The Growth Model

Our economic growth model seems an import-driven internal consumption-based pattern characterized by high credit growth and internal and external imbalances, and presumably heading towards resource based economy with assumption that manufacturing, as well as services, will no longer provide engine of growth. It is an easy-go model that requires no major effort to ensue. Basically beseech, borrow and spend (not even invest) brand that takes practically no account of  accountabilities for the financial recklessness, be it millions spent on domestic airports, education city, IT park, massive buildings and/or feeder roads of negligible benefits to the nation.

The economic growth model has to be supported by comprehensive plans. It should evolve fully responding to various challenges emerged as a result of detailed analysis of country’s  situation, strengths and weaknesses including people-sourced details. In formulating the model, it may even involve transforming the economic development pattern completely. Late Lee Kuan Yew said, "Well, we are pragmatists.  If in order to survive, we have to open up a sector, we open it up. Because the best test - the yardstick is, is this necessary for survival and progress? If it is, let's do it. We are ideology-free. What would make the place work, let's do it." 

Let us take the case of Bangladesh. With about $21 billion in exports in 2013 (80% of total exports) Bangladesh has become hot spot of ready-made garments (RMGs) producing mainly 5 items: T-shirts, sweaters, trousers, men’s and women’s shirts. There are more than 5,000 factories employing almost 4 million workers. Some experts forecast export-value growth of 7-9% annually and Bangladesh RMG market to touch $45 billion (about Nu 2.9 trillion, yes trillion) by 2020. Mind-blowing figure!

The main factors, among others, for Bangladesh RMG boom are: (i) strong and expanding backward linkage particularly for cotton items; (ii) domestic supply meeting 90% of fabric and 75% of yarn requirements; (iii) low labour and production costs (in time when increasing labour costs in China started to become an issue); (iv) easy and abundant access to skilled labour force; (v) flexible labour market laws and regulations; (vi) price competitiveness;  (vii) product diversification and upgrading; (viii) world standard and social compliances; (ix) courageous and bright entrepreneurs; (x) export friendly government policies; (xi) flexible financial market; and (xii) major push for image building and market promotion.

The Bangladeshis are working on improving transport infrastructure and energy supply, and reducing political unrest and strikes. The three main stakeholders — the government, suppliers, and buyers — work together. The government's top three priorities for investment are infrastructure, education, and trade support. It is clear, Bangladesh is on export-led development model and directs investment and entrepreneurs towards manufacturing exports. This is how they have been able to carve a $45 billion niche in the world market that involves even shifting RMG manufacturing base from China to Bangladesh. I envy them in an affirmative way!

A model is a conceptual framework devised to be used as a guide in making a diagnosis, understanding a developmental process, and forming a prognosis for continued future development direction of the country. It has normally five components: (i) the identifiable state describes the stage, level, phase, or period of the condition or process; (ii) the shift in state identifies qualities of change as progressive, sudden, abrupt, or recurrent; (iii) the form of progression describes patterns of development as linear, spiral, or oscillating, (iii) the  force that triggers the change or the step in development may be self-actualization or any form of stress, and (v) development is ultimately constrained by the fifth component, potentiality, the genetic and environmental possibility of growth.

It is not possible to have a dynamic economic growth model if the economy is mostly government-centric and does not enjoy the confidence of private  and non-profit sectors. That is what it is, and therefore step-by-step transformation of economy to the new growth model is prerogative. Plans drawn off the cuff and casual commitments with foot in the mouth by politicians do not work. The haphazard action plans/activities formulated on the back of an envelope not only distort  development resources and efforts streamlining,  but also stifles innovation, enterprise, and enquiry into cause and effect relationships. Without due attention to these it is impossible to interact with fiercely competitive world. Many with vacuum of ideology, principles, purpose and integrity may say why do we need to interact with the world? Many experts consider North Korea, Laos, Cambodia, Myanmar, and New Guinea as east Asia's failed states. Their one common characteristic: failure to trade and interact with the world.

As per Economic Development Policy (EDP), Bhutan’s economic development policy, guided by the overarching philosophy of Gross National Happiness (GNH), is based on the four pillars: (i) sustainable economic development; (ii) preservation and promotion of culture and tradition; (iii) conservation of environment; and (iv) good governance.

On sustainable economic growth alone, major challenges identified in EDP are:

(i)           Economy largely financed by external aid

(ii)          High fiscal deficit

(iii)         Weak balance of payment

(iv)         Mounting public debt

(v)          Difficult to sustain foreign exchange reserves as it is not built through exports

(vi)         Small domestic market

(vii)        Inadequate infrastructure

(viii)       High transportation cost

(ix)         Difficult access to finance

(x)          Inconsistent policies

(xi)         Lack of management skills

(xii)        Shortage of professionals

(xiii)       Low productivity of labour

(xiv)       Absence of R&D capability

(xv)        Access to land

The EDP recognizes that unless these constraints are systematically removed, the capacity of the private sector as the engine of growth cannot be enhanced. Heavy sentence!

Our competitive advantages identified in EDP are:

(i)          Political stability

(ii)         Peace and security

(iii)        A vibrant and living culture

(iv)        Natural and pristine environment

(v)         Geo-economic location and open access to the emerging Indian market

(vi)         Reliable and competitively priced energy

(vii)        Nation of GNH

(viii)       Wide use of English language

I suggest you to put the above pros and cons on an economic growth balance and see for yourself if these so called advantages can be classified as the country’s Unique Selling Proposition (USP), one that is expected to build on and to become Brand Bhutan. I will not go into geographical location that lacks credible reasoning to term as competitive advantage. The questions are, “Are we really up for export-led development model? Do we really want to lure credible FDIs to achieve our goal the way Bangladesh is doing?” The optimism displayed by our pseudo-idealists lack understanding how tough the mainstream FDI customers are! Credible FDIs do not do emotional investment. They look for opportunities and markets favourable to their businesses in the terms they dictate, if possible.

I am not disparaging EDP. We are in mid-2015 and the government statement of achieving minimum growth rate of 9% annually and striving to be a middle income nation by 2020 in EDP sounds hollow. It is not difficult to assess how much of efforts have gone so far into the Areas of Economic Opportunities identified in EDP to help generating wealth, employment and sustainable growth within the framework of GNH easing above 15 challenges. Surely, we cannot be taking things so casually once we put credibility of the nation in the forefront. Can we?

We are in high-voltage cloud computing age enabling to put-up apps in cloud storage, and do business or launch start-up. Those who do not realize value of internet, they can watch the world go by outside their window because you cannot eat pixels. The internet enables the use of the knowledge and power of community. Those who are not aware of this will eventually reach the point where they become a cubicle Jonestown devoid of anything resembling real-world logic.

Internet is the double-edged killer technology. The digitization not only benefit business in terms of product development and supply-chain management to sales and/or marketing, but also in providing straightforward information enabling people to interact among themselves facilitating benefits. It is possible to harness digitization benefits and the digitization process.

On the other hand it can ruin the foundational underpinning  with superficial use of information available in the net through application of shallow ideas and concept that are no longer relevant to the ground realities. We tend to be heading towards this syndrome. If you disagree with me, try talking to senior teachers how many shallow concepts and borrowed ideas have messed up the education system. Education is not alone. All most all sectors have applied policies and regulations that float because those are mostly square-pegs-in-round-holes. There are numerous ideas in the net that look good and can be downloaded free. These only help in framing superficial solutions sweeping under the carpet the real development dilemma and parroting frivolous nationalism. The problem is we suffer from doing things easy-way without analytical details to help structure development direction. Our inability or refusal to grasp in-depth knowledge of the structural problems, because we find conflicts of interest, will drive us to intellectual backlog deficit that will be of much bigger agony than any current account deficits. While the world's money is moving into the pockets of 25-year-olds with sexy ideas, our dated start-up engine does not fire because neither it has been retrofitted/modernized nor there is fuel.

In 1960, the American Economic Historian, W.W. Rostow, suggested that countries passed through five stages of economic development. According to Rostow development requires substantial investment in capital. For the economies of least developed countries to grow the right conditions for such investment have to be created. If aid is given or foreign direct investment occurs at Stage 3 the economy needs to have reached Stage 2. If Stage 2 has been reached then injections of investment may lead to rapid growth.

   

Rostow's Model - Stages of Economic Development

				Stage 5: High Mass Consumption   consumer oriented, durable goods flourish, service sector becomes dominant
			Stage 4: Drive to Maturity  diversification, innovation, less reliance on imports, investment
		Stage 3:Take Off               industrialization, growing investment, regional growth, political change
	Stage 2:Transitional Stage  specialization, surpluses, infrastructure
Stage 1: Traditional Society  subsistence, barter, agriculture

It is good to know the five stages of Rostow’s Economic Development model. I do not believe development ladder-steps are so structured and neat in reality. So we do not need to place ourselves on one of the Rostow treads. But there is no denying of the fact that one way or the other we need to climb the staircase for which a conducive environment for substantial investment in capital, both internal and external, is a prerequisite.

As of now I see two choices. Either continue status quo and head in the direction of east Asian nations mentioned above, or eliminate conflicts of interest in the areas of pursuing inclusive governance (such as, but not limited to, creating leveled playing field, exercising financial transparency, granting merit-based - rather than obeisance-rooted - reward and recognition, maintaining proper accountability, overhauling sectoral policies, regulations and procedures) and applying rule of law; and redirect the nation to proper economic growth model (even if it is resource based growth model). Unfortunately it is either/or. We need good alchemy!

Nepal Earthquakes

I could not walk pass some of the narrow gullies of Kathmandu,  without a thought about earthquake and feel of chill through my spine, looking how attached and fragile the houses were. I know the earthquake happens due to tectonic activity. But the earthquake disaster is a function of  tectonic activity, population size and quality of construction. Why were the authorities so indifferent that you almost feel like you are in three different countries while travelling around Kathmandu, Pokhra and remote villages of Nepal. That was my observation during our holiday there in January this year.  Sitting on top of major geological fault with one of highest urban population densities in the world (with population growth rate of about 6.5%) and dilapidated and fragile buildings all over, Kathmandu valley was clearly facing high earthquake risk. This, for smartphone era people with internet at their finger tips, is a general knowledge.

The Nepali villagers may say some things are beyond control. It was their karma. The tectonic activity is beyond anyone’s control but population density and construction qualities are man-made. The 1934 and 1988 earthquakes severely damaged Kathmandu with around 10,600 and 1,500 fatalities respectively. Life of human being is, at some point, touched by tragedy of some kind. I believe only those who accept this fact are more prepared to face it, for tragedy does not come with warning. How could the authorities not accept the facts of tragedies of such dimensions and get caught so unprepared? It is, in my view, the recklessness of ruling generations with neither a sense of responsibility nor accountability.

The devastation wrought by 7.8 magnitude on 25 April 2015 is hard to grasp. The official counts of dead are at least 8,046 people and injured more than 17,800 and adding. As per New York Times more than a quarter of the Nepal’s 28 million people have been affected. Entire villages remain buried under avalanches or landslides. About 75 percent of the buildings in Kathmandu are destroyed or are unsafe. We are close neighbour. Looking at these figures and images, our hearts ache. We prayed and did whatever we possibly could, and are still doing.

Looking around Kathmandu valley, people who survived may have just started to come out of the shock and feel little lucky. Lucky that it did not hit them hard. Lucky that the earthquake was during the daylight, during the night people would have been sleeping and who knows what would have happened. And that it was Saturday, when the children were not in schools. Also lucky that it did not happen during mid-monsoon or mid-winter.

As if not to let the Nepalese escape the trauma, another earthquake of 7.3 magnitude strikes Nepal again on 12 May 2015 followed by several aftershocks.  The government reported more than 100 deaths and 2,500 injuries.  Many would have said perseverance has limit. After the limit is crossed, what else can you do when the world is turned upside down? Thank God, Nepalese are more bold than one could imagine. If one Nepali rises in organizational hierarchy, pulling the person down is typical  Nepalese characteristic. But if in emergency, they fight and reach out to one another like no one else. They do not desert, as if to bear witness to the fact that true qualities of a being is tested during emergency. That probably shows bold Gurkha  chi with high resilience. The reason why PM Narendra Modi believes in the saying that “if a soldier says he is not afraid of death, he is either lying or he is a Gurkha.”

While the spirit may be strong, Nepal needs to fight the big battle, the battle to prevent cholera and other disease, speed-up relief operation to beat monsoon season which begins in about five weeks to provide tents and food to as many as 800,000 Nepalis whose homes are uninhabitable, and also quash  unscrupulous elements from becoming active in stealing properties, child trafficking, corruption  and other malpractices.

The big question now is, when will the Indian plate stop pushing Eurasia plate north-east causing unprecedented devastation in Nepal?  Will the Nepalese get over the search and rescue phase and move onto relief operation or they will be thrown back to digging survivors again? Some speculate that the thrust between the subducting Indian plate and the overriding Eurasia plate is moving eastwards, meaning towards Bhutan. The speculation may have been based on the fact that the epicentre has moved from west to east of Kathmandu valley. No one can predict earthquake. It does not come with warning. The fact is the Himalayan range sits on geological fault. The preparation now to face future earthquake will improve resilience and save many lives. 

And then moving on to rehabilitation and reconstruction phase, the longer-term challenge for Nepal is to rebuild shattered infrastructure and economy that may have been pushed back by a decade. Nepal is at a critical cross-road. It may look as an opportunity to rebuild better and do well, and rebound with Gurkha life-force. Or it may continue to remain a country bogged down by the caste-dominant power base ridden with corruption depriving other castes the benefits of sound governance and inclusive development. In Nepal they do not caste their votes, they vote their castes. If the Nepalese do not see opportunities to do well even after earth-shattering disaster, they may not see the light of the day for decades to come. Before that, situation may arise when the country may not be able to fulfill some of the basic conditions and responsibilities of a sovereign state (period). 

The Service Economy

         A service is owned, delivered, or sold but cannot be turned over by the service provider to the customer like the goods. It is an intangible commodity. Practically every product is associated with some type of service to it. The service delivery is commissioned by service provider to render service to the customer. The old dichotomy of product and service of the understanding that service provider referred to as only specific third party organizational sub-units and/or outsourced suppliers is being replaced with the new business model known as servitization of products. The servitization refers to the innovation of organisation’s capabilities and processes to better create value through a shift from selling products to selling product-service combination.

            Let us take an example of truck tyres. Instead of buying tyres, truck owners pay for the use of tyres (owned by tyre dealer) by kilometer tracked using GPS tracking units. Since the tyre is still owned by the tyre dealer, the truck owner returns the tyre to the dealer once the productive life of tyre is over. The truck owner need not worry about investment in, retreading and disposal of tyres. The business model aligns closely the interests of truck owners and tyre dealers. So it is servitization of tyres: the truck owner is paying for service not for the product. More classic example is the Rolls-Royce, the manufacturer of aero engines, selling by hour the power generated by their engine providing all support services including maintenance. The Rolls-Royce treats its business as service business, not seller of the aero engines. The service innovation moves on. Is our service sector moving forward or backward?

            In developed nations, services represent 70, 75, 80 percent of GDP. The service economy in developing countries is mostly concentrated in human services, hospitality, retail, health, education, telecommunication, information technology and financial services. Even in China, which we mostly think about manufacturing, infrastructure, mining and construction, services represent about 50 percent of the economy. In a low income country we can safely say it would be at least 50 percent of GDP. As the economies continue to develop, the importance of services grow because of the exponential increased demand for faster, more and better services.

            Even though service sector’s contribution to the overall economy is heavy, it is neglected and abused, and given low priority in most countries. And, when we talk about innovation, people typically think about product innovation, not innovation in providing services. Here, I can safely say that services have not changed at all over several decades. For instance, brick & mortar banks still provide services that are about 10 years behind time. The auto service sector is in dilapidated condition. The construction sector seems in back-gear. I see no change in retail experience in 1994 versus 2014. But twenty years ago, we were perfectly fine with “I’ll deliver it to you in a month, plus or minus a week.” Today, the clients expect you to deliver it in few days, plus or minus few hours. The quality and delivery of services count, and it will matter more as the economy develops further.

            We have to have business models that are effective and smart for efficient delivery of services. While we may be far behind the level that is required for servitization, the straightforward service efficiency has to come from not only business operation and management but also from business model that scales up or down: the service level has to adjust to the highly flexible demands. In a small country service market fluctuates at unprecedented level and is highly unpredictable. So service efficiency has to take account of high as well as low demands adjusting quickly and efficiently. Thus, when we start thinking about innovation, there is an instinctive reaction to consider adjusting the business model that changes with market, in other words it scales up or down quickly adjusting with the changing market demands. In the case of products the concept of scaling up/down through production levelling by volume through longer-term average demand works, but not in services.

            Unfortunately the government is too far behind to take cognizance of the need for rational support to the service economy enabling efficient private sector service delivery. Their mind is attuned to the idiotic pre-conceived notion that service sector makes money through unfair means. So its approach and attitude is limited to the practice of refuse-and-abuse as means for pursuing mainly their lead on what-is-there-for-me (and other category civil servants is busy fishing training abroad as almost a full-time job). Petty bureaucrats becoming tyrants (generally lead by immigration, revenue & customs, construction and other sectors) are not uncommon. It looks as if those bureaucrats know the weaknesses of their supervisors and therefore they treat themselves out of the supervisors' control which beget more greed for 'rewards' through corrupt practices. For those service providers who carve this-is-for-you slices for officeholders, the quality and delivery of services are non-issues because they are too preoccupied looking for mean means to make, without investing, money -- in coalition with corrupt individuals -- as quick as possible. It is a very counterproductive rogue private-public coalition that is almost impossible to apprehend.

            For instance, government invites tender for the product/service rates that should remain valid for one full financial year and does not mention the quantities of goods/services to be procured to suit themselves well. The government pool vehicle may go for repair with a work-order to a workshop whose arbitrary rates have been accepted for a year by the government tender committee. The vehicle may remain overnight in workshop and return next day with the repair bill. The workshop does nothing (neither mechanic nor spares are needed) but the repair bill is prepared, paid and shared. The workshop does not need to keep its book of accounts because it is covered by the exception (but generalized for the convenience of self-serving individuals, another major misplaced calling) under Rule No. 4.2 of General Provisions of Rules on Income Tax Act of the Kingdom of Bhutan (where lies, in my view, the root cause of corruption). No audit/anti-corruption unit can catch it. So why would you need time limits and quantities for submitting arbitrary product/service rates in the government tender?

            On works, the procedure for awarding contracts to lowest priced bid, treating technical and financial bid capacities at same footing once certain threshold is crossed, has failed. It has helped dubious contractors with questionable integrity to interface with shady bureaucrats for favours. As a result technical standards and specifications are sacrificed, technically qualified persons became redundant, institutions are weakened and sound investments in construction sector are eluded.

            So the service economy is a hotchpotch of policy muddle, capacity cocktail of national and non-national workers, operational imposture (aka fronting), corruption plinth, decayed milieu and/or shambolic bazaar. The service sector has to have credible capability to provide the customers best value for their money. It is devoid of new initiative, ideas, knowledge, innovation, sound policy/regulatory support and investment ingenuity for heading in the right direction. “If we are in the right direction, all we have to do is keep on walking,” says Zen Proverb. Nurturing service economy into the right direction is the issue, the BIG issue!

            The doctors, engineers, lawyers, accountants, managers, sales representatives, teachers, and other skilled professionals together serve as the engine of the service economy. If the service economy is disorganized from the core and the system undermines their value and technical knowledge, the professionals do not find enough functional space to perform with dedication and integrity. So where would the transformational driver of workforce change, away from present “casual culture”, come from? I wonder. I am not under foolish illusion that a chain is as strong as its strongest link. No sir, a chain is only as strong as its weakest link!

Diesel Price Deregulation in India

Last Saturday (18 October 2014) as I was watching on TV Maharastra and Harayana assembly election news, the Indian cabinet meeting to discuss deregulation of diesel price topped the agenda. For a fraction of a second I had forgotten that the international oil price had slumped to a four-year low and was getting ready to go and fill my car diesel tank to benefit couple of hundred bucks. I thought the market determining the diesel price meant ending government subsidy on diesel. The subsidy withdrawal normally entails price rise. Wait a minute … diesel price rise in the midst of assembly elections? PM Modi and Bharatiya Janata Party (BJP) could not be so stupid to increase fuel price when they were busy churning Modi’s popularity into electoral votes. The Maharastra and Harayan assembly results were expected next day (Sunday). By Saturday BJP was certain that they had Maharastra and Harayan in their pocket reversing skeptic belief that Lok Sabha results were an aberration and that Modi wave was temporary. There was a game-plan.

Then I remembered brent crude was at mid-eighties for a barrel in dollar terms compared with 115 in June. The international market price must be below the controlled price that the oil retailers were selling diesel in the Indian market. So the Indian government wanted to have a cake and eat it too. The deregulation brought pump price of diesel down immediately (effective midnight of 18 October) which will translate into lower inflation rate with positive impact on the voters, and the government need not foot the huge diesel subsidy bills in future. While the government passed on the volatile oil price risk with diesel price deregulation to the consumers, it also delivered one of the reforms needed for its economic promises -- a feather in the Maharastra and Harayan assembly election victory cap of BJP. The international rating agency, Moody's Investors Service, says the diesel price deregulation is a "credit positive".

On any other day, the political opponents would have made a hue and cry of the subsidy withdrawal as anti-poor policy and announced strike with the help of truckers’ lobby. But this time they were in awe. That’s how BJP plays the game of politics with business advantage, the Gujarati style. A double jeopardy, short-term!

We buy oil from Indian retailers, Indian Oil Corporation and Bharat Petroleum. So, our pump price of diesel will also be based on market (not our market but international) and Indian export tax exemption impacts.  This is perfectly fine as long as the international oil price is on downward slide. We may take advantage of the global oil prices hovering on bear market while the world oil demand forecast is still on down-side and OPEC cartels are not willing to cut production. Also, the oil-guzzling US is busy cutting its oil imports making itself more and more dependent on its own shale gas. The oil supply at the moment exceeds demand, the price is falling. Many analysts are of the view that oil price is heading to $70 a barrel. The short-term outlook is rosy, so let us enjoy!

Will the oil price keep on falling? The oil cartels are in no mood to cut production and let the oil price increase for now. Do not be under illusion that OPEC cartels are not working to create conditions for sudden oil price jump. The low oil price encourages people to buy big cars and make oil fields that are operating at marginal levels not viable. The other OPEC target is shale gas. The extraction of gas from shale rocks involve much deeper drilling than conventional oil. While the cost of extraction of conventional oil is about $25 per barrel, the shale cost $60-80 per barrel. The cartel aims at bringing the international oil price lower enough so that investment in shale does not make commercial sense. If the investment dries up, the US shale will be out of the market pricing. Also the cheap oil price will make investment in renewable energy less attractive. So OPEC members are continuing with maximising production despite oil price fall to liquidate inefficient producers, help increase energy dependency on OPEC and raise oil price later.

When the international oil price takes a reverse upward trend, the diesel price in India will climb faster filling the subsidy void triggering inflation. India deregulated oil price in 2002, but the policy had to be reversed because of international crude oil price increase in 2004. The BJP government is not likely to reverse the policy staking its credibility with international investors, and believes that their financial inclusion programme that enables direct cash transfers to poorer section of the society will shield them from the essential commodity price rise.

That being the case in India, we will be in direct line for oil price rise hit. If the Indian diesel subsidy is not back, our trucks one day in future will need to run paying the petrol pump price or more for diesel like in other countries where diesel is not subsidized. How do you think our policy makers will handle the situation when the diesel price rises in tandem with that of petrol and prices of essential commodities shoot through the roof? Your guess is as good as mine. So I do not need to mention here!

The Bhutan Education Reform

It is sometimes good to be fairly blunt. If I am wrong, feel free to contradict me. If convinced I am willing to correct/withdraw my views. I sincerely hope I am wrong. But as of now I do not wish to fool myself emulating ostrich with head buried in sand as against facing reality. If everyone loses touch with reality, there is and will be no solution to the problem ever. This is certain. Alternatively we may also pretend and hide from the reality, and whitewash the dilemma, almost a routine outfit now. But then more disastrous outcome will await us. Only those in a state of delusive contentment will not see the distinction.

First and foremost the bold education reform in Bhutan will have to not only address (a) the quality and relevance of education programs, and (b) education framework, governance, management, administration and education financing but also will need to look through as process as a shared responsibility.

Let me take up more important aspect, the education as the process with shared responsibility. In Bhutan, education means different to different persons. First to the parents, it is about school performing miracles to turn their children into future engineers/doctors/lawyers/entrepreneurs and/or worthy citizens while they brat-pamper the kids at home (if the parents are educated) or leave the offspring on their own (if in a village). I was traumatized when I overheard a seven-year-old, student in one of the elite private schools, threatening his school mates that he would come next day with his father’s pistol and shoot them dead. What kind of home education has he had? How do you think he will behave when he turns 15/16 years? To me it reflected characters of his parent. If you think this is an isolated case, look around and tell me the depth of parents’ contribution to their children education and compare it vis-à-vis elsewhere (e.g., in India). Home education is also key aspect of overall education of children.

If the child is in village, I know what-could-poor-illiterate-villagers-do is the normal argument. This is utter nonsense. My parents were villagers, poor, illiterate and parents of 1950s, not of smartphone era. My father was so obstinately firm on my education that nobody dared talk to him about not educating me and later not sending me to Kalimpong (India) on scholarship for higher education, not even my mother. My education for him was an issue non-negotiable. Such was his determination, commitment and appreciation of the value of education. It reflected the character of a person. Those who believe that there is no co-relation between the character of parents and education of their children are the ones who survive fishing in shallow waters. And, the system unfortunately seems to encourage them. So it has become more of trend than rare tendency. The parents are the role models for children. Thus if parents are least concerned about education, their children pay the price!

Education to a student is a question of grades, promotion to next level, and finally coming out with a certificate/degree enabling to do “something” (not sure what) with no aim, no purpose. I may have interviewed 40-50 persons for various positions in last twenty months or so. Frankly I would have preferred sixth grader of 1980s in general to the graduates of today in terms of communication ability and clarity of mind, and moral standards. Their English is extremely poor due to which their basic domain knowledge is very weak. I find their brains blurred and lacking stimulus interface. They float around in obscurity, and carry very low moral values.  I do not believe education has done anything to develop moral character. The old generation had high moral values while there are more educated persons than there were then. Young brains need to be at level to show-off their mental agility, intellectual alertness and high moral character.

And then most importantly to the teachers in (i) the government schools, the education is more about teaching to maintain their imposing status if the teacher is “in the circle" and teaching just for the sake of teaching if “out of circle", and (ii) private schools, teaching to please school management. The “in” and “out of circle" are toxic phenomenon that exist almost all over. The depth and immensity varies. The “out of circle" teachers generally are professional, dedicated and competent but poor education governance do not let them move in. They are senior dedicated teachers but find no motivation in giving their 100 percent, not even in the interest of children. It is not so much about remuneration but more about their values being not appreciated and being buried. They are experienced, capable and can teach children interactively – meaning they also get feedback and learn from the children, analyze and decide where, what and when to focus on for intellectual development of young mind. Teaching is not a physical task that you count in terms of number of lesson-plans and reward accordingly. It deals with development of young mind. It needs outcome based reward and incentive that recognizes their values to motivate teachers. I do not need to tell the qualities of teachers “in the circle": just try talking to few senior teachers and/or senior students.

And, to the principals education is about the figures -- percentages of (i) those who passed for higher education and (ii) failed. The school management and administration for them is about pumping their traditional ego and full dependency on those “in the circle" for their dogmatic imposition of the rules. Isn’t marginalizing good teachers because they refuse to believe in cronyism an offence? The issue is not only about selecting merit-based principals with focus on strong knowledge of school management and administration but also putting in place proper system of independent checks and balances. When you are putting someone in charge of future citizens of the country, you need their appointment process that is state of the art. Without the principle of meritocracy in the appointment of principals, and strong and effective third party monitoring system for school administration, management and finance; improving education standards in schools is just too farfetched.

Then to the private sector, education is about an ideal candidate with perfect combination of behavior, discipline, attitude, qualification, competency and output to serve their business while they are busy taking lead on land, natural resources, and government contracts or licenses that are the predominant sources of their wealth. There is no slightest notion on how best to develop their own institutional and staff capacity. When the capacity development concept does not figure as an important ingredient of corporate governance, public-private sector interface and interaction with an aim to improve the future workforce of the country including shaping the intellectual course of children is out of question. The private resources, even to show some good examples, look non-existent. The private sectors cannot shy away from the responsibility and think only in terms of employment for better cash returns. Everything need not be deposited in cash vaults!

Education is a shared responsibility. The country, society, parent, school, student and employer are all stake-holders of education and have specific roles to play. All stake-holders have to contribute and aim at the final outcome in terms of educated citizens’ ultimate performance in contributing to the socio-economic development of the country. It is a delicate process. A small mistake in taking right step will make huge future difference. It is the life of a person, the course of which takes quick turn depending on direction of every forward step taken. Where do you point your finger if a graduate, holder of distinction certificate issued by the Ministry of Labour & Human Resources, is a drug addict? Do you call that good education? I label them as qualified but poorly educated. I am not talking hypothesis here. It is much more than an exception, but less than generality.

Everyone thinks education is a free handout to be taken for granted. We have forgotten to value education. How can you expect a child to value the education? Who is responsible? Everybody! The value of education is missing because the society and system have influenced the education to be treated so. The combination of (i) attitude of the parents; (ii) education framework and design, policy and program, governance, management, administration and financing; and (iii) perspective of government and private sectors are responsible for it. Education is not a freebie. It is the process of gaining knowledge, improving outlook, broadening base of understanding, awakening the desire for getting better and sharpening the base of curiosity. If human mind is nurtured and cultivated, it will grow on those accounts far beyond expectation. If not and infected, lasting peace of mind and harmonious existence are eluded. So the human mind is open to only two options: Use it or Lose it!!

The Integrated Economic Community

H. Jackson Brown Jr. says “opportunity dances with those already on the dance floor.” True! If you are not on a dance floor how can anybody/anything dance with you. And to be on the floor, one needs to be healthy, not cynically crippled, and know how to dance well. It is not salsa, samba, tango, bharat natyam or Bhutanese “cham” the discussion is about. Let us not go literal, for PM Narendra Modi will push South Asian countries to the dance floor. He told visiting US Secretary of State John Kerry that he wanted to unite South Asia into an integrated economic community (IEC). By coming together, the South Asian economy will be much stronger. If they do, the IEC will be the “dance floor.” So we better do our homework and learn well the “economic dance” steps if we want the opportunities to dance with us. Even if IEC remains just a Modi dream (implausible), we still need to learn the nitty-gritty of South Asian economic affairs if our economy is to move in the right direction. If not, it will take its own course heading to dysfunctional configuration.

     Economic integration is the fusion of economic policies between different countries through partial or full elimination of tariff and non-tariff restrictions on trade between them. This is meant to lead to lower prices of goods and services benefiting distributors and consumers. The goal is to strengthen combined economic vitality and increase productivities of the countries. This is the economic rationale.  In addition to this, there are much more complex reasons, political obviously.

      The economic side alone will demand ambitious and coherent cooperation from the South Asian member countries. So the easy start for India to initiate the economic integration process is through Bhutan and Nepal.  Before the start of his first state visit, Modi has not only assured Bhutan of more funds for economic development but also wanted to speed up economic integration. This  he confirmed with massive increase of Indian grant and loan allocation to Bhutan of Rs 60 billion (US$ 1 billion equivalent) for this year compared with Rs 41 billion last year, an increase of nearly 50%. We do need strong capacity strength this year to uphold increased Indian assistance to the tune of 60% of GDP on our shoulders and stand straight. Prior to his departure to Nepal PM Modi said "I hope my visit will open a new chapter in India-Nepal relations, characterized by more frequent political engagement and closer cooperation across the full spectrum of our extraordinarily broad-based relations, which will serve as a model and catalyst for South Asian partnership for prosperity." He assured Nepalese parliament the availability of Nepali rupees 100 billion (US$ 1 billion) concessional line of credit  proposing “HIT” mantra [H:Highways (roadways), I:I-ways (information highways) and T:Transways (for energy transmission lines)] and encouraged harnessing hydro-power, of which Nepal’s untapped potential is estimated at 42,000 MW  while the installed capacity now is just 600 MW. I have my own analysis of the two one-billion-dollar packages and  "B4B" (Bharat for Bhutan and Bhutan for Bharat) vis-à-vis  "HIT" mantras, short- and long-term including the differences. You may have your own.

And, there are reports that the West Bengal state cabinet has allocated Rs 14 billion for improving North Bengal road connection with Bangladesh, Bhutan and Nepal even though the West Bengal Chief Minister Mamata Banerjee is proposing  to take her first overseas trip to Singapore to mobilize resources. The congress government in Assam, our other immediate neighbour in the south, may be indifferent to the momentum.

In the South Asian context,  Modi government wants a South Asian Association for Regional Cooperation (SAARC) development bank established early. In July 2014, the 8th South Asian Free Trade Area (SAFTA) Ministerial Council  met in Thimphu and agreed to fast-track the establishment of the SAARC  bank. The proposal is expected to be approved at the 18th SAARC summit scheduled in November this year in Kathmandu, Nepal. Transport and trade financing, the lifelines of economic integration, are expected to be major thrust of SAARC bank.

Within India a massive plan for new financial inclusion is expected to be announced by PM Modi on coming 15 August, independence day of India. There is no sense in talking integration with neighbours if your house is disintegrated. Simple as that. The plan includes providing universal access to banking facilities to the so far uncovered 100 million rural households. The second phase includes financial literacy programme, micro credit availability and creation of credit guarantee funds. All these, and more, on the economic front.

On the complex segment of economic integration, PM Modi sees integrated South Asian economic community through the security angle considering particularly the aggressive Chinese move to bring railways at three border points with Nepal, and at the "chicken's neck" area of Bhutan and India by 2020. The Chinese say the “network will play the role of continental bridge in South Asia and promote economic and cultural exchanges”. I am sure it will, but the complex aspect is silent.

When things move in critical direction in a break-neck speed can anyone afford remaining dysfunctional? It would simply be unfortunate!

The functionality of the government is often determine by the fact that how a healthy organization/society regulates corruption. A person commits a crime. Eventually, the organization/agent/news papers find out about it, and despite the fair amount of blowback, they will get and take a grip on it. The culprit digs in, but more inconsistencies are out. The person resigns. It's an unattractive example, but that's what a functioning system looks like.

And, the dysfunction looks like the following. The functionary identifies a procedural issue which, if messed with,  is almost impossible to take the grip on. That it debilitates the country’s economy is non-issue for those who look through kaleidoscopic procedural loopholes for rent seeking. Then paralysed and ethically deficient governance replaces performance and outcome. The people with passion and commitment sadly vanishes from the look.  There are these in every government. The rules are made with exception to take care of the weaker section of the society. The cunning entity turns itself into a weaker faction to take advantage of the exception, to bypasses the rule. Then there are vicious government-private circles that operate through the channel benefiting everyone at heavy cost to the government. There is a vacuum of ideology, principles, purpose and integrity which money rushes to fill. They do not even perceive the world go by outside their own window.

The reason why the Chinese and Indians are cracking the corruption ring respectively through investigations and severe actions on suspected "serious disciplinary violation" by communist party members and  crackdown by special investigation team on black money stashed abroad. In China the clean–up has reached  unprecedented level that a previous member of the highest 7-member decision-making body,  the Politburo Standing Committee, has taken the direct hit. The method and speed differs: one with communist style and pace and other republican. We are neither of two nor have so much cash to stash in vaults, but not ideally functional. It is just a question of couple of retrofits at the bull’s-eye enabling fresh and passionate empathy circulation into the system. That will bring passion, commitment and even courage in the right place. It is not possible to know how hot the water is without a dip. Not a rocket science, those who have taken a dip know where the bull’s-eye is. Even the termites bring down a beautiful house if their strength is underestimated. For bright and predictable, a spinal strength, it is about!

The World Cup

Around thirty years ago, I met one gentleman during one of the seminar coffee breaks in New Delhi. I don’t recollect his name but I still remember how he introduced himself. “I am …. from Uruguay. You know football, World Cup? We are very good in football.” I thought the introduction was intriguing. The person obviously was jolly. He thought no one would know Uruguay in this part of the World, so he might as well enter through football, more appropriately the World Cup, the biggest event on earth. The first World Cup, with only 13 countries competing for the trophy, was held in Uruguay in 1930. Fast forward to World Cup 2014, Uruguay entered into Round of 16. So what if Uruguay superstar Luis Suarez bit Italy's Giorgio Chiellini, every Uruguayan would say. To them it was a non-issue in comparison to Uruguay-Italy score of 1-0 in group D match. Uruguay, minus Suarez who returned home carrying 9-match FIFA ban on his shoulder, played quarterfinal and lost to Colombia. For banning Suarez the guy I met in Delhi would have slammed FIFA leaders in no lesser in terms than his President Jose Mujica’s  “sons of bitches”.

       You cannot call me World Cup fanatic by any standard. If I were, I would not doze off in sofa during past mid-night matches.  I was up and down during the matches but invariably watched extra time play and/or penalty shootouts. In those on-off sessions I caught one scene that I must narrate here. Two players collide in mid air, both fall flat and act as if they are competing in “who-dies-first” episode.  The referee blows whistle, and runs to give a hand to one of the players to stand on his feet. When he is up, the referee says something, most likely, “we play football here, not opponent’s butt.” Both laugh. Then the ref flashes yellow card on him. The player is still laughing. The slowmo showed a solid knee kick on opponent’s backside. The player who got kicked gets up on his own massaging his back. No help for him.  The Arab proverb says “when you shoot an arrow of truth, dip its point in honey.” How true!  It was fun even when I was half asleep. Yes, fun World Cup had lots of it but same thing you watch on repeat telecast, it is stale. The World Cup peculiarity!

        We saw in the World Cup amazing display of preparation, determination and organization; of the level   Louis van Gaal, the Dutch World Cup coach, exhibited to the amazement of the whole world. In an unusual and bold move he replaces  Holland’s goalkeeper with substitute Tim Krul at the end of extra time. Krul had not touched a ball earlier in this World Cup. van Gaal sent him just to save penalties. The tall, imposing Krul goes and saves two Costa Rican penalty shots and walks out Holland’s hero, breaking Costa Rica hearts and ending quarter final match at 4-3 in favour of the Dutch. It was obvious that van Gaal had prepared Krul for penalties. Some say penalties are cruel, but for Costa Rica it was Krul.

      Of the four semi-finalists Brazil have five World Cups, Germany three, Argentina two and the Dutch have been runners up three times. The 2014 World Cup contentions at semi-final were like: (i) Brazil should win because they are good and the host of the 2014 World Cup (and Neymar’s dream); (ii) Germany should win because look at their game plan intelligence; (iii) Argentina should win because look at the way Messi and his team play; and (iv) Holland should win because poor guys have lost thrice earlier. All deserved to win and had stood behind “Say No to Racism” FIFA banner supporting it. We did not see prejudice, discrimination, or antagonism directed against someone of a different race based on the belief that one's own race/ethnicity is superior in the World Cup. Did we? The Uruguayan I met in Delhi, his president and countrymen would disagree, I am quite certain about this.

     I am so fascinated with the World Cup colours and noise. Is the World Cup always so colourful and energetically noisy or the Latin American spirit coming live on TV? And the atmosphere, you would have seen. My closest encounter to that part of the world is through few books I read including  “The Motorcycle Diaries” by Ernesto Che Guevara. If you watched the Brazil-Columbia quarter final 90% of stadium was yellow of which  more than 50% had face painted with Brazil colours. More than Brazil’s 2-1 win, the quarter final will be remembered for their poster boy Neymar being ruled out of the rest of the World Cup due to fractured vertebrae after taking a knee to his back from the Colombia defender Juan Zuniga late in the game. Never mind the top-selling no 10 jersey that even Brazilian dogs preferred to put on and investment of Nike, Unilever, Volkswagen and Santander in him via endorsement deals, the whole nation grieved Neymar’s injury. 

    To add insult to injury, Brazil suffered humiliating 1-7 defeat in semi-final against the Germans. Germany was doing everything right, fully taking advantage of the Brazil imbalance, vulnerability, and disorganized situation. The Germans were absolutely merciless. The Brazil players, 200 million Brazilians and their yellow-jersey clad fans all over the World were in tears. "Like every Brazilian, I am very, very sad about this defeat. I am immensely sorry for all of us. Fans and our players," Brazil President Dilma Rousseff wrote on Twitter. To me the Germans looked awesome from day one. Still 7-1 was a chill pill to swallow. Even hard German fans felt sorry for such Brazilian collapse.

      With Brazil's big defeat still fresh in the memory of everyone, the second semi-final turned out to be conservative  tight match. There were very few opportunities to take a shot to the goal. It looked like both, Argentina and Holland, preferred to go for penalties rather than take aggressive risk: Holland confident from their quarter final four-out-of-four shootout against Costa Rica and Argentina very positive on their football shooting skills. The Dutch coach van Gaal had already used his three substitutes and could not bring Tim Krul for penalties like before. He could have saved one to bring in Krul. Why he did not do is a mystery. Accurate the Argentineans were, shooting four of the four balls into the net and the Argentina goalkeeper, Sergio Romero, was the shootout-hero blocking two Dutch penalty shots. This gave Argentina 4-2 win for the final with Germany. With that win and Brazil out, the Argentina fans have made Rio de Janeiro’s famous Copacabana beach their own, turning it from yellow-green to blue-white, to cheer South American World Cup win. 

      With injured star Neymar watching the match from the bench, Brazil lost 0-3 to Netherlands in the third-place play-off. Brazil defence looked as frail as in the semi-final against Germany when Holland scored their first goal within 3 minutes and second on 17th minute, and strikers did not appear strong enough to penetrate Dutch defence. It obviously is not possible to garner team energy and World Cup momentum so soon. The Netherlands returned with the consolation third place and with unbeaten 2014 World Cup record, the semi-final loss against Argentina being a penalty shootout.

       So Germany is the 1-0 winner of the Jules Rimet World Cup trophy.  They also pocket a grand total of US$35 million while Argentina takes runner-up cheque of US$25 million. The 120 minutes World Cup final was intense. The Germans were ahead overall with more ball possession, impressive display of ball passing and control. The planning, organization and teamwork of Germans were somehow kept on check by the Argentineans except the 113th minute stunning goal by German substitute Mario Gotze. Keeping Germany on check, Argentina had few opportunities to shoot the ball into the German net but they put the ball wide past the goal.  Even though Messi, wearing captain’s armband, may have calibrated his team to make him shine, he had to be satisfied with Golden Ball trophy for best player of the World Cup. I wonder if he will be up there with Pele and Maradona. The Golden Boot for maximum goals was awarded to Colombian James Rodriguez and Golden Glove for best goalkeeper was bagged by Germany’s Manual Neuer.

      Who says we are not outward-looking and least bothered about whatever happens outside in the World except for occasional glance at scanty cut and paste BBC/CNN pieces in Kuensel? The World Cup is World Cup, even Jules Rimet Trophy  was in Changlimithang, Thimphu (Bhutan). So football fans watching World Cup on the giant screen at the same venue should not surprise anyone. Do we need to wear Adidas/Nike no 10 jersey and paint faces to cheer the favourite World Cup team? We can do it in ghos, kiras, pants and shorts,  but for the World Cup spirit!