Responsible Management Education

What Lies Ahead for the Indian Youth

India has the world’s highest youth population. According to 2011 Census, 62.5% of its 1.2 billion people are in the working population age of 15-59. On the other hand, Japan is the world’s oldest nation, with 25% of its population is above 65 years of age and by the year 2040, this is going to rise to 36%. In contrast, the proportion of dependents in India is going to witness a fall in the next two decades (often called demographic dividend), and this implies that the young population would be actively engaged in employment. This also implies a growing pool of buyers for goods and services who would engage in conspicuous consumption. During his visit to New York in 2014, Prime Minister Mr. Narendra Modi had proclaimed that India is blessed with “Democracy, Demographic Dividend and Demand”.

But one must not forget that the demographic dividend won’t last forever and in order to reap demographic dividend, India would need to scale up the skills and industries. A report by World Economic Forum (WEF) titled “The Future of Jobs” mentions the top 10 skills that would be required in 2020. These are: complex problem solving; critical thinking; creativity; people management; coordinating with others; emotional intelligence; judgement and decision making; service orientation; negotiation and cognitive flexibility.

These skills would become necessary to work in the milieu of so called the fourth industrial revolution. The first three industrial revolutions pertained to usage of steam, usage of electricity and usage of electronics and IT.  In essence, the fourth industrial revolution is a digital revolution. According to WEF report, this incorporates usage of robotics, self-driven vehicles, advanced materials, biotechnology and genomics. Yes, the boffins at WEF might have consulted all the screenplays of Steven Spielberg!

In 2015, Indian government launched Skill India campaign, which aims to train the youth in various blue collar skills and enhance entrepreneurship by the year 2020. But India experiences huge skills gap. According to the survey of Labour Bureau, only around 7% of persons aged 15 year and above received vocational training. In order to encourage entrepreneurship in India, the policymakers initiated the National Policy on Skill Development and Entrepreneurship 2015. They hope to enhance skills in three main areas, viz. soft skills, entrepreneurship, and digital literacy.

India’s Indian Information Technology (IT) service sector employs 4 million people, but the sector is experiencing slowdown in employment. According to The National Association of Software and Services Companies (NASSCOM), a trade association of IT and Business Process Outsourcing (BPO) industry, 150 thousand new positions were created in the IT sector in 2016, compared to 230 thousand positions in 2013. The same association predicts that field such as data analytics and connected devices will account for at least 38 per cent of Indian IT industry revenues by 2025.

At the time of this writing, I have been watching Live Stream of annual meeting of Berkshire Hathaway and its CEO Warren Buffet (one of the richest person and investor) has many investments. Among these, he owns a railroad company and an insurance company in USA. He mentioned in Q&A session that technologies like self-driving cars would make insurance industry redundant and artificial intelligence (AI) would disrupt the current economic system as there would be an adjustment in the economy that needs fewer human workers.

India as a growing economy and it is betting on IT industry as its future engine of growth, it cannot remain immune to these change. Indian youth needs to sharpen the skills and be ready to face the rapid future economic and technological disruptions.

 

 

 

 

Book Review The Curse of Cash by Kenneth S Rogoff. Princeton University Press Published August 2016.

 

The Curse of Cash        

Kenneth S Rogoff                                                             

Princeton University Press

August 2016.

  • ISBN-10:0691172137
  • ISBN-13:978-0691172132

 

Book Review by Gurpreet Singh Bhatia

Associate Professor, Economics, IILM Institute for Higher Education, New Delhi

Email: gurpreet.bhatia@iilm.edu

 

The author begins with the hypothesis that the time has come for advanced countries to rethink the role of cash in their economies. The author had suggested to the authorities in the US that phasing out high denomination note of $100 would help cull underground economy. The similar idea of phasing out high denomination notes of €500 has been put forward by policy makers to the European Central Bank.

The research provides evidence that in developed countries, the underground economy accounts for majority of cash holding and the economy is characterized by a high demand for small bills for use in retail transactions, but this demand appears to be diminishing over time, due to increased debit card usage.

Using the scanner data of US retail transaction, researchers have found that low-income households use small bills for cash purchases in stores. The author enlightens the audience of the fact that in European counties, majority of the people use cash for buying items less than €20, and a very small proportion of population uses cash to buy items that cost more than €1000.

Chapter four begins with the conjecture that even in developed countries in some countries like the US, many poor and low-income individuals rely heavily on cash.

The countries with very low currency to GDP ratio include a mix of countries that have taken action to phase out cash (Norway, Sweden, and Denmark) and high-inflation countries, where holding cash is expensive, because it quickly depreciates in real value. The currency ratios for Canada and the UK are both roughly half that of the US.

Chapter 3 titled “Size and Composition of Global Currency Supplies, and the Share Held Abroad” gives mind boggling facts about currency in circulation around the world, and about the proportion of high denomination currency held by citizens.

The author discusses the size and composition of global currency supplies, and the share held abroad. The author conjectures that if Marco Polo were able to return to China today, one of the few familiar items he would discover would be the paper currency.

The author begins with the historical perspective of currencies, and informs that China was the first country to introduce paper currency. The author says that after WWII, international community gave up the idea of reestablishing gold standard in favor of Bretton Woods system of fixed exchange rates with the US dollar as the pivotal currency, and the US dollar became the de facto world currency.

The author raises an important point of society´s need to balance an individual’s right to privacy with society’s need to enforce its laws and regulations? For example, shifting from cash economy to digital payment economy exposes citizens to the possibility of being included in the database at the cost of personal privacy.

It is a misperception that the advanced economies are doing away with cash. In fact, the use of cash in advanced economies is increasing. And it is not just the United States that has a gigantic currency supply dominated by big bills. The problem is nearly universal in advanced economies.

In chapter six, the author explains the concept of seigniorage. It occurs when the government prints money and spends it at face value. It makes profits because the cost of printing is only a very small proportion of the face value of currency.

All countries except Sweden have earned from seigniorage. Sweden´s profits from printing of currency is negative because in that country, public’s use of notes and coins has declined since 2007, both as proportion of GDP and also in absolute terms.

The central banks have the privilege to print money and recover their operating costs, but the central banks must exercise considerable amount of discretion on where to draw the fine line between necessary expenditures and non-trivial ones. It is important that central banks maintain independence.

In chapter 7, Rogoff provides the reader with a comprehensive plan on how to phase out paper currency in the US context. The author suggests that the currency be phased out in four steps.

The fourth stage focuses on real time clearing, where the government helps facilitate development of the quick payments.

Chapter eight is on the concept of zero bound constraint where the economies experience lower interest rate coupled with low growth.

In the recent years, the OECD countries have witnessed a near zero interest rate (the interest rates have been even negative in countries like Germany and Japan).

Chapter 9 focuses on inflation targets, GDP and fiscal policy. The author suggests that the central banks raise target inflation rates from an average of 2% to 4%. The reason is that money in neutral in long run. When the central banks lower interest rate, consumers and procurers adjust to prices in the long run and the only way the economy could be kick started is by increasing the target inflation rates.

Rogoff suggest that instead of targeting inflation, a better idea would be to target GDP and enhance it through reducing income tax and increasing value added tax, thereby increasing inflation effective demand, therefore providing stimulus.

The last part of this book deals with digital currency. Rogoff questions the feasibility of replacing paper currency with digital currency in emerging market like India where majority of population is engaged in agriculture in rural areas where the infrastructure fir digital currency is not yet developed. On the positive side, phasing out cash in favor of digital currency in emerging markets would have positive effect by reducing corruption and underground economy.

The author stipulates that cryptocurrency like Bitcoin could be a currency of the future. After all, Bitcoin could function as unit of account and medium of exchange, withe same functions of paper currency.

In conclusion, this is an important and coincidentally, a timely book in context of current demonetization being implemented in Indian economy. It would behoove the policymakers and researchers in India to pay heed to the recommendations provided by Kenneth Rogoff, specifically related to emerging economies.

 

 

Global Academic Expedition to EM Normandie, France

 

The Global Study Visit, Itinerary, France & Business!  


A global study program was organized for the PG-1 students (2016-18 batch) of IILM, all the campuses. Students were given choices to choose one of their dream global universities on the basis of modules offered by the university. The choices were France, Spain, Canada, Germany and Finland. The entire program was sponsored by IILM and the partner school except that the students had to bear extra expenditures like food, travelling etc.

On the 4th of September 2016, 45 students collectively from LR, Gurgaon and Greater Noida campus boarded Emirates flight for Ecole de Management de Normandie, along with the assigned senior faculty. The students were provided with the resident at Apart’ City, Caen, adjacent to the school. From EM Normandie, the program was coordinated by Mrs. Severine Groult (International Development Manager, Short program) and Brigitte Laine (International Development Assistant).

In addition with this the students were also explained about the rules and regulations to be followed in college and hotel. Each and every student was provided on the same day with a unique identity card and a tram/bus card to travel nearby location for free of cost.

Selective Modules Taught at EM Normandie  


The curriculum comprised of 10 ECTS Credits (2 ECTS Credits per module).  Three modules of 15 hours of face-to-face teaching, one module of comprising two tutorial of 30 minutes each, and one module of business/cultural visits.

  1. Business Start-up- Prof. Max Mikael Bjorling

The students learnt about important Aspects and theories of business start-up, various aspects of entrepreneurship, thinking out-of-the-box as entrepreneurs and about the importance of being creative and how creativity fosters entrepreneurship.  They were asked to write a report (not exceeding 2000 words) on entrepreneurial ideas/ventures related to setting up of tourism-firm that would attract tourists from India to France.

  1. Doing Business in France. Prof. Marie-Pierre Seznec

The students learnt about French business-culture, legal framework, and values taught from school to business. They had to choose a Normand company, and provide an overview. They then had to choose Indian company that might establish partnership with the Normand company, providing overview of Indian company and researching on the potential partnership. The focus was on creative presentations.

  1. Supply Chain Management, Professor Roger Soulieux

Student learnt about the concept of supply chain and logistics, inventory and flow management, inventory cost management. The module included live experience of supply chain management (distribution network) at Le Havre Port.

  1. Business Project. Alain De Lamaziere

Students worked in groups. Analysis of Lingerie and Swimsuit (L&S) business in the EU. They had the task of up L&S Company; looking at setting up/collaborating with the French L&S business in other EU countries; forming strategy and developing hypothetical financials. The students were encouraged to visit stores and enquire about the pricing and marketing strategy. They were asked to place emphasis on e-marketing. The assessment was based on group presentation.

  1. Business Environment –Visits

In addition with this the students were also explained about the rules and regulations to be followed in college and hotel. Each and every student was provided on the same day with a unique identity card and a tram/bus card to travel nearby location for free of cost.

The program was planned in such a way that there were class room lectures and related excursions. At the end the students were asked to present a power point presentation in three modules and multiple choice question in SCM module. The students were rated on scale of 20 in business project and top 3 business plan i.e. groups were appreciated for their work. In business startup module the students were asked to present their idea individually on how tourism in Normandie can attract Indian tourist..

The Wonders of France (Paris, Belgium, Amsterdam and Switzerland)


A surprise team building activity was also organized for all in an amusement park called Festyland, where students were assigned to capture pictures and videos and finally produce a digital file which was discussed in terms of business in front of Mr. Lair, Director of Festyland.

In addition to this students were taken to Caramel D’isigny where they tasted the caramel products and were showed the entire process how caramel chocolates are made.  Another excursion was also made to cider factory i.e. Billy’s farm where the students there shown the process of making cider and how apples can help in making business. Students were allowed to taste the different kinds of cider and buy these from the firm.

A trip was also planned for the students to Paris. Each student was given a blue t-shirt with the brand tag of EM Normandie on it for the trip. Students were shown the 360° view of Paris from Montparnasse tower. In addition to this student were also shown some of the major brand and historical monuments like Arc De Triomphe and finally dropped to Eiffel tower where photoshoot was done and students were allowed to enjoy on their own. Finally a relaxing trip on cruise down the river Seine was organized which proved out a great way to see many of Paris’ famous landmarks and sights.

Over the weekends everyone was allowed to go for the places they wished. Majorly students targeted Belgium, Amsterdam and Switzerland. The expense for this trip was on their own. But before leaving from the hotel they were asked to give a written information of the places they were visiting and the contact numbers, including the hotel and travelling tickets details. This information was circulated to IILM as well as EM Normandie so as to keep a tract to the student’s safety and security.

Au Revoir!


The 26 days for the student ended with lot of fun and learning at EM Normandie. Student who exceled in their work were appreciated from university side and a dinner at was organized for all in an Indian restaurant. Finally on 30th morning the students were dropped to the Paris airport to back to India.

IILM has invited Prof. Bjorling to conduct sessions in Lodhi Road campus on Business Startup. IILM is awaiting his consent. Dr. Gurpreet Singh Bhatia has initiated case study in collaboration with EM Normandie faculty, Dr. Marie.

The students gained business-knowledge (digital and strategic marketing; operations; financials; business strategy and development; supply chain management and logistics) and the curriculum helped them develop soft skills (team-work, time management, and oral defense).