Thursday, March 5, 2009

Who gets first knocked out in a recession?

I    Introduction

The question addressed here is, whether it is the small-scale unit or the large-scale unit that goes out of the market first, when economy is embroiled in a recessionary spiral. The paper explores the history of business failure in India to find some evidence on the same.


It is commonly perceived that big firms have much more resilience and resistance to adverse market conditions compared to small scale units because of their economies of scale, high profit margins and accumulated reserves. However, the year 2008 seems to be an year of "fall of giants". The melting heat was first experienced by the developed countries. The big names in financial sector like AIG- the largest insurer, Lehman- the biggest investment banker, Wa Mu - US's largest saving and loan bank were the first to bite the dust with the onset of sub-prime crisis. In the manufacturing sector, the auto giants who account for 4% of the GDP of US like GM and Chrysler are coming close to bankruptcy. The firms which had started laying-off people massively are not the small ones but big firms like the mining giant Anglo American, Rio Tinto, IT tycoon Microsoft etc. The media industry, which survived on advertisement revenues, opened their roll with New York Times and Tribunal.


II     What does the theory say?

There are several factors like managerial inefficiency, competitive forces, entry deterrence strategies of rivals, macro economic pressures, policy measures of government etc. which could be put together to explain business failure. In this paper, we limit ourselves to the "size" aspect of failure putting it against a recessionary background.

The organisational ecology theories (the underlying analogy is that firms are like organisms starting their life small, then mature, produce offspring and eventually die) focus on the age and size aspects of business failures and their interrelationships. One such hypothesis in the organisational ecology- 'liability of smallness' (small firms tend to exit fast) as
propounded by Aldrich and Auster (1986) emerges from lack of sufficient financial resources, managerial weakness, limited access to information and operational weaknesses like inadequate capacity utilization, inability to change according to market conditions and so on. Since organizations start small, it is difficult to disentangle the influence of newness and smallness. In fact youth and smallness are the greatest liabilities for the organization. There are many studies showing that it is the newness rather than the smallness that make small firms more prone to sickness. According to the available literature, evidences exist in both directions. Some studies put small firms superior to large firms and some others, vice versa.

Towards mid 1980's the concept of declining industries came up, where the important competitive move is disinvestments rather than investment, as happens during a recession or in the case of a technologically obsolete product. When exit becomes imperative, the firms should reduce capacity to remain profitable. But, capacity reduction is a public good, which should be provided privately by any of the existing firms. Hence, each firm would like its competitor to shoulder the reduction and the real question is who gives in first. This timing game in a declining industry is therefore a war of attrition rather than a race to pre-empt. Ghemawat and Nalebuff (1985) pointed out that in declining industry with a duopoly setup where exit becomes an all or nothing situation, the smaller of the two equally efficient duopolists will force its larger rival to exit as soon as duopoly profits turned negative. This was under the assumption that firms are perfectly informed about their competitors' costs and capacity and re-entry after exit is not allowed. If one relax the assumption of complete information, thus efficiency, and provide for uncertainty about rivals' costs, then there will be sequential equilibrium in the duopoly. When the expectations are symmetric, if exit occurs it will be the less efficient firm that leaves. Londregan (1989) allowing for re-entry and under the assumption of positive re-entry costs concluded that smallness would be an advantage during the decline and by backward induction during the growth phase.

Towards the end of 1980's the studies on multi-plant firms came up to provide for the adjustments in capacity during a declining phase. Whinston (1987) argued that it is difficult to reach any general conclusions regarding plant closures if capacity is adjustable only in lumpsum. In a later article (1988) he argued that when firms have different sized plants, multiple equilibria are possible, i.e. the largest firm will not necessarily be the first to exit or cut capacity. Ghemawat and Nalebuff (1990) gave firms greater strategic flexibility by letting them continuously adjusts their capacities as demand decreases. They found that large firms would first reduce capacity; continues so until they have shrunk to the size of their formerly smaller rivals; then all competitors with identical capacities reduce together. Under the assumption that firms are capable of incremental reduction in capacity, Leiberman M.B (1990) brought out two sets of predictions. If larger firms are more efficient and have economies of scale then such differences would cause smaller producers to be shaken out relatively early during a declining phase. In the absence of this cost difference, smaller firms would be profitable over longer periods as demand tapers off to zero. Given the superior ability of small firms to stake out, larger firms would rationally choose to exit early or would mimic their smaller rivals by drastically cutting capacity. In all these literatures, the relatively superior staying power of the small firms is emphasized. Stretching this concept of declining industry to a recessionary period when players appears to be too many, then one can probably say that the rate at which small firms exit from the market will be lower than the rate at which large firms leave the market during the depression phase of the economy.

During a recessionary phase hideout problems and Common Pool Problems
as propounded by Brigham et al. (1999) can accentuate the failure of firms by offering credible threats to restructuring and reorganization, once the firm identifies a problem that can lead to failure. Hide out problem is the difficulty in getting all the parties involved, to agree to a voluntary and informal reorganization plan. Common Pool Problem is the aggressive tendency on the part of individual creditors to foreclose or attach the properties of a defaulting firm even though it is worth more as an ongoing concern. This is because the attachment by one creditor would always reduce the value of the assets, hence operating cash flow. As a result, the value of the remaining creditors' claims would decline. Even those creditors who understand the merits of keeping the firm alive would be forced to foreclose because the foreclosure by other creditors would reduce the payoffs to those who do not. These factors operate irrespective of whether a firm is small or big. The tempo of business failure builds up if the institutions financing industry are in shambles. Thus a deflation arising out of bank failures can increase the number of failed firms in an economy. A more highly leveraged firm will have a greater difficulty in withstanding deflation and banking crises. This is because when information is asymmetric, firms' cost of external funds will depend on their networth and the ability of the banking system to issue loans. Thus during a recession, there will be a disproportionate increase in the cost of financing for the credit-constrained firms (or one with an already high debt-equity ratio) and thus an increase in their likelihood of failure.

Richardson, Kane and Lobinger (1998) talk about how, the aggressive growth strategies followed by firms can be detrimental to their existence during a recession. For these strategies to be successful, two conditions are to be fulfilled;

Both these factors typically weaken following a peak in the business cycle because prices and aggregate market supply declines as demand dwindles. This will reduce profitability and cash flows. Hence, liquidity from both, operating cash flows and available financial cash flows declines resulting in increased recession-induced default risk.

III     Evidence from India

In India, the concept of 'business failure' itself is alien as we uniquely termed it as 'industrial sickness'. In the 1980's enterprises never died though they failed; they were only allowed to remain "sick". Apart from there being many hurdles for entry, exit was also prohibited in order to protect labour-interests, exhibiting a phobia towards the closure of even the most inefficient units. This made India the unique abode of industrial sickness, where firms that must have otherwise been thrown out of the market, continued there with government support. Now with the proposed winding up of BIFR and introduction of SARFAESI Act market forces operate to a great extent in the exit or winding up of firms, such that the concept of "business failure" truly fits in.


The last recessionary phase of 1997-2003 wherein firms were more or less open to market forces with respect to their survival or exit is used as a reference period for analysing the shakeout pattern in the Indian scenario. For providing a background, the shakeout pattern in the previous period of industrial sickness 1983-92 is also given.


Average Annual Growth Rate of sick SSI units and sick/weak non-SSI units financed by scheduled commercial banks


Sick SSI

Sick Non-SSI

non SSI units including weak units

Total including weak units



Real Amount O/S


Real Amount O/S


Real Amount O/S


Real Amount O/S




















Few interesting observations are:

  1. Looking closely at the yearly movements in the number of sick units, we realise that our large and medium scale units are vulnerable to external imbalances and sudden policy shifts much more than the small scale units. When Rajive Gandhi's government attempted moderate dozes of liberalisation, the effect was immediately visible in the trend of non-SSI sickness which tripled (SSI sickness doubled for the same year 1987). Similarly when recession hit the economy in 1997, the first set of industries to feel the impact appears to be in the non-SSI sector. (See Figure) By March 1998, sick non-SSI units grew by 4.2% whereas sick SSI units continued its decline (-5.7% per annum). However there was a sharp increase by 38% in March 1999 with respect to SSI sickness. This might be due to the slightly upward revision in the definition of SSI units (which have taken effect during 1998-99) as those units with Rs. 300 lakhs investment in plant and machinery instead of Rs. 60 lakhs as defined earlier. (In 1999, the definition of SSI was reverted to Rs. 100 lakhs investment in plant and machinery; See endnotes for definition of SSI's over time) It is not to say that recession did not have any impact on sickness in the SSI sector. In all likelihood, as theories on declining industries suggest, there seems to be a delay of one year for the small scale sector to get impacted.

    This time lag can be attributed to the flexibility and superior staying power of small industries in a depression phase. Many studies by SIDO and NCAER have shown that the technological advancement has made the SSI's more efficient in the post liberalisation period thus reducing their failure rate. In other words, technology is compensating for the disadvantages associated with small size. In recessionary years, their smallness itself is shown to be a blessing in disguise, especially when they are technically efficient.


    1. Another, interesting feature of the shakeout pattern in India is that the post-reform period is marked by a drastic reduction in the viability of sick units which indicates that chances are high for the practise of creative accounting among those who have fallen sick. In the year 1990 the outstanding credit that could be redeemed was 39% of the total amount blocked. In 2001, the amount that can be redeemed from the potentially viable units reduces to less than half of it- 17%. This has to be read along with the reduction in the percentage of weak units, which fell from 71% in 1980 to 12% in 2003. The dual classification of non-SSI sickness –Sick and Weak units- was supposed to take care of the early detection of sickness. However, the disgracefulness of 'weak status' force firms to cover their sickness and go for creative accounting, where losses and networth erosion appears only when it becomes impossible to hide it. This is substantiated by the fact that many of the annual reports do not show losses even when the firms are defaulters to their creditors. This is an after-effect of the common pool problem discussed above. Given that failure has a history, it is highly unlikely that firms fall sick on one fine morning. Stories of Satyam and other such corporate scandals points to this effect.


IV    Conclusion

It appears that the non-SSI sector in India is more vulnerable to recession than the small scale sector. In the present recession also, our small scale sector might be much more resilient due to its superior staying power in a declining phase. Perhaps government intervention is required in terms of avoiding the hide-out problem and common pool problem, such that effective restructuring and reorganisation of failed units is possible. This is particularly needed in a recessionary phase consequent upon bank failures. There is also a felt need for strengthening the capital structure of Indian firms (reducing the debt –equity ratio) in such a way that equity financing gives firms the superior staying power in a period of credit squeeze. Hence arises, the need to strengthen and deepen the stock markets which reduces the cost of capital (ownership) to Indian firms.

Saturday, August 30, 2008

The Steel Economics: Firms’ Perspective

The Steel Economics: Firms’ Perspective

The hot metal is hot both on account of rising prices (Sudhir Shyam, IES Today, 7 July 2008) and rising production expectations. Here an attempt is made to look at the pertinent issues plaguing the steel sector, based on my interaction with plant managers at Bhilai Steel Plant in July 2008. The paper considers the issues of vertical integration, iron ore export policy, input price rationalization, product diversification and technological challenges from the perspective of steel firms, particularly SAIL

Steel Sector in India: The production of steel increased from 1.2 MT in 1950-51 to 53 MT in 2008 but still it is only one tenth of the present Chinese production (Table 1). The last phase starting from the year 2000 onwards (Chart 1) has shown a steep increase in production due to the entry of private players and if that growth momentum is continued, production will be 200 MT by 2020[i]. Iron and steel sector accounted for around 10% of the growth in the manufacturing sector in the last fiscal (Source: Economic Survey 2007-08). However, the per capita consumption is a mere 43 Kg in 2006-07 as against the global average of 197 Kg and China’s average figure of 307 Kg. Worse, the per capita consumption in the rural areas is just 2 Kg compared to 70 Kg in the urban areas. This signifies the scope of expansion India can have. Around 193 MoUs worth Rs.5.14 lakh crores for 240 MT of steel have been signed to cater to this prospective demand.

Strategy of going big: The “steely resolve” to fight back against odd times and ways of 1980’s and 90’s has put the steel firms on a sustained half a decade long growth path since 2000. And with the surging Olympic demand from China and the rest of the world, profit figures of the companies have finally reached acceptable levels. Now the focus is on sustainability for which consolidation and vertical integration are sought after. The vertically integrated companies with sufficient economies of scale are turning out to be the least cost players in the market, for instance Tata Steel with its captive coal mines[ii]. Steel Industry has been violating all perceived laws of nature while being on this consolidation move. Now this is an industry where small fishes eat big fishes. Acquisition of Corus by Tata and Arcellor by Mittal occurred due to this pressing need for consolidation. Tata jumped from 45th position at the global level to the 6th position after the deal. Now Mittal’s production is 3.3 times higher than the second highest producer-Nippon Steel. However, this should alert the regulators to possible monopolistic tendencies in the sector.
Story of Input price increase: Sudhir Shyam, (IES Today, 7 July 2008) had presented the apprehension about steel firms raising prices, taking advantage of rising demand though the claim is based on rising input costs. The selling price was 1.5 times the cost per ton of steel (for SAIL which contributes to around 28% of total production in the country) in 2004. This increased to 1.63 times in 2007-08 (Chart 2). However, this should be viewed against the 20 year long slump in steel market during 1980-2000.
Though there is no dearth of iron ore the prices of iron ore are shooting up. According to IISI, only three firms (CVRD -Vale, Rio Tinto and BHP Billiton) account for 70% of the sea borne trade in iron ore which makes one suspicious of cartelled foul play at the input level though steel firms are at present devoid of cartel arrangements. BHP Billiton is trying to take over Rio Tinto which means, the merged entity will have control over more than 40% of the global iron ore production- same share the oil cartel –OPEC is having at the global level. For strategic reasons the biggest steel producer China is planning to use its Sovereign Wealth Fund to increase its stake in key input suppliers like Rio Tinto. In India, production is mostly based on captive mines hence iron ore price hike has not affected them materially in the short run. The pertinent issue is the rise in the price of imported coke and various ferro alloys which increased on an average by 77% and 33-636% respectively during 2004-08 (Source SAIL). As these resources are to be imported, securing long term supply arrangements is vital to the sustainability of profits.
Export of iron ore: killing the goose laying the golden Egg? China- the biggest producer of steel in the world depends on imported iron ore, allegedly saving its huge reserves for commanding a monopoly position in future. In fact 91.2% of the Indian iron ore exports, which is priced at half the domestic prices, are purchased by China[iii]. Though India is the 4th largest producer of iron ore (China being first), its reserves are meant to last only for 104 years. Is strengthening the bilateral trade with China strong enough a reason to permit this? Or is this a reincarnation of the drain theory? Above all, iron ore comes from those states which are reeling under resource curse, where poverty is at its highest despite being resource rich. Hence a right export-policy and translation of its benefits into high royalty payments to these states is crucial.

The cost of quality improvement is very costly as BIS’s quality standards provide grades whose ranges are large enough to prevent product differentiation. Hence firms do not have enough incentives to improve upon the quality of the apparently homogenous steel products and cash in by charging differential prices. Instead, the sensitivity analysis done at the firm level (Table 2) shows that by changing the coke firing rate or yield rates at mills, firms stand to benefit more. Product diversification is (Table 3) also a preferred option for steel firms. The Bhilai Steel Plant (BSP) of SAIL has a long record of making profit even when other firms of SAIL were running in losses. This is attributed to the diverse product mix (especially production of rail) of BSP. To prevent the hotmetal going back into the hotbed of overproduction and glut, brand loyalty through product differentiation and quality improvement are imperative.
In fact, India’s production of saleable steel is only one fifth of the hot metal it produces. This shows the efficiency gains India has to aim for. Technological progress has eluded the blast furnace and coke oven batteries[iv] which industry experts say, world over is a problem. Sometimes the technology of the user industry itself limits the growth prospects of firms. For instance, BSP has the capability to produce half a km long rails (instead of the present 32m long rail) which reduces the accident rate and cost of repairs and maintenance substantially. But Railway does not have the wagons to transport it.

India steel summit identified 6 important challenges for the steel companies: climate change (industry alone accounts for 5-6% of global CO2 emissions with China alone accounting for 50% of it. In India 15% of the GHG emissions are by the steel companies), raw materials, people (creating a zero accident rate environment alongside better human resource management), capacity investments, growing the market in construction, and the image of steel kept free from that of a dirty hot shop. To reduce CO2 emissions in the light of Kyoto protocol, there is a need to further maximize the recycling of end-of-life steel. With the proposed expansion in steel production, it is of utmost importance that India should not end up as a net buyer of carbon credits.

Role of Government and PSUs: To meet the targeted doubling of capacity, PSUs believe they need fast track decisions from the government, specially on land clearances. The capacity expansion drive when it was first conceived was targeted at an estimated cost of Rs. 26,000 cr, but at present the drive would entail an expenditure of Rs.90,000 cr. However, the debt equity ratio of SAIL is just 0.12 compared to 2-5 for private players like Tata Steel or Jindal. This implies that the PSU can actually go on an expansion drive on its own without creating much future liabilities.

The increase in the share of private players would significantly reduce the governments’ control over price, especially in the inflation scenario that might accompany the high growth trajectory. However, the entry of private players has brought in the much needed technological and efficiency concerns in the industry. The biggest relief is that all stakeholders have started thinking big and is all set to support the globe on our steel frames.

[i] The Joint Plant Committee has initially set a target of 100 MT of steel by 2018
[ii] Arcelor Mittal plans to produce 80 percent of its ore in the next decade, up from 45 percent now, to maximize profits from U.S. steel prices that are at a record-high $1,068 a ton… Bloomberg
[iii] While the net sales realization from exports ranged from Rs 538 per tonne to Rs 1,292 per tonne, domestic price ranged from Rs 1,783 per tonne to Rs 2,546 per tonne. (ET, 17 July 2008, quoting NMDC) Hence NMDC was planning to seek the imposition of ad valorem export duty of 15% matching up with the 65% increase in the international benchmark prices
[iv] Coke oven batteries produces the enriched coke for firing in the blast furnace

(This write up was published on IES today on 29/08/2008)

Tuesday, July 22, 2008

Economies of Scale and Property Rights in Farming: Story of Kayal Murickan

When the world is trying to grapple with another food crisis, I am taken back to the food crisis of 1930's in Travancore. This is the story of my neighbour Mr. Thomman Joseph, Murickummoottl alias the "Kayal Raja" (King of Lakes) or "Kayal Murickan" who responded to the desperate calls of the then Travancore Raja to enhance food production. He asked for freedom of operation and Raja granted it readily thus making Murickan the first farm-entrepreneur of the region.

What makes Kayal Murickan Unique?

Murickan is a saviour to those who faced the famine during and after the World War II. Since his first harvest of 1935, he used to bring out 4000 tonnes of rice per annum by cultivating below the sea level, on the lake bed, similar to dykes of Holland. Under high risk conditions he cultivated perhaps, for the first time below the sea level, without posing any environmental hazards and by employing around 3000 people. Kuttanadu has not known famine since the time of Murickan .

His Entrepreneurial Strategy

Murickan identified the shallow fertile region at the conjugation of rivers and constructed a rounded bund of around 15 feet width, using coconut logs, bamboo poles and river silt. Then, from inside the rounded bund the water was drained (initially manually and in later years using motors) and on the clear fertile lake bed farming was done. The bund was further strengthened using rocks and coconut trees and tillers lived in the small huts built on the bunds. Thus he created around 2152 acres of cultivable lake bed divided into three, each one named after the royal member of the Travancore Palace who inaugurated it.

I. Chithira kayal [Q block] = 900 acres

II Marthandam kayal [S block] = 652 acres

III. Rani kayal [T block] = 600 acres

The lakes received the much needed constant vigil and uncompromising commitment from Murickan and his tillers. The land was fertile and did not command the use of fertilizers. He reaped the economies of scale and had gainful cultivation for around 37 years till the left Govt. in Kerala identified him as a petty bourgeois. (click here to see the animated graphics of his farming technique)

History of destruction

The trail of destruction starts with the rift created between farmers and tillers on the wings of communist ideology. In 1969 farmers asked for a wage hike, which was not agreeable to Murickan and other farmers in the Kuttanadu region and the latter threatened to keep the land fallow. In 1972, left govt. of Kerala issued an arrest warrant for him and seized around 1935 acres of land from Murickan. The legal battle (1972-84) went up to Supreme Court but Murickan's compensation was just enough to meet the court expenses. This proud farmer did not bother to divide his land in binami names to manipulate the ceiling level, like many big farmers in the region and had to content with the fragments.

During 1972-75 farming in QST blocks were directly under the control of Dept. of Agriculture and revenue. In 1975 the declared surplus land of 1600 acres were distributed among 1580 "tillers" from among 16,000 applications. The curious twist is that land was divided mainly according to political affiliations rather than based on tiller status. (CPM = 480, Congress = 380, CPI= 360, RSP= 360) From 1975-1990 farmers co-operatives were formed under the directives of the Govt but could not make profit except during 1984-86 when the Dy. Collector of the region took a direct involvement in the farming. By 1990 the cumulative losses from the lakes were too high and Govt withdrew from the scene. In 1990, the then Nayanar Govt (left) formed three Paddy Producing Societies in 3 lakes, each one dominated by a political party.

Marthandam - Congress

Chithira - RSP

Rani - CPI & CPM

Societies decided to take farm loans by keeping farmers' property deeds as collateral. However, only Marthandam lake could repay the loan. Rani & Chithira lake incurred losses [Rs. 7 lakhs and 5 lakhs respectively]
The CPI, CPM and RSP party leaders secretly contracted the land to outsiders who in turn sub-contracted it to others. The bank loans were not repaid by the political leaders (3.75 lakh repaid in Chithira lake) and farmers lost their land leading to ultimate stoppage of farming. By 1995 Chithira and Rani became fallow and farming continues for namesake in Marthandam. In one of the blocks, auctioned land was purchased by the CPM controlled co-operative bank itself and was later sold out for a paltry sum of Rs. 60 lakhs to tourist lobbies, though Govt had asked to sell it at Rs. 75 lakhs. Upon enquiry by the Dept of Co-operation the governing board of the bank was dismissed. Even now no action has been taken in repatriating the land to the farmers, as political parties consider it as a loss of face.

At present lakes are illegally dredged to mine white shells worth crores of rupees and to let boats in, bunds were breached. Thus the mighty 15 feet wide bunds which survived the fury of nature for around half a century succumbed to exploitative forces. In many places the reclaimed land merged with the lake. Deep trenches on the lakebed created out of mining makes paddy cultivation almost impossible now.

What went wrong? The lessons learned

Take over of Murickan's land is a case of mindless political intervention arose out of the failure in distinguishing between an entrepreneur and a landlord. The crime lies in dividing the seized land on party lines. Any political event could derail the timing of sowing or harvesting. In the name of socialism the Paddy Producing Societies engaged in competitive overstaffing and political fights between left party workers and Societies were quite common. Large scale corruption emerged starting from the purchase of seeds, pesticides etc to harvesting. The officers of the Govt were also too costly to be pleased. Often low quality seeds and fertilizers were used which increased the cost of operation substantially. The owner cultivators now had no connection with their land as many stayed outside the Kuttanadu region and commuting was too time consuming and costly. Farming needs constant vigil and guard and here government nor contractors / sub contractors could guarantee that. Another major factor is fragmentation and the resultant loss in economies of scale. Even high yielding varieties of seeds or technology couldn't be a substitute for scale economies.

Was the finder-keeper ethics sufficient enough to retain the property rights to Murickan who created that land out of water? Is the destruction of private property justified in the case of entrepreneurs? Who is right- Raja who assured the freedom of operation or the modern welfare Govt? Even now use of harvest machines in Kuttanad, which faces a sever shortage of farm labourers, is not a welcome move for the Govt. Sometimes I wonder who can be another Murickan- incentivized to come out with innovative technologies to save the farmers and the farm sector.

(Author acknowledges the conversations with members of Murickan's family: Jose Murickan, Kavalam, Kerala and Joseph Murickan, Peerumedu Development Society, Kerala. I also acknowledge the help received from Sunny Joseph [Malayala Manorama] and Lijo, St. Joseph's College of Communication Chry. in recreating the story. )

The story was first presented for Center for Civil Society in the Communicating Freedom Workshop held in May 25-29, 2005 at Gurgaon and later on November 12, 2005 at the Liberty and Society Seminar at Calicut Kerala

  1. [1] Kayal or lake refers to backwaters here. The land created out of lake bed is also known as kayal.

  2. Out of this 700 tonnes was the wage component. This translates to around 20 Kg of rice per month per family, sufficient enough for a 6 member family. Around 500 were the permanent employees in the farm. As per another record wages come to around 4 kooliyan for male (around 2.5 kg) and 2 kooliyans for females (around 1.5 kg) per day.

  3. He was arrested under “National Securities Act” which is generally used against terrorists

  4. Only recently Kuttanadu region got connected with roads. Till then people had to come by boats.

  5. The acquisition of Murickan’s land is generally considered as a “mistake” in land reforms even by the left party who acquired it and has publicly acknowledged it to a great extent.

How long Anti-Sexual Harassment Cells work like this???

I attempt to expose the working of an anti-sexual harassment committee (ASHC) in a 'five star' Central University. The Committee constituted in the University mirrored the same prejudices and tradition-bound analysis that predominates the rest of the University. Due to the patriarchal response system of the Committee, the initial enthusiasm generated by the establishment of Anti-Sexual Harassment Committee [ASHC] disappeared and gradually women stopped believing that it could be an effective grievance redressal mechanism and moved away from it.


Though it was mandatory, the University never had an active Anti-Sexual Harassment Cell (ASHC). The fight for a sexual harassment cell has a long history. There were many petitions, pamphlets, representation and one national colloquium was organized to pressurise the university to set this up. The national colloquium organized along with NGO's was instrumental in the document UGC gave shape to deal with sexual harassment in academic spaces.


The highest form of desecration of the female body happened when some students put up a poster on the day of holi describing the body parts of certain women in the campus. ASHC was created for after the furore it created in the campus. The success of this case brought in its wake many similar cases into the otherwise peaceful setting of the campus like e-mail harassment [sending e-mails full of obscene and sexual comments] sexual harassment cases against research guides etc.


However, the success was very much short-lived. One prominent reason for this was that ASHC made punishments a mockery. University in fact maintained a double standard regarding punishments. An University which took a tough stand of rusticating 10 Dalit students for two years for a small commotion like man-handling the warden for his casteist remarks, suspended the accused in one of the sexual harassment cases during the two months vacation time and dismissed one after he finished his course in the university. When University insisted that none of the rusticated Dalit students should be seen within campus an upper caste fellow involved in a sexual harassment case was seen in public inside the campus for the next one more year as an illegal occupant. This discrepancy in punishments has in a way accentuated the already existing caste division in the campus.


Once the initial enthusiasm got over, out-of- the-committee settlements became the norm especially when the victim and the accused were from the same community or department. Out -of -the -committee settlements are done, most of the time putting the victim and the accused round the same table as if it is a counselling session. This method has never been practiced in any of the previous cases involving violence [i.e. hostel fights, dalit-upper caste fight etc.] Only in sexual harassment cases the administration is forcing for such 'amicable' settlements. When such methods are practiced the accused finds it easy to get away with a 'secret apology" made inside the committee meeting room. No real punishments are involved in this. Here the accused has the freedom to keep his "gentleman status" and spreads numerous false things about the victim once he is outside the meeting room. On the other hand "something is better than none" attitude prevents victims from proceeding further or standing firm on their cases with the catastrophic result that the number of cases actually taken to the committee reduced over time. The discontent with the proceedings went to such an extreme that a recent incidence of rape, which happened very much within the campus, did not even reach the committee.


Many a girls who had to go through the proceedings of the committee felt that the esteemed faculty members should be taught what the word sexual harassment means. The frivolous comments or observations made by the members of the committee often irked the sensitive population. Attempts to lighten the cases as 'eve teasings' were commonly made allegations. The members seem to be waiting for a rape case to handle it as the sexual harassment case. To add to this, in some of the cases the victims finally got the status of the accused. In one of the sittings, one member commented that threatening made by the victim's would-be to the accused will be considered as goondaism and will be dealt with seriously, because it is an act of indiscipline. Victims had to face many insensitive questions from the committee members including allegations like "provocation by the victims". The committee members were not qualitatively different from those who sat outside and made comments like "the girls asked for it". If it was a case happened at wee hours the immediate question would be "why you girls go to the department at this time?" In a 2000 acre residential campus, where researchers toil in day and night in their laboratories, this question could not be well-meaning.


On more than one occasion, members of the committee stated that these women and the supporting feminists are "over sensitive" or "over react to things" and are worsening the situation and hence declined to take up many cases. Why would a woman file a case when it simultaneously puts her own time and dignity at stake? Only when she feels that she is powerless in effectively tackling the repeated attacks. If members of the committee had understood this they would not have made comments on "over sensitiveness". Committee does not have the right to dub a person's sensitiveness to harassments as "over sensitiveness". While doing this, the members of ASHC are also behaving like ordinary folks who always ask for hushed dealings.


Also, committee never had clear guidelines regarding the kind of cases to be taken up in the committee. During an election campaign one of the political parties circulated a pamphlet through which it attacked and assassinated the character of one of the most politically active female of another party. The committee declined to take up the case with the justification that it was a part of election campaign. The case against a research guide got dangled because of the faculty fraternity. We realised how difficult it was to raise a sexual harassment case against a faculty member in a committee consisting mostly of faculty members. Even though the committee found him guilty the administration never bothered to implement its recommendation and ordered for an "independent judicial enquiry" by a retired judge. Interestingly, complaints submitted by non-teaching staffs and female faculty members were never taken up by the committee. Also in some cases continuous harassments had made some victims paranoiac, weakening their cases. Unless the ASHC perceive these cases with some sensitivity to the nature of psychological impacts such cases can create in victims, justice would be a far cry.


The caste bias of the committee members gets reflected in the handling of the cases also. Some members of the ASHC itself revealed that caste angle is sidelined in many cases. It is notable that firm decisions were taken only when the issue was not muddled with caste angle. When lower caste women are involved as victims, knowingly or unknowingly the opinion sprouts, "she was also not quite right". Thus as Dalit women say, ASHC also ended up as an upper caste extravaganza.


ASHC also felt powerless when it came to atrocities committed by outsiders within the campus precincts. In another incident an upper caste woman was abused in a sexually toned vulgar language by a leading lawyer on the platform of a Dalit organisation working inside the campus. Since it contained many baseless arguments, the issue evoked much protest inside the campus. Efforts to publish a written apology by the lawyer or by the organisation failed because both took a firm stand that criticism against an upper-caste woman can be done in such a language, given the history of atrocities committed by the upper caste groups. The ASHC declined to file the complaint saying that issue did not come under its purview. Though an outside lawyer cannot be called in to produce an apology the ASHC could have at least made the organisation under whose banner he spoke, to make a public apology. Such an act should have made organisations more responsible and sensitive. This was an incident, which revealed the limitation of ASHC to some extent.


For long, women's organisations working inside the campus had been asking the ASHC to conduct awareness programmes for female students either directly or indirectly through the platforms provided by other organisations in the campus. However, ASHC has limited itself to the court functions. This happened after one of its members was targeted by the chauvinistic groups for conducting classes for the first year girls. She was accused of promoting lesbianism in the campus through a pamphlet widely circulated inside the campus. For some unknown reason the case was not taken up and many felt that if a member of ASHC is not protected then what kind of protection does this committee guarantees for students. It is disheartening to see that ASHC is taking up such a baseless accusation as an excuse for not conducting awareness programmes.


The very constitution of ASHC has evoked much protest within the campus. Its independence and impartiality were never assured. It never had an outside, independent member from NGO's in it, as laid down in Supreme Court guidelines. Curiously, only married women faculty members- a majority of whose husbands are faculty members in the same University- found a place in the committee. Those women faculty members who have openly raised their voices against harassments within the campus were conveniently excluded from the committee. There was no election for the student representative to be inducted into the committee. It was always a nomination of favourites by the administration. The Dean of Students Welfare and the Chief Warden, [who are also members of the discipline committee] were always members of ASHC irrespective of their level of sensitiveness. Apart from all these, the members of the Dalit community were either underrepresented or not represented at all.



University campuses are also witnessing the ever-deepening tension between the gendered forces. More and more girls will come up and ask for their rights and negotiate for equal space. Unless such expressions for justice and feelings of hurt are properly taken into account, a peaceful family or society will be a mirage, as is proved by the increasing number of divorces and sexual crimes. Hence there is no option left for the society except entering into dialogues and a proper redressal of her grievances. There lies the need for revamping bodies like ASHC. It is the duty of ASHC to make these women feel empowered. At the same time it should ensure that in course of time the "scare phenomenon" it has created would wane away for a friendly discourse.


The present performance of the ASHC is dismal because the committee reflects the same attitudinal bias of the ordinary folks in the university. Unless the committee becomes more sensitive victims would only shy away from it. Along with it measures should be taken to correct its structural deformities. Some steps suggested to strengthen the Committee are as follows:-


  1. The ASHC should be vested with more powers and its decisions should be binding on every individual in the University.
  2. Independence and impartiality of the committee should be ensured by laying down rules regarding the intake of members.
  3. The ASHC should be empowered to handle atrocities done by outsiders within the campus.
  4. Students need to elect their representatives along with students union representatives. Faculty representatives should be judiciously appointed by the Vice-Chancellor following certain broad criteria like participation in gender issues / human rights issues, their area of research, and on the level of their sensitivity to the issue concerned.
  5. Committee members should change or rotate every year. Appointment and Retirement of Committee should be made public. It should not be handled as a family affair of the administration
  6. No member of the committee should be in other committees of the university like grievance, or disciplinary committee etc. at the same time
  7. At present the ASHC limits itself to complaints and cases. It needs to have a broader agenda in the University. Its members should undertake a "guardianship scheme" where members interact with the female members in the campus at regular intervals even without receiving complaints. This can enhance the trust and confidence on the Committee.


Wednesday, July 9, 2008

Celebration of Women’s Day: The Gender Biases in Higher Educational Institutions

"Excuse Me!!! Nowadays guys are mature. Educated youth treat women as equals…If you still talk about harassments, it is a big lie! You are trying to whip up passion". This is the typical response when somebody tries to expose the not-so-progressive minds of the so-called progressive, educated men. It is widely believed that education can make people gender sensitive. However, we are losing faith in this argument. Kerala despite its high level of literacy and educational standards maintains one of the worst records in crimes against women. Sexual harassments and discrimination in higher educational centres are not much less compared to that of other public spaces. Women's achievements are de-legitimised even in academic circles. It was in the light of increasing incidences of atrocities against women in work spaces that the Supreme Court laid down the guidelines for setting up Anti-Sexual Harassment Cells.


Here I am trying to analyse the responses of post-graduate students to a women's day celebration in the University campus. It also throws light on the caste divisions & conflicts among women that surfaced while organising the event. The modus operandi was to put up some blank chart papers in almost every part of the campus—in front of department offices, on hostel notice boards and on the walls of tea shops and shopping complexes. The students were invited to write their frank opinions and wishes about the coming event on these opinion boards. The experiment of course re-enforced the fact that even higher educational centres, are not free from the attitudinal bias against women.

Motivation for the Experiment

Two years of stay in the campus had created a feeling that there was something unusually strange in the attitude of the scholars to women's issues. We found it strange that this attitude prevailed in a centre of learning inhabited by the so-called highly educated, knowledgeable research scholars. The University has many a story to tell about women's movements in the campus. It has the dubious distinction of having scuttled a bill for women's representation in the Students' Union, though, in almost all the co-educational institutions one seat is reserved for the women. The bill could not be passed because women groups asked for important posts and also because they brought up the issue of rotational reservation for dalit women. The acrimonious debate in the Students' General Body which discussed the bill was in fact, a revelation. We heard some learned men shouting, "Let them sit in the kitchen; allowing them to study here itself is a charity". Following the failure of the bill, the chauvinistic group in the campus put up a woman candidate of their own to the post of Arts Club Secretary and made her win the elections, in order to prove to the sceptics that women can actually win the elections without the ladder of women's reservation. In fact, they proved to the society the might of their ego, which allows only those subservient women, who accept and acknowledge their supremacy, to function in the Students' Union. Women's entry into politics, most of the time, takes this lacklustre route as proved in the Assembly and Lok Sabha elections. In the Students' Union Elections never ever a woman candidate won a post other than as Arts Club Secretary. Anyway, the debates that occurred in connection with the discussion of the bill made some of us skeptical about our own hopes of qualified women winning elections independently, without the ladder of reservation. It also exploded the myth that educated men are generous and would present their reservations only in a democratic manner, because, every woman who spoke in the general body meeting in favour of reservation was greeted with howls and catcalls.


Two years later we wanted to have a one-day seminar on women's issues in general, along with film screening and cultural programmes. But Students' Union, a zero percent female represented Union, rejected our demand for funds outright. However, the university administration, floating on funds for such projects, readily granted twice the amount we asked for and directed the Students' Union to handover the sum, which would be reimbursed to their account later. The attitude of the Students' Union was reflected on the T-shirt worn by one of their representatives from whom we collected the sanctioned amount. It was, apparently, made specially for the occasion and flaunted the words: "I want a woman who can wash my clothes; can cook food for me; will be at home when I come back tired…" Those who were interested could send the application to his e-mail address, which was given at the back of his T-shirt. We still, are not very sure about what prompted him to this wild antic. But this T-shirt gave us the idea of putting up an opinion board.


The Responses-an Analysis

The boards filled up much faster than we expected—in fact, it took only a few minutes in some places. The immediate response to holding a celebration, as found expression in the boards, was "Why should there be a women's day? What about the remaining 364 days? Perhaps every bitch has a day" This response was echoed even from the Ladies hostels, in a more or less similar fashion. The architects of this response did not seem to have understood the idea behind dedicating a certain day to a particular cause. This was to take stock of the situation; it was to remind us of the gap between promises and achievements in the previous accounting periods.


In some responses there was an exhortation to the campus community to observe women's day as "black day" because "the more the lady shouts, the more the world cries" and "proactive women are not good for the society". Some responses sounded completely negative like, "shoes should be in the right place". There was a complete de-legitimisation of a woman's ability when a wily fellow drew the crude picture of a pregnant woman, below which was written, "what men cannot do, women can do". One remark went like this; "you want to celebrate women's day because you think you are oppressed and need special attention". The question that comes up here is, if women think they are not oppressed will the oppression disappear? Is the way out from oppression, is to feel there is no oppression? The response seemed to have suggested so.


Soon after the opinion boards were placed, the organisers of the event were branded as feminists, though none of them were actually working in the area of women's issues. Anyway, the title feminist was not used as a compliment. The word feminist was used in a derogatory sense everywhere inside the campus. Those who dared to ask questions were branded as feminists and were alienated almost completely. The title, "feminist" seemed to have created a kind of fear in the minds of campus folks including 'modern', 'urban' girls. Interestingly, some men also claimed themselves to be strong feminists as they were very much 'concerned' about women. Many used the term "pseudo feminist" to refer to those who stood for women's cause. There was not even a single feminist in the campus; all were alleged to be pseudo feminists. It is strange to notice how society uses words of empowerment itself to denigrate and disempower the same cause.


The scribbling revealed what many understood by the term feminist. It showed how patriarchy wanted the meaning of feminism to be understood. One in fact wrote, "Sex is everything for them". The opinion boards were filled with definitions like 'feminists are good for sex, not for marriage", "feminists are bloodsuckers, poisonous snakes and the biggest headache for men" etc. Their thesis regarding the origin of feminism was that "lack of social relations, isolation and sexual frustration lead to feminism".


The graffiti showed that the very act of coming together and holding a seminar on gender issues created a kind of sexual fear in the minds of men. This frustration and fear of their sexual supremacy being challenged were reflected in the comment "woman even when she reaches heights, at one point she should sleep under a man [sic]". Some sighed, "I hope God will save the men who are going to marry feminists". The organisers of the event were convicted for the crime of being feminists and/ or immoral women, who did not care for the rich Bharatiya tradition. They were asked to respect men, not to misuse the respect given to them, to follow Indian culture and be like Sita. There were earnest requests not to beat their husbands. The organisers were requested to "form association to show their virgin power" rather than indulge in such activities as the present one. Quite often feminists were portrayed as those having scant respect for virginity. The repeated reference to virginity and projection of feminists as immoral women show the real blow to an assertion of rights by women. Why does the negotiation for an equal space invite a sexually toned response? This is another strategy to alienate, ostracise and stigmatise those who assert their rights in order to prevent other women from joining the group. This is a powerful way of de-legitimising a cause.


An article on this issue would be incomplete without reference to the responses from the ladies' side. The typical response, "the purpose of a woman's life is to give birth to a baby and be a mother" had thankfully, many replies around it. There were observations like "a woman gives her heart and soul to her family and what she wants in return is only love and care". The linguistic route to acknowledge the superiority of man was presented in the argument, "a woman is complete only with a man". All these responses point to the patriarchal mode of thinking still prevalent among educated women, from which they have not come out. This built-in patriarchal mode of thinking among fellow women is another obstacle progressive women face on their way to freedom. Women themselves gave hushed warnings to those who break free from the traditions of tolerance and from the holy duty of upholding the morale and pride of the society. For instance, one wrote "My dad says, look at your mom! You don't have to run after ideals. Somewhere, I know, it is true". Remaining as an ideal woman, as the ever-tolerant-obedient mother ensures the continuity of the traditions. Every woman is asked to harbour this burden on her shoulders, to be like her mother or to remain in the past firmly rooted to the traditions. She is denied the present and the future. She is denied access to modernity in thoughts.


A special mention should be made about the caste divisions that surfaced during the organisation of this event. Upper caste women had been more visible and effective in asserting their rights first. But they conveniently overlooked the hurt feelings of fellow lower caste women. The conflict between an upper-caste woman and a dalit woman is not principally much different from that between a man and a woman. Opinion boards had many references to feminism as an offshoot of the 'elitist attitude' of upper caste women. The apprehension on the part of Dalit women that feminism is an upper caste extravaganza was visible when they declared themselves not to be a part of the function. However, later they joined hands and read out a declaration during the meeting in which they condemned the oppression on gender-lines as well as on caste lines and emphasised the need for coming together.


When the society is layered in many ways, any unidirectional attempt for establishing justice is futile. Any attempt to correct gender divisions should simultaneously correct the caste divisions too. However, these internal differences have been taken up as an excuse for non-cooperation to women's issues by the general crowd. An unfortunate development in the campuses all over India is that with affluence& with liberalisation many have turned hostile to issues of gender and caste discrimination, all in the name of efficiency- a concept which ironically has its root in the social and historical upbringing of the individual. In general, the student community has become more indifferent to such issues despite the show of apparent modernism.


Consequences and Events that Followed –The ASHC

The free and frank views were aired only because the scribblers never knew what the organisers were planning to do with their responses. The exhibition of the responses inside the meeting hall turned out as an authentic record of the general attitude of the scholars in the campus for those who always disbelieved it. Once the myth that academic spaces are free from sexual harassment was exploded, it was easy to set up and activate a committee on Anti- sexual harassments [ASHC], when an issue came up. The highest form of desecration of the female body happened when some students put up a poster on the day of holi describing the body parts of certain women in the campus. The success of this case brought in its wake many similar cases into the otherwise peaceful setting of the campus like e-mail harassment [sending e-mails full of obscene and sexual comments] sexual harassment cases against research guides etc. Later on we heard ASHC also lost its credibility.


So let us not be under any illusion that higher educational centres are free of harassments. As Nabneeta Dev Sen remarked, "In the women folk tradition in India, never mind where you are, which century you belong to, or what language you speak to, you are all sisters in sorrow". There has been an ever-deepening tension between the forces that wanted to see patriarchy perpetuating itself and those who wanted to break free. University campuses are not exceptional.


However, these oppositions will only intensify the movement. In our experiment, many girls who wrote, on the first day of the opinion board, about women's day celebration as an unnecessary act of creating tension changed their views toward the end of the session. As my friend Shalini, probably after being fed up with the posted opinions on the board wrote on it,


"Today I said something of my own.

But why are you looking at me

Like a stranger?

Yes! I did it deliberately!

I ran away from your kingdom.

I was your echo and shadow.

You gave me a vocabulary,

To remind, when you forget the words.

Today I heard my voice,

Saw my image…

Do you think I am alone?

I hear the murmurs and footsteps,

Outside the gate.

I'm joining them!..."


This is not an isolated opinion. More and more girls will come up and ask for their rights. They would come up and negotiate for equal space. Unless such expressions for justice and feelings of hurt are properly taken into account, a peaceful family or society will be a mirage, as is proved by the increasing number of divorces and sexual crimes. Hence there is no option left for the society except entering into dialogues and a proper redressal of her grievances. There lies the need for revamping bodies like ASHC. It is the duty of ASHC to make these women feel empowered. At the same time it should ensure that in course of time the "scare phenomenon" it has created would wane away for a friendly discourse.

Sunday, July 6, 2008

When “Effort Deficit” emerges out of UPSC Gates with best efforts… A Probationer’s Perspective

Emergence of India as a prospective global leader is widely acknowledged. As a global leader it is not just sufficient to have a good knowledge economy supported by a robust manufacturing centre, but it is essential to have a responsible and sensitive administration on the lead.

On 24th April 2008 speaking at the 9th D P Kohli Memorial Lecture the Vice President of India – Shri Hamid Anzari said: “We have a situation in which the politics of corruption and the corruption of politics fuel each other. Both impact adversely on governance and therefore on development. A UNDP report estimated that if corruption levels are reduced to those of Scandinavian countries, investment would increase by 10 per cent and the GDP growth by 1.5 per cent.” As per the latest report of the Transparency International 25% of the respondents had to pay a bribe to get things done. Worse, 90% of those interviewed felt that corruption will only increase in future. These remarks reflect upon the lack of integrity, credibility and commitment of government officials.

However it is not just corruption which plagues the steel frame of the country. Many studies have come out with robust evidence on the effort deficit (gap between what public servants know and what they actually do) by government officials in stark contrast to their capabilities. It shows the lack of inclination or motivation or incentive to utilise their capabilities for nation building. The Hota Committee[1] on civil service reforms (July 2004) held that bright and upright civil servants are not only dwindling in numbers but are also getting marginalised in the process of decision making and implementation of government programmes. The seminar organised by CAG in 2004[2] noted that absence of a system of reward and punishment in Indian executives may have partly contributed to the overall insensitivity to outcome of development schemes undertaken.

It is indisputable that for over the past one decade a significant number of mediocre candidates looking for job security, or meritorious candidates looking for power and high social status, save any intention of helping the nation are getting selected to the service. This is despite the claims of 6th Central Pay Commission (CPC) that the bright and service oriented are still attracted to civil services. In fact many enter the gates of UPSC with the best efforts, only to exhibit effort deficit later. The training institutes for probationary officers now echo the practical wisdom of pretending to be ignorant, less efficient and less enthusiastic so as to be successful in personal lives.

There are many reasons at work behind the effort deficit like, lack of fixity of tenure and absence of objective and impartial evaluation of work on the basis of annual performance targets etc. The need for performance evaluation has been talked by many commissions and agencies but was successfully pushed under the carpet by pointing out the element of subjectivity involved in any kind of evaluation. This is so when in a county like New Zealand the salaries of the secretaries are linked to their performances. The 6th CPC suggested pay band system and Performance Related Incentive Scheme (PRIS)[3] for all the civil servants in addition to an annual increment of 3.5% of the annual salary as bonus for 20% of best performing PB-3 grade officers. Even in US, when such a scheme was introduced the civil service fraternity rose to the occasion and made everybody best performers. In India due to the stipulation of “percentage of population” the civil service fraternity might rotate the chances for every one. For performing officers, more than the extra pay what they aspire for is recognition for their work and due consideration in promotion to bigger tasks rather than pushing the undeserving to key posts. The simple task of assuring transparency in promotion can correct this.

It is not to say that PRIS is totally irrelevant. Those countries (except a few like Australia) which adopted performance based pay system has not abandoned it but only corrected it for the loopholes. In India a beginning has to be made somewhere. When pension reforms were thought out by the Government, they did not touch upon the existing government staff. Rather they implemented a New Pension Scheme for the fresh recruits. Similarly such a ‘divide and rule policy’ can also be tried out here. The new recruits who are now receiving a pay package similar to those in private enterprises (the basic for the fresh recruit is Rs. 21,000) can be subjected to the performance evaluation scheme from the very beginning and can be considered for the bonus.

Bringing all the civil servants to performance based evaluation is too ambitious. Any front line attack on bureaucracy will be surely opposed. The backdoor policy of making departments accountable for the money they receive from the government is a much more viable option. That is the way many countries like Australia or US have done it. The possibility of a budget cut and abolition of the section /division can perhaps wake up the sleeping giants from the crater of effort deficit. The RTI or FRBM did exactly this backdoor management of civil servants. They did not attack the civil servants straight way, but simply empowered the opposite party.

In addition, some changes also have to be made in the selection mode of UPSC. When we look at IES, the greatest challenge now, seems to get officers with policy and application interest in Economics. For IES to establish its identity as a group of professionals, it is imperative to significantly increase the intake of candidates for whom IES is the first choice. It can be corrected only through a proper selection mechanism. For instance we need to catch them young and train accordingly. Following is a tentative plan we can work out on.
Conduct the All India Exam when prospective candidates are doing their MA 1st year. By the time they finish their MA the result of the exams should be out, selecting a total of around 3 times or even 5 times the number of vacancies. (Exam can be conducted twice in a year or can be taken twice- during their first year of MA or second year of MA. In a way, chances are limited to two attempts)
Create IES quotas / Chairs in reputed Central Universities or Institutes for M.Phil (some institutes have a two year programme whereas some have only a one year programme. Hence some thought has to be given in selecting the institutes)
The selected candidates can opt for the M.Phil programme at these institutes which would sharpen their research and academic interest in the subject. For those who don’t come under any merit cum means scholarship, some stipend or scholarship can also be thought of.
After the completion of M.Phil final interviews can be held. In fact there is nothing to loose for the candidates who do not get selected.
The selected officer trainees can be sent for a one year attachment with the district collector or can be appointed as Research Officers to the District Rural Development Authority of their own home district. At this stage they need to prepare a development plan for the district and the same can be used as an evaluation mode by the cadre along with the ACR from the District Collector.
After the completion of their district attachment they should be sent to another one year of training, exposing them to the various sectoral issues as done right now. This would complete the two years of probation with the least cost on exchequer.

In this process we correct for the lack of field experience among the policy makers. Also it assures the entry of people with right attitude, right academic interest and skill set. If we fail to act now, perhaps we would fail to produce economists with global outlook and mindset as Dr. Seema Gaur pointed out on IES today (30 April 2008).
(Author is a civil servant and the views expressed here are her personal views and do not reflect the views of the government. This is an article written in the daily online newsletter of IES officers – IES today on May 5th, 2008.)

Read, every day, something no one else is reading. Think, every day, something no one else is thinking. Do, every day, something no one else would be silly enough to do. It is bad for the mind to be always part of unanimity. - Christopher Morley

[1] Administrative Reforms in the era of Liberalisation and Globaliseaton: Need for change of mindset of civil servants, P.C. Hota, Indian Journal of Public Administration Vol LIII, No.3, July-September 2007
[2] Proceedings of the Seminar on “Performance Indicators - Economic & social sectors”- held at National Academy of Audit & Accounts, Shimla on 17 /01 /2004, pp-32
[3] Chapter 2.5 of 6th CPC report