14 TUESDAY, 1 OCTOBER 2019

NEW DELHI VIEWS

OUR VIEW MY VIEW | BARE TALK

MINT

Straws in the wind that call for

caution in financial markets
Current headwinds suggest that the next 14 months are unlikely to be a smooth ride for US stocks

and the CEO have been too dramatic the stock up so that their stock options
for the market to digest. However, the are in positive territory. Of course, there
market would do well not to ignore it. are also tax-related and behavioural
Not only that, another company reasons for the executive preference of
shelved its IPO and a third one that stock buybacks over paying out divi-
made its market debut recently saw its dends. Those are dated explanations.
stock price close below the IPO offer The more proximate and realistic expla-
price. These are important lead indica- nations are related to their own com-
tors for the broader market. As for pensation. In this endeavour, they have
V. ANANTHA NAGESWARAN actual leading indicators, David Rosen- been aided by America’s loose-for-long
is the dean of IFMR Graduate School of berg of Gluskin Sheff points out that monetary policy. Borrowing cheaply at
Business, Krea University the Organisation for Economic Co-op- low interest rates to buy shares has been
eration and Development (OECD) lead- the easiest financial engineering trick
ing indicator for the US peaked in April that companies have engaged in this

May this ban on onion

2018. The same for Europe peaked in cycle. Hence, despite such compelling
November 2017. reasons and inducements to continue

T
he old Chinese saying, “Be sure of Then, there are Q ratios and the engaging in stock buybacks, if execu-
what you want; you may get it,” cyclically adjusted price-earnings ratio tives are selling stocks, it must be the
has never been more apt for the attributed to economist Robert Shiller. case that they view business prospects

exports be the last Democratic Party in the US, and it is

perhaps true for financial market
investors too. Given that most of the
mainstream media on either side of the
The Q ratio is better known as the
Tobin’s Q. To oversimplify a little, it is
estimated as the ratio of the market
value of shares to the book value of
dimly, or that their stocks are over-
priced, or both.
America’s general government debt
has gone up from around 76% of gross
Atlantic has lined up on one side of the shares. According to Andrew Smithers, domestic product (GDP) in June 2009
“impeach Trump” proposition, it a well known market commentator in to around 100% of GDP as of June 2019,
The government’s clamp on exports may well contain the bulb’s price surge. But for a real should be tempting for true contrarians the UK, as a result of revised data on US according to data from the Bank for
to take the other side and buy on market non-financial companies that the Fed- International Settlements. According to
solution, we need to manage stocks better and rescue farmers from a boom-and-bust cycle dips. Several pieces of evidence, how- eral Reserve has made available on 20 a report published in Financial Times
ever, suggest that contrarians are better September 2019, the Q ratio suggests on 25 September (on.ft.com/2mAbvmC),
advised to pull in their haunches and that US non-financial stocks were over- the median government debt to GDP
watch from the sidelines. valued by 171% as of 25 September. Of ratio of a sample of 12 countries stood at

I
t took only a few weeks for onion prices, pen from season to season. Consider this year’s To start with, profit margins in course, by this measure, US non-finan- 70%, the highest since the middle of the
which began their ascent late August, to story. Onion prices in Maharashtra’s Lasal- American companies had peaked cial stocks were even more overvalued 19th century if one excludes war peri-
several years ago. They have been in September 1929 and in March 2000, ods. If low interest rates had spurred
top ₹80 per kilogram in some retail mar- gaon, the country’s largest wholesale market declining slowly since then. Two, the but that offers only small comfort. economic growth sharply, debt ratios
kets. An alarmed government did what it for the vegetable, crashed to ₹5 per kilogram in gap between the growth in operating Finally, stock selling by corporate would not have risen so much. In fact, in
often does. It banned onion exports and January, thanks partly to oversupply caused by profits declared by S&P 500 companies insiders in the US is at its highest in two the US, the economic expansion that
capped the stocks that traders are allowed increased acreage over the past five years. and the growth in measures of corpo- decades. This is so even as one adjusts began in June 2009 has been the weak-
to keep. Clamps on outbound shipment had Reeling under losses, many farmers opted for rate profit in National Income Accounts insider share sales for corporate stock est since World War II.
has widened considerably. It means option grants and tax-induced sales. As the Democratic Party prepares to
been imposed earlier, by way of a steep mini- other crops. Coupled with other factors, this that operating profits declared by com- Usually, US corporate executives do not thwart the re-election bid of US Presi-
mum export price of $850 per tonne, or about appears to have squeezed supply, and fears of a panies to their shareholders are works buy stocks when the market is cheap. dent Donald Trump, the bitterness and
₹60 per kilogram. The Centre’s effort to shortage were enough to push prices up. of fiction. The last time that the gap They buy when it is expensive. This may anger quotients in US politics and soci-
enhance domestic supply is understandable, An effective way out would be to intervene between the two was this wide was in appear counter-intuitive, but it makes ety look set to scale unprecedented
since this vegetable is a diet staple in India, not just on behalf of consumers, but also on the 1999-2000. What happened in 2000 to sense. When the market is naturally heights. Whatever the final denoue-
stock markets in America is easy to fig- cheap or when the company’s top line ment, the next 14 months are unlikely
especially for the poor. A spike in its price is side of farmers whenever they suffer a price ure out. Third, the company that gave and bottom line are growing healthily, it to be a smooth ride for US stocks, espe-
said to have unseated at least one state govern- crash. State agencies should buy onions in us the term “Community EBITDA” has does not need artificial props such as cially given other strong headwinds. For
ment in the past. Two decades ago, the Bharat- bulk, assuring them of better remuneration, had to postpone its initial public offer- corporate stock buybacks. When both investors, not just in the US but around
iya Janata Party lost power to the Congress and hold them in storage for release later in the ing (IPO) and its chief executive officer are struggling or when an individual the world, there is still time to exercise
party in Delhi in what was billed as “the onion year once market prices exceed the cost of pro- (CEO) has had to resign. The turn- stock and the stock market are fully caution and prudence.
around in the fortunes of this company priced, then executives need to pump These are the author’s personal views.
election”. That episode has not been forgotten. curement plus preservation. It is not as if our
But a ban on exports may not be the best way to policy tools don’t aim for this. But any price
keep a staple item affordable. It may offer tem- stabilization mechanism needs proper imple-
porary relief, but there are other ways to deal mentation if onion producers are to be rescued
with price volatility. from a cycle of gluts-and-scarcity that seems to
Rather than resort to arbitrary restrictions, have set in. This might require a revision of
better supply management could do an effec- various other policies that restrain farmers www.livemint.com New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Chandigarh*, Pune* Thursday, October 1, 2009 Vol.3 No.234 Rs. 3.00 24 PAGES
+ 4 PAGES MARKETS WATCH

tive job. There is some seasonality to the rate at from selling their crops freely, even domesti- LeT stays robust
TERROR:
after Mumbai attacks >6

which these edible bulbs sell. Typically, prices cally. For too long has the country expected EXCLUSIVE PARTNER
ECONOMY: How the poor monsoon
stoked food prices
WSJ: The myth of baby booms during
economic busts >19
>7
October: This is one of the
trend upwards as the annual monsoon season farmers to keep supply going without offering
SENSEX 17,126.84 Æ 273.93

What’s inside
NIFTY 5,083.95 Æ 77.10

DEAD END
DOLLAR Rs48.11 ®

MTN deal off, what

EURO Rs69.82 æ Re0.19 GOLD Rs15,620 Æ Rs95 OIL $66.73 Æ $1.94

UP, UP AND AWAY

The Sensex rose to a 16-month high,
its highest close since 21 May 2008.
peculiarly dangerous
ends. This is an in-between phase, after the them a good chance to maximize their income.
17200 17,126.84

months to speculate in
Air India pilots returned to work on Wednesday after the 17,142.52
government intervened to suspend incentive cuts. Sepa- 17100
rately, National Aviation Co. of India Ltd, which runs the
carrier, has managed to seal an insurance deal worth $8.9
billion for a premium of $24.23 million with a consortium
led by Anil Ambani’s Reliance General Insurance.
LEADING THE NEWS MONEY MATTERS
>P4 next for Bharti? 17000

16900

16800
16,868.46
Sensex

spring harvest of the rabi crop has thinned out, The current crisis may justify an export ban as
IMF has pared DIPP has termed as the HARIKRISHNA KATRAGADDA/MINT
its estimate of “last opportunity” a second South Africa rejects 16700
9.55am 30 Sep 3.30pm
bank losses, extension that government merger; big setback n Mittal could look at ways
Source: Bloomberg
of expanding in African

stocks. The others are July,

but says banks has given commodity
around the exchanges to fall in line to Sunil Mittal firm’s markets. Bharti may look at PARAS JAIN/MINT

world are still

likely to face additional
with the latest foreign in-
vestment guidelines. >P14
ambition of becoming
global telecom force
MTN’s competition in South
Africa Sensex tops
write-downs of $1.5 trillion
by the end of next year. >P17
***
Manas Chakravarty and
n The Indian company may
consider South-East Asia and 17,000; strong

but the kharif harvest is yet to hit the market. an emergency measure, but in general, the
*** Mobis Philipose say a cor- B Y S HAUVIK G HOSH West Asia for expansion. But
Loop Telecom risks losing
its licence to offer fixed and
rection may
be less pain-
[email protected]
·························
NEW DELHI
South-East Asian markets
are crowded and West Asia
debut for OIL
wireless services as DoT ful for the is expensive
has questioned its owner- markets this

T he second merger at-

tempt by Bharti Airtel Ltd n Bharti may seek to acquire
B Y A NIRUDH L ASKAR &

January, September, April,

ship and control. >P8 time. >P14 N . S UNDARESHA
and MTN Group Ltd end- licences in target countries. S UBRAMANIAN
ed in failure on Wednesday after This may be cheaper but will ·························
the South African government take much longer than MUMBAI

An analysis of price trends in the past half country should not take anyone’s export
an acquisition
rejected the union, dealing a
blow to Sunil Mittal’s ambition
of creating an emerging markets
I ndia’s stock markets rose
sharply on Wednesday on
expectations of good results
telecom giant with 200 million from companies for the quar-
subscribers and $20 billion ter ended 30 September, the
(Rs96,000 crore) in revenue. second of fiscal year 2009-10
Both companies are now for most companies, and a
likely to look for alternative statement from a government

November, May, March,

CORPORATE NEWS ECONOMY & POLITICS partners. official that the country would

decade reveals price spikes during this period opportunities away. Just as central banks keep
Two turbines for the Bharti and MTN, Africa’s continue to divest some of its
Bawana power plant that biggest telecom firm, called off stake in some public sector
will be crucial for meeting four months of talks the day companies.
Delhi’s power deficit are the exclusive nature of the ne- While most analysts said the
stuck near Rewari in gotiations lapsed. The exclu- markets would stay at this level
Haryana, delaying the com- sive talks had been extended or even rise further, one
Mounting bad loans have missioning of the first block
lowered its profits in India, of 750MW capacity. >P4 TURN TO PAGE 3® Lost effort: Bharti Airtel’s chairman Sunil Mittal. TURN TO PAGE 2®

every alternate year. This suggests that farm- a close watch on liquidity conditions to keep
but ABN Amro says it will ***
continue corporate and Two mobile courts rotating

June, December, August

wholesale banking opera- through sections of Delhi
tions here.
***
>P8 are conducting summary
trials on beggars brought in
New FDI norms to
Israeli drug maker Taro
Pharmaceutical has filed a
by their raid squads. The
initiative aims to clear the
cover banks too
lawsuit against India’s Sun streets of beggars ahead of
Pharma in a US federal the 2010 Games. >P20 B Y A SIT R ANJAN M ISHRA &

ers have been responding to a boom-and-bust interest rates and other prices on an even keel,
court, alleging Sun did not C .R . S UKUMAR
disclose information on its VIEWS ·························
NEW DELHI/HYDERABAD
US subsidiary Caraco. >P9 Salil Tripathi re-
*** calls some high
I ndian banks that have more

and February.
Emaar MGF is liable to pay points of the 63-year than half their share capital
a penalty of Rs15 lakh a day history of the Far owned by foreign investors will
for the first 15 days and Eastern Economic continue to be covered by the
Rs20 lakh a day thereafter if Review that will new foreign direct investment
there is a delay in the com- stop publication (FDI) guidelines introduced by

cycle in their onion earnings. If the previous the government should devote special atten-
pletion of the Common- after December. the government in February,
wealth Games Village. >P10 >P22 possibly restricting their abili-
ty to open branches and invest
in other ventures.
Commerce and industry

QUICK EDIT TURN TO BACK PAGE ®

One reason to be happy

year was rewarding, more gets grown, which tion to the task of smoothening out onion price S unil Mittal’s best,
eventually, wasn’t good
enough to see the deal
between Bharti Airtel and
South Africa’s MTN go
England. In business, it has
meant a demand from
indigenous South Africans for
a stake in previously
white-only businesses. It also
Vishal looks to
restructure debt
B Y R ASUL B AILAY

MA R K T WA I N
through. means a significant sense of [email protected]
While the deal fell through national pride in home-grown ·························

could crash wholesale prices. If the experience volatility. It is a perishable commodity, but
because the South African businesses such as MTN. NEW DELHI

government decided to get

involved, it also fell through
because the Indian
South Africa was right to
demand a dual listing for the
companies in India and South
V ishal Retail Ltd and banks
that loaned it money are in
the process of going in for a
government decided not Africa. And India, where corporate debt restructuring
to—other than making polite politicans are only too eager (CDR) exercise in an attempt
statements about how it was to play cheerleader to global to revive the fortunes of the
keen on the deal. mergers involving Indian cash-strapped retailer, accord-
South Africa is in the midst firms, was right to refuse to ing to three people with direct

was bad, on the other hand, they prefer to use these days all it takes is technology to extend
of painful change. In cricket, consider the dual listing issue knowledge of the matter.
this meant it lost a player of because it would have meant Lenders to the retailer
Kevin Pietersen’s stature to a major change in its laws. whose stocks are listed on the

Mint is also available for Rs5.50 with Hindustan Times under a combo offer TURN TO BACK PAGE ®

their land for other crops. This could also hap- its shelf life.

MY VIEW | IT MATTERS

Why the newly minted data scientist wants a new job

could teach the IT services crowd a thing or code that can compute the result. have been able to meet. It seems that anyone is doing it, so everyone claims they are doing
SIDDHARTH PAI two about Artificial Intelligence (AI). Many The huge availability of computing power with a passing familiarity with mathematics it.” He should know a thing or two about data
of the engagements that service providers today means that these predictions and or statistics as well as the ability to write pro- science. After all, data science is supposedly
now have with such firms are on the business behavioural associations can be made in grams can easily pole-vault him- or herself one method that firms can use to predict
process side. The horror that business proc- fractions of a second. This allows your web into a high-paying career. consumer behaviour, and Ariely is the
ess outsourcing (BPO) employees have to search provider or social networking site to However, it turns out that newly minted author of several bestsellers in the field of

H
eavy cloud, but no rain runs the endure while vetting violent videos on social serve advertisements just nanoseconds after “data scientists”, the hottest commodities in behavioural economics such as Predictably
refrain from a song by Sting, the Brit- media platforms, for example, has been the you have shown interest in the job market today, are Irrational and The Upside Of Irrationality.
ish rock artist. Some years ago, when subject of much negative news coverage. a product. And since every- quite disillusioned by the In a world where the very definition of a
every information technology (IT) services The current buzzwords doing the rounds thing you do online is There is a vast realities surrounding their field is fuzzy and many employees as well as
company was waxing eloquent about its are “digital” and “big data”. My opinion is stored on a server some- chosen field. According to employers are upstarts, there is a vast mis-
“cloud” prowess, I would begin my talks at that no one quite knows what digital is, and where forever, all your past mismatch in the the article in the Financial match between expectations and reality.
conferences by quoting that line. As an out- the fungibility of internal reporting allows online forays can be Times, which cites a Stack The data scientist walks into a job with high
sourcing adviser, it was already evident to companies to bundle whatever they want instantly called up by an
expectations of Overflow survey of more expectations of sitting at a desk and working

is founder of Siana Capital, a

me that the real cloud deals were going to
the likes of Amazon Web Services, Google
under this grouping. Big data or “data sci-
ence” is now one of the hottest fields in the
algorithm to predict the
next thing you are going to
work and its than 64,000 respondents,
data scientists and their
out complex algorithms, while the reality is
that most employers are at ground zero—
venture fund management
company focused on tech
and Microsoft Azure, none of which were
traditional IT service providers.
market. It consists, supposedly, of any disci-
pline that can combine the fields of statistics
want to do.
One would expect that a
reality, which is close brethren “machine
learning specialists” are
where they need to find data which is stored
in silos within their own organizations and
Traditional providers did not really have and computer science. hot new field like this fuelling worker right on top of the list of convert this into a centralized repository
competitive offerings in the marketplace, Statistics provide data for behavioural would require long years of employees who are looking which can be accessed by various computer
though there was much talk from them of (and other) prediction models or algorithms. training and study. Inter- discontent for new jobs. systems. This means that most “data scien-
“public” clouds, “private clouds, and Algorithms form the underpinning of AI and estingly however, an article Big data seems to fall in tists” find themselves as little more than
“hybrid” clouds in the “Smac” environment. are linked with statistical concepts that have in the Financial Times the same realm as the other resources in an effort to categorize and pool
Smac—or social, mobile, analytics and been around for aeons. Old-style statistical (on.ft.com/2zEjKQc) says that many people buzzwords that Smac spawned. No one quite data, or to run queries on data in existing
cloud—was a catch-all buzzword in use by an regression modelling and Box-Jenkins time who move into the field of data science are knows what it is. Dan Ariely, a professor of silos, which are all boring tasks.
industry that didn’t quite realize that it was series analyses look for causality and corre- able to do so without formal training at tradi- psychology and behavioural economics at It looks like the field of data science is back
social networks and mobile providers whom lations in data and can predict outcomes tional institutes of higher learning. This is Duke University, in a cutting assessment of to the days of the IT outsourcing boom,
it wanted to serve who were instead going to over periods of time. The computer science because demand for employees who possess the field, says, “Big data is like teenage sex: when employee attrition and job hopping
own the cloud environment. side of big data allows for programmers to these skills has grown much more rapidly everyone talks about it, nobody really knows were the operating realities that every firm
It also turned out that social networks convert paper algorithms into computer than what traditional academic institutions how to do it, everyone thinks everyone else in the sector had to live with.
 VIEWS TUESDAY, 1 OCTOBER 2019
NEW DELHI 15

MY VIEW | A VISIBLE HAND G LO B A L VO I C E S

India needs more engineers for Trump tears up the welcome mat

P resident [Donald] Trump’s latest assault on immigration, cutting the number

its economic transformation of refugees accepted to a mere 18,000 from 30,000 last year, is better than the
complete ban that some of his aides were seeking. But looking at mere numbers
misses the point. This is the administration’s latest message to anyone dreaming
of a freer life in the US: that they should just stay away. The Trump administration
has systematically acted to bar as many refugees and asylum seekers as possible,
virtually from its first day, supplanting America’s traditional welcome to the world’s
We ought to recognize their role in forming the vast pools of human capital India requires to achieve a $5 trillion economy desperate people with a spirit of xenophobia and bigotry. Led by Stephen Miller,
a zealot who has planted lieutenants throughout the government, the Trump White
House has made its anti-immigration campaign something akin to a crusade, with
HT “the wall” along the Mexican border as its symbol.
The limit announced by the State Department on Thursday is far below the
110,000 refugees a year that President Barack Obama said in 2016 should be let in...
The proffered reason for the cut was the huge backlog in immigration courts...
There are enormous backlogs, and the US cannot let in everyone who wants to
come. But the severity of the cutbacks makes clear that the administration’s ration-
ale hides its real motive: to score political points with a base of voters fearful of
immigration by seeming to keep out as many people as possible.
The New York Times

NARAYAN RAMACHANDRAN
is chairman, InKlude Labs. Read Narayan’s Mint
columns at www.livemint.com/avisiblehand Netanyahu’s last ditch efforts

I sraeli President Reuven Rivlin finally and with greatest reluctance chose incum-
bent Prime Minister Benjamin Netanyahu on Wednesday to form the next gov-
ernment after failing to convince Benny Gantz, leader of the centrist Blue and
White Party, and Netanyahu, leader of the rightist Likud Party, to form a national
unity government. Gantz’s party won 33 Knesset seats while Netayanhu’s won 32

E
very year, 15 September is celebrated in seats. Normally, Gantz should be given the first opportunity to form the next gov-
India as Engineer’s Day (E-Day). E-Day is ernment. Yet, the complexity of Israeli politics and the continued support of ultra-
organized as a tribute to Bharat Ratna Orthodox and other allies to the Likud leader gave Netanyahu an edge to assemble
laureate Mokshagundam Visvesvaraya. the new government.
Visvesvaraya was a statesman, civil Most observers bet that Netanyahu will not succeed this time after losing a
engineer and diwan of Mysore who was chance to form a majority government following last April’s elections. There is
knighted with the Knight Commander of the Brit- every hope that Netanyahu’s bid for another term to form the next Israeli govern-
ish Empire (KCIE) title by King George V in 1915. ment will fail. The stakes are high as the Israeli prime minister carries the image of
Throughout a life of hundred years, Visvesvaraya the enemy to peace. Netanyahu’s main concern is to escape prosecution over cor-
was prolific and productive. He completed his civil ruption charges levied against him... For how long this game will continue, no one
engineering education at the College of Engineer- knows, but one thing is certain: It will end, and if not now, then in the near future.
ing in Pune, whose principal was the legendary The Jordan Times
Irishman, Theodore Cooke. Cooke was a big sup-
porter of Indians in engineering and was responsi-
ble for training the engineers for the public works Chinese advance with their country
department (PWD) of that era. Visvesvaraya’s first
job after college was as an engineer at the PWD in
Mumbai. Thereafter, he worked on numerous irri-
gation and sanitation projects, and patented a sys-
T uesday, 1 October marks the 70th anniversary of the founding of the People’s
Republic of China. The average age of Chinese people is 37 years, which means
they have accompanied China for 37 years. Many young Chinese need to learn
tem of automatic weir floodgates. He went on to about the country through narratives of other people. Based on distinct experien-
design the Krishna Raja Sagar dam in Mysore and a ces, people of different generations may also have various perspectives of China.
flood protection system for Hyderabad. Unable to But China has made huge economic achievements and has become the world’s
break the glass ceiling of an executive engineer, he second-largest economy. It realized initial modernization, led its largest population
joined public service as chief engineer and diwan in the world to live in a well-off society, and achieved poverty alleviation. Once suf-
of Mysore state, where he encouraged private fering from poverty and bullies, China has recovered its dignity and become a
enterprises and helped set up numerous institu- world-class strategic power. China has been one of the most outstanding develop-
tions, including the Mysore Soap Factory, Mysore ing countries in the world.
Iron and Steel Works, and the Mysore Chamber of What is the great national rejuvenation of China? In addition to China becoming
Commerce. In an age when it appears that fact is stronger, a majority of Chinese people understand the rejuvenation as enjoying a
sometimes fiction, and fiction often fact, Visvesva- world-class livelihood. China is always motivated to develop with definite goals as
raya would have stood out. On being conferred the it serves its people, whose demands are always clear... The seven decades since the
Bharat Ratna in 1955, Visvesvaraya wrote to India’s of Madras Presidency), and Raja Jwala Prasad, also The quantity and quality of engineers that India founding of the PRC is a promise to the future. Standing by China, our lives will be
then prime minister Jawaharlal Nehru to say: “If from Roorkee (chief engineer, irrigation for UP). is producing annually are not adequate for this based on a solid platform. Our wish for a better life is sacred, our efforts will be more
you feel, by giving this title, I will praise your gov- While India makes the top 10 of science and task. While the number of Indian Institutes of respected , and we will benefit from our country’s strong development.
ernment, you will be disappointed. I am a fact-find- engineering graduates each year in the world, it Technology (IITs) has increased to 23 (from the Global Times, China
ing man.” does not make that same list for engineers. Accord- original five), private engineering colleges set up in
Visvesvaraya was one among the early “Indian” ing to Unesco, Russia tops the engineering list, haste in recent years appear to be shutting down
engineers in industrializing India. Most such engi- while other countries, such as Iran, Japan and around the country because, on the one hand, Teachers should not feel threatened
neers rose in either public works departments or in Mexico, are ahead of India. In addition, the num- employers find their students inadequately
the railways. A book that chronicles the story of
these early engineers is The Birth Of An Indian
Profession: Engineers, Industry, And The State
ber of graduate engineers who go on to do a post-
graduate and doctoral degree in engineering in
India is not keeping pace with a growing economy.
trained, and, on the other, students are unable to
find internship opportunities and employment.
Linkages between education and industry are
S chool teachers who already feel undervalued, overworked and underpaid can
be forgiven for feeling angry when they are made to carry the blame for Austra-
lia’s fall in international rankings in areas such as maths, reading and science. But
1900-47, written by Aparajith Ramnath, a histo- By various estimates, India will need to invest $1 missing. So, large-scale employers now do their that does not justify them dismissing out-of-hand the issues which have again been
rian who traces the lives of these engineers and trillion to $1.5 trillion in capital expenditure over training in-house and graduate engineers switch to highlighted by a new report by the Auditor General for NSW which said raising
their contribution to an India that was still trying to the next decade to build infrastructure and estab- other fields like sales and marketing. The whole teacher quality was crucial to getting better results for students. Many state school
shed colonialism in preparation for independence. lish the production units needed for an economy system needs to be reimagined in such a way that teachers and teachers’ unions will see this report, “Ensuring teacher quality in NSW
India’s famous scientists and mathematicians of to reach $5 trillion and beyond. A major part of the colleges produce employable engineers, and the schools,” as a slur on a profession which they rightly see as a vocation. Some will see
that time, including C.V. Raman, Satyendra Nath human capital for this must come from engineers government and the private sector work with insti- it is a ruse to distract attention from the deep causes of Australia’s educational mal-
Bose (of “boson” particle fame) and Srinivasa Ram- at all levels—in the government as well as the pri- tutions for apprenticeship, internship and employ- aise which, according to them, are low salaries, big classes and the inequality
anujan (number theory), are well known, but the vate sector. Imagine the building activity that took ment. There is an old adage that says that “cometh between the disadvantaged and rich private schools.
country’s engineers have largely remained hidden. place in the US in the early 20th century and in the hour, cometh the (wo)man”. Today’s India Teachers are indeed undervalued and these wider issues have merit but that does
The earliest engineering colleges in India were set post-war Japan; India will need talent for that and needs an engineer like Visvesvaraya to drive this not mean the government should ignore teacher quality... The auditor-general
up in the mid-19th century in Guindy, Pune, Shib- more in the coming decades. Every kind of engi- transformation with the same clarity, dynamism argues that, if it wants to raise standards, the NSW Department of Education needs
pur (West Bengal), Mumbai and Patna, and it is neer will be needed; not just computer scientists, and courage to speak truth to power. to get more directly involved and ease some of the burden... Given NSW wants its
from here that most of the early engineers came. In but also civil, mechanical, metallurgical and elec- PS: “Like Mahatma Gandhi, Visvesvaraya is an schools to be friendly and inclusive, no one wants teachers to live in fear for their
addition to Visvesvaraya from Pune, there were trical engineers to help build bridges, highways, Indian above all, no copy of an American or jobs if they have a bad day in class when they were under observation. But the proc-
L.P. Misra and Ganga Ram from the University of power plants, buildings, airports, ports and facto- Englishman. Yet he has imbibed the modern ess for keeping up standards and monitoring must be improved.
Roorkee, A.V. Ramalinga Iyer and N. Swaminatha ries, and to set up sanitation projects, flood control scientific outlook and made a synthesis of the two,” The Sydney Morning Herald
Iyer (both of whom rose to become chief engineer systems, pharma and biotech laboratories, etc. said Jawaharlal Nehru.

GUEST VIEW

Indian bonds could well be the toast of global investors

success. The easing of controls on foreign berg Barclays Global Aggregate Index about 6% of the index overall. That would the governance process for index providers
STEVE BERKLEY investments into the bond market would could hold guidepoints for India in achiev- make these Chinese bonds the fourth larg- and investors alike. Index providers such as
open new avenues for capital flows as India ing similar index inclusion. China’s bond est currency component of the index after Bloomberg can play a proactive role in facili-
increases its issuance of government debt to market accessibility was first discussed at the dollar, euro and Japanese yen. tating that engagement.
fuel its economy. The government is looking Bloomberg’s Index Advisory Council meet- Some of the core initial conditions to sup- Secondly, concrete steps to reform India’s
to increase public investment to ₹100 tril- ings in 2016. The following year, we port index inclusion are already in place in financial markets will need to be undertaken

T
he current low-to-negative interest lion over the next five years from ₹35 trillion updated inclusion rules for the Bloomberg India. These include a rules-based monetary systematically and over time to meet index
rate environment around the world is over the last five. In addition, the issuance of Barclays China Aggregate and fiscal policy frame- inclusion rules. For example, quotas, caps
making Indian bonds an even more foreign currency debt and removal of Index and launched two work, manageable levels of and other restrictions on bond investments
attractive option for certain investors. India restrictions on bond investments—includ- global indices that This requires external debt, a flexible will need to be removed or eased in a
has an active and open financial market. The ing caps and capital controls that are road- included China as a fore- exchange rate and ade- planned and transparent way.
country’s stock market is among the 10 larg- blocks for global investors—would help runner to future full inclu- bond market quate levels of forex Thirdly, resolving the operational
est in the world, and its fixed income market address concerns over the ease of access to sion. As of April, Chinese reserves. requirements of investors is critical. Suc-
is the fourth largest among emerging econo- India’s financial markets. bonds are being phased
reforms, which Implementing the fur- cessful index inclusion requires the coordi-

is global head of Bloomberg

mies. However, cultivating a stronger bond
market to help underwrite the burgeoning
For global investors, a more international-
ized debt capital market would deliver
into the aforementioned
index over a period of 20
are also key to ther required elements
may take time and political
nation of many market players and regula-
tors. Taxation laws need to be clear, global
Indices economy is necessary if India is to reach its
bold ambition of becoming a $5 trillion
greater pricing transparency, stronger gov-
ernance in assessment of opportunities and
months. So far, with the
inclusion of only Chinese
India achieving will, but it’s worth remem-
bering that China’s journey
custodians must be able to support market
participants, and rating agencies need to
economy by 2024, and, according to Bloom- more efficient capital allocation. Index government and policy its broader to index inclusion took establish their presence to support the even-
berg Economics’ base-case estimates, $8.4 inclusion would also be a strong signal that bank securities in the three years. On these too, tual inclusion of corporate bonds.
trillion by 2030. If it can do so, India’s econ- India’s bond market is open for business. index, the amount of Chi- economic goals China holds some relevant A well-functioning, internationally acces-
omy could be the third largest by 2026, For Indian bonds to be included in some nese bonds held by over- insights for India’s own sible bond market thrives on transparency.
behind only China and the US. of the most important global indices, many seas institutions reached a moves, notwithstanding Attracting global investors through a clear,
India’s future inclusion in benchmark of which are tracked by trillions of dollars of historic high of RMB 2.02 trillion as of July. the differences in the financial, political and time-bound and well sequenced series of
indices could significantly deepen India’s benchmark-driven assets under manage- Goldman Sachs predicts that China’s inclu- regulatory dynamics of the two markets. reforms and easing of restrictions can be a
bond market and attract global investors, ment, India’s local currency debt market sion in global benchmark indices will Firstly, regular communication between key lever in India achieving its bold eco-
who are playing an increasingly important must be classified as investment grade. The attract more than $1 trillion of capital international investors and India’s regula- nomic vision and targets. It’s time to turn the
role in shaping foreign portfolio allocation currency must be freely tradable, converti- inflows to China’s bond market over the tors, government and economic architects dream into a near-time reality and unlock
flows into growing economies. Continued ble, hedgeable and free of capital controls. next decade. Once fully phased in, Chinese is crucial. Engagement on the ease of access new financing opportunities for India’s
financial market reforms will be critical to China’s recent inclusion in the Bloom- bonds in the index are expected to make up to India’s bond market will be a core part of bond market.