE A NUMBER OF WAYS to contain health costs, but none is a magic bullet. And each has political consequences that are not attractive for current office holders.
States, for instance, could set money aside a dedicated trust to pay down the liability gradually, as if it were a mortgage. Rating agencies seem to favor this approach. Because assets in the trust would earn an investment rate of return, money to pay down the liability would accumulate quickly, bolstering balance sheets. But how do you raise the money for the trust in the first place? Tax hikes aren't the easy answer. Most states have been cutting taxes, notes Bob Kurtter of Moody's. "Anti-tax sentiment is widespread," he notes.
Some states are considering issuing retiree-health obligation bonds, modeled on pension-obligation bonds. The latter allow states to pay down their pension liabilities early and save money. The interest paid to the bond holders is less than the pension obligation would have been if it hadn't been pre-funded with earning assets. But, while forecasting the future liabilities of pension plans is relatively easy, predicting health-care liabilities is anything but.
"You don't know who is going to get sick or who is going to have the million-dollar claims," says J. Richard Johnson, a Segal Co. senior vice president. "You are chasing a moving target."
The upshot: Retiree health-care bonds could be very risky for the issuers. And, Johnson says, states issuing the bonds might have to pay higher rates on subsequent bond issues for bridges, roads and schools -- even if their ratings are unaffected by the new debt -- simply to attract more buyers.
Bob Locke, Mountain View's finance director, predicts that there will be a flood of bond issues to finance the retirement liabilities of states and cities. He bases this prediction on scuttlebutt he hears as president of the fiscal officer's department of the League of California Cities.
States and cities, of course, simply could cut their health-care promises. Retiree health benefits aren't protected by law the way pension plans are; this is true for both corporate and government employees.
In fact, many states and cities already are changing the terms of retiree health-care for new hires.
The Bottom Line
Prices of muni bonds from issues with heavy retiree health costs could soon come under pressure. Bonds of water and sewer authorities with smaller payrolls could excel.
Pennsylvania is offering new hires a cash subsidy, based on years of service, that can be used to pay for health coverage in retirement. This is far less expensive than offering coverage itself. In Oregon three years ago, workers acceded to a multiyear wage freeze in order to maintain their health coverage.
Last year, the leaders of the striking New York City subway workers' union, which was fighting to protect its pensions tentatively agreed to pay more for health insurance. And in Georgia, Gov. Sonny Perdue pushed the legislature to adopt a managed-care plan for state workers that he expects to slow the growth in expenditures from 14% a year to 9%.
Few states have gone so far as to renege on promises to retirees, however. Many states promised them handsome retirement benefits as a strategy to keep wage increases low. Segal's Johnson says a spirit of paternalism runs deep at the state level, and few politicians have the stomach to attack the problem this way. But they may have to overcome their queasiness to head off a financial crisis.
Addressing the problems of retiree health care will almost certainly be harder for state and local governments than for corporations. Public workers tend to be five to 10 years older than private-sector employees.
In addition, the retirement packages let state employees stop working at an earlier age. Many retire when they're 50 to 55 years old and thus use their health plans much longer than private-sector employees do. Johnson notes that states are lax in tracking the work habits of their retirees, letting them take part-time jobs and "double-dip." This gives state workers an incentive to retire as soon as they can.
If states don't get a grip on the problem, one thing is certain: America's taxpayers will pay the price.

March 8, 2006

Seven Pillars of Folly

March 8, 2006; Page A20

The oil exporters of the Persian Gulf are flush with cash. Some of that money is going towards acquiring P&O, the British shipping concern, thus sparking off the heated controversy over foreign control of U.S. ports. This has led people to worry that Arab petrodollars might be scared away from the U.S. In fact, unlike during the last oil boom of the late 1970s, relatively little of the current Arab oil surplus has been directly invested in U.S. assets or even deposited in the international banking system. This time much of the oil money has remained at home where a classic speculative mania is now being played out.
Lawrence of Arabia took the title of his celebrated book from a passage in the Book of Proverbs: "Wisdom hath builded her house, she hath hewn out her seven pillars." In homage to Lawrence, we identify the seven pillars of folly upon which the Great Arab Boom has been weakly constructed.
 The first pillar is liquidity: OPEC members have earned around $1.3 trillion in petrodollars since 1998, according to the Bank for International Settlements. The extra liquidity injected into the Gulf economies by the oil price hike since 2002 is estimated at around $300 billion by HSBC. Some of this money has been spent on building up foreign currency reserves and on the acquisition of foreign companies, such as P&O. Arab takeovers of European and U.S. firms totaled $30 billion last year. Some money has even been invested in hedge funds and gold. However, a great deal has stayed in the Gulf region.
This has contributed to an extraordinary explosion of bank credit in Saudi Arabia and its neighbors. Since the member countries of the Gulf Cooperation Council link their currencies to the U.S. dollar, they have also enjoyed the Federal Reserve's easy money policy. The Saudi government has recently repaid around $100 billion of outstanding debt, further contributing to domestic liquidity.
The deposit base of Gulf commercial banks has increased by over 60% since 2000, according to a recent report from Credit Suisse. Bank loans have financed business investment, personal consumption, property development and stock margin loans, thereby boosting both the economy and asset prices.
 The second pillar is the new economy: The Gulf economies are growing rapidly, along with corporate profits. Returns on equity in the region are approaching 20%, calculates Credit Suisse. Saudi Arabia has recently joined the World Trade Organization. Kuwait is selling off some state-owned businesses. A new era of permanently high oil prices and perpetual prosperity has been hailed.
The Gulf rulers are seeking to reduce their economies' dependence on oil. This is spurring a massive investment boom. Dubai is attempting to transform itself into a leading financial center and tourist resort. Saudi Arabia intends to become a world leader in fertilizer production. A bridge costing $3 billion is proposed to span the Red Sea. A new economy is coming into being. The current oil boom, unlike former ones, won't be followed by a bust, say the believers. This time it's different.
 The third pillar is the stock market: The recent performance of Arab stock markets makes the Nasdaq of the late 1990s look like a slouch. Since January 2002, the Egyptian, Dubai and Saudi stock markets are up respectively by over 1,100%, 630% and 600%. Only four years ago, Gulf companies were priced at around twice book value. Today they trade on an average of 44 times historic earnings and at over eight times book value. Gulf banks are valued at over nine times book value, according to Credit Suisse.
Sabic, a Saudi conglomerate, is currently ranked among the world's 10 largest companies by market capitalization. The Saudi stock exchange has a market cap of around $750 billion. That's roughly three times the country's GDP. By comparison, the U.S. stock market reached a peak of 183% of GDP in March 2000. In fact, the relative overvaluation of the Saudi stock market is even greater than these figures suggest. Nomura analyst Tarek Fadlallah points out that as the oil industry remains in state hands, a far smaller fraction of Saudi economic activity is captured by the stock market than in the U.S.
 The fourth pillar is an IPO boom: In the late 1980s, the Japanese authorities kindled a speculative mania by floating telecom giant NTT. In unconscious imitation, the Gulf states have stimulated their mania with privatizations and IPOs at bargain prices. It is not unknown for stocks to climb 500% on the first day's trading. Applications for new issues have been oversubscribed by up to 800 times. One IPO in the United Arab Emirates attracted aggregate subscriptions greater than $100 billion, a larger sum than the UAE's GDP.
 The fifth pillar is a property boom: Dubai is the fastest-growing city in the world. Hundreds of new buildings are under construction, including what is planned to be the tallest building ever, the Burj Tower. Cynics point out that the capping of the world's highest property, from the Empire State Building to the Petronas Towers in Malaysia, has occasionally in the past coincided with economic crises. Reports suggest that the majority of new Dubai properties are being acquired for speculative purposes, with only small deposits put down. They are being flipped in the contemporary Miami manner.
 The sixth pillar is market inefficiency: Financial information in the Gulf is totally inadequate. The Saudi megacap conglomerate Sabic attracts no domestic financial analysis, says Nomura's Mr. Fadlallah. Companies report their results in a rudimentary fashion. It is against the law to sell short overpriced stocks in the Saudi market. And foreigners' financial sophistication is absent since only Gulf nationals can purchase Saudi stocks. Instead, speculators operate in an information vacuum in markets reportedly dominated by insider trading and practiced manipulation.
 The seventh pillar is the madness of crowds: Newspapers gleefully report stories of police called to protect banks from overeager IPO subscribers. A Saudi woman is said to have been divorced by her husband for no reason other than that he'd had lost money in the stock market. Up to two million of the 16 million Saudi population are said to be playing the market. Interest-free loans are commonly available. Saudi bank foyers are lined with LCD screens showing stock movements. A local TV station has started to provide stock market reports. The education minister has warned teachers to stop day-trading at schools. People are quitting their jobs to trade.
This is a familiar tale of folly, similar in certain aspects to the global technology bubble of the late 1990s. And like the tech bubble it is set to burst. The current Gulf prosperity is a mirage created by a haze of liquidity. The Federal Reserve, which inadvertently caused the Arab bubble when it slashed interest rates in 2002, is currently mopping up that liquidity. The Gulf Arabs are likely to be rudely awoken from their speculative dreams. In fact, the Arab markets are beginning to crack: Dubai has fallen 40% from its November peak, and the Saudi market is down by around 12% in the past few days.
There are several implications of the coming Arab crash. Speculative booms lead to capital being misallocated. Many of today's investments in the Gulf region may appear, in retrospect, as extravagant as U.S. fiber-optic expenditures in the late 1990s. As for Dubai's desire to become an international financial center, it is spookily reminiscent of Tokyo's ambition to rival New York and London in the 1980s. Japan's ambition was shattered by the collapse of its bubble economy.
The political consequences could be more serious. Arab rulers have deliberately encouraged the boom in the hope that rising asset prices and a strong economy would distract their youthful populations from religious fundamentalism. This strategy could backfire. History teaches that when speculative bubbles burst and the public loses large sums, there is normally a political backlash. This was true of the U.S. in the 1930s, and to a lesser extent in the early 2000s, and of Japan in the 1990s. It's not hard to imagine Islamists capitalizing on a future bust with denunciations of stock-market gambling. Some of today's young Arab day-traders could well turn into tomorrow's al Qaeda recruits.
Mr. Chancellor is deputy U.S. editor for

March 6, 2006

The bureaucrat won't share his space, and politicians play a zero sum game with cities

The software czar who wants to redesign urban hardware spoke to our National Metro Editor Bachi Karkaria on what must go into civic infrastructure planning to get the best out of it
N R Narayana Murthy is the corporate face of civic improvement. He has established the paradigm for public-private partnership, raising the bar for, both, the business community and bureaucrats. He has not stinted on time, money or spade-calling to ensure its efficient functioning. The Deve Gowda spanner and Murthy’s high-wattage pull-out may have screwed up the PPP showpiece of the Bangalore International Airport, but the incident has highlighted the need to nuance the ground rules, and demarcate the territorial lines. What are the sticking points, where lies our strength?
What defines leadership in the creation of civic wealth?
No.1 is Urgency. We have been asking for a captive power plant for Bangalore since 1983, a truck terminal for 15 years. Now, after a decade, work on the stilt toll-way to Electronics City has started, but it’s still slow. We no longer have a forex problem. We should hire the best consultants from South Korea, Japan, Germany, get them to identify five to 10 nationally important projects, and give presentations. Then involve Indian companies so they too learn. Dr Mahathir told me how the Petronas Towers got built on time, “I contracted one to a Japanese company and one to a South Korean. Each tried to get its job done better and faster.
Two, objectivity. The Golden Quadrilateral project slowed when the government changed. National infrastructure should not fall prey to politics. Use data and logic to argue out the case, then stick to the decision, whether you are in power or the opposition.
Three, a recognition of technology. Flyovers take years because we don’t bring in sophisticated equipment. While trying to create jobs for 100 or 200 people, we inconvenience thousands, and delay the benefits to many more. And look at our work culture. In Thailand, China, Singapore, Indonesia, they build round the clock. Ours observe office timings. Civil works should run on three fully staffed shifts. Set tough targets, and compress cycle-time.
Isn’t corporate involvement motivated merely by self-interest, not any noble altruism?
It is a fundamental principle of economic behaviour that human selfinterest drives what is ultimately good for all society. On the other hand, in developing countries, corporates must go beyond this and make a difference to their context. Lots of companies want to do something, but are disgusted by the bottlenecks, the friction. Even philanthropy in India is not easy. Someone wanted to add wards to a public hospital; it took one year just to get the electric connections. People think you are doing it for political power.
What is needed to make civic Public-Private Partnerships work?
It is not the role of corporates to build roads. Their primary objective is to run their business efficiently and ethically. But they can be in partnership; the Bangalore Agenda Task Force did fantastic work. But when the Dharam Singh government came in, they simply abolished it. They did not even have the courtesy to inform Nandan (Nilekani), forget about a thank you. He poor fellow was spending his own money and weekends. Governments must create a system which recognises the value that PPP brings.
Where do the fault-lines lie?
One, no discipline in thought; the attitude is , ‘whatever the previous government did, I am going to undo’. Two, colonial legacy. Bureaucracy is uncomfortable with anyone sharing their sphere; they see it as loss of power/control. Three, political vested interest. Their vote-base is rural so they are afraid to suggest any urban bias. But they should not play a zerosum game. The trouble is no one uses data; so wrong perceptions will persist.
Surely, we also need to ensure accountability from the private sector?
When the PPP is formed, declare the expected outcomes, the performance indicators for these, the required budget; mandate data provision on inputs and outcomes.
Today we don’t have any transparency in the public domain. We have got the right to information after almost 60 years—it’s ridiculous. Transparency comes from fairness which includes honesty. This much money was put in, this much service came out of it. Once you increase transparency, accountability will come naturally. You have to mandate because you have to be fair to the community.
What is the psychological spinoff of good infrastructure?
The confidence that my child will reach school safe and healthy. That we can go to office in a decent, human manner. This way our energy and enthusiasm are high, productivity improves, and self-esteem. The environment should want to make you set out.Today it is debilitating. Take us. We leave the warm embryo of home and plunge into pollution, poverty, potholed roads, uncivil behaviour. We arrive at the Campus feeling miserable, and, in a jiffy, we have to transfer our mindset from the Third World to the demanding First World. Improvement in infrastructure is a visible sign, a big bonus in arguing the case for our country.
Can IT-enabled civic services be scaled up — or drilled down? Strategists such as Kamal Munir of Cambridge University disagree. Look what happened to Chandrababu Naidu.
How can IT be branded ‘elitist’. Its very purpose is to reduce cost and cycle-time, to improve productivity and comfort level. Who wants all this more than the poor? The Bhumi project computerised land records, so villagers get their certificates at the taluka itself.
A Nasscom experiment connected up a Mumbai taxi driver with his family in Azamgarh via video conference; you should have seen his sheer joy. Every instrument, if thought out, can be implemented. But implementation is so poor.
You frontally represent conservative culture, yet your business has unleashed a lifestyle revolution. Are you worried about the ‘clash of civilisations’ which IT money has triggered, about the pace of urban change?
When society is in the process of transformation, there is bound to be tension. You have to look at the pluses and minuses, and arrive at a considered judgment. I am convinced that the next generation has as good a value system. Looking at my children, their friends, in some ways I find them better than me. I am not so concerned about preserving the past, as long as people handle change in a well-thought-out manner. The young are smarter than us. This anxiety is as old as civilization. My wife was telling me that even the hieroglyphics in the pyramids spelt out this kind of moaning. It is natural for every generation to romanticise the past and be sceptical of the future. So let us just have faith in the present.
You are fond of the Robert Kennedy quote, “People see things as they are and wonder why. I see things as they never were, and say ‘Why Not?’.” Has the Bangalore Airport kerfuffle changed this? Made you cynical?
No. There will always be debate. That is the beauty of this country. I may feel let down because the other party is not going by data or logic. But this happens even at home. We have democracy, secularism and a youthful populations —it’s an extraordinary combination of potent forces.

Shift in Japan Executives Who Earned MBAs

March 6, 2006; Page B1

TOKYO -- Ever since his college days in the early 1980s, Yoichi Wada knew he wanted to be a manager. In the U.S., he might have headed off to business school. But in Japan, Mr. Wada's options were more limited: There were only three business schools in the country at the time.

So Mr. Wada designed his own quirky management-training program during a 16-year stint at a big Japanese brokerage. He sold stocks, analyzed securities, worked as an investment banker, and got himself sent to Poland as a foreign ministry attache -- all the time studying basic bookkeeping and other skills on his own.

Now president of videogame maker Square Enix Co., the 46-year-old Mr. Wada says he's glad he opted for real-world experience over formal business education. "I figured I had to be on the front lines," he says. "I had to get rigorous training."

Mr. Wada's do-it-yourself approach highlights a big difference in the way managers have traditionally learned their craft in Japan versus the U.S. Even at world-leading companies like Toyota Motor Corp., few managers have formal training. Instead, Japanese companies tend to promote executives from their own ranks, valuing long service in the trenches over the latest biz-school smarts.

There are some indications this is changing, as Japan emerges from a 15-year business slump. Companies such as Sanyo Electronics Co. are opting for outsiders to lead them through rough bouts of reorganization. The president of electronics giant Toshiba Corp., who was tapped from within last year, has said the company needs executives with expertise in managing, rather than operating specific business lines.

The soul-searching following Japan's "lost decade" of economic stagnation is spurring interest here in more-formal management training, resulting in an explosion of books teaching basic management skills and a boom in business schools, which have expanded to 45 from eight in 1990, according to Japanese business-school operator Globis Corp. That is still fewer than in the U.S., which has about 850 graduate business schools, according to the Association to Advance Collegiate Schools of Business, an accrediting group.

Japanese management trackers say the first wave of students to get MBAs abroad in the late 1980s are now ascending the executive ranks, meaning there will likely be a gradual shift to more professionally trained managers in the next several years. Yet even some Japanese experts who applaud the trend say the country will probably never become as hooked on MBAs as the U.S., and that the traditional hands-on approach is probably just as helpful in the end.

"If I had to do it again, I wouldn't go to business school," says Shinji Yamamoto, a partner at consultant Bain & Co. in Japan, who in 1985 was sent by the bank where he was working to get an MBA at the University of Chicago. Mr. Yamamoto says managers can learn the most valuable skills on their own; he's written several self-help books, including "Exercise the Work Muscle -- For People in Their Twenties."

The typical Japanese approach is illustrated by Toyota, which despite being the subject of countless business-school case studies, has only three MBAs among its 26 highest-ranking executives.

The company rarely hires outsiders for management posts in Japan. Every year, Toyota sends as many as five of its 65,000 Japanese employees to MBA programs abroad. The rest make do with the company's in-house training system: a mandatory two- or three-day session when they're first promoted to management, followed by optional seminars on topics like reading financial statements.

Mr. Wada's path to a management career started in 1984, when he joined Nomura Securities. At the time, Nomura was known for its ruthless insistence on performance and its relatively rapid promotion of talented young executives, a rarity in a land where an entrenched seniority system typically meant aspiring leaders had to wait decades to rise to the top.

Mr. Wada spent three years peddling stocks and bonds door to door in Hiroshima, learning about front-line sales under a quota system that demanded salesmen double their rivals' results. In his free time, he taught himself accounting and macroeconomics.

Mr. Wada caught the attention of Nomura executives when he proposed a training class for salesmen. They brought him to Tokyo for a three-year stint in the corporate-planning department, where Mr. Wada learned how a big company runs. He lobbied to be sent abroad, and in 1990 Nomura loaned him to the Foreign Ministry as a cultural attache to Poland. "I wanted to be in charge of a project from beginning to end," he explains, noting that such opportunities are rare inside a big organization. Mr. Wada got his wish: In an office with just a handful of staff, he was put in charge of a project to promote Japanese culture to a newly capitalist Poland.

Two years later, he returned to Nomura headquarters, where he worked as a securities analyst, then an investment banker advising companies on mergers and acquisitions, then as head of risk management in Nomura's global accounting office.

Mr. Wada says that practical experience has proved invaluable at Square Enix. He was hired as chief financial officer of its predecessor, Square Co., in 2000. Within a year, that company was foundering after a big-budget movie project flopped, costing it hundreds of millions of dollars and prompting the resignation of its two top executives.

At the end of 2001, Mr. Wada was named chief executive officer of Square Co. He quickly negotiated a much-needed investment from game-console maker Sony Corp. At the same time, he drew on his Nomura experience in crafting contracts to close a tricky deal with Sony rival Nintendo Co.

Mr. Wada's investment-banking chops also came in handy: In 2003, he orchestrated a merger with fellow game maker Enix Corp. Last year, Square Enix acquired game creator Taito.

Mr. Wada, who wears only suits to work to stress his role as a professional manager, says his Nomura experience analyzing companies helped him decide which firms would be a good fit with Square Enix. He has restored the company to profitability, and its shares on the Tokyo Stock Exchange are up roughly 31% since Mr. Wada took over as CEO.

So is there anything Mr. Wada would have learned in an American MBA program that he couldn't get on the job? "Yes," the Japanese executive replies instantly: "English."

March 4, 2006

A Cuban Connection Lifts Unlikely College Into Chess Majors

Pickup Team at Miami Dade
Stuns the Ivy League;
Bouncers' Mental Game
March 4, 2006; Page A1

MIAMI -- In December, Alberto Hernández, a brawny 40-year-old security guard who studies English part time at Miami Dade College, sat down across a tournament chessboard from Albert Yeh, 20, a biochemistry major at Harvard, which boasts one of the oldest college chess clubs in the nation.
In a grueling six-hour match, Mr. Hernández fought Mr. Yeh to a draw, lifting his team above Harvard in the tournament standings. "That was a tough game with Harvard," recalls Mr. Hernández, an ex-bouncer, rubbing his shaved scalp.
Four years ago, Miami Dade College didn't know chess from checkers. Since then, this community college has emerged as the nation's most unlikely chess powerhouse, with triumphs over Harvard, Yale, Stanford and the Massachusetts Institute of Technology.
The secret to its success: a team stocked with players who fled chess-mad Cuba.
Mr. Hernández, a former Cuban junior national champion, taught chess before leaving the island on a raft in 1994. He was scooped up by the U.S. Coast Guard and deposited in a refugee camp at the U.S. naval base on Guantanamo Bay, where he fashioned chess sets by melting down plastic food-ration boxes and soda bottles. Ten months later, he was permitted to enter the U.S. His five teammates include a former member of the Cuban national chess team, 33-year-old Renier González, who defected in Colombia in 1999 and is now ranked No. 30 in the U.S. by the U.S. Chess Federation. Another Cuban-American team member plays professional poker on the side.
As these Cuban immigrants struggled to make new lives in America, they crossed paths by chance at this commuter college of some 80,000 students, where all six team members are part-time students. Nine out of ten students on Miami Dade's eight campuses are Hispanic or black, and the average age is 27. Playing collegiate chess was the last thing Messrs. Hernández and González were thinking about when they enrolled at Miami Dade to learn English.
Chess is a passion in Cuba, played with an intensity usually reserved for baseball. In the 1920s, a Cuban grandmaster, José Raúl Capablanca, was the game's third world champion and became a national hero. Thirty years later, Che Guevara relaxed from fighting a guerrilla war in the mountains of Cuba by battling his comrades-in-arms on the chessboard.
Then, as Cuba became a pawn of the Soviet Union, a chess powerhouse, Fidel Castro made learning the game obligatory in Cuban schools. He established Soviet-style boarding schools where gifted young players received four hours of daily training from chess masters. The lousy economy helped too. "Since nobody does any work in Cuba, hobbies are very welcome," says Mr. Hernández.
In 2002, he and another Miami Dade student from Cuba, Rodelay Medina, were working as bouncers at a Latin nightclub, where they passed the time by playing boardless chess against one another, tracking moves in their heads. On a whim, Mr. Medina, a computer-science student who is now 24, decided to enroll in the Pan-American Collegiate Tournament, scheduled that year for Miami, which draws college teams from around the hemisphere. Miami Dade didn't have a team, but he persuaded Mr. Hernández and four other Cuban-American students at the college to chip in $20 each for the entry fee.
T-Shirts and Flip-Flops
The six men showed up as the Miami Dade team wearing jeans, T-shirts and flip-flops. They sliced through a field of about 30 universities, besting such schools as Princeton and the University of Chicago. Miami Dade's top player, Bruci López, a recently arrived 18-year-old Cuban immigrant, beat grandmaster Alexander Onischuk, the ace for powerhouse University of Maryland at Baltimore County. (Months later, Maryland dangled a scholarship before Mr. López, and he jumped to that team.) Miami Dade finished third. The proud players presented their trophy to stunned Miami Dade officials, who quickly made them the school's chess team.
"If anyone had asked me 10 minutes earlier whether we had a chess team, I would have said no," says René Garcia, a wild-haired psychology professor who became the team's adviser. It was the first time in the history of college chess that a community college had placed in the contest. "It was always a Harvard, Stanford or MIT," says James Stallings, chairman of the College Chess Committee of the chess federation. "I don't know any other community college that is even close."
The University of Maryland at Baltimore County and the University of Texas at Dallas typically finish one-two at college chess's Final Four tournament. They recruit players, providing stipends and scholarships valued at about $30,000, and hone players' skills by taking them on the road to a half-dozen or so tournaments a year. Some elite schools bring in grandmasters to lecture or coach their chess clubs.
Miami Dade caps its financial aid at $500 per player, and cannot afford to send its players to more than one or two tournaments a year outside the city. Its team members are frequently older than their competitors and are holding down jobs to support families. (They must take at least two classes a semester to maintain their collegiate-chess eligibility.) They seldom have time to practice against one another, so they train online at home or at a computer in the tiny chess room at the school.
Even so, Miami Dade has placed third at the Final Four for the last three years running. In 2004, Miami Dade was named Chess College of the Year by the U.S. Chess Federation.
Mr. Hernández's marathon match in December against Mr. Yeh, the Harvard student half his age, helped lead Miami Dade to a third-place finish in that tournament, and paved the way for it to qualify for this year's Final Four.
"It was very tense. I thought I would win," says Mr. Yeh, who had a pawn advantage over Mr. Hernández as they neared the end of the game. Because other Harvard players had already lost, Mr. Yeh had to win to salvage a draw with Miami Dade and to keep alive Harvard's hopes of finishing among the top contenders. "I kept playing hard, thinking I could convert my advantage to a win. But he was determined to hold me off. We were down to the last 20 minutes of a six-hour match, and I couldn't find a way to position a win. I had to accept the draw."
One recent afternoon, the team's top player, Mr. González, met at the chess room to practice against Mr. Medina. Mr. González, a business student, got a visa to the U.S. in 2001, thanks to a chess-playing U.S. diplomat who befriended him after he defected from the national team in Colombia. Mr. Medina made it to Miami in 1994 when his mother won an immigration lottery known as el Bombo that permits some 20,000 Cubans to come annually to the U.S.
Cuban Rhythm
When the two sat down to play, they brought a distinctly Cuban rhythm to a game that is often silent and somber, bantering and punning rapidly in Spanish.
"Te la vi," said Mr. González. ("I saw your move.")
"Tel Aviv, capital of Israel?" Mr. Medina shot back.
"I offer you a draw," rasped Mr. González in a Mafioso whisper.
"I don't want your draw," said Mr. Medina, who ultimately lost.
Later, a weary Mr. Hernández stopped by. He had risen before dawn to work a nine-hour shift as a security guard, then had stopped briefly at the Miami nightclub where he also works to help with the evening setup. Using his online name, Southbeachchulo, he logged onto a chess Web site for a fast-paced game of "blitz chess" against a grandmaster who calls himself Kevlar. Each player had five minutes to make all his moves, but Mr. Hernández conceded defeat after four minutes. "I'm too tired...I've been under too much pressure at work," he said.
The team is gearing up for the Final Four next month in Dallas. Mr. Hernández plans to play hours of blitz chess online. Mr. González, who teaches chess in Miami public schools, sharpens his skills against the best local players at the chess club where he gives private lessons. This week, he's playing some of the nation's best players at the U.S. Chess Championship in San Diego.
Mr. González is looking to redeem himself from a loss in last year's Final Four to the University of Texas at Dallas. Had he managed a tie in his match, Miami Dade would have finished second, not third. "It hurt," says Mr. González. "I shed quite a few tears."
Miami Dade players are thinking of wearing blazers with the Miami Dade logo, supplied by the school. But Mr. Medina says his preferred tournament wear is still shorts and flip-flops.