IIM INDORE IS GOING TO OPEN ITS NEW CENTRE IN DUBAI

Indian Institute of Management, Indore (IIM-I) is planning to open a Study Centre in United Arab Emirates (UAE) in partnership with a private company.

“We are going to open a Study Centre in UAE in September.

Initially, there would be around 50 seats for the Executive Post Graduate Programme in Management (EPGP),” IIM-I Director, Mr N Ravichandran told reporters last night here.

Mr Ravichandran said that the centre would be opened at Ras Al Khaimah near Dubai in partnership with a private company which would provide logistic support and also help in administration and marketing adding that the academic control, however, would rest with IIM-I.

The IIM-I Director said that the new venture would help Indians who are working in the Gulf and want to acquire quality education in management.

Meanwhile, responding to a query, Mr Ravichandran said that Human Resource Development Ministry has made IIM-I as the mentor of IIM-Udaipur.

NEW RBI BRANCH IN SECOND STATE OF NORTH-EAST INDIA I.E. IN TRIPURA AFTER ASSAM

The Reserve Bank of India (RBI) has decided to establish its branch here to ensure better monitoring and supervision of banking sector in Tripura, official sources said here on Saturday.

Agartala will be the second state capital in the North-east to have a RBI branch after Guwahati, RBI, Executive Director Mr Deepak Kumar Mohanty said. The branch would be opened by May this year, he said.

The Credit Deposit Ratio (CDR) in the Northeast, he said, was lower than the national average due to limited economic activity.

“There are no industries in the region and there is little scope for big investment in agriculture sector also, so the limited economic activity is coming on the way of maintaining an equilibrium in the credit deposit ratio”, he pointed out.

Mr Mohanty, who attended a Financial Outreach Programme organised by RBI in South Tripura district yesterday said, big credit penetration would be required to increase the CDR in the region.

While the CDR is 74 percent in the national level, in the northeast it stands at only 33-34 percent, he said adding RBI had taken a serious note of the low percentage of CDR in the North-East.

“Every village having population of 2000 will have bank branch in the Northeast by next fiscal year (2011-12) to increase the bank population in rural areas”, he said adding that banking facility would be available in potential non-bank hamlets.

As you already know that, when you fill the form then you say, that you are ready to serve anywhere in India. Have you ever thought what type of problem you'll face if you will be posted in North-Eastern states of India?

well, to help you, the following points may be useful for you. Just read and think over them...okeys......

First, weak market linkages are a major constraint in the development of the region. For this reason, urgent attention needs to be paid to developing roads, air links, telecommunications and other components of transport and communications. Investment in infrastructure could be scaled up through the Public-Private Partnership model.

Second, initiatives need to be taken to promote sustainable industrial development compatible with the unique bio-diversity of the region. Agro-based industries, food processing, wood products, traditional textiles and light manufacturing industries can be encouraged to come up in the region.

Third, there is a need to increase agricultural productivity and promote diversification into horticulture and floriculture for which the agro-climatic conditions in the region are well- suited.

Fourth, a sustainable growth paradigm will not only help further acceleration in growth but will also improve fiscal sustainability by helping to lower the debt-GSDP ratio.

Fifth, the high level of literacy and human development levels coupled with bio-diversity provides ample opportunity for development of tourism and exports.

Sixth, a deterrent for bank lending is the high level of non-performing assets (NPAs) in the region. This has been, in part, due to unviability of some of the activities financed by banks and lack of adequate engagement with the borrowers. There is, therefore, a need to improve credit culture in which financial education could play a vital role. In addition, banks will have to augment the staff strength in their branches with an emphasis on staff with knowledge of local customs and practices. Given the preponderance of community-based society in NES, group lending could be a successful mode of credit delivery. Hence, there is a need for promotion of self-help groups (SHGs) with greater linkage with banks. In this regard, NABARD has an important role to play, not only in promotion of SHGs, but also in capacity building, along with SIDBI and concerned state government agencies. Another area where there is substantial scope for expansion is low-cost housing. Expansion of housing loan remains poor as mortgages cannot be created in many parts of NES. However, banks can explore innovative structures for housing loans with a greater emphasis on group lending.

Seventh, in any plan for financial sector development, the physical presence of a bank branch is important. But the topography of the region, the dispersal of population, transport bottlenecks and law and order conditions in some areas inhibit branch expansion other than in certain commercial centres. Hence, all the stake-holders ­­- banks, state governments and the Reserve Bank - need to work in close co-ordination for increasing banking penetration and promoting financial inclusion in the region.

Financial inclusion is important for bringing the poor and under-privileged sections of society within the banking fold and thereby generating and sustaining equitable growth.

Let me now turn to the various measures initiated by the Reserve Bank for promoting financial inclusion.

First, the Reserve Bank for long has instituted a mechanism called ‘priority sector lending’ through which credit is channelled to certain preferred sectors, which, inter alia, include small-scale industry, small businesses and agriculture.

In the post-reform period, the priority sector has been expanded to include advances to retail trade, educational loans, micro-finance and low-cost housing. This has helped in furthering the cause of financial inclusion.

Second, the Union Finance Minister announced in the Budget 2010-11 that every village in the country with over 2000 population must have access to banking services by March 2012.

In order to operationalise this process, commercial banks have prepared financial inclusion plans which have been submitted to the Reserve Bank.

As brick-and-mortar branches will not be viable in very small centres, the approach is to meet this challenge through the business correspondent (BC) model and by leveraging communication technology.

Under this model, banks appoint agents who provide basic banking services at the door-step of a client on behalf of banks.

Third, the Reserve Bank has asked banks to open no-frills accounts.

These accounts have no or very low minimum balance requirement and have provisions for small loans by way of overdrafts.

This is a very convenient account for small depositors, especially in rural areas.

Fourth, a major impediment for a common person to open bank account is the ‘Know Your Customer’ (KYC) norm.

The norm has been relaxed for small accounts, viz., deposits up to Rs.50,000 and credit up to Rs.1 lakh.

A simple introduction by an existing account holder in a bank should be adequate to open an account.

In this regard, Aadhar, the Unique Identification Number (UID) Project of the Central Government, which aims at providing a unique ID number for everyone in the country, will help the poor to establish their identity to meet the banks’ KYC norms.

Fifth, farmers can get credit from banks conveniently through Kisan Credit Cards (KCCs) and General Purpose Credit Cards (GCCs).

Sixth, while several banking facilities are available, a common person may not be aware of them.

Hence, financial literacy becomes critically important.

Accordingly, the Reserve Bank has initiated a ‘Project Financial Literacy’ with the objective of disseminating information regarding the central bank and general banking concepts to various target groups.

RBI's ‘Financial Education’ website link offers basics of banking, finance and central banking for children of all ages.

Finally, there is also a learning process for the Reserve Bank.

Accordingly, our Governor, Dr. Subbarao initiated the outreach programme last year as a part of our Platinum Jubilee celebrations.

Under the outreach programme, the top management of the Reserve Bank visits at least one village in every state and union territory with state government officials and commercial banks to give focused attention on financial inclusion.

With India achieving higher growth trajectory and acquiring the status of most promising emerging economy, have we ever thought of status of poor people in India whose conditions are deteriorating day by day?

Well, here, I would like to discuss about that even after 63 years of independence the subject of Indian poverty still remains a cause of concern.

It’s a well known fact that even urban poverty is prevalent due to impoverishment of rural peasantry which pushes them to migrate from villages in search of subsistence living in towns and cities.

Why Indian people are poor?
Well we have answered this question several time in exams, but answering it again will take us to jovial memories of our school times!

Major cause of poverty in India is lack of productive assets and financial resources for both communities and individuals.

High levels of illiteracy, inadequate health care and extremely limited access to social services are common among poor rural people.

Microenterprise development, which could generate income and enable them to improve their living conditions, has only recently become a focus of the government.

Poverty map of India
Poverty is most prevalent in parts of Rajasthan, Madhya Pradesh, Uttar Pradesh, Bihar, Jharkhand, Chhattisgarh, Orissa and West Bengal.

Large population of rural India resides in India’s semi arid tropical region.

In these areas shortages of water and recurrent droughts inhibit the transition in agriculture which green revolution has been able to achieve elsewhere.

There is also high incidence of poverty in flood prone areas such as those extending from eastern utter Pradesh to the Assam plains and especially in northern Bihar.

Poverty affects the lives of tribal people in forest areas, where loss of resources has made them even poorer.

In coastal fishing communities’ people’s living conditions are deteriorating because of environmental degradation, stock depletion and vulnerability to natural disasters.

Statistics reveal that about 2/3 of India’s population live in rural areas and almost 170 million of them are poor.

Poverty in India can be defined as a situation where certain sections of people are unable to fulfill their basic needs.

The economics of urban poverty

There is huge momentum in growth of big cities than smaller towns.

India’s mega cities constitute of highest percentage of slum dwellers in the country.

As India is transforming into more urbanized economy, more it is getting prone to urban poverty.

The reasons behind this urban poverty can be stated as below:

1. · Improper training
2. · Growing population
3. · Slower job growth
4. · Failure of PDS system

The urban poor population of India is estimated to be nearly 8 crores, while slum population 4 crores.

The complicated scenario of poverty

Urban poverty is diagnosed by following symptoms:

1. · Scanty household income: resulting in insufficient consumption of basic necessities, sometimes exacerbated by uneven distribution of consumption within household, between men and women and between adult men and children.
2. · Partial asset base : for individuals households or communities
3. · Inadequate provision for public infrastructure and services
4. · Exploitation and discrimination

Conundrum of urban poverty

Urban poverty was by far detectable due to lack of land tenure, access to affordable shelter and basic amenities, particularly health, education and social security.

The bulk of urban poor are residing in extremely deprived conditions with inadequate physical amenities like low cost water supply, sanitation, sewerage, drainage, community centers and social services relating to health care, Pre School, non-formal education.

Workers who are engaged in informal sector form the majority of urban poor.

Workers in this sector earn low wages or if they are self employed their income is poor.

Large number of people among them consists of low skilled rural migrants or migrants from small towns.

There is hardly any working regulation for these people and they earn wages which are less than specified minimum wages.

Informal sector comprises people like vegetable vendors, rickshaw pullers, maids who come to work in our homes, people employed on streets and many more.

When these people come to the city, due to lack of appropriate skills they get into the informal sector.

The only difference which they get in migrating from village to city is that now they come under urban poverty level rather than rural poverty.

Many people in these urban areas are homeless, without access to clean water and hygiene systems of waste disposal and they live in polluted degraded environment.

Poverty alleviation programmes
Any work on poverty of India is incomplete without mentioning of poverty alleviation programmes.

So to provide all you readers full information on urban poverty lets have look at some of these poverty alleviation programmes.

Urban poverty alleviation is one of the most challenging tasks for government which calls from some imaginative new approaches in this direction.

The basic need of the hour is to provide these urban poor with assistance in setting up of microenterprises there by providing them avenues for enhancement in their incomes, so that they get access to physical amenities like clean drinking water, drainage , sanitation , community centers , health care , nutrition , preschool and formal education.

What is inflation?

Inflation is the increase in prices of baskets of goods and services that represents economy as a whole. It is measured as an annual percentage increase. For e.g. We all love to watch movies; there was a time when movie ticket was for Rs 50 and now its cost Rs 100, the prices have doubled, this is how inflation affects us. Take another e.g. suppose with Rs 100 you can buy only 6kg of groceries , the same amount of money can only buy 6/ ( 1+I) kg of groceries next year , where I refers to rate of inflation beyond today. Thus if the rate of inflation is 5%, other things being equal you can buy only 6/1.05 worth of groceries.
Well all of us know what is inflation and what are its causes……..so I won’t be going much in to it….

Measurement scale of inflation
Inflation can be measured by the following 2 ways:
· Inflation based on changes in consumer prices for specific baskets of goods known as consumer price index (CPI).
· Inflation based on changes in average prices of goods traded in wholesale market called as wholesale price index (WPI)
In India inflation is calculated on the basis of WPI. WPI is calculated on weekly basis unlikely CPI that is calculated on monthly basis.
WPI in India includes a total of 676 commodities and tracks the change of prices in these commodities.
These goods can be classified as under:
· Primary articles ( food articles non-food articles and minerals)
· Fuel ,power ,light ,lubricants and manufactured products like food products , beverages , tobacco , textiles ,leather and leather products).
Now with one eg ill show how WPI is calculated
WPI is calculated on base year and WPI base year is assumed to be 100
Let’s calculate the WPI for year 2007: assume that price of kilogram wheat in 2007 is Rs 7 and for 1993-94 kilogram wheat costs Rs 5
Therefore the WPI of year 2007 is:
Price of wheat in 2007 – price of wheat in 1994 / price of wheat in 1994 *100
7-5 /5*100 = 40
Since WPI for base year is assumed to be 100, WPI for 2007 will become 100+40 =140.

Calculation of rate of inflation
If we have the WPI values of two time zones, say, beginning and end of year, the inflation rate for the year will be:

(WPI of end of year – WPI of beginning of year)/WPI of beginning of year x 100)
For e.g. WPI on 1st January 2007 are 141.2 and on January 2008 are 144.4, then inflation rate for year 2008 is,

144.4-141.2 / 141.2 *100 = 2.26 %, therefore we can conclude inflation rate for the year 2008 is 2.26% (I know this number seems to be unbelievable but it’s just an e.g.)

WPI vs CPI

Now as we have seen how inflation is calcualated with WPI , its now time to analyze wthether WPI is a good measure of inflation or not.

Most of the major economies like US, UK, Japan, France, Singapore and even our arch rival China have selected CPI as its official barometer to weigh its inflation.

But our country, India, is amongst few countries of the world, which selected WPI as its official scale to measure the inflation in the economy.

The main difference between WPI and CPI is that wholesale price index measures inflation at each stage of production while consumer price index measures inflation only at final stage of production.

CPI is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers.

It is a price index that tracks the prices of a specified basket of consumer goods and services, providing a measure of inflation.

CPI is a fixed quantity price index and considered by some a cost of living index. Under CPI, an index is scaled so that it is equal to 100 at a chosen point in time, so that all other values of the index are a percentage relative to this one.

In use of WPI there are certain problems which have been encountered.

· Economists say that main problem with WPI is that more than 100 out of 435 commodities included in the index have abstained to be important from consumption point of view.

Take, for example, a commodity like coarse grains that go into making of livestock feed.

This commodity is insignificant, but continues to be considered while measuring inflation.

· WPI measures general level of price changes either at level of wholesaler or at the producer and does not take into account the retail margins.

Therefore we see here that WPI does give the true picture of inflation.

· In present day service sector plays a key role in indian economy.

Consumers are spending loads of money on services like education and health.

And these services are not incorpated in calculation of WPI.

· Moreover the inflation figures that we get on Friday hardly makes a differnce to consumers, as the commodites on which inflation is calculated are not part individual consumers budget.

Therefore in order to know what exact number of inflation is affecting your budget , it is advisible you should do your own calculation.

You can compare your expenditure for previous years and with present scenario required to maitain your lifestyle and you ill come to know that increase in expenditure would be a few times higher than the official inflation figure.

But it is not easy for country like india to adopt to CPI , as in India, there are four different types of CPI indices, and that makes switching over to the Index from WPI fairly 'risky and unwieldy.

' The four CPI series are:

· CPI Industrial Workers;
· CPI Urban Non-Manual Employees;
· CPI Agricultural labourers; and
· CPI Rural labour.
Apart from this official staements say that there is too much of lag in reporting of CPI numbers, which makes it difficult for india to calcualte inflation based on CPI figures.

India calcualtes inflation on weekly basis , whereas CPI figures are available on monthly basis.

So all this give little ground for indian government to adopt CPI in calculating inflation.