The Judiciary Doesn’t Make the Top Ten

June 19, 2008

This Goldman Sachs report on 10 things India needs to do to achieve its potential (via) is pretty good. I have two quibbles with it, though.

  1. How come judicial reforms and clearing the backlog of cases didn’t make it to the list? I realise this is a subjective measure of value, but I would have though this was more important than increasing trade with neighbours or increasing the number of universities.
  2. Chart 18 on Page 17 is weird. Does the fourth category of cereals represent the weighted average of the first three categories (rice, maize and paddy), other cereals, or all cereals. Not that this distracts from the overall point of the graph, which is that agricultural productivity in India is pathetic. It’s just an irritating fog in an otherwise decent report.

Desipundit, Poopi, and Disability

June 17, 2008

Jagadguru’s latest post is a wondrous marvel. I reproduce it here in its entirety:

Only DP will link to such crappy review like the one they linked for Dasavatharam. The nutcase who reviewed is known for his ignorance and disability to understand science. He writes such a crappy review and DP people link to it. What a shame!!

(Jagadguru on Politics)

This establishes Jagadguru’s divinity once and for all, just as in earlier incarnations He had demonstrated His greatness by showing Yashodha the cosmos inside his mouth, or Arjuna his radiant form.

More on Finance and Inclusive Growth

June 17, 2008

Suddenly, the idea that financial sophistication leads to inclusive growth seems to have caught on (well, except with the Ministry of Finance, which is actually in a position to do something about it). First there was my Pragati piece. Yesterday, Nivirkar Singh’s column in Mint also touched on this:

Petia Topalova of the International Monetary Fund has recently examined the links between policy and inclusiveness of growth. In particular, she uses variation across states as well as three time periods, spanning 1983 to 2005, to examine these links. Inclusiveness is defined as the difference between the consumption growth rate of the poorest and richest 30% Indians.

First, higher financial development, measured either by real credit per capita or by a larger initial share of agricultural labourers with loans from formal financial institutions, is significantly associated with more inclusive growth.


OK, this is interesting. One of the points the Raghuram Rajan report raises is that access to credit is actually only one leg of financial inclusion, and is the most overused one. The other two legs – access to savings instruments and access to risk management instruments like insurance – have traditionally been missing. So there are two ways to read this:

  1. The correlation between credit and inclusive growth doesn’t mean anything. It’s just a coincidence that this turned up, and might be caused by something else – more urbanisation, say, or might even run in the opposite direction – financial inclusion leads to more demand for credit (though I personally think it’s a positive feedback loop – they cause each other)
  2. The research is right. Credit might be only one leg, but it still has an impact. And we haven’t even seen what would happen once savings and insurance also get taken up. In that case, the gap could close in a stunning way.

Moving on. After Nivirkar Singh’s column, there’s also the cover story in today’s Business Standard the Strategist. It’s about FabIndia, and how they’re encouraging artisan communities to set up private limited companies where the shareholding is split between the artisans themselves, their employees, FabIndia, and outside private investors.

The concept, now a Harvard Business School case study, is simple. A fully-owned subsidiary of FabIndia, Artisans Micro Finance, a venture fund, facilitates the setting up of these companies, which are owned 49 per cent by the fund, 26 per cent by the artisans, 15 per cent by private investors and 10 per cent by the employees of the community-owned company.

The artisans gain in many ways. The value of their shares goes up. They earn dividends when the company is in a position to declare them.

The shares offer the artisans a divisible asset class (land can be divided but its divisions are often disputed and jewellery is largely indivisible) and community-owned companies help convert FabIndia’s artisan base into an asset.

“If he wants to get his daughter married and needs money, he can sell his shares and realise the appreciation. He can also take a loan by offering his shares as collateral,” says Bissell.

(the Strategist)

The article is worth reading even if you aren’t interested in finance, and you’re more interested in social entrepreneurship or marketing or traditional handicrafts. Axshully it is worth reading even if you are a metrosexual and only buy organic muesli as you will get to know about new and exciting opportunities to buy it as FabIndia expands.

By the way, William Bissel mentions in the article that the co-operative system imposes too many restrictions on the artisan and the private limited company makes more sense. This is a massive understatement. The legal and accounting procedures for co-operatives in India are so totally broken that co-ops inevitably end up in the hands of regional politicians. That, however, is the subject of another post, and by someone else.

A Newfound Respect for Legal Sanctity

June 17, 2008

India Today (which I read only because my guesthouse had nothing else except Femina) has a report out on how Arjun Singh and/ or the Ministry of Education has found objections to all the National Knowledge Commission’s recommendations except the one on increasing government funding for university education.

It seems Arjun is determined to spoil the reforms party. A detailed comment prepared by the ministry in response to the recommendations blames NKC for its feeble grasp of ground realities.

The ministry says private sector investment in higher education and public and private partnership can be encouraged only within the ambit of the Supreme Court judgement, which clarifies that private investment in higher education will be based on the principle of nonprofit and non-commercial purpose.

On a cautionary note, it says appropriate policies should be made for the entry of foreign institutions in India: “The entry of sub-standard and fly-by-night operators has to be prevented.”

NKC observes that private investment in university education is almost negligible, whereas in professional education there is de facto privatisation.

(India Today)

Performance based pay for professors has also been rejected, as it is legally uncertain:

Another controversial proposal—salary differentials within the universities in favour of better performing teachers—has also been rejected as its legal sanctity is in question.

I recall the last time the legal sanctity of something was in question – reservations in private colleges, that is – the UPA amended the Constitution. This newfound respect for existing law is most heartening.

Kunal Kohli and the Missing Umbrella

June 16, 2008

Kunal Kohli must be struck down upon with great vengeance.

Not because Thoda Pyaar Thoda Magic mixes Hindi, Urdu and English words into the title. I actually approve of that.

Not because it’s a ripoff of Mary Poppins. After all, you can’t expect better from a man who’s already ripped off When Harry Met Sally and The Truth About Cats and Dogs.

Not even because the sardar kid in the movie looks like an aspiring suicide bomber in the posters. Yes, looking at his surly gaze can put you off lunch, but I suppose it’s not really his fault or even Kohli’s.

No, the reason Kunal Kohli must be viciously and brutally attacked is that in the process of ripping of Mary Poppins, he has replaced the nanny’s magic umbrella with a magic bicycle. This is nothing but a slap in the face of the good, decent, lower to middle-middle class folks in Mumbai for whom an umbrella is their only defence in the monsoons – unlike poncy git filmmakers with chauffeur driven cars.

A violent assault on Kunal Kohli represents the highest form of class warfare. To the barricades, comrades!

From His Mother’s Womb Untimely Ripp’d

June 9, 2008

While I’m in favour of Indian newspapers doing more feature stories that go more in-depth than five hundred words and two soundbites, this Mint article on Caesarean sections is not the way to go. It’s poorly researched, inconclusive, meanders all over the place, and does too much New York Times level balancing of opposing opinions, even when the opposing opinions don’t necessarily have equal relevance or weight.

I am an MBA and not an MBBS. Also, I am unlikely to ever receive a C-section (though the possibility can never be ruled out). As both a producer and consumer of C-sections, I lack experience and expertise. However:

  1. I am a smartarse who likes to call out wonky reasoning even when I know nothing about the underlying facts the reasoning is built on.
  2. I also have a personal interest in infants as sacrifices to Elder Gods and a food source.
  3. I was in Section C in IIMB and I feel this obliges me to defend all C-sections. In fact, Kodhi and me wanted to use ‘I was reborn by C Section’ as the class tshirt slogan but Bubbly shot down the idea because she thought it was too gross.
  4. Defending C-sections has the added advantage that it may piss off the Mad Momma.

Right. So here we go. First, the article. As I alluded above, it’s mostly a collection of sound-bites without any solid analysis, and so doesn’t really qualify as good feature journalism. It takes quotes from every possible party concerned, and doesn’t develop any of them. But such is life.

Then there’s confusing correlation and causation:

The burst in numbers is also inextricably linked with the advent of “corporatized” private health care in India.
Birth is big business; delivery rates vary from city to city, but a large private hospital in Delhi can earn up to Rs70,000-80,000 for a Caesarean package (including room and OT charges), whereas a normal delivery package brings in around Rs44,000, according to numbers collected by a team of doctors at Sitaram Bhartia hospital.

Yes, fine, but a Caesarean delivery would cost more than a normal delivery even at a non-corporatised hospital or clinic. The rise of corporatized health care is due to rising affluence and a preference for reliability. The preference for C-sections is also due to rising influence, as the article itself points out:

Urban Indian women are now marrying later, conceiving later in life, and having fewer children. Every child is so precious that parents are averse to taking any risk and are increasingly viewing the Caesarean as a reliable option.

Rather, the growth in C-section numbers, he says, is better explained by changing urban lifestyles, busy obstetrician schedules and the convenience of planned procedures. “Many women try to schedule Caesarean procedures on special days such as birthdays or festivals,” says Barua. On some of these days, women line up for Caesareans,” he adds.

Just because affluence leads to corporate health service, and affluence also leads to a preference for C-sections, doesn’t mean corporate health service leads to C-sections. Or vice versa.

OK, but what about the actual medical risks? Those are important too, right? Well, here the article goes into this, that, but on the other hand again:

There is no denying the fact that Caesarean sections routinely save lives. In the event of certain serious pregnancy-related complications, the surgery can be a mother or baby’s only hope. At least two studies have also shown that scheduled or “elective” C-sections—as opposed to an “emergency” Caesarean section in which a mother or child is already in distress—may even be safer than vaginal deliveries. Some scientists also argue that the procedure can help reduce the risk of problems such as incontinence in later life.

Research, however, challenges these claims, and throws light on the problems that can complicate a surgical birth. Bleeding can be severe and the surgical wound can get infected. Recovery time is weeks longer and more painful. And, after one C-section, a mother faces serious risks during her next delivery, including the chances of uterine rupture or her new baby’s placenta attaching itself to her scar.

So what we have here is a choice of risks, yes? When the mother is in distress, it’s not really a difficult decision – the risk of infection, and of not being able to control bleeding is much more easily dealt with than the risk of something far more complicated like upside-down breech babies (mentioned earlier in the article). But yep, what about next delivery risks? This study conducted in South Australia mentions them. It measures what the odds of particular illnesses or complications in a mother’s second birth are, when the first birth is a C-section. 95% of the time, the increased risk compared to a normal birth are:

  • Head not coming out first: 65% to 106% more likely
  • Placenta previa: 30% to 111% more likely
  • Hemorrhaging: 8% to 41% more likely
  • Placenta accreta: 2.28 to 864 times more likely
  • Prolonged labour: 3.91 to 8.89 times more likely
  • Low birth weight: 14% to 48% more likely
  • Emergency C-section: 8.98 to 9.67 times more likely

Which sounds scary, except for two things. First, the study itself makes a disclaimer: Cesarean delivery is associated with increased risks for adverse obstetric and perinatal outcomes in the subsequent birth. However, some risks may be due to confounding factors related to the indication for the first cesarean. In other words, the first C-section may have been caused by medical factors which also led to increased risks in the second birth. Secondly, the risks are already small: placenta accreta occurs once in every 2500 births. Even if the chance of placenta accreta goes up a 100 times, it’ll only happen 4% of the time. Not vanishingly small odds, but small enough that you can trade-off the increased risks with the comfort and security of a C-section the first time.

What about the study the article mentions? The one about increased risk of respiratory problems?

In a study reported last December in the British Medical Journal, researchers studied 34,458 live births in Denmark—of these, 2,687 were elective Caesareans—and found that C-section babies were up to four times more likely to have respiratory problems.

Here’s a link to the study in question. Elective C-section babies are four times more likely to have respiratory problems. However, when you break down the odds by when the C-section happens – it turns out that while the odds are even higher than four times if the C-section is early – when the C-section happens in the same week the natural birth would have; there is no significant difference in the risks. The study is not an argument against C-sections, but against scheduling early C-sections – which is very sensible.

What really makes me angry in the article is this quote:

“We’ve come to believe that C-sections are safe but it’s an urban myth,” says Ruth Malik, 38, who co-founded Birth India, a natural childbirth advocacy group in Mumbai, last year, after having gone through two Caesarean procedures she now believes weren’t necessary. Ruth, who recently filed a suit against her doctor in Mumbai, says: “Birth is not an illness. We don’t need a surgeon to help us have babies. It’s a natural function, it’s something our bodies simply know how to do.”

OK, safe C-sections being an urban myth is something that makes me want to scream out ‘citation needed’. Safe in what context? How safe or unsafe? Natural birth isn’t 100% safe and neither are C-sections. The question is, are they safe enough? For negligibly less safety, is a lot more convenience worth it? Why not let the mother decide?

The scary thing about the ‘nature never intended this!’ argument against C-sections is that it can go down a slippery slope. If you argue against C-sections because they were never intended by nature, you can also argue against abortions. Or pacemakers or kidney dialysis. In fact, to contact lenses and spectacles.

Readers (especially Ritwik, probably) will now rush in to point out that the slippery slope argument is absurd. There is a ‘yuck’ factor about abdominal incisions that is not there in spectacles. And pacemakers are lifesaving devices while elective C-sections are largely about convenience.

So what? Cosmetic surgery is about convenience and not lifesaving, but there are no advocacy groups against it. So is LASIK surgery for that matter. And what about ear piercing and tattooing? Those are invasive body modifications which are not necessary at all, and also come with risks of infection, but nobody sensible argues against them on the grounds that they’re unnatural. (For more comprehensive and better written articles about biological enhancement, naturalism, and dignity, read this and this)

Yes, it is sensible to make informed choices about whatever you do – take out a home loan, go driving instead of taking a bus, or getting a C-section instead of a natural delivery. But this should be based on the risks to you personally, not vague platitudes about whether it was intended by nature or not. We can trust mothers to make the right decision about whether C-sections suit them or not, without bringing in conspiracy theories about corporate healthcare, or whether caesarean sections are ‘natural’ or not.

The Trouble With Exams

June 9, 2008

So the five month old DU Economics post had this reasonably long comments thread which instead of discussing DU or economics itself ended up discussing the stud-fighter framework, the best sort of examination system, what it is that an examination system should actually be examining, and the difference between CBSE Boards and the JEE. I promised a followup post by Sankranti, and then promptly forgot all about it and started blogging about other things like superhero underwear. However, I do get down to things… eventually, so here’s the post. Though by delaying it as much as this, I can now justifiably claim that it’s become topical.

Right. So. Question: what purpose do exams actually serve? I can think of:

  1. Establishing a minimum level of competence or knowledge or providing a pass-mark. Examples of this are getting 33% in the CBSE Boards, or 80% in my employer’s HIV-AIDS e-learning module, or 100% in my employer’s money laundering e-learning module (we take money laundering very seriously). Also, CA certification.
  2. Creating a filter so that you can select the top – the JEE works this way
  3. As a stage-gate between two-levels of education or employment, or between education and employment – in combination with #1 or #2 – the SAT/ GRE work a bit like this – being at the top isn’t essential because there are enough available seats to ensure that you can get in a long way down.
  4. To determine how much a student has learnt independent of formally certifying competence or university admission or things like that. For example, the practice tests a tutor or a coaching centre gives so that students can know how far ahead or far behind they are. Or the sample papers which a student practices ahead of the boards.
  5. To determine how successful the teacher or the examination system has been in passing on concepts. For example, the Azim Premji Foundation conducts its own tests at Class 5 and Class 8 (I think) for students in Chambal valley and North Karnataka rural schools to measure how well they are performing and which ones deserve aid.

Which is a fabulous framework if you stick to it. In practice, though, here’s the problem in real life. Where the CBSE is concerned, the board exam is being used for purpose #1: certifying minimum competence. Delhi University, on the other hand, uses it for purpose #2: as a filter to select top-performers, which is not what the boards are designed for. The boards are supposed to be high-scoring, easily crackable if you study the entire year, and use questions with standard answers that can be checked against a template to simplify the lives of the unfortunate examiner who has to check hundreds of answer sheets. Is it any surprise that college cutoffs start hitting 97% levels?

(An associated hoopla about the boards is that everyone taking them (and their parents, and their teachers) go up in arms every time a paper is difficult. All things being equal, it doesn’t matter, because a bad paper is just going to push the cutoff down – it’s still going to be the top five hundred people who convert the top five hundred seats. To be fair, all things aren’t equal, because students can have different subject combinations. So if the mathematics exam is particularly tough, someone who’s taken psychology or physical education instead gets an advantage.)

There’s another major problem with using the boards as an entrance / selection exam. To be fair, this is a problem with all entrance exams in India. It’s a one-shot exam which happens only once a year. It doesn’t measure how you perform in the classroom, and your long-term ability to learn, which is something that the teacher on the ground is much better placed to judge. And if you mess up a one-shot examination once, you don’t get a chance to make up for it until the next year. And by mess up I don’t only mean fail, I also mean get any score low enough to prevent you from getting the course/ college you want.

So basically, college admissions boil down to this: you get one opportunity once a year to display your excellence through an exam which is designed not to test expertise but minimum competence. As processes go, this is so thoroughly broken that re-engineering consultants would throw up their hands in despair and suggest restarting from scratch.

Not only is the process broken, it’s broken in a way that disproportionately hurts the poor. Why? Well, because:

  1. In the situation described above – you mess up your exams and need to wait another year, the opportunity cost of sitting out another year is much lower. If you’re rich, or even middle class, your family has enough savings (or enough of a standard of living to cut back a little) to not worry about starting your career a year later.
  2. If you have a one-year run up to the exams, that gives rich kids a year in which to hire tutors to help them prepare for the exams. This becomes even worse when the CBSE makes papers ‘easy’, because when papers are well-designed and difficult, topping them is truly a function of how smart you are. When they’re easy, students who have time to spare and money for tutors crack the scene. When they’re difficult because they’re badly designed, the top ranks become a lottery.

Which is why the new CBSE exam design scheme, called HOTS (Higher Order Thinking Skills) may turn out to be one of the more sensible things the CBSE has ever done:

HOTS was the new basis of the question papers in the Class 10 exams this year. It is an analytical problem solving process, geared to assess the students’ absorption of knowledge and its application.

“The average performance and pass percentage has increased across the board but the number of perfect scorers has gone down. The new question pattern to judge students’ knowledge base could be the reason,” said Ganguly.

There is a substantial decline in the number of candidates who have bagged the ‘perfect score’ in Mathematics. “As against 5,251 students last year, this year just 2,647 students have scored 100 out of 100 in Mathematics.”

Similarly, in Social Science, only 598 students have scored a full 100 as against 1,233 last year.

(Delhi Live)

In fact, HOTS may have resulted in better government school performance too, which sort of supports my point about conceptual examinations helping the poor:

That the results in government schools have improved is evident: it shows the largest increase in pass percentage, climbing from 77.12 per cent in 2007 to 83.68 per cent. And 100 of the 900-odd schools saw a pass rate of 100 per cent, as compared with 41 schools in 2007.

But Education Minister Arvinder Singh put the improved results largely down to “better teacher training” rather than HOTS.

(Indian Express)

So is it better training or HOTS? Probably both, but I suspect more HOTS than training – the effect of training shows up slowly over time, while HOTS was a sudden change. And I haven’t gone through enough data on the new HOTS papers to judge how conceptual they actually are.

But HOTS still doesn’t fix the core issue which is that university-entrance tests and school-leaving tests should be wholly different beasts. It also doesn’t fix the one-shot problem. Wonderful though the results of putting HOTS into place appear to be, HOTS is an incremental improvement on an examination system that needs radical redesign. Just to reiterate, the pieces which are still missing are:

  1. Measuring classroom performance
  2. Separating school-leaving competence and university entrance competence for everything, not just professional courses
  3. Making examinations better at measuring conceptual skills rather than mugging skills- HOTS is supposed to do this and may actually have accomplished it, but I would like that to be subjected to rigorous testing
  4. Redesigning exams (school leaving and university entrance ones) so that taking them over and over, or the amount of time you spend on preparation has less impact on how well you do- I think HOTS is meant to accomplish this as well, as was the JEE redesign a year or so ago.
  5. Making university entrance more dependent on multiple factors like extra-curricular skills, conceptual skills, ability to be a stud and a fighter, instead of just a since exam score. But this is probably not going to happen without a massive supply-side expansion of good universities (please see Abi and Ravikiran on this).

Tragically, I have been writing this post over a month and a half, after intending to write it six months ago, and it is now much less coherent than I hoped it would be. My apologies, and I aim to clarify confusion in the comments. Have away!

In Pragati

June 4, 2008

I have an article on how finance is actually infrastructure and financial sector reforms out in this month’s edition of Pragati. The link to the article gives you an excerpt and you’ll have to download the PDF version (slightly less than 2 MB) to read the full thing.

The article had a checkered history. I had almost finished researching it when I suddenly had to dash to Delhi. When I returned to Bangalore I fell sick and told Ravikiran and Nitin I wouldn’t be able to write it after all. The fact that I had no furniture in this point and writing would have to be done propped up against a wall may have contributed. Then I came to Bombay where I had a guesthouse with a dsek, and called up and offered to write it after all.

By this time I was five days over deadline and had to write it in a mad rush between ten and two in the morning at my guesthouse. The next day I had to check out of the guesthouse and didn’t have a new one to shift to, so I finished the article between noon and three in the afternoon while squatting in an unoccupied cabin next to an FX dealing room. Sadly, I had finished the bit about currency markets and was writing about financial inclusion and regulation by then.

Anyway, the result of all this was that I wrote the article in practically stream-of-consciousness style. As a result, not only was it a week over deadline, it was 1200 words over the word limit. It is a tribute to Ravikiran’s mad editing skillz that the article is now within the limit and still readable.

Beer Arbitrage

June 4, 2008

Via Skimpy‘s Google Reader Shared Items, I have discovered this wonderful website: It’s the wikipedia of beer prices. Users e-mail in the price of a pint of beer wherever they live or travel, and the data are updated down to city level. The listed price of a pint in Bombay, for instance, is USD 1.82 – which is accurate enough.

The website also lists the ten cheapest, and the ten most expensive countries in the world for a beer. What’s really interesting is that in Rwanda, a pint is only 0.32 GBP, while in neighbouring Burundi, it’s at least three times more – 0.94 GBP in Bujumbura, and a whopping GBP 5.51 in Burundi City.

Imagine the arbitrage opportunity at the border! This, I feel, is the future of finance – FX traders carrying yen will be replaced by beer traders carrying Urgwagwa.