Tuesday, June 2, 2015

Financial Disasters

Chase Manhattan and their involvement with Drysdale Securities


http://financetrain.com/chase-manhattan-and-their-involvement-with-drysdale-securities/
http://www.nytimes.com/1982/05/20/business/lessons-in-drysdale-s-default.html

http://www.investinganswers.com/financial-dictionary/debt-bankruptcy/repurchase-agreement-repo-1630

https://www.youtube.com/watch?v=BbHheJwOiPQ

Trading Scandal at Kidder Peabody

http://www.nytimes.com/1994/08/05/us/behind-kidder-scandal-overview-kidder-scandal-tied-failure-supervision.html?pagewanted=2

http://financetrain.com/case-study-trading-scandal-at-kidder-peabody/


Nick Leeson & the Collapse of Barings Bank

http://www.thebubblebubble.com/barings-collapse/

http://aw-bc.com/scp/0321197488/assets/downloads/ch7.pdf
pdf
 Allied Irish Banks


http://mountainmentorsassociates.com/files/Case_Study_-_Allied_Irish_Banks.pdf

Friday, May 1, 2015

Short View about India's Budget Allocation to Public Educational Sector 2015-16

My politics have only one style, only one mantra and only one focus and that is development. And it means that there should be change in the lives of the poor people. Their children should get education, their parents should get medicine. And there should be concrete house in place of jhuggis,

Narendra Modi, our Prime Minister said during Delhi election campaign on Feb 4th 2015(1). 

He said about education, health care and housing during Delhi election rally to get votes from voters. However, in reality, his mantras are unlikely true. This article is about his one of the mantra, i.e. Education in the recent central government budget 2015-16 presented by BJP led government to the parliament on February 28th 2015.

Educational Sector

Table 1 (Source (5)

Department
Revised 2014-15
2015-16
Department School Education & Literacy
Plan(Cr)
Non Plan(Cr)
Total(Cr)

Plan(Cr)
Non Plan(Cr)
Total(Cr)

43,517.90
3,287.10
46,805
39,038.50
3,181
42,219.50
Department of Higher Education
13,000
10,700
23,700
15,855.26
11,000
26,855.26
Total
56,517.90
13,987.10
70,505
54,893.76
14,181
69,074.76

At times, when government is expecting the GDP growth above 5% and crude oil price is less under $50 per barrel, government didn’t increase expenditure in the public education sector, but government reduced the budget allocation for the education sector marginally. Government allocates nearly 69,074 crore of rupees for this year, which is 1431 crore less compared to last year. Last year, Rs. 70,505 crore was allocated in the revised budget, and government reduced the funding in the education department by 2 % in this year. 

Table 2

Age Group
Population (Crores)
0-6
15                                                                     (Source 2)
Less than 18
47.2                                                                 (Source 4)
Less than 25
62.5                                                                (Source 3)

Table 3

Age group
Population (Cr)
Amount per Person per year
Amount Per Month ( 10 Months as 2 Months Vacation
6-18 (School Age group)
32.2
Rs. 1319
131
18-24 (Higher Education age group)
15.3
Rs.1755
175
6-24 (Total Education)
47.5
Rs. 1454
145


10 % expenditure reduced in Department of School Education:

Everybody knew that school education is the building blocks of child's future and future of this country. There are nearly 32.2 crores children in India between the age 6-18, and they are all should have been in schools. In the recent budget, government spends just Rs.1319 per Indian child per year. The government reduced Rs. 4585.5 crores in this budget compared to the last year. The total expenditure for school department will be around Rs.42,219 crores for this year, which is nearly 10 % less compared to the last year. The government allocated Rs.46,805 crores for school education in the last revised interim budget.
  
90 % slashed in Mid Day Meal.

In this budget, there is great reduction of allocation for the mid-day meal scheme. The central government slashed nearly 90 % of allocation for the mid day meal scheme. Government allocated only Rs. 132 crores this year compares to Rs.1, 296.5 crore the last year (8).

Thriving private school business

Recently, government implemented regulation regarding a student-teacher ratio which is needed to be 40:1. When government is imposing such rules, it is essential that government needs to increase the number of schools and allocating more funds to the department of school education unlike reducing the amount meant for it and asking state governments to look after the educational sector. The sources of income for state governments are very less compared to the central government. This budget reduction only helps private schools where some schools are charging more than 1 lakh of rupees for teaching basics alphabets and numerical in their kindergarten schools. 

Children going to private schools increased 40 % in rural areas in the last ten years 

At present, nearly 1 in 3 rural area children (30.3%) are studying in private schools, already 40 % increased compared to the last ten years. In urban areas, it is much higher. Around 75 % children are studying in private schools (9). Government may cite reasons for reduction in allocation by saying quality standards are not raised in government schools as expected. It is the duty of the government to control, maintain and over view the quality standard in education rather blaming the outcome of the system. It indicates that government wants to cut down the expenditure by spending less in school education, which will affect the future of the future generation in this country.  

 Lack of evidence for private schools are better when compare to public schools.

There is no strong adequate evidence from research that private education systems are good compared to public education in developing countries.

Below are some of the findings regarding private schools in developing countries according to UK’s Department for International Development (DFID), (10)  

1)      “Private school pupils may achieve better learning outcomes when compared with state schools. However, there is no adequate evidence for it.
2)      "It is also stated that many children may not be achieving basic competencies even in private schools".
3)      The cost of education delivery is lower in private schools than state schools often due to lower salaries for private school teachers compared with their government school counterparts
From this it is clear that state sponsor schools can perform better compared to private running schools

Higher Education in India:

In order to boost investment from foreign players, government is trying to project as if they are allocating more amount of money in higher education in India. They didn’t actually increase the investment, they have taken the allocation which is meant for primary education department and re distributed to higher education department. There are 15 crore of people in the age group between which is 18-24  which is nearly 10 % of the population qualifies for higher education in India. Government is spending nearly 1755 rupees per person annually.

India's Higher education is $100 Billion Market 

It was estimated that Indian education market is about Rs 675,000 crore ($109.84 billion) in this year. However, government is spending around 9.7 % of the country's requirement. It shows that private players continue to use the opportunity from lack of government investment in the educational sector to get a piece of market share in 600,000 crores business.  

According to Yogendra Yadav, at present expelled from AAP party is also a former member of the University Grants Commission (UGC). He once said that “more than 100 MPs actually own or run private higher educational institutions and HRD ministry (that covers education) actually nominated people running private educational institutes to the UGC (responsible for setting educational standards)”.

Since politicians are running private-education institutions, it is obvious that they frame rules according to their advantage rather thinking about common people. The private players will continue to dominate the higher education in this country, because of lack of funding from government. We can see the results as many new colleges are getting started every year. The aim is not to help students to get knowledge but likely to usurp money from parents who are willing to pay more amounts for their children's education. 

Raise of Social Economical issues

BBC documentary India's Daughter on Gang rape held in Delhi in 2012 provides insight about victim and accused family's social and economical backgrounds. Victim’s parents sold their agricultural lands to support their daughter’s education. She also worked in a call center to meet their educational expenses. On the other side, all the accused didn’t have proper school education. It just a sample picture of  economic and social situation in this country. One section among the people is selling their asset to meet their children higher education expenditure so that their children will have a better future. On the other side, people without proper school education, are turning into criminals. These kinds of scenarios can be reduced or removed, only if the government take priority steps to improve the educational system in this country. 

Sustainable-Development – Emphasis on children education.

The Bhartiya Janata Party (BJP) government led by Narendra Modi often uses the word “Development” in their propaganda. For them, development means bringing more investment to the country, relaxing rules and cutting down red tapes in bureaucracy to make sure investors shouldn't be at loss and helping them to get more returns on investment.

But according to UN, development will sustain only if governments emphasis on education for all children is the foremost step for a sustainable development alongside ending extreme poverty, hunger, and death from preventable and treatable causes (11). From this it clearly shows that, government development will sustain only if children education is taken care by 

Conclusion

Indian economy will be greater than 2 trillion-dollar economy in this year. However, government at present spends nearly 6 % of GDP on total education and just 1.5 % of GDP on higher education. When India is aiming to become a super power, they should increase the allocation of funds to the education department for betterment of future generation's social and economic conditions. 

5 % reduction in corporate tax 

Our government wants to reduce corporate tax to 25 % from the present 30 % in coming years citing to have a competitive advantage among other countries to attract investments. When develop nations want to increase the allocation in education to turn their country’s economy towards the knowledge-based economy in the future. The knowledge-based economy is proposed as a future economic model as development of low cost robotics and automation in the manufacturing sector which will drastically reduce necessity of labours in the manufacturing industry(12). India will lose the competitive advantage compare to other countries in the longer run in the future if it is not provide adequate priority to education sector at present.

 The aim of the private educational institutes will be making profits rather than providing quality education to the people. Only government can provide quality education at lower cost. IITs, NITs, Regional government colleges, Kendra vidyalas are the examples for the above statement. It is unclear that if our prime minister’s main political mantra is children education, then why there is a reduction in funds. From his actions, it seems that education may not be his main mantra.  

References:


5)                    indiadidac.com/blog/item/337-union-budget-2015-16-highlights-for-education-employment-and-skill-development

11)                https://sustainabledevelopment.un.org/sdgsproposal

Sunday, May 5, 2013

Short View about Indian Economy , Agriculture , Unemployment


In 1991, India faced severe economic crisis in the history. India had foreign exchange reserve that could last only for three weeks to pay for its essential imports. India asked to pledge 67 tons of gold assets to one of the world pawn broker International Monetary Fund (IMF). India airlifted its gold to Bank of England and Union Bank of Switzerland to secure a loan of $2.2 Billion. Though India’s present situation is not the same as that of 1991 but figures by IMF makes us to fear that India may head back to the situation.

IMF initially predicted the GDP growth would be at 5%. It is the main reason to worry because it is the lowest growth in the past ten years. However, on May 1, 2013, it changed it’s forecasted to 5.8 % for this current fiscal year. As the global economy is going through a stagnant growth phase, it is also affecting the Indian economy.

Indian IT, Manufacturing and Service sectors benefited a lot from globalization. Agricultural sector is the largest job producing sector for the people in the country. When other sectors achieved double-digit growth, but the agriculture sector is just growing at an average of 3.4 % from 2004."Slow agricultural growth is a concern for policymakers as some two-thirds of India’s people depend on rural employment for a living… Farmers' access to markets is hampered by poor roads, rudimentary market infrastructure, and excessive regulation." The above were said by World Bank in a report about India. When there is a need for huge investment into the agriculture sector, but the Prime Minister Manmohan Singh asking people to move out of agriculture to other the non-agricultural sectors (1). This is just an example how our governments neglected and neglecting the dominant sector of the country.

GDP (Gross Domestic Product) is a measure of country’s production or income. In a simple manner, it is the sum of incomes all people living in a country. When GDP growth declines mean total production of all sectors in the country is also decreasing. When production declines, it will result in job loss across sectors.

By 2020, the average age of an Indian will be 29. The number of young people entering the workforce is growing every year. In the recent 2013-14 union government budget, it was mentioned that the government planned to provide training for 90 lakhs people this year to improve their skill. Coming years will tell how many people got trained, and how many were benefited from the program.

From the history, it is a well-known fact that investors reluctant to invest when a growth rate reduces. The current government policies benefited a few big capitalists rather than small industrialists. Already many Indian and foreign companies wanted to modify our labour's laws to suit them. It is said that around 200 laws were in place to protect the interest of the workers in india. Even after having laws, workers are not getting their due wages in many parts of the country. Government may utilize this opportunity of slow growth rate, to allow many foreign players, provides more benefits to them and there is a possibility that there may be a change in labour laws to suit them.

The worst thing the government can do to the country is keeping the young people unemployed. It seems governments do not want to encourage the major employable sector in the country, i.e. agriculture.Congress led UPA government want to project growth as its success in the past ten years to gain votes. However, the truth is neither growth nor success stories happening in India. Growth declines , unemployment among youth , drought situation creating fear among us that Indian economy may go to 1991 situation.

Friday, November 16, 2012

Truth about NASA's image of India on Diwali





Indians around the world celebrate Diwali by lighting lamps, and firecrackers as part of celebration. But in Facebook, Many people shared a colorful picture of India on Diwali, which was taken from space by NASA. In the picture, Indian subcontinent was looking bright and colorful compared to other parts of the world. While seeing the picture many were assumed that the brightness was due to firing of crackers on that night.


Actually, the picture was brightened to highlight the concentration of population in the cities in Indian subcontinent. Brightness was not due to the burning crackers. The extra light produced by crackers is low, and it is barely visible when observed from space.


It can be explained by another example. When we travel on a flight, we could see a street light of the city on a night only when the flight nearing an airport.


Below is the true description of the image.


In 2012, it began on November 11. On November 12, 2012, the Visible Infrared Imaging Radiometer Suite (VIIRS) on the Suomi NPP satellite captured this nighttime view of southern Asia. The image is based on data collected by the VIIRS “day-night band,” which detects light in a range of wavelengths from green to near-infrared. The image has been brightened to make the city lights easier to distinguish. Most of the bright areas are cities and towns in India as India is home to more than 1.2 billion people and has 30 cities with populations over 1 million. Cities in Bangladesh, Nepal, and Pakistan are also visible at the edges of the image. That image, based on data from the Operational Linescan System flown on U.S. Defense Meteorological Satellite Program (DMSP) satellites, is a color-composite created in 2003 by NOAA scientist Chris Elvidge to highlight population growth over time. In that image, white areas show city lights that were visible prior to 1992, while blue, green, and red shades indicate city lights that became visible in 1992, 1998, and 2003 respectively.


Source : http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=79682

Friday, May 18, 2012

The Musalman - Preservation of a Dream

The 'Musalman' is probably the last handwritten newspaper in the world. It has been published and read every day in South India's Chennai since 1927 in almost the same form. In the shadow of the Wallajah Mosque in Chennai, a team of six die hard workers still put out this hand-penned paper. Four of them are katibs -- writers dedicated to the ancient art of Urdu calligraphy. It's tough for the die-hard artists of Urdu calligraphy. But the story we tell here is not just of their desperation and despair. The fact is, at the office of 'The Musalman', the oldest Urdu daily in India, no one has ever quit. They work till they pass on. This is the story we tell.