IITs & IIMs Everywhere….. Is this a Right Move?

News: HRD minister Arjun Singh announced that 8 new IITs and 7 new IIMs will be established in India very soon.

Arjun Singh’s Logic: If 7 IITs and 7 IIMs can have such a big impact, then why not we have 7 more for each?

My View: Why not we have 70 or 700 more for each? Soon, there will be enough IITs and IIMs that we will not need any other engineering colleges or MBA programs. Every student will go to an IIT and then to an IIM. After completing MBA from IIM all students will start with a salary package of 100 lakh Rs per annum. Will not that be better Mr. Arjun Singh?

Once upon a time I saw on one news channel a state chief minister telling the public that his state will have an IT park in every street of every town. It was an imagery statement by a politician for the sake of pleasing his vote bank. Announcement about new IITs and IIMs by human resources minister is also same kind of statement. I was perhaps humored by the government’s decision to extend (Please read ‘dilute’) IIT and IIM brand as never done before by any government in Indian history.

The keyword here is brand dilution. Perhaps it is the dilution of brand through its overuse.

Brand IIT was a dream that started in 1951 with IIT Kharagpur will soon be killed by the stupid politicians who by mistake consider themselves the saviour of India. The man who has a dowry case filed against him by his daughter-in-law, the man who was once accused of running a fake lottery, has decided the fate of Indian technical education. With this increasing number of IITs and IIMs brand IIT & IIM will be diluted to a point where we will end up average mind studying in IITs and IIMs.

The icing on the cake is that new IITs and IIMs will come up in backward areas and end up taking many more years to become tall institutions than necessary. True, we set up IITs & IIMs in locations like Kharagpur and Khojikhode. But that was a different era. Today it will be difficult to attract good talent and faculty in these backward areas.

If practical aspects are ignored, the new IITs and IIMs will definitely suffer. And that is not good news for anyone.

As far as I think primary education is the most fundamental building block for any education system and if this is not strong you can imagine what will happen to the building that we are going to create above that.

Should not government work towards raising the standards of government funded schools first?

Should not government stop establishing new IITs and IIMs and give enough funds to these schools first?

Should not these schools also have the same education system as DPS and Bombay Scottish?

If we will start having students from government funded schools getting selected in IITs and IIMs then only I think it will be a right time to establish new IITs and IIMs. Then only we can insure that we are having a fair education system and justice for all the classes of Indian society.

Impact of US Recession on Indian Economy

I have seen that forecasts are being made about the recession in the US and therefore slowdown in India. Some reports even said that India is in the middle of a slowdown now. I wonder why such an exaggerated view?

There is a definitely a slowdown in the US economy. I am not sure this has turned into a recession yet.

Emerging economies (BRIC economies, Ukraine, Turkey, Argentina, and Chile etc.) are now contributing for a very large proportion of global growth. India, China and Russia alone contributed over 30% of the growth in the global economy in 2007. This is totally different from the late 1990s when the US economy had a central role in global growth. In fact the weight of the US economy in the entire global economy has been declining since 2001. At the same time the weight of the BRIC economies (Brazil, Russia, China and India) has been rising steadily.

In 1999 the US economy represented 30.91% of world GDP, and in 2007 this percentage is down to 22.4%. In 2000 the US economy accounted for an impressive 40.71% of global growth, and in 2007 this share is down to 6.43%. So there are obvious reasons for thinking that this time round the impact of any US recession will not be as acutely felt in some parts of the world.

The fact that the rupee has risen considerably is in itself an expression of the confidence levels imposed in India by foreign investors.

Interdependencies between the US economy and emerging economies like India and China has reduced considerably over the last decade. Thus, the effect may not be as drastic as would have been the case in late 1990s.

Some specific sectors like IT Enabled Services sector, Tourism sector etc may be a hit. Also due to appreciation in rupee exporters are pushing government to intervene and rate cut. But what is being forgotten is the fact that stronger rupee will cut the import bill.

If things don’t get worse than already predicted in the US housing markets, the world economy will only show a modest slow down in 2008. It follows then that India should still show substantial growth and there should still be bullish trends (a little moderated and realistic) in our stock markets.

In summary, at the macro-level, a recession in the US may bring down GDP growth, but not by much. At the micro-level, specific sectors could be affected.

For US firms, who have long looked at China as a better investment destination, this may be a good time to look at India as well. After all, 350 million people with purchasing power cannot be ignored. This is not a sales pitch for India, but only a gentle suggestion to US corporations.