22 May 2020

India's Systems: Quality Vs Quantity

INDIA'S SYSTEMS: QUALITY VS QUANTITY

Every system has two fundamental aspects: quality and quantity. Which is more important? Both are equally important. That is – a system must ideally maximise both quality and quantity. But given resource constraints, we can increase only one of these two parameters at a time. So to achieve both quality and quantity, a sequential approach is needed. Accordingly, two approaches are available:
Phase 1
Phase 2
Approach 1
Increase quality
Keep quantity low
Increase quantity
Maintain quality
Approach 2
Increase quantity
Keep quality low
Increase quality
Maintain quantity

Which approach is better? The critical part of the process is the second phase. In the first approach, the second phase involves increasing the quantity of a high-quality low-quantity system. In the second approach, the second phase involves increasing the quality of a high-quantity low-quality system. Which of these two processes has a higher probability of success? Once the question is framed this way, it becomes clear that the first approach has a higher probability of success – and is therefore better.

India came under foreign rule around 1000 AD – during the Agricultural Age. It remained under slavery for 1000 years – under the Turks, Mughals and British. During the period of British rule, the Agricultural Age ended and a new age in the history of mankind - the Modern/Industrial Age - started. When India finally became free in 1947, the fundamental challenge before it was to build modern systems that would be both world-class (quality) and big enough for the world's second-biggest country (quantity). And that required choosing between the two approaches described above. Unfortunately, we chose the second approach. That is – we aimed for quantity rather than quality, perhaps hoping to increase the quality later. The result is that today we are stuck with low-quality high-quantity systems whose quality we are now struggling to increase.

Classroom Education Vs Online Education

CLASSROOM EDUCATION VS ONLINE EDUCATION

"The Covid-19 crisis has changed the world forever – especially education. Classroom education is dead, obsolete and Stone Age. Online education will and should replace classroom education." This is now the consensus opinion of almost all experts and ordinary people.

I know people will call me Stone Age. But based on my 18 years experience as a student and 7 years experience as a faculty, I will say this: The classroom + blackboard + chalk is the most effective method for understanding a subject – especially complex concepts. There is no substitute for mentally wrestling with complex concepts with the help of a faculty who has been doing the same for years – along with other students who are currently doing the same.

If online education is better than classroom education because it is more 'efficient', then why stop there? Why not take this idea one step further – to its logical conclusion? Excellent textbooks are available on every subject. So the most 'efficient' option is to simply buy the textbooks, sit at home and read the textbooks. Where is the need for even an online education? To get a degree? It will be more 'efficient' for universities to only conduct exams and award degrees to those who pass the exams.

Since 1947, we have completely neglected quality and focussed only on quantity in our education. This is the #1 reason for India's under-development today. Now this online education will become another excuse to further dilute quality for the sake of quantity in our education. "We have reached X number of students", "We have trained Y number of candidates", "We have produced Z number of graduates", etc. How well have they understood the subjects? Especially complex concepts? Nobody is bothered about this.

20 May 2020

India's Debt, Fiscal Deficit And GDP Growth Rate

Let a country's GDP be G and its debt be D. Then its debt-to-GDP ratio is D/G. Let its GDP grow at a rate of g every year (0 < g < 1). Then its GDP next year will be (1 + g) × G. Let its fiscal deficit next year be F. Then its debt next year will be D + F. So its debt-to-GDP ratio next year will be (D + F)/[(1 + g) × G]. If the debt-to-GDP ratio is to remain constant, then:
D/G = (D + F)/[(1 + g) × G]

Let us express both debt and fiscal deficit as a fraction of the GDP. Let D/G be d and F/[(1 + g) × G] be f. Then the constant debt-to-GDP ratio condition becomes:
d = d /(1 + g) + f

This gives us:
1. f = d × g / (1 + g)
And:
2. g = f / (d - f)

A country starts off with a certain amount of debt (D) – which is expressed as a fraction of its GDP (D/G = d). It wants to reduce its debt-to-GDP ratio (d). How to do this? There are two ways of asking and answering this question:
1. If the country's GDP grows at a certain rate g, then it must keep its fiscal deficit (as a fraction of its GDP) below some level f. Equation 1 gives us this value of f.
2. If the country maintains its fiscal deficit (as a fraction of its GDP) at a certain level f, then its GDP must grow above some rate g. Equation 2 gives us this value of g.

India's debt-to-GDP ratio is 70% – which is the highest among major industrialising countries. How to reduce this? We can use the two equations given above. Accordingly we have:

A. Maximum fiscal deficit (based on the GDP growth rate)
GDP Growth Rate
Maximum Fiscal Deficit
5%
3.3%
6%
4.0%
7%
4.6%
8%
5.2%
9%
5.8%
10%
6.4%
Our average GDP growth rate since 2000 has been 7%.

B. Minimum GDP growth rate (based on the fiscal deficit)
Fiscal Deficit
Minimum GDP Growth Rate
3%
4.5%
4%
6.1%
5%
7.7%
6%
9.4%
7%
11.1%
8%
12.9%
9%
14.8%
10%
16.7%
Our average fiscal deficit since 2000 has been 4.5%.

Note: The 2003 Fiscal Responsibility and Budget Management (FRBM) Act states that the government must reduce the fiscal deficit to 3% of GDP.

12 May 2020

Major/Important Finance Ministers Of India

Major/important finance ministers of India:

#Finance MinisterPeriodPrime Minister
1Shanmukham Chetty1947–1948Jawaharlal Nehru
2John Mathai1948–1950Jawaharlal Nehru
3Chintaman Deshmukh1950–1956Jawaharlal Nehru
4T T Krishnamachari1956–1958Jawaharlal Nehru
5Morarji Desai1958–1963Jawaharlal Nehru
6T T Krishnamachari1963–1965Nehru / L B Shastri
7Sachindra Chaudhuri1966–1967Indira Gandhi
8Morarji Desai1967–1969Indira Gandhi
9Yashwantrao Chavan1970–1974Indira Gandhi
10C Subramaniam1974–1977Indira Gandhi
11Hirubhai Patel1977–1979Indira Gandhi
12Charan Singh1979–1980Morarji Desai
13R Venkataraman1980–1982Indira Gandhi
14Pranab Mukherjee1982–1984Indira Gandhi
15V P Singh1984–1987Rajiv Gandhi
16Narayan Tiwari1987–1988Rajiv Gandhi
17Shankarrao Chavan1988–1989Rajiv Gandhi
18Madhu Dandavate1989–1990V P Singh
19Yashwant Sinha1990–1991Chandra Shekhar
20Manmohan Singh1991–1996P V Narasimha Rao
21P Chidambaram1996–1998Deve Gowda / Gujral
22Yashwant Sinha1998–2002Atal Bihari Vajpayee
23Jaswant Singh2002–2004Atal Bihari Vajpayee
24P Chidambaram2004–2008Manmohan Singh
25Pranab Mukherjee2009–2012Manmohan Singh
26P Chidambaram2012–2014Manmohan Singh
27Arun Jaitley2014–2019Narendra Modi
28Nirmala Sitaraman2019–Narendra Modi