Analysis

Here we go again. Indian Human Resource Development Minister Kapil Sibal has "launched" a $35 computer, evidently his "dream project".

The touch-screen, Linux-based device looks iPad inspired, but we know little about how it works. It emerged from a student project with a bill of material adding up to $47, a price that the minister wants to bring down to $10 "to take forward inclusive education". It promises browser and PDF reader, wi-fi, 2GB memory, USB, Open Office, and multimedia content viewers and interfaces.

Will it die a quick death within this year, or a painful, government-funded one over the next two? I fear the latter. Project Sakshat even has a busy website so it looks like a project well under way.

The Rs 10,000 PC. The Simputer. The $100 MIT laptop. NetPCs from a host of companies. India's so-called $10 laptop. How many flops and failures will it take to convince governments (and brave but misled companies) to get these facts of tech, products, and life?

You don't launch products until you have a product to launch. Else it's vaporware. The Indian government is building up a good track record of vaporware, from $10 laptops upward. (Apple launches with a million units ready to sell, and midnight queues outside.)

You don't show prototypes unless they are working ones with running apps, backed by a clear game plan to build up a vendor and apps network, and a clear design, spec (and preferably bill of materials).

It isn't about the hardware. It's the application and the apps ecosystem. What will it be used for, and who will make those apps? Where's the developer community and the roadmap for hundreds of apps, as Apple had when it launched the iPhone and the iPad?

Product design isn't one-off. It's an ongoing process, with software updates, improvements, upgrades, and most of all, growing apps support. You can make a working laptop, but it's no trivial task maintaining it through the life-cycle of the product, ensuring support, firmware and hardware upgrades, and new versions.

Replicating the Nano story is no joke. It takes years, expertise, innovation, hard work and lots of luck (and many patents, as with the Nano) to launch a product at one-tenth the current market price. I don't know of any examples of such overnight miracles (the Nano arrived after years of work, at about half of the current entry-level product's price tag.)

You don't re-invent the wheel. We already have $35 computing devices. We call them mobile phones. They're capable, connected, always-on, personal, and every second Indian has one. They're an ideal front-end to information and entertainment, served over voice or SMS or data.

Over the years I've been less blunt about cheap-PC efforts. But now I am angry. The government is wasting its efforts and my tax money, and making a laughing stock of Indian technological prowess.

It isn't the government's job to create and sell cheap PCs. If it wants to use ICT for development and education, it can use some of our tax rupees to build the ecosystem. Create compelling G2C (government to citizen) apps. Shift to education delivered over networks, make e-tax filings mandatory, create citizen services delivered over the internet.

And ramp up tech usage in the government: ensure employees have broadband at home, with reasons to use it—intranets and work-from-home—as well as mobile data and apps. Oh, and it can use the funds and roadmap of the Sakshat project to fund content development for $35 mobile phones—of which there must be 100 million in India.

This isn't the first "cheap laptop" effort. MIT's $100 laptop hasn't taken off yet, though it's at the $200 level and has a roadmap—including options to fund a subsidy. And maybe Sakshat 2.0 is not a hoax, unlike its predecessor. Yes, you can reach any price with sufficient subsidy. But that is no enduring solution. It may make more sense for India to negotiate a rock-bottom price for 10 million of last year's laptops, and subsidize them down to $35.

Prasanto Kumar Roy, 43, is a noted technology journalist and analyst. He is Chief Editor of Cybermedia's infotech and telecom publications and CIOL.com, a tech portal.  An alumnus of St. Stephen's College, Delhi, he is deeply interested in mobile technology, and is a keen evangelist and writer on green tech. He travels widely and lectures on technology and media issues.

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Visiting us during her vacations, Manjari, my teenage niece, asked me if I would help her with a summer project. I agreed. It involved the study of coins. The curious kid wanted to know what a one-paisa coin looked like. Her next question: "What can one paisa buy?"

We were amused as to why a teacher would give a 'one paisa' project when the cheapest toffee costs 50 paisa, or around one cent. Manjari's search into the shape, size, and metallic content of one paisa coin landed her at the Reserve Bank of India's (RBI's) monetary museum. She learnt that over a period of time, the cost-benefit considerations led to a gradual discontinuance of 1, 2 and 3 paisa coins in 1970s.

Then came a discovery of sorts. There was something that was worth a paisa -- offered by the burgeoning, yet highly competitive, Indian telecom industry. For just one paisa, one can talk to someone in the farthest corner of India for one second, or send an SMS of 160 characters to any one of the 600 million mobile phone users in India. Not only that, one can extract more from the service provider if the bill plan is well chosen. Of course, it also depends on the desperation of the service provider to acquire and retain a customer.

The Indian telecom industry, the world's fastest growing, must be credited with applying all the marketing tricks ranging from product or service sampling, marginal costing, happy hours, family and friends packs among others to hook the customer.

This explains the offer for sending 15,000 SMSs for Rs.99 (around $2) a month -- a cool 3 SMSs for 2 paise. Or for just Rs.299 (around $6.5) to call 65 hours, or full-hour of talking with your mother for under Rs.5 (11 cents). If your circle of friends extends nationally, at Rs.599 ($13.3) per month plan you can talk for 65 hours, packing in 60 minutes of calling for a little over Rs.9 ($2).

For the service provider there is little money to be made in the local or long-distance calls from an individual subscriber. However, money is made from value added services -- ranging from ring tones and astrology, music downloads and jokes, stock alerts to cricket scores, international calls and data services. It is estimated that there are at least 100 different services that add up to plum value added services. There is hardly a subscriber who has not subscribed to a service or two at a minimum of Rs.15 (33 cents) per month.

If you include data services like browsing the web to send email, downloading music or streaming video to watch TV, the billing potential for the mobile companies is huge and is likely to grow manifold in the third generation (3G) regime. By subscribing to data packages on a mobile phone the subscriber can navigate unknown routes or even make international calls for a song.

While all 600 million Indian mobile subscribers don't own a handset that supports data services, it is only a matter of time when some of the cheaper "copycat" look-alike handsets -- as market researcher, IDC calls them -- will be within every mobile user's reach for as little as one-tenth the average price of a smart phone.

Industry analysts expect that a number of service providers could be offering mobile voice over internet protocol (VoIP) services to offer cheap international calls. Right now making international calls is not only expensive it also needs activation, often for a fee and a fat security deposit. Once the mobile VoIP services are available, the call rates could drop from the current Rs.6.40 (14 cents) per minute at the lower band to as low as Re.1-Rs.2 (2-4 cents) per minute.

Already a few options like the iTel Mobile Dialer Express available in the market allow a phone subscriber to make VoIP call from the mobile phone. With the mass deployment of Wi-Fi networks in many countries and the introduction of cheap GPRS service, calling from mobile set using VoIP technology is getting popular.

The telecom tariffs in India, among the lowest in the world, have silently been making a visible difference at the sociological level -- you see it in a bus, train or plane. At another level there are mobile air space consumers who are busy converting phone calls from a primarily day time activity to a 24/7 activity.

With a variety of cheap night-time calling packages on offer, it is not uncommon for friends to call each other late into night and for much longer durations. With value offerings targeted in the non-peak hours, the service providers have been able to make inroads into the sleeping hours of young student community successfully.

The time is not far when the mobile revolution will embrace the remaining half of the country -- at a steady rate of adding 20 million new mobile connections every month -- in less than three years. The economies of scale will hopefully extract the India demographic advantage for many more seconds at the cost of a single paisa.

Sanjit Chatterjee is Director Global Marketing and Strategy for Singapore-based mobile VoIPsolution provider REVE Systems. REVE Systems' iTel Mobile Dialer has been named product of the year 2009 by Internet Telephony.

Over the last 10 years, Chatterjee has seen the telecom industry grow in various dimensions while working with Net4India, Indiatimes and FlyTxt.

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India’s policy response to the economic downturn has been very swift with the Reseve Bank of India (RBI) cutting the repo rate by 425 bps in a span of six months and the cash reserve ratio (CRR) by 400 bps in just three months.

With the economic recovery gaining ground, despite rising inflation, the RBI went slow on withdrawing accommodative policy. It was a calibrated move, given the risk of snapping growth which was in a nascent stage.

However, with robust pick-up in consumption demand, recovery in private capex gaining momentum, early signs of improvement in credit growth and inflation becoming more broad-based than merely led by drought-impacted rise in food prices, it is time to move away from excessively accommodative monetary policy towards a neutral policy regime.

Along with the economy going through its second highest inflation phase in the decade, the RBI also faces the challenge of managing the highest ever net annual government borrowing programme in a smooth and non-disruptive manner.

Corporate and consumer credit off-take is likely to gain momentum due to improving consumer and business confidence. Further, higher oil price will increase under-recoveries of down-stream oil companies and increase credit demand from this sector.

Given such a scenario, higher government borrowing programme may have a crowding-out effect on private sector credit and thereby significantly impact interest rates in short-to-medium term. All these factors will have a significant bearing on RBI’s Monetary Policy over the next one year.

We expect RBI to display optimism on economic growth and set its FY11 GDP growth projection at 8.25% with an upward bias even though concerns on core inflation are likely to be elevated due to surge in global commodity prices, strong domestic demand and supply constraints.

The RBI’s surprise rate hike in the month of March 2010 clearly flagged its concern over rising broad-based inflation expectation. Policymakers' continued thrust on driving consumption through stimulus has put consumption drivers in top gear.

However, despite low interest rate regime due to aftermath of global financial crisis capex growth has been lacklustre. We expect capex to pick up aggressively in the next 12-18 months which will further propel credit growth. However, in the interim, surging manufacturing inflation remains a key risk.

Despite RBI being behind the curve in rate normalization till now, we expect acceleration in rate hike going forward, which will play a crucial role in shaping outlook for near-term economic growth. We expect RBI to hike the repo and reverse repo rates by 50 bps in either its scheduled policy meet on April 20, 2010 or soon thereafter.

On an average, Rs 12000 crore of g-sec auction is planned every week. So, RBI is unlikely to aggressively absorb excess liquidity from the system which is currently to the tune of Rs.50,000 crore.

Over the course of next one year, we are likely to see repo rate, reverse repo rate and CRR rising by 100 bps each. In our views, managing government borrowing programme is not a staggering task, albeit at an elevated cost.

It is going to be a defining moment for the RBI to manage the growth and inflation tussle simultaneously without impacting the other but, in my view, this time the focus should be on inflation rather than growth because it is cause of concern that we see signs of higher inflation at such an early stage of the uptrend in the business cycle.

Vikram Kotak is the Chief Investment Officer, Birla Sun Life Insurance (BSLI) since July 2007. He is a qualified Chartered Accountant and has experience of more than 13 yers in debt and equity markets, corporate finance and research.

He is a member of the Working Group Committee on Investments formed by the Insurance Regulatory and Development Authority (IRDA).

Before joining BSLI, Mr. Kotak was with Techno Group as President, Equity Business, for two years. Prior to that, he was Head – Fixed Income Business with Birla Sun Life Securities Limited (BSSL).

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Nandini Sahai

I have chosen to discuss Media and Democracy in South Asia, for the simple reason that in the last one year or so all the countries in the region have gone in for elections and are now democratic countries.

The mass media constitute the backbone of democracy. The media supply the political information that voters base their decisions on. They identify problems in our society and serve as a medium for deliberation. They are also the watchdogs that we rely on for uncovering errors and wrongdoings by those who have power.

It is therefore reasonable to require that the media perform to certain standards with respect to these functions, and our democratic society rests on the assumption that they do.

The state of media in South Asian countries in 2009 was as varied as diverse the countries of the region are. With almost 100 TV channels in India, dozens in Pakistan, Bangladesh, Sri Lanka and Nepal, South Asia has entered the electronic and digital multimedia stage in an unprecedented way.

Never in history has the growth in media been so mismatched with the archaic and obstructive legal, traditional and administrative structures at such a scale and with such intensity. At a nerve breaking speed, the information revolution is demolishing all hurdles and restrictions that come in its way.

Also in many South Asian countries, the judiciary has failed democracy. One of the major flaws in the judiciary is the delay in its legal System. In South Asia, more than two million cases are pending in 18 High Courts alone and more than 200,000 cases are pending in the Supreme Court for admission, interim reliefs or final hearing.

If you will look into The Guinness Book of Records you will perhaps find an entry, which says that the most protracted law suit ever, recorded was in India. A "mahant", who is a keeper of a temple, filed a suit in Pune in 1205 AD and the case was decided in 1966 –(761) years later! However, this is not the average time taken by the Indian courts for deciding cases. Normally, it takes between 5 and 15 years for a case to be decided in an Indian court. But this time is long enough to break anyone’s belief in the judicial system and democracy.

Democracy can only function when the state does not get involved in any judicial proceedings, just to save those whom it has favoured previously. It is up to the courts to give justice to the people or it would be sooner rather than later that the people start to lose trust in the judicial system. In fact, it is the duty of the state to ensure that judicial proceedings are free , fair, impartial and peaceful.

The people in South Asian countries may have lost trust and faith in judiciary and law system, but do they have trust in the police? Sadly speaking the answer is "NO" specially in the Indian context. Indian police discriminate against people on the basis of caste and financial status and consider themselves above the law, undermining the country’s democratic ideals, a leading human rights group said.

Police also stood accused of illegally detaining crime suspects, torturing them and even carrying out extra judicial killings in custody with impunity. The reports collated from interviews with about 80 policemen of various ranks and victims of police atrocities said several officers admitted in private that suspects were often tortured and beaten to extract confessions

Policemen charged at economist Professor Anu Muhammd with truncheons as he fell on the road during a police attack on a peaceful procession of the national committee to protect oil, gas, mineral resources, power and port, which was marching to lay siege to the Petrobangla head office in Dhaka.

Both legs of Anu Muhammad, also a professor of economics at Jahangirnagar University, were badly fractured in the police attack. He and other injured were taken to Dhaka Medical College Hospital and most of them were released after first aid. Professor Anu Muhammad was shifted to Square Hospital from DMCH.

Journalists trying to visit Anu Muhammad at Square Hospital were refused permission to see him. When contacted, the hospital management said it might have been done on the advice of the attending doctors.

South Asia is in the grip of multifaceted crises extenuated by the poor quality of governance and its inability to grapple with the challenges of population explosion, poverty, deprivation, social exclusion, rapid urbanization, and environmental degradation caused by the very forces of development.

The symptoms of this multifaceted crisis are seen in the rise of political and social violence, militarization of society, pervasive political graft and corruption, youth alienation, and, indeed, the undoing of democracy itself with the peaceful overthrow of an elected Government by the military establishment for mal-governance.

With a population of 1.3 billion or around 22% of the world population, the challenge to governance in South Asia is immense. The task ahead is made more complex by the regional diversity borne out of its multi-racial , multi-religious, multi-linguistic and multi-cultural composition.

Furthermore, around 550 million or about 45% of the world’s poor people are to be found in South Asia and have yet to fully enjoy the fruits of democracy and development. The poor are either out of the mainstream of development as chronically marginalized people or face hardships on account of anti-poor policies, priorities and institutions.

The lack of democratic participation and its relation to poverty in South Asia can be seen in terms of ineffective political parties, local governments, national parliaments, civil society and civil service. In addition, the lack of dynamic and visionary political, bureaucratic and business leadership also serve to retard the extent of democratic participation in South Asia, strengthening the involvement of provincial councils in energy.

Most South Asian countries are following independence from British rule and, in the case of Nepal, liberation from the autocracy of one family group in 1950. They have enjoyed democratic systems of governance at some time or the other, often for extended periods of time. Electoral processes have, however, been found wanting to some extent in all these countries.

We have to understand the electoral processes as they are actually operated in South Asia to discover the reasons for the flaws in these systems and the degrees of success or failure in attempts at reforms Manipulation of elections by government and electoral malpractices are of critical concern in all South Asian countries.

South Asia is home to 1.5 billion people, who together comrpise one-fifth of all humanity. One-fifth of the population in South Asia is between the ages of 15 and 24. This is the largest number of young people ever to transition into adulthood, both in South Asia and in the world as a whole.

The prevailing conditions of political and economic insecurity, and the need to address them in a collective manner, are compelling reasons to forge a strong South Asian community capable of acting locally and regionally.

A step towards this happened in New Delhi late last year. Youth representatives (18 - 30 years) from India, Bangladesh, Nepal, Pakistan, Afghanistan, Sri Lanka, Bhutan and Maldives gathered in the capital to deliberate on various issues confronting their region as part of the South Asia Youth Summit 2008 (SAYS '08) on November 24 and 25, 2008.

The summit brought together nearly 100 delegates comprising youth representatives from the fields of Media, Politics, Arts, Law and Business from across South Asia to create a space for a liberal dialogue on common public policy issues faced by South Asian countries.

The culmination of the two-day summit took place at India Gate where participants formed a youth chain and lit candles in solidarity with each other to fight against terrorism and spread the message of peace. And there began the "drafting of a new South Asia."

The nations of South Asia are more alike than they are different. Cultures and languages spill across national borders, most of which were created in the colonial era.

As in many other parts of the world, the creation of new and "artificial" national identities has been the source of much conflict and violent upheaval. This complex struggle continues to shape South Asia's political and economic landscape.

South Asian economies are a mixture of poverty and plenty, with advanced and productive economies couped with persistent poverty.

The turbulent past 60 years of South Asia have cost the region dearly. The prospects of a region, which could have been a leading geo-political entity in a multi-polar world, were dampened.

Therefore, it is high time new solutions and right directions are sought, especially with the help of the youth of the region. It is they who can effectively make an impact with their contributions, thus leading to the formation of a peaceful democratic South Asia.

The media has a crucial role in not only strengthening democratic processes in each of the countries in the region, but also in fostering greater cooperation and understanding among them. They can create the demand for change and ensure that the process is implemented in the best possible manner. The vast resources that many media organisations in the region today have and the fact that technology has removed most constraints of distance and time give the media houses and individual journalists a unique opportunity to play the role that audiences trust them to perform.

Nandini Sahai is a distinguished development journalist who has used journalism as a powerful tool for social development.

She is currently the Director of The International Centre, Goa. She is the guiding spirit behind the Media Information and Communication Centre of India (MICCI), a non-profit organisation created by leading academicians, journalists and social activists, which has worked on projects in areas such as Right to Information, Women in Media, Community Radio, Media and Social Development, Media and Disaster Management, Rural Journalism, Broadcast Bill and Youth and Media.

Before forming MICCI, she was the Country Manager of AMIC-India, a subsidiary of AMIC (Asian Media and Information Centre), a Singapore-based International NGO working in media related issues.

She is one of the leading Right to Information (RTI) advocates and has been closely associated with Aruna Roy, a Magsaysay Award winner in creating awareness among people about their rights. She has also worked with International Rehabilitation Council for Torture Victims (IRCT).

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Millions of us woke up on Sunday (November 29) morning with front-page headlines that screamed "Online birth pangs dog CAT", "CAT's e-debacle leaves students foxed", and so on. But what was a matter of clever wordplay for newspapers spells uncertainty and unwarranted anxiety for 240,000 IIM aspirants and their parents.

As for the Indian Institutes of Management (IIMs) experimenting with the online entrance exam and Prometric, the company handling this system of testing , it is a time of big crisis. The stakes involved for all the stakeholders are too high. They involve the future of the IIM admission seekers, the image of haloed IIMs and, most importantly, the future of e-governance in the country.

It's no easy task launching a mega computer-based testing operation of this scale that involves training, equipping and coordinating activities among a large number of dispersed players. A number of biometric and security devices built into the test system adds another layer of complexity. The risk of pranksters trying to sneak into the servers or infect them with viruses is equally real.

A variety of suggestions have been pouring in from academics, technical experts and test preparation companies. These range from extending pilot phase to building in redundancies in the computer systems to allow logging in by tens of thousands of aspirants simultaneously.

Some experts have blamed the current crisis on a complacent vendor with a failure record quoting examples of how the UK government body ended its five-year multi-million dollar contract with ETS, the parent company of Prometric, following serious troubles with the administration and marking of tests. The issue rocked the British parliament and continued to consume headlines day in and day out all through July and Augst 2008.

However, even as the directors of IIMs and the technical teams from Prometric work towards stabilizing the system, they also need to step up their communication with candidates. They need to issue statements, assuring candidates that they would find ways to accommodate all those who missed their tests.

Finally, instead of belittling the new system, it is in every one's interest to let this new model succeed because a mega initiative like this has lessons not only for the IIMs but for the entire education system. If it succeeds, it could possibly lead to a transparent e-governance system emerging in the education system.

The decision of the IIMs to move from the traditional three-decade old paper and pencil method of selection of candidates for 3,000-odd seats to the computer-based method is revolutionary in more ways than one and it is important to give it a fair try.

The online Common Admission Test (CAT) exam is the first baby step in application of IT beyond the private sector that will help overcome the oft-quoted risk of impersonation at the entrance exams and enable transparency. It will also help build a database of applicants, over years, and correlate the performance levels of successful applicants and their actual performance at IIMs.

The average Indian has benefited from e-governance initiatives that have brought some semblance of order to the earlier chaos. Two most successful examples that touch the lives of every Indian include the replacement of the old ballot system by electronic voting machines in elections. The second national success story is the railway reservation system adopted over two decades ago. The system has seamlessly moved on to internet-based booking of tickets over a period of time.

But can we say that these two high impact systems are with absolutely zero defect? Perhaps, no. Because there are occasional failures, system breakdowns and outages due to a variety of reasons that render them dysfunctional for a few moments to a few hours.

The education system needs a full-fledged e-governance system that goes beyond handling online admissions, generating fee bills to recording attendance and posting results. The country needs to graduate to a seamless system of education that offers relevant and most up-to-date content and allows mobility of students across streams, across colleges and above all inclusion of those who have no access to education. We need to look ahead, and seek ways to building linkages with the unique identity systems being launched by the government under Nandan Nilekani.

The author is a Strategic Communications and PR Counsel for the services industry. He was until recently the Group Executive Vice-President for the NIIT Group. In this role, he was brand custodian for NIIT for nearly 20 years. An alumnus of the Faculty of Management Studies, University of Delhi, he writes occasionally on issues of national importance.

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(The following are excerpts from a speech on Affordable Land and Housing delivered by Mr Deepak S Parekh, Executive Chairman, HDFC, at the Habitat Business Forum in Delhi on July 7, 2009.)

India and China are going to be the economic torchbearers as the world slowly recuperates from arguably, the greatest financial crisis in the modern era.

Housing plays a pivotal role in the economy and its importance can be gauged from the fact that the global financial crisis had its roots in the US housing sector. The US had always been credited for its well developed, sophisticated housing finance market and perhaps no one envisaged the enormity and snowball effect of this crisis.

But when one looks back, certain fundamentals went completely awry. The crux of the mortgage crisis was that prudent lending norms had been disregarded, structured financial products had become so complex that few were able to understand the risks associated with these instruments, there were regulatory lapses and lastly, the greed factor led to excessive risk taking.

The collapse of several leading financial institutions had its repercussions across all financial markets and the total expected write downs on global exposures is now expected to be in the range of US $ 4 trillion.

The global financial system is strongly interlinked and this has debunked the decoupling theory. But the impact of the global financial crisis varies from country to country. In many western economies, the financial sector's largest exposures were in the housing and real estate sector, which is not the case with say, China or India. Both China and India continue to have low mortgage to GDP ratios at 11% and 7% respectively and the demand for housing continues to remain enormous in these rapidly growing nations.

Fortunately, the importance of housing has been recognised by the governments of both these countries.

The Chinese economy has benefited from the government's mega stimulus package of US$ 586 billion. In an effort to promote affordable housing for the urban poor, the Chinese government's stimulus plan includes a pledge to build 5.2 million low-rent homes over the next three years and subsidise housing for 7.5 million poor urban families. A total of US$ 59 billion is earmarked for affordable housing projects and US$ 54 billion on improving rural living standards.

Despite India being the second fastest growing economy, its Achilles' heel has always been the state of its infrastructure and the acute shortage of housing. To the discerning eye of a visitor to India, the rapid economic growth is not reflected in the quality of urban infrastructure or civic life.

India is urbanising at a pace that is higher than the world average. Its cities today are unable to cope with the burgeoning population. Projections indicate that by 2030, more than 40% of the country's population will be residing in urban areas compared to the present 28%.

Economic development and urbanisation are inextricably linked. Cities have created employment opportunities and are generators of wealth, with 55% of the country's GDP being contributed from cities. But as the housing stock is unable to keep pace with the demand, the result has been an environment of mushrooming unauthorised construction, congestion, proliferation of slums and degradation of the urban living experience. Adding to these woes is the severe shortage of basic amenities, with scores of citizens continuing to be without power, water and sanitation.

The Indian government recognises the challenges it faces on housing, particularly on account of the rising pace of urbanisation. While the government has initiated several measures and programmes to deal with these challenges, one has to appreciate that solutions are not easy given the huge shortage of housing in India. Again, there are large income disparities, which means that different solutions need to be sought for different income groups.

Take for instance the fiscal incentives offered by the government on a housing loan. This has helped scores of middle-class Indians to realise their dreams of owning a home. For example, if the interest rate on a housing loan is 9.25% p.a. and if one factors in the fiscal concessions of interest exemption of Rs. 1.5 million and the deduction of the principal component of Rs. 1 million, the effective rate of interest paid on a housing loan for a tax paying individual comes down to less than 4% p.a. This serves as a tremendous saving for the individual.

It is uplifting to hear President Pratibha Patil set the tone with an ambitious target of making India slum-free in the next five years. The ground reality is that there is an urgent need to take some hard decisions, but in my opinion it is not beyond the grasp of the new government.

The top priority of the government should be to ensure the reintroduction of the Land Acquisition Amendment Bill and the Rehabilitation and Resettlement Bill, despite the new political noises being made. SEZs have become a non-starter, road and airport projects have been hindered and industrial projects have been delayed due to land acquisition related issues.

The total urban land stock in India is only 2.3% of the country's total geographical area, but houses 30% of the country's population. At a policy level, there is a need to bring in additional urban lands on a regular basis. The process of land acquisition and conversion of agricultural lands for urban use also needs to be simplified.

The affordable housing agenda is extremely challenging, but solutions can be found through inter supportive public private arrangements. The private sector has to be incentivised to participate in this segment, while the government has to create the enabling environment. To that effect, the slum rehabilitation schemes have worked well - the developer provides the slum dwellers with permanent structures, typically a one- room tenement with an attached bathroom free of cost, while the developer benefits from the surplus land which can be used for commercial purposes. Going forward, it is imperative that the government rationalise stamp duties, review processes for master planning, provide for upward increases in FSI, which is commensurate with investment in infrastructure and encourage more in-situ development.

State housing boards can also play an important role. One can cite the recent success cases of state housing boards like the Maharashtra Housing and Area Development Authority (MHADA) or the Delhi Development Authority, which offered flats at prices that were within the common man's reach. The number of applications received for these homes is testimony of the immense demand.

Sometimes, however, state housing boards tend to shift their focus from providing housing to merely selling land for profit. The housing board either sits on these huge cash surpluses or the funds get passed on to the state government which, in turn, gets deployed in other areas, besides housing. It is imperative that such profits be ring-fenced and deployed for affordable housing only. Given the huge demand for homes built by state housing boards, they should ramp up their scale of operations and ensure that more affordable homes are built faster.

There is also merit in the Urban Development Ministry's proposed "reverse tendering" plan wherein state-owned land would be provided at a pre-determined price and expressions of interest would be invited from private developers for building homes at the lowest possible price. This would go a long way in providing housing to the middle and low-income groups, without the risks of speculation creeping in through artificially inflated land prices.

Personally, I am sceptical whether the present breed of developers will stay committed to the affordable housing segment. Certain top rung developers have already started increasing prices, especially in mid-income projects, following the recent pick up in sales. Besides, with liquidity no longer being a constraint, certain developers are seeking to once again increase their margins.

The real estate market had just begun correcting itself and it would be extremely unfortunate if developers were to increase home prices at this juncture. Over the longer term, I envisage that the affordable housing segment will belong to dedicated niche players. We already have a few such examples, but to increase scale, these players may need to be appropriately supported and incentivised.

A point that I have repeatedly raised is the compelling need to introduce a real estate regulator, whose role would be to oversee and monitor the affordable housing agenda, promote real estate reforms and act as a platform to protect buyers from real estate fraud.

Why should it be difficult for the government to insist that all flats be sold only on the basis of carpet area, which is the actual liveable space? Why is the idea of a real estate regulator, which can protect a homebuyer, be resisted at all? For instance, our regulators for various financial products and services are extremely vigilant in protecting customers, but in the case of buying a home, which is the single largest investment made by a person in his or her lifetime, there is no regulator or even an Ombudsman-type body to redress instances of real estate fraud. A real estate regulator will immensely help this sector.

Let me briefly turn to financing aspects. The demand for housing finance continues to remain immense and one is hopeful that the surplus liquidity within the system will provide scope for some softening of interest rates in the ensuing period.

India has prided itself on its robust financial system which largely remained insulated from the global financial meltdown. The central bank has been credited for its vigilance on the real estate market and for its pre-emptive measures such as increasing risk weights on commercial real estate loans and provisioning requirements to prevent the build-up of an asset bubble.

But given the dynamic and constantly changing environment, India cannot rest on its laurels. The time may be apposite for India to perhaps take a leaf from the European Commission's recent draft on "Responsible Lending Standards for Home Loans." It is important to recognise that responsible lending for home loans must aim at not only providing the initial access to housing through credit for borrowers, but must keep in mind the long-term objective, which is keeping borrowers in their homes. These standards set out mutual obligations on the part of borrowers, credit intermediaries, lenders and regulators.

It is of utmost importance for a lender to provide adequate, transparent and understandable information to prospective home borrowers. An information overload must also be avoided. A customer must be educated sufficiently on a home loan product, (more so if it is a complex structure) so as to enable him or her to make a well-informed decision. Asset quality should always be the overriding factor. Landing up with excessive non-performing loans may be a drag on the financial system, but de-housing unintentional defaulters on account of mis-selling as we have seen in the US, is a path that India can ill-afford to follow. These are lessons we must keep in mind.

Across all income segments, man's dreams and aspirations remain the same - that of striving for a better quality of life. I am optimistic to believe that housing finance solutions can be found. There is no reason to believe that commercial financial institutions cannot finance low-income borrowers.

For instance, as long as there is a verifiable income source and a clear title to the property, commercial institutions must play their role. At the very bottom of the income group, government support is vital. So through public and private support, I am optimistic to believe India can successfully "straddle the pyramid".

By straddling the pyramid, one means that different sets of housing solutions can be found for different income segments. India is fortunate to have a number of visionary policymakers, intellectuals and professionals who are all trying very hard to find the right solutions. While the 20th century was called the "age of urbanisation", the 21st century may well be termed as the "age of sustainable urbanisation."

(Mr Deepak S Parekh is the executive Chairman of HDFC. He is a Fellow of the Institute of Chartered Accountants (England & Wales). Mr. Parekh joined HDFC in a senior management position in 1978. He was inducted as a wholetime director of the Corporation in 1985 and was appointed Chairman in 1993. He is the chief executive officer of the Corporation.)

The following is the text of an article by Prime Minister Manmohan Singh on "The Vision of Emerging Powers--India" published in the compendium brought out by the G-8 nations on the eve of their Summit in Italy on July 9-10:

"As we near the end of the first decade of the 21st century, the challenges of global governance in an increasingly inter-connected and multi-polar world are truly formidable. Our institutions of global governance, centred on what may be called the UN system, were designed for the most part at the end of the Second World War and reflected the politico-economic realities of that age. The world was then dominantly bipolar, in the political and military sense, international trade and international capital flows were low, the developing countries were not economically important, indeed most of them were not even independent.

There has been a sea change since then. Bipolarity has given way to multi-polarity, the developing countries are not only sovereign states but some group of developing countries have gained in relative economic importance and this trend will only gain momentum. The world has also become much more interconnected through the expansion of trade in goods and services and expansion of financial flows generated by capital account liberalisation. Interconnection has in turn greatly increased problems of contagion and vulnerability especially through financial linkages.

Our established institutions of global governance have evolved to some extent in response to these changes, but much less than they should have and the pace of evolution is likely to remain well behind the rate at which the world is changing. The centre piece of the post-war global architecture is the United Nations, conceived originally as the Parliament of the nations with the Security Council at its apex. The size of the international parliament has of course expanded and while there is occasional cynicism about how effectively the General Assembly can reflect global opinion, and especially evolve workable solutions on key issues, there is no doubt that it serves a valuable purpose in giving voice to every country.

However, this is not the same thing as saying that we have a structure which is functionally efficient and capable of dealing with the complex challenges the world faces today. The Security Council has not changed at all and its present structure poses serious problems of legitimacy. The system of two-tiered membership, which gives a veto to the five permanent members i.e. the nations that emerged victorious after the Second World War, is clearly anachronistic. Germany and Japan, which have significantly larger economies than Britain and France, both permanent members, are excluded. China is the only developing country in the P-5 and it is there for historical reasons, not as a large and economically important developing country. It is obvious that if the system was being designed today it would be very different. However, while the problems have long been recognised, efforts to reform the system have made little headway.

The unworkability of the existing structures has led to greater reliance on plurilateral groupings. Some of these such as the G-7, later expanded to the G-8, are to be seen as a group of countries with common interest, not necessarily representative of the global community. The original rationale of the G-7 was the belief that it would evolve more effective consultation among the more powerful countries on one side of the bipolar world of the 1970s and 1980s. Its expansion to the G-8 reflects the disappearance of that particular faultline by the collapse of the Soviet Union. However, while the Group includes many of the economically powerful nations, it is obviously not representative as it does not include any developing country.

Some years ago the G-8 has been expanded into the G-8 + 5 by adding China, India, Brazil, Mexico and South Africa. More recently, the group has been expanded even further to include a handful of countries in the name of achieving additional outreach. While these ad hoc expansions are a useful way of broadening the range of consultation undertaken by the G-8, it suffers from two limitations. The expanded group is not cohesive since the countries included for purposes of outreach do not participate fully in the proceedings, or the preparations, and the expanded group therefore does not have a composite identity. Second, these groupings do not have any special legitimacy within the UN System.

The deficiencies of the existing system of governance have been dramatically brought home during the recent international financial and economic crisis. The crisis has highlighted the fact that all economies are now highly inter connected and problems originating in one part of the world economy can quickly snowball into a global crisis. It has forcefully exposed fundamental weaknesses in the approach to financial regulation which emphasised light regulation and greater reliance on inhouse controls and market discipline to control risk. This approach gained popularity in the 1990s and is now perceived to have been overdone. The issue has revealed the inadequacies in the existing domestic regulatory systems in the industrialised countries and also in the international institutions set up to police these areas and to take remedial action when needed.

Whatever the causes and specific failures underlying the crisis, the world was quick to realise that a global crisis requires a global solution. It was also realised that the existing institutions of global governance did not permit effective coordination of a global response. The world therefore responded not by working within the existing system, but by convening a meeting of the G-20 at the level of leaders. The G-20 was established in 1999 at the suggestion of Paul Martin of Canada and has a composition which is somewhat different from the IMFC which meets regularly at Finance Ministers level. The G-20 has been meeting at the level of Finance Ministers since 1999. Recognising the seriousness of the crisis, the United States convened a meeting of the leaders of the Group of 20 in Washington D.C. in November 2008. The Group met again in London in April 2009. Unlike the G-8+5, this group has a composite identity since all member countries participate on equal terms including in the preparatory process. However, the selection of countries remains arbitrary and can be questioned as to its representativeness, especially since it departs from the composition of the IMFC which reflects the representation on the Board of the IMF.

The G-20 meeting in London certainly achieved a great deal more than normal meetings of this type, especially in two respects. First, it succeeded in expanding the perimeter of financial regulation and endorsing the establishment of global standards to which national standards can be aligned. These standards will be developed by the Financial Stability Forum (now renamed the Financial Stability Board) which has been expanded to include all G-20 countries that were not members earlier. Second it achieved a significant expansion in funding for the Bretton Woods Institutions. However, it did not achieve any significant reform of the international financial institutions. The Group has decided to meet again in September and it remains to be seen whether it will be able to evolve some ideas for making significant reforms by then.

The problems faced by the institutions of governance charged with handling the financial system are also relevant for other international institutions dealing with political and security issues, trade, climate change, etc. They need to update structures and upgrade work methods; reform decision-making and ensure effective delivery. They need to adapt, adjust and accommodate to adequately reflect ground realities, contemporary aspirations, and pressing requirements of developing countries including emerging economies.

India, as the largest democracy in the world and an emerging economy that has achieved the ability to grow rapidly, remains deeply committed to multilateralism. It has been an active member in global institutions – the United Nations, Bretton Woods Institutions, World Trade Organization, International Atomic Energy Agency and so on. It will continue to be so in the decades ahead, based on commitment to principles and values that define these institutions. India will seek its due place, play its destined role and share its assigned responsibility, giving voice to the hopes and aspirations of a billion people in South Asia. It will continue to strive for the reform of the United Nations to make it more democratic; to fight against the scourge of terrorism and dismantling its infrastructures on the basis of zero tolerance; to fight piracy on the high seas; to restructure the Bretton Woods Institutions to create a new financial architecture; to achieve an early conclusion of the Doha Round of trade negotiations, with its development dimension, and to address climate change issues, guided by the principle of common but differentiated responsibility and respective capability.

India’s view of the world has always been guided by the wisdom of that ancient Indian saying – Vasudhaiva Kutumbakam – ‘the whole world is one family’. This idea found expression in Jawaharlal Nehru’s very first address as Prime Minister: "Those dreams are for India, but they are also for the world, for all the nations and peoples are too closely knit together today for any of them to imagine that it can live apart. Peace has been said to be indivisible; so is freedom, so is prosperity now and so also is disaster in this One World that can no longer be split into isolated fragments." That eternal message of the Indian people will guide us in our attempt to seek inclusive global solutions to intractable global problems, and give new hope to humanity."

NNN

Left ideology and thought played an important role in shaping the course of history in the 19th and 20th centuries. What is its relevance for India in the 21st century is a big question which is weighing heavily in the informed and enlightened public mind today.

The Lok Sabha elections being held in five phases from mid-April to mid-May will determine the Left parties' reach and rapport with the electorate to a limited extent. In fact, the Left policies have a much bigger role in the country's politics than their electoral strength and their limited presence in a few states.

The Left, in my opinion, should continue to remain relevant till poverty, inequality and disparity remain but if the present Left leadership, particularly of the Communist Party of India (Marxist) (CPM), sticks to its "fundamentalist" path its reach would become increasingly limited.

But what is it that prevents the Left-of- Centre parties from playing their rightful role in national politics? A mixed set of misplaced priorities, mistaken notion of their strength, superiority complex and a skewed understanding of the emerging middle class prevents them from assuming the role that is due to them.

Theoretically, the Left appears to be stuck on a late 19th and early 20th century Marxist-Leninist-Maoist understanding of the national and international forces. This is one reason for their failure to grow in the public esteem.

It will be futile here to point out that the Left missed a historic opportunity to occupy a space in the public mind when the CPM, under the influence of the Kerala group, did not allow former West Bengal Chief Minister Jyoti Basu to become the Prime Minister in 1996.

Not only that Jyoti Basu enjoyed credibility among the people but his expertise in managing a coalition would also have proved to the masses that the Left was a responsible player.

A five-year Jyoti Basu-led coalition government in New Delhi would have removed the stigma that non-Congress parties cannot provide a stable government.

Similarly, the CPM's stand on Lok Sabha Speaker Somnath Chatterjee has contributed to its discredit. There were differences on the Somnath issue among the Left parties but the CPM succeeded in stopping them from coming into open. This has once again alienated the Left from the middle class.

Today, the Third Front, which has been floated by the Left, is being seen as a desperate attempt to prevent the Congress from coming to power. At the same time, there is a popular belief that any Third Front government would not last its full term and would result in another mid-term election.

Though the Left has been claiming that it wants to have a non-Congress and non-BJP government at the Centre but in their anti-Congressism zeal they may be promoting the communal outfits and parties. By ensuring division of the secular vote, the Left may unwittingly be helping the BJP candidates in the ongoing general elections.

First and foremost, the present Left leadership conducts national politics from an anti-Congress stand and sees international politics through an anti-imperialist prism. Apart from this, the Left leaders also suffer from the notion of mistaken moralist strength.

After having remained in power in West Bengal for over three decades and alternatively in Kerala for couple of times, the Left parties are no more perceived as better than other bourgeois parties in public perception.

Shorn of high moral ground, which they used to occupy in public perception, the Left today is being seen as a party which wants political power at all costs without any responsibility.

The internal differences and conflicts among the various parties in the Left Front are yet another reason which militates against it. The role of ideology is increasingly diminishing in the Left's political strategy. The Left-supported trade union movement has reduced itself to a wage revision mechanism and has failed to evolve into a movement which promotes positive labour practices and also contributes to higher levels of productivity.

What is surprising is that fact that the Communist and Socialist parties have nothing in common but for the fact that the Left, like the Socialists, have started equating caste to class.

Like the Socialist parties which were oriented on caste lines, the Left parties too have hopped onto the caste bandwagon. But programmatic unity is elusive and there has been no honest attempt in the last few years to achieve unity among the Left parties and a broad understanding between the Left and Socialists.

What we find today is that one Socialist faction-JD (U) - is aligned with the BJP and the other JD (S) is with the Left. Other socialist parties like the RJD and SP are floating the fourth front.

Ideally, the Left and Socialist parties should have been contesting the Lok Sabha election jointly but it appears an ever elusive wish.

What to talk of the Left-Socialist convergence, even the Left is divided. The CPM and CPI could have taken an initiative to show the way. This would then open doors for wider unity of the left which would include the CPI (M-L) and Naxal outfits.

Unity of the Left forces would go a long way to prove the sincerity of purpose for the national cause. This is not possible in the near future as almost all Left leaders without exception lack a long term vision of the national politics.

The ongoing general elections are going to be a watershed in the national politics and the 15th Lok Sabha.

^{About the author: Dr Satish Misra is a Senior Fellow of the Observer Research Foundation. He has done his Ph.D. from Humboldt University, Berlin, in International Affairs. He has done MA (Western History) from Lucknow University. Before joining ORF he has worked with various English newspapers and magazines. He has produced documentaries for Doordarshan, the Ministry of External Affairs and the Government of Madhya Pradesh. He has to his credit some publications - India and GDR: Three Decades of Relations, India and Antarctic Treaty (Contribution), Indira Gandhi: A Profile in Courage (Contribution), Jalianwala Bagh Massacre and the Tribune (Contribution), Pragyan Varshiki Aveam Gyan Kosh (Hindi Micropedia) (Contribution), Gujarat: A Case Study of the Tyranny of Power (Contribution). At present, he is working on the annual review of Indian Politics (with main focus on Uttar Pradesh) and on monographs of different political parties.}

US President Barack Obama came to London with a mission. His primary goal was to ensure the participation of other countries in the US effort to pump money into the global economy. His intentions were announced beforehand during his frequent media interactions. There had also been protests from the EU, led by France and Germany, who had rightly asserted that the institution of robust regulations in the global financial system must precede any further efforts to sustain the old world financial order by injecting funds through bailouts and stimuli. However, in the end Obama had his way, aided to a large extent by the emerging economies led by the Asian giants. While India eagerly supported the American line, the Chinese clearly lacked original voice, enmeshed as they are in the ‘Made in America’ mire.

The pre-summit dinner witnessed ‘Obamaspeak’ that was followed by the complementary and supportive remarks of the Indian Prime Minister, a noted economist and a credible voice of the Third World. These initial views seemed omnipresent in the final communiqué that was circulated at the conclusion of the summit. While Dr Manmohan Singh’s suggestions on protectionism, regulation and surveillance, IMF reforms and credit flows were a part of the final G-20 declaration, even he would be the first to admit (as he did at a press conference later), these key aspects formed part of the Rhetoric or future promise, even as the US endeavour to ensure global participation in the bail out efforts and recapitalization of institutions formed the substance of the agreement.

The Committee of 20 has agreed to infuse capital into the IMF without any immediate reform in its constitution and operations. The current $250 billion at the disposal of IMF would be increased by $500 billion. Japan and EU have agreed to provide $100 billion of additional funds while China will contribute $40 billion. The IMF will also increase the amount available to each country by way of Special Drawing Rights (SDR) by $250 billion. This allows distressed economies to literally print additional currency and convert it to tradable notes in extreme circumstances. There is also a suggestion that IMF would deploy more effective surveillance; hopefully implying it will watch the West as closely as it does the developing world. However, in the absence of regulations and regulatory authority it remains to be seen if this surveillance would amount to much. The world was expecting a reform of the IMF to be initiated and an urgent change in its governance; these measures have been relegated to the list of future efforts and promises.

The other major disappointment was the lack of progress in instituting a global financial regulator. As a consolation the G-20 agreed to strengthen the Financial Stability Forum and enlarge its membership to include India, China and Brazil (and have rechristened it as the Financial Stability Board). Though it aspires to serve as a watchdog and advise national regulators on activities of individual companies/organizations, the lack of defined powers will clearly undermine its ability to serve the role of a global regulator that is so urgently needed.

President Obama had unequivocally sought the participation of EU, India and China (read funding from) on the rescue efforts through government bailouts. His intention to get commitments from these countries was thwarted by the French and German governments. British Premier, Gordon Brown, though stitched together a compromise that restated the $ 5 trillion stimulus already announced by countries along with the possibility of further bail-outs in future if needed. Though this aspect was meant to be at the core of any G-20 resolution, it remains unresolved primarily due to the ‘Regulation Versus Stimulus’ divide between the US and continental Europe.

The Indian position has also supported the need for regulation though the conviction of its position will be tested in the days ahead. India needs to integrate with the global financial systems in order to access capital that it urgently needs. It is important that India argue for the early establishment of a supra-regulator so that the global risks to its banks and institutions are minimized.

India and other countries have also agreed to participate in recapitalizing financial institutions on the belief and with the stated intention of reviving global credit flows and have also agreed to jointly agree to the treatment of ‘toxic assets’. In fact  treatment of ‘toxic asset’ in the declaration does not cut any new ground and the responsibility for the same still rests with local governments though a commonality in the mechanics is proposed. One of the great impediments for bank credit is the presence of these bad loans. Unless these bad loans are purged from the balance sheets it remains to be seen if banks could resume regular lending again and this important challenge still remains unaddressed.

President Obama made it clear at a post-summit press conference that his primary mandate is to serve the American citizens and this was evident in the discussion on protectionism and its articulation in the summit agreement. While the wordings have asked countries to desist from protectionist tendencies (trade barriers) till 2010 (12 months), there is skepticism as 17 nations have already breached trade practices since November last, when a similar agreement had been endorsed. The suggestion of this 12 month time-frame itself is suspect. Why should any time-frame be mentioned and why should not all trade at all time respect the WTO arrangements? Wouldn’t this special emphasis on a time period actually encourage countries such as the US to operate outside of the WTO claiming special circumstances? This summit will also strengthen Obama’s hand as he defends his position on the issue of executive salaries and bonuses at home. New rules and best practices agreed to by the G-20 crack down on the multi-million dollar cash bonuses doled out as reward for risky investment and trading calls.

In conclusion it would seem that the while the current crisis may see the end of the ‘Washington Consensus’, the overwhelming dominance of President Obama at the summit underscores that Washington would firmly remain the architect and the driver of the new world order through, and on the other side of, this crisis. The outcome of this summit can be summed up as ‘No Stimulus and No Regulation’ declaration, though with plenty of promises on both fronts.

The author is Vice-President-Development and Outreach at the Observer Research Foundation (ORF) in New Delhi. His area of expertise is Regulation/Policy, Corporate Communications and Media Studies. An electrical engineer by training, Mr Saran is a Masters in Media Studies from the London School of Economics. Frpm 1994 onwards he has had a rich and diverse experience in the Indian private sector and was actively engaged with regulators and policy-makers during the 1990s as India undertook economic reforms. Since October 2008, Mr Saran is developing and implementing the outreach and development programmes at ORF. His current projects are in the domain of "globalisation" and include studies on Islam, Radicalisation, Climate Change and the Global Financial Crisis. He continues to contribute in various fora on regulatory aspects and on the political economy. The views expressed in this article are his own.