MARCH 2015 ARTHNITI

ARTHNITI Arthniti, is the annual college magazine published by SSE’s Economic Journalism club, “Arthniti”. The magazine which initially started out as an economic journal, was a compilation of articles written by students on various Economic issues and thoughts. This year, the magazine went through a few changes, and Arthniti has officially become SSE’s annual college magazine. Arthniti shall now include an update on all the events that transpired in college during the academic year, much like a yearbook! We hope you enjoy reading it!

!1

INTERVIEW WITH SSE FACULTY MEMBERS!

Read all about the lives of Pal, Shreya and KKR before SSE!

SSE WINS SIU FOOTBALL!

SSE’S BRILLIANT VICTORY AT SIU

ARTHNITI ENTERS THE BLOGGING SPHERE!

LAISSEZ FAIRE 2015 READ ALL ABOUT

SSE’S 4TH ANNUAL COLLEGE FEST

Arthniti has now become SSE’s annual college

magazine!

ARTHNITI

MARCH 2015 ARTHNITI

!2

2014-15 has been an eventful year

for SSE. The year started off with

the induction programme and culminated with the Annual Day. Throughout the

year the institute remained

extremely active with events such as Ethnic Day, Laissez Faire 2015, Sports

events and finally the farewell.

Amidst all the chaos and

excitement, SSE has surely had an

extremely fun filled and

memorable year that can be

cherished by one and all.

MARCH 2015 ARTHNITI

Editorial Team

Faculty-In-Charge: Ishita Ghosh Sushma Nayak

Chief Editor: Aishwarya Karunakaran

Consulting Editor: Geet Chawla

Economic Editor: Kaustubh Chahande and Shloka Jaiswal

Non-Economic Editor: Varun Mehta and Sanaya Chandar

Creative Team: Padmakshi Karanjkar, Vainat Desai and Sarayu Nandakumar

Reporters: Manasi Nikam, Nandita Ramesh, Akshita Mathur and Krishna Betai

Cover Design: Kripa Jayram and Rahul Gupta

Photography: Kalyani Saxena

!3

MARCH 2015 ARTHNITI

Contents S. No. Conents Page No.

1 Editorial Board’s Message 5

2 Economic Moats: Are They Necessary For A Business To Survive? 6

3 The Government’s Promises Are Incredible 9

4 The Russian Oil-igarchy 11

5 Srsly, News 13

6 Change Is A Like Runaway 15

7 Greek Austerity Tales 17

8 Laissez Faire 2015: Fest Diaries 19

9 Laissez Faire 2015: At A Glance 23

10 Dissolution Of The Planning Commission 25

11 Let’s Play A Game 26

12 Smart Cities 28

13 SSE Wins The SIU Football Tournament! 31

14 Potential Investor 33

15 Love Undoubting 34

16 Contribution Of The Indian Forging Industry To The Growth Of The Indian Economy

36

17 How Elections Affect The Economy 38

18 Faculty Interview 41

19 Rationale Behind The Irrational 43

20 Medieval India: Trade And Commerce 45

21 Ode On A Grain 48

!4

MARCH 2015 ARTHNITI

Editorial Board’s Message

The entire team at Arthniti would like to thank our teachers Sushma Ma’am,

Sukalpa Ma’am, Ishita Ghoshal Ma’am and Ishita Ghosh Ma’am, for their

continued support and encouragement.

Heartfelt thanks to our sponsors Bussan Auto Finance (Mr. K. P. Sunil and Mr.

K.R. Rajesh) without whom our magazine would have remained a dream.

!5

MARCH 2015 ARTHNITI

Economic Moats: Are They Necessary For A Business To Survive? COMPETE - Create Offbeat, Modern, Progressive & Enterprising Team of Experts

By: Sushma Nayak Aishwarya Karunakaran

What keeps you going when you know there are players around as good as you or even better?  Do things differently…is it? Or have a unique edge over them!  Yes, you've got it right. In a gung ho world where cutthroat competition seems imminent, the only way to stay in business appears ‘economic moat.’

The Swiss Alps, canals in Venice, restaurants next to the Eiffel Tower or the closest Mc. Donald’s - wherever you go, Coca Cola is one thing you can find with great ease. A drink that has been widely accepted by the world enjoys nothing but an ‘Economic Moat.’

The concept of economic moat was coined by American business magnate and philanthropist Warren Buffett. Years ago, a castle was usually protected by a moat - ‘a deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defence against attack.’ The moat would circle the castle and protect it from hostile attacks. The wider the moat, the more cosseted the castle was. Thus, according to Buffet, a ‘moat’ is the competitive advantage that a corporation enjoys over other companies in the same industry. In his words, “In business, I look for economic castles protected by unbreachable ‘moats’.” A company may attain competitive advantage through constant improvement, novelty and acts of innovation.

Coca Cola, the world’s largest non-alcoholic beverage producer, is believed to enjoy competitive advantage over its competitors. Here’s an interesting case in point. People who have known about the company’s smart strategies may be aware that soon after Roberto Goizueta took charge as CEO of Coca-Cola in the 1980s, he confronted tough competition from Pepsi that was taking a chunk of Coke's market share. His management was Pepsi-focused and targeting an increase in market share. Goizueta decided to cease competing against Pepsi and instead compete against other generic fluids. He asked his team about the average fluid intake of an American per day. The answer was 14 ounces; Coke's share of that was a meager two ounces. Goizueta said Coke needed a larger share of that market. The opponent wasn't Pepsi. It was the water, fruit juices, tea, coffee and milk that comprised the remaining 12 ounces. People should go for a Coke whenever they felt like sipping something. Consequently, Coke put up vending machines at every street corner. Sales scaled and Pepsi has found it difficult to catch up since then. In 2011, Coca Cola’s market share was at a whopping 25.9% as opposed to Pepsi’s 11.5%.

!6

MARCH 2015 ARTHNITI

! Coca Cola has a competitive advantage which probably prevents other firms from entering or competing in the industry. This could be because of the company’s ability to keep its costs low, strong branding or certain characteristics that other firms have not been able to imitate or replicate. An important aspect to be noted is that a strong value chain, nurtured through robust partnerships with suppliers, distributors and retailers, has enabled Coca Cola meet the demand of its consumers across 200 countries.

While economic moat may seem advantageous to a firm, this may not always be the case. Economic moats only protect the company from the threat of competition, however, external threats such as changes in the consumer’s tastes and preferences are not accounted for. Coke today is facing such a threat. With consumers around the world adopting a healthier diet, the consumption of coke is decreasing. Consider Mexico, the largest consumer of soft drinks in the world. Mexico has gotten its wake up call and has started taking drastic steps to improve its citizens’ diet. The state of Mexico has introduced schemes such as ‘Nutrition on the go’ which aims to maintain the BMI values of school children. Moreover, Mexico has implemented the ‘Soda tax’ and ‘Junk food tax’ that taxes sugary drinks and junk food. The State intends to charge ‘one peso per liter, or about 8 cents, on soft drinks and an 8 percent sales tax on high-calorie foods, including potato chips, sweets and cereal’ (Villegas, 2013). Similar to Mexico, people around the

!7

MARCH 2015 ARTHNITI

world are taking the issue of obesity very seriously and are making sweeping changes to their diet- which means no more coke.

!

Coca Cola’s ‘arch opponent’ Pepsi, has found a smart way to tackle this threat. While Coke has made promises to increase international sales, Pepsi has found the key in diversification. The process of change started in 2006, with Pepsi Co. appointing Indra Nooyi as its CEO. Nooyi, understanding the shift in consumers’ preference from soft drinks to healthy nutritional drinks and snacks, refocused Pepsi on water, juices and sports drinks. The company is now aiming to expand its nutritional business from $10 billion to $30 billion. Coca Cola on the other hand, promised an increase in marketing by $3 billion. While the company is making a positive effort to go healthy with Vitamin Water and Odwalla, soda continues to remain 75% of Coca Cola’s sales. Thus, the bigger question that looms ahead is, while Coke enjoys a situation of economic moat, is this subject to change? Is Coca Cola being naïve and not responding appropriately or is Pepsi Co. taking an unnecessary detour? The answer to this shall hopefully be answered in the future.

!8

MARCH 2015 ARTHNITI

The Government’s Promises Are Incredible By: Kaustubh Chahande

Suppose a government wants to discourage housing constructions in areas prone to floods, it can achieve that in a number of ways. One of which could be to declare that it would not subsidize disaster insurances or maybe warn the people that it would not compensate the residents in case of a disaster. However, people may expect that the government would compensate them anyway, because it always has done so in the past, and ignore the warning. In this manner government policies can be potentially self-defeating.

This is a classic example of a time-inconsistent problem, documented by Finn Kydland and Edward Prescott in their 1977 paper Rules Rather Than Discretion: The Inconsistency of Optimal Plans. In this paper the two economists explain how discretionary policies can be self-defeating. According to them, if governments can act at their discretion, they can break their promises, therefore the government's promises are not credible. Rational individuals forecast this breaking of promises and change their own behaviour to suit. This prevents discretionary government policy from working. Thus, governments should credibly commit to following simple rules, and not use discretionary policy.

Kydland and Prescott believed that a government’s promises of greater price stability face the same difficulty. To tackle high unemployment, it will boost the economy to improve employment figures, but this tends to push up prices. The government thus faces a trade-off and has goals at odds. Individuals recognize this and so do not have confidence in the government’s promise of low inflation. This defeats the goal of increasing employment by increasing demand, because people know that higher wages will be offset by higher prices. Accounting for rational expectations, the effect of the boost is simply higher inflation.

For this reason the two economists have proposed that instead of having a free reign to set economic policy, governments should commit to following clear rules. A more radical solution to this problem would be the introduction of an independent disciplinarian. In macroeconomic policy this kind of role can be taken by independent central banks, which place less weight on employment and more weight on low inflation than the government does. Their control of monetary policy allows the government to credibly commit to low inflation.

This paper had widespread impact. Following this research central banks around the world started to commit to a long term policy of pursuing price stability and low inflation. The U.S. had put in place an implicit policy of seeking low inflation. Subsequently, from the early 1990s, many countries such as New Zealand, Sweden and the U.K. introduced a policy of inflation targeting. This kind of targeting involves the central banks committing to pursue a defined range of inflation. Richard Rogerson, presently a faculty at the Princeton University, noted that many of such changes have been a result of the paper. The period of low inflation that arose in the 2000s

!9

MARCH 2015 ARTHNITI

is often attributed to the rise of independent central banks. Incidentally, this period was also accompanied by strong growth.

In the past few years, modern economics has taken the issue of credibility in a different stride. John Kay, from London School of Economics, notes how the blame is laid out on the commitment to establish credibility if the desired outcome is not reached. He has explained how credibility has become a dogma - credibility instead of being a tool to achieve effective economic policies has become a goal in itself.

We can try to assess the importance of credibility in financial markets by asking the question: how much does time-consistency of central bank policies matter to the investors? It is a fact that just before a central bank announcement the investors’ decisions are highly influenced by the past policies of the incumbent governor. To note this one does not have to look any further than the media coverage of financial markets before the scheduled announcements of the Reserve Bank of India or the United States Federal Reserve or any central bank as a matter of fact. But generally, how much of the expectations formed by the investors are actually derived from all knowable information about the central bank or the government? It turns out that even most of the sophisticated investors do not form most of their expectations from predictions of future public finances but conventional wisdom, and what they come across in financial news media. So instead of basing most of their investment decisions on their own analysis, they rely on opinions given by financial ‘experts’.

It is in fact interesting to note that many financial pundits retain significant credibility even after getting their predictions wrong. The biggest example of this would be the case of credit rating agencies during the Global Financial Crisis of 2008. Companies such as Standard and Poor’s, Fitch and Moody’s gave the highest ratings to securities such as Credit Debt Obligations (CDOs) which lived up to the nickname they later received – ‘junk’. Yet the ratings these companies presently offer immensely influence investors. Hence, in important market scenarios credibility is sometimes irrelevant.

Thus in retrospect, more vital than fixating on credibility is warranting that the proposed goals will actually lead to needed outcomes, because central banks can gain credibility by sustaining price stability, however it would not matter much if price stability is not accompanied by economic growth and full employment.

!10

MARCH 2015 ARTHNITI

The Russian Oil-igarchy By: Shloka Jaiswal

Seeing how much of an effect an adverse economic climate in the form of a falling rupee and rising inflation had in the ouster of the previous government, the incumbent Modi Sarkar will definitely be relieved at the current collapse in oil prices and subsequent slowing down of inflationary forces.

Falling oil prices for a country which imports the majority of its consumed energy means a lower toll on the balance of payments, and lower inflation. On the flip side of the coin however, for oil exporting nations, falling prices ring a death knell for political and economic stability in the country.

This has become so widespread that there are UNDP reports now warning against ‘commodity dependence’, or a trend of low income countries becoming dangerously dependent on commodity exports.1 Such are the events that have resulted in economic cataclysm in Russia.

THE WAY HERE

The reasons are multi-fold. Firstly, the vertiginous assault of oil prices in the last decade has led to oil rich countries becoming extremely dependent on exports for the majority of their revenue.

Russian oil and natural gas exports amounted for 68% of their export earnings.2 Easy inflows resulting from a commodities boom largely caused by an over-consuming United States and expanding China have resulted in maximum resources in oil producing countries being poured into the oil industry , at the expense of the crippling of other industries.

A stock market index is built to give an idea of the general performance of an economy at a glance, and a cursory comparison of Russian and Indian stock indices reveals the extent to which easy money inflows from natural resources can distort incentives to develop other industries. In Indian stock indices a variety of industries all over the spectrum of technological sophistication can be found ranging from textiles to biotechnology. The market cap is also evenly distributed along different sectors. In Russia however, the majority of big companies are in the energy sector only. This is the proverbial equivalent of putting all your eggs in one oil tanker. This goes a long way in explaining why $248 Billion of market capitalisation has been eroded, leaving the Russian stock market capitalisation at $531 Billion smaller than Apple at $648 Billion.3

This lopsided development has led to socio-political inertia, with despite having a high per capita income ($23,200 adjusted for PPP), there is rampant income inequality. The 110 richest Russians own about 35% of the country’s wealth 4, and the countries cities barring Moscow and St.

!11

MARCH 2015 ARTHNITI

Petersburg are all unimpressive in size and infrastructure, all indicators of a society which is still top heavy economically and politically.5

The Russian economy in recent years had already developed the unique distinction of having negative net factor income from abroad (capital outflows recorded at $151 Billion in 2014) due to the paucity of investment opportunities inside the country.6

The nation’s financial institutions have been ravaged by crony capitalism in the form of a high number of loan defaults caused by oil companies mostly run by those close to the nation’s political elite. The cost of credit has already surpassed developing country levels, as after the collapse of the rouble had caused the central bank to raise rates by an unprecedented 550 basis points to 17% from 12.5% to increase the demand for the rouble.7

THE WAY FROM HERE

Economic adversity in the country has only been precipitated by the decline in the rouble and trade sanctions induced after alleged Russian aggression in Ukraine. 8

The Russian Government’s budget had been delicately balanced on trend of rocketing oil prices, such that the country would be in a deficit if the price of oil at any point dropped below $100 a barrel.9 With crude prices now well below $60, the effects of the price decline can be seen manifesting themselves in the form of a 0.5% decline in GDP YoY last November, the first decline since 2009, with expected contractions of up to 5% if the glut in prices persists. The projected fiscal deficit for FY15 is expected to be 0.6%.10

Despite raising interest rates, the Russian Economy will most likely be unable to retain foreign capital as S&P and Moody’s have downgraded Russian debt to just above junk level, a move which led the government to suspend ratings from these agencies in the country.11

As things stand, Vladimir Putin will have to rule will with an iron fist in a velvet glove if he is to rescue his political career from such a political quagmire. While his expansionist ambitions have suffered at the hands of a world where oil prices are falling amid booming energy consumption, he will probably have to rediscover some of his more democratic virtues if he is to convince the EU to remove the trade sanctions levied and provide economic relief to the country.

!12

MARCH 2015 ARTHNITI

Srsly, News By: Sanaya Chandar

The revolutionary powers of the internet have had far reaching impacts since the boom of the World Wide Web in the 1990s. Some say that the internet represents an anarchic society devoid of any reasonable laws to govern the goings-on of avid internet inhabitants, while others celebrate it for that very fact; that principles such as Net Neutrality give the little guys a fighting chance against their bigger, well established opponents.

The freedom granted by the internet has created a vast online forum for people all over the world to air their views that has in turn, transformed the business of disseminating news. Every major news publication and magazine has its online counterpart and a Twitter handle to ensure viewers a speedy update on the news of the world. It is even said that every major world event finds its way to Twitter before it reaches any television news channel.

With the internet becoming a hub of discussion and discourse, a new strain of news has gained in popularity: satirical news. This strain is particularly popular among the internet-using youth as they shift ever more rapidly from print and broadcast media to the world of social media. The supposed lawlessness of the internet grants these news sources the license to toe the line between politically correct and painfully, hilariously true and often, allows them to ignore that line altogether and whizz past it in their vehicles of satirical wisdom.

Last year, with the elections in full swing, we found amidst the rubble of biased and shoddily written newspaper reports, a completely objective take on the battle of Modi vs. Gandhi through John Oliver’s Last Week Tonight. While adding comedy to serious matters of the world might seem like a daunting task, this funny Brit has managed to do it seamlessly for two seasons now, tackling various issues such as the question of the death penalty in the United States or the Scottish referendum that was concluded last year. We find instances of this new way of reporting news even in India when we look at The Week that Wasn’t with Cyrus Broacha, FakingNews, News Laundry, the YouTube news channel that pokes fun at India’s professionally dodgy news reporting and puts these reports ‘out to dry’, or even the All India Bhakchod when it brings light to socially relevant issues in its own uniquely comedic way.

What makes satirical news so very appealing? For starters, humour never fails to ensure rapture and entertainment, but what’s most intriguing about satire in news is not that it presents a completely unbiased picture of world events, but with a very plainly stated opinion that colours the reporting of this news. When John Oliver talks the ostentatious welcome ceremony that Narendra Modi received at the Madison Square Garden when he visited America, he unabashedly admits to thinking that it was an unusually ostentatious greeting for a world leader. What’s so refreshing about this is that his opinion remains quite detached from the actual event, not dictated by any affiliation to any political party of news syndicate. It isn’t a doctored report,

!13

MARCH 2015 ARTHNITI

designed to laud or berate specific individuals or entities; it is a regular citizen’s outside view of the news available for everyone to read. It presents this opinion to viewers and makes them think about how it came to be. These shows do not force an opinion down the viewers’ throat; they present them with a few side of a multi-faceted debate and make them think about the validity of their own opinions.

Another interesting factor that has contributed to the popularity of satirical news is that beneath the layers of wry wit, there is a load of research that is conducted to ensure the authenticity of everything that is reported by these anchors. This research tells viewers that the opinions presented through these channels are by no means arbitrary or blindly held, but are the result of some very extensive research.

Regular news channels on the other hand, have not done much to help their cause. Sensationalism and unnecessary dramatics have made broadcasters a laughingstock in the country. When people can no longer take ‘serious’ news seriously, that’s when the answer to the question of a dash of satire becomes a firm ‘why not?’. More importantly, when the news itself is so gut-wrenchingly horrible in most cases, it becomes rather tiresome to hear a self-important news anchor rant about these atrocities; that’s when embracing the satire becomes all the more appealing.

!14

MARCH 2015 ARTHNITI

Change Is Like A Runaway Train by: Varun Mehta

Change is like a runaway train, speeding its way into our lives. A child is born into this world, frail and defenceless. His mind is a blank slate. I was once that child. I watched the world around me with the eyes of an infant, without judgement, with nothing but pure wonder and curiosity. I watched the colour of the leaves fade, I watched them wither and die. I watched the sun rise and set. I reached for the stars and the moon, trying to pluck them out of the sky and put them away in the jar by my bed. I watched the colour fade from my mother’s face, the smooth glow of it being replaced by tired lines. With every sunrise, every sunset, every flower that bloomed and shrivelled. I grew.

As I grew, I learned. The blank slate with which I came into this world changed. It grew into an endless expanse of thought and emotion; a tumbling, rolling ocean of wonder, anger, sadness, joy, and fear interspersed with opinion. Little thoughts are born every day, every minute, in dark corners of my mind, unfolding tentatively, creeping in slowly.

I soon became aware of the expectant eyes around me, watching me, studying my every move, judging me. I felt the cold, unfriendly fingers of society prying into my mind. I can no longer look at a fellow human being without judgement in my eyes. I cannot see them for what they are, for I have changed.

I will soon step into the world, as impermanent in its nature as I am. I will attempt to understand it. It will be demanded of me, that I come to terms with violence, dishonesty and unkindness. I must soon take a stand on them- either condone them or condemn them. I will be asked to partake in such cruelty in order to survive in this world and I shall do so, justifying it, calling it inevitable, in order to silence my conscience. I will settle comfortably into a mundane, quiet life, revolving around a pay cheque and all the comfort that it buys. My dreams will be locked away in a jar with the stars and moon.

I will watch the colours fade away from my eyes, my hair and my skin. I will leave behind the vigour of my youth and keep walking. I will pass by my broken dreams, and keep walking. I will look at my reflection, years from now, and I will be unable to find the child I left behind underneath all the lines on my face. I will begin to lose my senses, one at a time. I shall become prone to illness. I will watch my friends die and soon I will take my place beside them. With no fanfare, no celebration of the life I have lived. I will quietly slip away. I will die.

We are ephemeral beings, born into impermanence. To be born, to change and then to die is our destiny. In this world, the one thing that ties the present, the past and the future together, the one thing that will remain long after our bones turn to dust, is change. It is not something to be avoided or feared, but something to be embraced. I stand today on the threshold of destiny, as I have for every moment that I have lived and breathed and will continue to do so until I die. I

!15

MARCH 2015 ARTHNITI

watch the world around me changing, as it has been since the moment it was born and as it will be until the day it is reduced to dust.

Change is sudden, unexpected. It cannot be fought. It cannot be denied. It transcends class, religion, everything. It is the sole universal force that guides us all. The only tool we have in the face of this formidable force is our conscience. Unlike rocks, being constantly weathered down by wind and rain, we have the opportunity to rectify change that has happened for the worse and to be thankful for the change that happens for the good. That is why I know that I will not succumb to all the forces working to weather me down.

I will stand and fight with all my might to fill my life with the same wonder and fascination.

!16

MARCH 2015 ARTHNITI

Greek Austerity Tales Should the ‘troika’ be more sensitive the country’s demands?

By: Arshiya Rathee

Greeks drink and celebrate as the winning party Syriza gets the ‘anti-austerity’ word out to the ‘troika’ and the other EU governments. Greeks believe that their newly elected leader, Mr. Alexis Tsipras will stand up to the new day Hades (the European Central Bank, European Commission, the IMF and other European governments) and not fall in line with existing and upcoming bailout program due the end of this month. Nonetheless, will Mr. Tsipras- ‘Achilles’ personified live up to his name or default on his promises as did his predecessors after assuming the chair?

Mr. Tsipras says there has already been enough austerity measures in Europe, agreed. He further explains that these measure have done nothing but create deflation in the country, agreed. Greece’s debt has been increasing (from 120 per cent to 175 percent of its GDP), despite tax increases and spending cuts and is therefore unsustainable, not agreed! Greece has been awarded prolonged repayment periods and low interest rates, specifically in comparison to Italy and Ireland. Greece’s debt servicing stands at 1.5 per cent of its GDP, especially in the face of primary budget surplus in the third quarter of 2014. Greece should be the last country to rule its debt a ‘Herculean’ task.

Runs on bank deposits have been on a continuous rise in Greece, amounting to € 11 billion in the month of January itself, adding to the declining tax revenues. These flagging conditions together with Mr. Tsipras economic recovery plan [(i) rehire 12,000 public sector workers, (ii) put a stop to privatisation, (iii) a benign aid to downtrodden Greeks (iv) a magnanimous rise in the minimum wages], could bring to a close the economic recovery achieved last year(a 0.7 per cent growth in the third quarter of 2014, putting Greece on the top performers list of the year in Europe).

What happens if Greece rebuffs the debt payments? Nothing too drastic, just that Mrs. Merkel gets the much awaited opportunity to bust the already crumbling Greek banking system. Greece has outstanding payments due this month and early March to the IMF; which the new government has vowed to fulfil. Without successful conclusion of the end of February negotiations, Greece could miss out on € 7 billion aid this year and € 13 billion by the year 2016 from the IMF (since the troika seems disgruntled at the Greek government to impose enough reforms). Greece is dependent on official foreign support; the private lending markets have shut their doors to country in the aftermath of S&P ranking of Greece’s debt as BB+, i.e., ‘junk’; Mr. Tsipras is in no position to strike a deal in his favour and as a result on would have to default on most of his promises if not all. Mr. Tsipras has understood that, be it to sustain the economy or go on a ‘spending spree’ as his campaign’s slogan screams. No wonder, the new government has scraped off the outright debt forgiveness clause from their proposal, that too well in time! Not so mighty anymore, huh?

!17

MARCH 2015 ARTHNITI

But all said and done, Greek voters’ angst and decision in electing the left wing Syriza cannot be disputed. The bailouts and austerity programs have forced many Greeks into poverty, youth unemployment climbing up to 50 per cent and depression on a steep ascent. But Germany and the IMF just would not budge; they are adamant in refusing to consider the next round of debt relief unless Greece complies with the structural reforms (austerity courses) and continue running on fiscal deficits. German official Hans Peter Friedrich (a senior official in Mrs. Merkel’s right-centrist governing coalition) has gone on record in voicing out German animosity towards Greece -  “The Greeks have the right to elect whomever they want,’’ and “We have the right to no longer finance Greek debt”. They are not as wary of the ‘Grexit’ now as they were in 2012, although the price would be huge for both, Greece and the rest of the continent- Greek economy would be injured more and would trigger doubts of Spain, Italy and Portugal’s withdrawal from the union.

Despite everything, they are not comprehending the compounded costs of austerity which Greece would have to bear. Spending cuts would drive down the Greek economy further into a depression, deepening the wound falling tax revenues; this would force another cut to be undertaken by the government which would lead to decreasing in private spending and in no time the Greek economy would shrink to the size of an African one.

Mr. Tsipras four part plan [(i) keep 70 per cent of the present reforms and replace the rest with 10 new reforms negotiated and agreed upon by the OECD, instead of the troika; (ii) reduce primary budget surplus to a mere target of 1.5 per cent of the GDP from 3 per cent in 2015; (iii) swap debt with either ‘perpetual’ bonds- extended maturity period of 11 to 30 years or ‘GDP linked’ bonds- interest payment is linked to Greek growth; (iv) spending € 1.9 billion in ‘humanitarian assistance’] is not without logic. Though Mr. Tsipras bargaining power is rather weak, the new government’s proposal could be taken into account for negotiations.

Eurozone creditors should provide Greece the flexibility it is asking for in its reforms, for mutual interests lest anything other than that, especially in the face of formerly failed reforms to revive the Greek economy; and accord the Greek economy a chance to breathe!

!18

MARCH 2015 ARTHNITI

Laissez Faire 2015

!

Fest Diaries

Chapter 1: I Hear a Noise I don’t mean to go on a rant, but something seems to have changed recently. The other inhabitants of my educational institution have taken to some very strange behaviour. They appear to be possessed, as though some singular object is directing every action of theirs, unifying them in a frankly, alarming fashion. If I didn’t know any better, I’d say they have a true purpose, a goal to work towards.

No, it must be something else.

It was a noise that first alerted me to this bizarre turn of events. I can’t quite put my finger on it, but it must have been that distinct rustle of the wind when it decides to change direction. Maybe it was the soft clicking of the keys of a keyboard as emails were sent to anyone in possession of an email address. It could also be the faint bickering sounds of canteen deliberations, I do not know. Perhaps it was that random student who declared in high and gay tones, it’s fest time! It’s one of those things that I’ll spend a lifetime pondering without finding any answers.

Having added yet another item to my list of unanswerable, existential questions, I decided to investigate a little further into this pickle. I noticed that there was a discernible distinction between two factions of the student population: one that was very obviously affected by this virus

!19

MARCH 2015 ARTHNITI

and one that remained curiously unaffected. Now I don’t take myself for someone who is easily alarmed, but these findings made me feel extremely uneasy.

If education is a hot pot of intellectual curiosity, I am a ladle, dipping myself into it to pour out its soupy contents in a community food distribution programme.  Over the weeks, I discovered that a social order was beginning to form itself, a sort of hierarchy. I’m no anarchist, but a spontaneous social reorganisation does warrant some high level primary research.

I continued my research for several weeks and found strange patterns of behaviour in those affected by the virus. Their feathers seemed a tad ruffled and their faces screamed deceit. I saw smiles on their faces, but terror in their eyes. It scared me. Was I the only person who noticed this? As the weeks passed by, the terror grew and subsided intermittently. I only ever saw the terror when they smiled, as though they were afraid of something, but were smiling it away forcefully. Say hello to my little friend, indeed.

I also noticed that the terror was almost directly proportional to the number of periodic gatherings that the affected population formed among themselves. Each gathering would begin will an elevation of terror and end with its nullification. As per the data collected and my other findings, I can only surmise that making these small huddles in local eateries served as a sort of drug, a medical supplement, if you will.

I sit here now, perched in front of my laptop, contemplating the true purpose of this exercise and of all life itself. After all these weeks, I realised that I had hitherto only witnessed an incubation period. My readings seem to be going haywire, much like the behaviour of the affected population. More and more people are beginning to come under its sway almost voluntarily. People are running around in organised chaos and the virus has spread to other educational institutions as well. It seems that it is nigh impossible for the human body, nay, the human brain, for this is an affliction of the mind, to remain immune against this all powerful strain. It’s hard to resist the prospect of official merrymaking in the name of a higher power. I find myself wondering whether I will be immune to this epidemic. Maybe it is a question of when rather than if. There are questions that science has failed to answer and when questions posed by any research exercise find no conclusion, it is best surmised that forces, other than the ones that human beings are acquainted with, are in operation. It is time to put myself at risk and expose myself to those forces…

To be continued

!20

MARCH 2015 ARTHNITI

Chapter 2 By: Aishwarya Karunakaran

Distressed faces and agitated voices seem to have taken over the third, fourth and fifth floor of our building. If that wasn’t enough even NCC is doomed. Posters were hung and flyers were handed out. Laissez Faire 2015 is here.

In the last few months, LF ’15 had taken over every SSE student’s life, regardless of whether one was involved in the fest or not. Students, who once mocked this very fest, now work tirelessly for the same. What brought about this change? The answer is as much a mystery as the Bermuda triangle.

Over the last one week, the preparations for Laissez Faire 2015 intensified. The college was filled with pockets of students grooving to the latest Bollywood tunes, pumping their fists in the air like their very movements were vital for a continued flow of Oxygen on campus. Volunteers ran after their preys with passes for various promotional events like hungry predators. Event heads, who probably have 75% attendance over a span of five semesters, now talk about cash flow and demand-supply problems like those Suits on Reuters. Hunched backs in the computer lab sit and prepare questions for the quiz, while some others try to collect money from students desperately clutching on to their wallets. To make things more difficult, the fest is that one time of the year when even the most prodigal student will put a miser to shame.

The LF bug hasn’t hit just the students. The teachers, much like the students, can be found scuttering around campus putting pieces together for the big day. LF ’15 is the only thing on everyone’s mind.

Months of hard work and drudgery will be put to test today. The outcome, while unknown, should be of least importance. What one must take note of however, is the consistent and relentless efforts put in by the Fest committee and faculty. With every minor and major setback, they chose to rise up and fight, instead of backing down. LF -15, if nothing, will be a robust reminder of the efforts put in by the LF ’15 team.

Chapter 3 By: Padmakshi Karanjkar

It came, it saw, it conquered. LF15 was a fest to remember. And why wouldn’t it be? The organizers put in their blood and sweat into bringing about one of the most promoted and successful fests that SSE has seen.

!21

MARCH 2015 ARTHNITI

From the countless film screenings as pre-fest events, to those during the fest, and a high-energy after party, the organizers succeeded to weave the theme of films into the fest with élan.

The motley students of SSE, who on usual occasion refuse any sort of uniformity in their apparel, all donned their identical blue fest tees for the duration of this fest. If this was a Bollywood movie, I wouldn’t be surprised to see them all break into synchronized dance. And I’m sure that given the chance, they would have, for the air was charged with a contagious excitement that had been steadily growing over the preceding weeks, and even the most blasé, sat up and took notice.

Volunteers from the various committees hustled about, making sure that everything was perfect. Even if it wasn’t, well, as they say – the show must go on! And it did. The reels of our real-life fest kept rolling.Determined Event-heads turned from being like bosses into being bosses, and led their teams with panache. Dozens of students scurried all about, a few still perplexed about why they were doing so in the first place.

Blaring out musical  numbers in the afternoon certainly helped not only to amp up the entertainment quotient, but also to reel in a greater crowd for our filmy fest. Every event had some great participants, and went off without a hitch.

As for now, well, let’s roll the credits for this year’s Laissez Faire.It has just one last message for you – “I’ll be back.

LF ’15Talkies: A Glance

!22

MARCH 2015 ARTHNITI

LF ’15Talkies: A Glance

!23

MARCH 2015 ARTHNITI

!24

MARCH 2015 ARTHNITI

Dissolution Of ThePlanning Commission by: Manasi Nikam

On Independence Day, PM Narendra Modi declared his intent of abolishing the Planning Commission and instead adopting a think tank, which will function as a guiding force for sustainable development. The new body would lead the country based on creative thinking, public-private partnership, optimum utilisation of resources, utilisation of youth power of the nation, to promote the aspirations of State Governments seeking development, to empower the State Governments and to empower the federal structure.

The Planning Commission was adopted after the Soviet ‘command economy’ during the infancy of India’s independence period. The purpose was to map out a plan for India’s agrarian economy. The PC would allocate Central funds to states, sanction capital spending of the central government, provide necessary co-ordination between ministries, reconciling their priorities, and a critical long view for policymakers, executing and making the Five Year Plans. The PC was also consulted while forming the budget. Over the years, the PC emerged as a parallel cabinet.

However, now, the PM accuses the PC of having outlived its purpose. After the reforms of 1991, the role of the PC has been reduced to setting goals for the economy which are rarely adhered to. It is not accountable neither to the Parliament or the CAG of India. The states have complained that the PC uses a one size fits all policy, especially while allocating funds to states. The schemes formulated by the PC for the 5 Year Plans usually degenerate into ineffectual statements. Secondly, as the Indian economy moves toward the capitalist side, the concept of a Planning Commission, which was adopted in India after Joseph Stalin's socialist economy policy seems obsolete.

More recently, the PC was criticized for spending 50,000 $ to renovate two office toilets. Another blow came when it suggested that citizens who earn more than Rs. 27 were not poor, in a country where almost 22 % of the population is below poverty line.

I believe that Mr.Modi's mantra of “minimum government, maximum governance” will work in favour of the Indian economy. States will have more autonomy regarding the utilization of funds and the process would be decentralized to a certain extent. There is no dearth of schemes for the poor, but now ensuring that the benefits of these schemes reach the concerned is a bigger challenge. A more dynamic system must be implemented which will address issues such as climate change, sustainable development, infrastructure, health and education.

!25

MARCH 2015 ARTHNITI

Let’s Play A Game By: Nandita Ramesh

There is no economic concept more frequently used than Game Theory, the study of strategic decision making. Whether you are betting on the outcome of a match, or trying to decide an ending for your novel; if there is more than one way, Game Theory comes into play.

Since Game Theory is nothing but the science of deduction, who better to walk you through its intricacies than the greatest detective of all time: Mr. Sherlock Holmes. Assuming you are a fan or have at least watched BBC’s Sherlock, let’s take the example of the last scene of the first episode (‘Study in Pink’) to see how fascinating Game Theory really is. The episode features a serial killer who kills his victims by making them eat a pill from a bottle at gunpoint. He asks them to choose a pill from two identical bottles and eats the other pill himself. However, he claims to know which pill is poisoned and which is not. In the aforementioned scene, he forces Sherlock to play his ‘game’.

Here if we consider the payoffs as 0 for eating the good pill and -1 for eating the poisoned one and the pills are named as A and B respectively, then the payoff matrix will look somewhat like this.

Since both of them can’t take the same pill, that section of the matrix is left blank. Therefore, both the payoffs that do exist provide a 50-50 chance to each player to live and thus, there is clearly no optimal strategy. The killer has perfect knowledge (he knows which pill is poisoned) but he is forced to act according to whatever strategy Sherlock chooses. Sherlock on the other hand, lacks knowledge or has imperfect knowledge and thus, unless he finds out which pill is poisoned, he is indifferent to both choices. There is no Nash equilibrium either.

Now let us consider the addition of a third possibility. Supposing Sherlock is given another choice to either play this game or get shot by the killer, as is the scenario in the episode, then he can either take the 50% chance of staying alive or 100% chance of being dead. Since Sherlock is rational, the logical conclusion he arrives at is choosing to play the game. Here he adopts a maximin strategy, a commonly used strategy that maximizes the minimum gain that can be earned.

Now let us add to the current scenario the possibility that the gun is not real and that both

Sherlock\killer A B

A - 0,-1

B -1,0 -

!26

MARCH 2015 ARTHNITI

Sherlock and the killer are aware of this. Here we will consider the payoff for choosing the gun from Sherlock’s perspective and the payoff for choosing the game, while the circumstance of whether the gun is real is written here as the killer’s ability to shoot.

Here it is assumed that the killer gets a greater payoff in terms of satisfaction when Sherlock plays the game, but still gets some payoff if he can kill him using a gun. Whereas, Sherlock gets maximum payoff when there is complete assurance that his life is not in danger, but he still gets some payoff when he plays the game too because he has a 50% chance of winning. -1, the lowest payoff or the greatest loss, represents the scenario in which he is surely going to die. Sherlock gets maximum payoff when he chooses the gun and it isn’t real. Maximum payoff for the killer on the other hand, is when he gets Sherlock to play the game, regardless of whether he can or cannot shoot. His payoff is dependent on Sherlock’s strategy since he has given Sherlock the first mover advantage (advantage involved with moving first, i.e., taking a decision before the opponent so that the opponent has to change his/her strategy accordingly).

Since Sherlock can’t be sure whether the gun is real, he would choose to play the game, because in the event that the gun is real, there is a 100% chance that he will die, while by choosing to play the game, he gives himself at least a 50-50 chance at survival.

This situation is somewhat similar to the prisoner’s dilemma, a classic example of a Game Theory game, in which the prisoner chooses to confess because he isn’t sure whether the other prisoner will or not. However in this case, the dilemma is only Sherlock’s and not of both the players.

However, in the event that Sherlock knows for sure that the gun is a fake, he knows that the killer cannot shoot and can thus maximize his payoff by choosing not to play the game and choosing the gun, as he does in the show.

So, here it is - a thorough analysis of the plot a popular BBC series using Game Theory. Game Theory is a dynamic tool used by economists which finds its application in a host of unexpected places. Just like the ‘science of deduction’, it requires you to think of all possible outcomes and choose the one that leaves you in the best possible position, all the while remaining two moves ahead of your opponent. This nifty little theory will definitely leave you ‘Sherlocked’.

SHERLOCK\KILLER Can shoot Can’t shoot

Chooses game 1,2 1,2

Chooses gun -1,1 2,0

!27

MARCH 2015 ARTHNITI

Smart Cities India should be realistic and must prioritise wisely

By: Krishnakali Vaishnav

The ‘Modi budget’ of 2014-15 signed up India for the Smart City craze overtaking the world. The Finance Minister, Mr. Arun Jaitely had allocated Rs.7060 crores for creating hundred Smart Cities across India. (Srivas, 2014) More recently, Smart Cities wove their way into the conversations between the Indian Prime Minister and the US president, amongst discussions about nuclear deals, military projects and joint strategic statements. The surprising amount of attention accorded to this new concept calls for a closer look.

Smart Cities are not as new a concept as we would like to believe. It was put forward by IBM as a part of their ‘Smarter Planet’ campaign in the year 2008, when the world was hit by one of the worst financial crisis of its time. By 2009, this concept had captured the imaginations of countries like the USA, China, UAE and South Korea who immediately began to concentrate on investing in, experimenting with and developing this idea which finally lead to the establishment of several such Cities in these countries with support from IBM and several other players such as Google, Amazon , Cisco etc. (What are Smart Cities?, 2014)

Smart Cities are designed to be hubs of economic and business activity, having top -of- the- line physical and social infrastructure backed with new age technology and environmental friendly power. Good governance and effective institutional infrastructure are also supposed to be characteristic of these Cities. These Cities rely upon advanced information technology and communication systems to make the city ‘smarter’ and eliminate the problems faced by the current cities such as superior level- such as real time information on traffic congestion, smart grids to ensure optimal consumption of water and energy, automated sewage disposal systems and so on.

The primary aims of these Cities are to foster innovation and encourage business via streamlined regulations, advantageous taxation system and other such incentives and concessions.

Smart Cities are viewed as a medium to control the rapid urbanization observed in most countries. The stride of migration from the rural to urban areas has been increasing and it is estimated that by 2050, 70% of the world population will be living in Cities. India with its status as the fastest emerging nation is no exception. India’s population living in urban areas is expected to increase from 30% of the population in 2014 to around 41% of the population in 2030. It is estimated that the level of urbanization will reach 50% by 2039. (East Asia Forum, 2014)These new Cities are expected to absorb the influx of rural population into the cities so as to enable India to progress steadily on its growth path.

!28

MARCH 2015 ARTHNITI

It is clear that the idea of Smart Cities and the potential benefits of setting up one are lucrative to say the least but India must cautious. This sudden flurry to set up Smart Cities may not be prudent after all.

This Smart Cities at the moment are nothing but experiments, very expensive experiments, which India has ambitiously taken up and the chances of them being successful seem to be very low. India may have the technology to make Smart Cities ‘smart’, however, achieving success in Smart Cities requires more than technology. The Metros of India, which are supposed to be the most developed poles of India, have yet to find solutions to the poor infrastructure, substandard constructions, unsustainable growth and unbearable pollution. This state of the Metros is a clear indication of the plight of the rest of the cities in the country. Hence, it is doubtful as to whether setting up of Smart Cities would resolve these problems and improve the lives of the common man.

City planning has never been given priority in India and so far nothing significant has been done to control urban sprawl. This sudden drive to create superlative Cities with exceptional infrastructure and urban services has caught our bureaucrats by surprise. The urban administration and town planning authorities have the responsibility to construct these Cities and resource crunch, in terms of funds and energy, are cited as one of the major obstacles in the path of building Smart Cities. Clearly, this sudden drive to build efficient well planed urban services has been a major leap and India does not have the physical or human capital required to support this leap adequately.

It seems to be more advisable to spend the funds allocated towards building Smart Cities in improving the condition of the existing cities and improving the quality of life of their existing citizens. These funds could be used to create satellite cities to decongest the existing large cities bursting at its seams and hence relive the pressure on infrastructure. In other words, it is more advantageous to pursue setting up cities with smart elements rather than concentrate on Smart Cities.

Acquisition of land for setting up Smart Cities is another technical deterrent regarding the setting up of these Cities is the acquisition of land. In a Communist country like China, land acquisition has never been a problem whereas in a democracy like India, acquisition of land is a delicate issue and is very controversial as of today. Unlike China, India does not have the legal power or resources to takeover land stating the purpose of development. Despite governmental efforts to pass the Land Acquisition Act 2014, to replace the older less friendly set of regulations set in 1984, this problem is bound to be a major hiccup in the plans for setting up Smart Cities and may result in social and political turmoil. (Times of India, 2015)

The idea to build a hundred Smart Cities is aimed at improving the business ecosystem of India. The government however must realize that the business climate of India may be improved by

!29

MARCH 2015 ARTHNITI

simply introducing a few minor changes in the system such as altering the tax laws and making it more transparent and uniform, establishing laws with respect to litigation and bankruptcy, hastening or shortening the process of business registrations, single window clearances and so on. These simple steps would improve the ease of doing business in India by a greater degree and at a lower cost compared to setting up of Smart Cities.

The government has failed to come up with any strategic plan or even an agenda with regards to the Smart Cities and they manner in which they shall help improve the business climate of the country. Without a comprehensive plan and adequate guidelines Smart Cities will remain nothing but more than run-of-the-mill real estate projects with speculations about high returns while running over time. Therefore it is desirable for the government to concentrate specifically on resolving the specific problems faced by businesses rather than attempt to create an economic haven in an attempt to provide a suitable ecosystem for thriving business. (East Asia Forum, 2014)

Lastly, India has the majority of its population living below poverty line, homeless and plagued by hunger. Is it then morally viable to divert funds of such a large scale towards building high tech cities? Instead of aiming to provide superlative qualities of life to the rich should India not concentrate on uplifting the poor and providing them the basic facilities required to lead a healthy and respectable life? These are ethical questions which are in need of answers.

Undoubtedly, Smart Cities are the future and India should be ambitious. However, India must first address the social, economic, political and legal issues and infrastructural bottlenecks facing her existing Cities before graduating to the next level, i.e. Smart Cities. The lengthy period of 8 to 10 years required for building these establishments from scratch and the additional time period required to attract investors, entrepreneurs, businesses and residents makes the future of Smart Cities decidedly distant and uncertain. India must not try to emulate the Northern nations’ development models. India has several tasks on its agenda, most of them intricate and complex and India must prioritize wisely. Hence, Smart Cities, as of today, remain a very futuristic concept for India.

!30

MARCH 2015 ARTHNITI

SSE Wins The SIU Football Tournament!

Symbiosis School of Economics beat Symbiosis Institute of Design to win the

Symbiosis International University Football Tournament!

SSE is the only other institute other than Symbiosis Centre for Management Studies to win this tournament!

!31

MARCH 2015 ARTHNITI

The football team that has had its fair share of failures, seems to have picked themselves up and emerged victorious.

SSE beat SID in a penalty shoot out with the winning goal being scored by Dhruv Patwa.

!32

Sauvanik Das, Captain and Goal Keeper of the team was awarded ‘Best Player’ at the SIU tournament.

Das was also awarded the Hiraskar Award for Extraordinary Achievement in Sports on the Annual Day.

MARCH 2015 ARTHNITI

Potential Investor By: Rishad Chatterjee

"I made a killing in the stock market. My broker lost all my money, so I killed him." - Jim Loy.For several people, ‘investing’ has often been an inexplicable term. Many others who do invest usually do not have the slightest clue about what they are doing. However, there are a select few who have delved into the complex intricacies of investing and have emerged with two things – a valuable hobby and a noticeably fatter wallet. This article is designed to give you a brief idea about investing and hopefully it taps into a section of potential investors who have always been eager to learn the ropes of investing. Instead of simply giving you the definition of terms, the article will answer some basic yet obvious questions.We begin with the most important question – Why invest?For starters, how does life without work sound? However, it is important that you do not rush to conclusions. Please note that this article is in no way encouraging you to Zuckerberg your way out of college and use the extra money for unlimited wifi. The money up for grabs in the stock market is in unlimited supply – an absolute bounty waiting for the right person to come along and sweep her off her feet and into your pocket. Most importantly, the stock market is bursting at the seams with investors who really do not understand it. This makes it far more profitable for the ten percent who do. The thrills of the stock market ensure that you are always learning more about its complexities – your mistakes paving the way for some of your biggest payloads. Whether you want to retire on your own island or drive a Porsche to the supermarket, investing the right way is your meal ticket.It is about now that you’re asking yourself why everyone isn’t driving the neatest car on the strip. This brings me to the next question – Why isn’t everyone investing?The most obvious reason for this is because there will always be more cases of stock market failures than successes. For every Warren Buffett, there are thousands of investors who rue the day they ever got involved. Research itself does not simple ensure success. It is very important that caution is exercised when it comes down to investing. Often the most obvious buy turns out to be your absolute undoing. Investing takes a very solid knowledge, a risk-taking ability and a willingness to learn from mistakes. Those who find themselves without any of these attributes will never succeed. Finally – when is the right time to begin investing?

!33

MARCH 2015 ARTHNITI

Your research always lays the foundation for your confidence. Books such as ‘The Intelligent Investor’ by Benjamin Graham or ‘Rich Dad, Poor Dad’ by Robert Kiyosaki are recognized as solid places to begin but every investment author or guru can feed you with chunks of knowledge that fortify your learning process. Virtual stock market trading games are available on the internet and are incredibly helpful. Even scribbling fictitious trades in a book like a quintessential Jeffrey Archer character will prove beneficial. Hard work and a healthy curiosity is where you can start. When it’s the right time to begin trading, you should be rearing to go. There are several other questions. When should I buy shares? When should I sell? Which news channel guru will always help me? (None of them, incidentally) Should I be greedy or cautious?Your road to achieving ‘Investor Level: Houdini’ will definitely be challenging but with your drive, this writer is sure that you can attain such an ascension. With the right amount of caution and curiosity, your success is inevitable.   "Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it." - Peter Lynch.

!34

MARCH 2015 ARTHNITI

Love Undoubting By: Sebin Nidhiri

Snuggled in him she slept,

Sure of his warmth, her every night.

Lulled by his word, an untruth her truth,

Her peace in undoubted trust, her innocence too innocent.

Deafness her shield, Silence her sword to ward off truths unkind

For in ignorance,

her bliss, her he, is hers alone.

For that girl I pray.

If only,

Deafness and silence could true an untruth,

Undoubted trust could rewrite the written

Her love, his love hers make.

If only.

To that girl I say

Joy, not bliss. Transience, not eternity.

!35

MARCH 2015 ARTHNITI

Contribution Of The Indian Forging Industry To The Growth Of The Indian Economy By: Padmakshi Karanjkar

Shloka Jaiswal

From the smallest wrench in your toolbox, to the integral, high precision components of a Maserati, forging is responsible for the creation of a host of metal instruments and tools. The forging industry in India is a mighty one. It depends heavily on steel supply, which is in abundance in India. The wares of this industry are mostly supplied to the automobile industry. Forging is basically a process by which metal is compressed and converted into the required shape. Economically speaking, this industry is crucial to a country such as India.

The main input required for forging is steel. Not only is steel abundantly produced in India, but it is also dumped into this country by China. Though this affects the steel industry negatively, there is a positive effect of this on the forging industry itself. This is because there is an abundant supply of the raw material, which leads to low input costs. Value-addition is the key benefit of forging. This labour-intensive process produces high quality products, which are either exported directly or made into vehicle components that are then exported. There is usually a generous profit margin of 13-15% associated with this industry.

The benefits of the forging industry to the Indian economy are multi-fold:

The forging industry is very labor intensive, it employs directly and indirectly about 200,000 people. From a period between 2003 and 2008, the industry registered a Cumulative Average Growth Rate of 29%. It also contributes to the Current Account Balance as 10-15% of the produce is imported abroad ,mainly to the US, Europe and China. In 2010-11, the estimated value of exports was $800 million USD. This increase in the export of value added products is a move towards a developed economy. This is because a large number of Original Equipment Manufacturers (OEMs) started sourcing parts from Indian firms. Domestically also, the automotive boom in the first decade of the 21st century resulted in micro and small scale industries getting a foothold onto bigger and more profitable production models. In 2010-11 the estimated investments in the forging sector totaled $600 million

Hence the forging industry contributes immensely to reducing India’s unemployment and Current Account Deficit.

However, a number of factors have affected the industry’s ability to contribute to the nation’s economy. High prices of production inputs have dampened growth prospects. Recently, the

!36

MARCH 2015 ARTHNITI

industry has been lobbying for a ban on exports of high grade iron imports to China to reduce the price of the ore in India. Alternatively, the implementation of a 30% export duty has been proposed. The lowering of corporate taxes has also been pleaded, making the case for the reintroduction of the Goods and Services Tax at a rate of 8.5% instead of the current 12.5% VAT, which will bring it on par with the taxation levels in developed economies. Stringent environmental norms and policy paralysis also affected the industry growth rate. Rising oil prices increase the costs of running furnaces and quenching heated products Despite these drawbacks, forging makes a significant contribution to the growth of India's economy. It provides employment opportunities to millions and generates a noteworthy revenue. Through the years, companies such as Bharat Forge (founded in 1961) and Mahindra Forgings have been instrumental in India's economic growth.

The forging industry is a fundamental industry. It creates not only employment opportunities, but also business and production opportunities for MNCs which want to produce cheaply in India.

Thus, the growth and progress of the forging industry catalyze the advancement of not only related industries in India, but of the Indian economy as a whole.

!37

MARCH 2015 ARTHNITI

How Elections Affect The Economy By: Manasi Nikam

The Lok Sabha elections of 2014 created history, not only in terms of the mandate but in terms of expenditure as well. A whooping sum of Rs. 30,000 crores (5 billion) was spent, according to a study by the Centre for Media Studies. It is the second most expensive election, ranking behind the 2012 USA presidential campaign in which, according to the US presidential commission, 7 billion dollars were spent.

It is pointless to discuss the source of this outrageous amount. But, as an economics student, it makes me wonder, is this largesse after all good for the economy? The Associate Chamber of Commerce and Industry of India published a study, which estimates that the expenditure will have a multiplier effect of Rs.60,000 crores. Which brings us to the question how? Sectors like advertising, media, hospitality, transport witness a definite increase in demand for their services leading to an increase in the sale of equipment like video camera, packaged water, etc. Span Air, a private Indian air charter service, had leased out all five of its aircrafts to Congress at a daily cost of about $900,000. Liquor sales doubled. Unorganised sector workers like coconut sellers, drivers, vada-pav walas witness a boost in their income. Unemployed youth, daily-wage agricultural labourers are paid by candidates to attend rallies.

Even government expenditure increases as it tries to appease voters and garner votes by implementing wasteful, populist projects. A World Bank study on “Political Cycles in a Developing Economy: effect of elections in the Indian States,” has suggested an existence of a trend of populist economic policies implemented by ''opportunistic'' politicians around election times for political gain. A research paper by Harvard University economist, Shawn Cole, found out that loans sanctioned to farmers by state-run banks is 5-10 percentage points higher in election years than in the following years. Such manipulations fuel inflation in the economy.

Campaigns of political parties are largely funded by corporates and wealthy candidates. This would require a diversion of funds, funds which might have otherwise been used to make a direct business investment. For instance, consumption of steel decreases in every election year. The average growth in steel consumption in an election year is 6.45 percentage points lower compared to a non-election year.

Political uncertainty causes businessmen to delay investment projects. Key decisions are postponed till a new government is formed, to gauge the future policy environment. Industrial credit is also affected.

This leads us to conclude that election spending gives only a temporary boost to the economy. Consumption patterns change, capital expenditures take a backseat which is counter productive

!38

MARCH 2015 ARTHNITI

for the economy. India is the largest democracy in the world with more than 814 million people eligible to vote. The process of elections is inevitable but India can't afford to spend 5 billion dollars every election, when majority of the country's population lives in acute poverty. It is time for the Indian government to consider a more accountable and sustainable form of funding so that the money can be diverted to more productive investments.

!39

MARCH 2015 ARTHNITI

Faculty Interview Our faculty members play an integral part of our lives. Whether it’s for attendance or getting the 8 AM canned, they play very influential roles in our lives. Yet, as students, we only get to see one side of our faculty members. To change this, Sarayu and Padmakshi conducted an interview with KKR sir, Abhinav Pal sir and Shreya ma’am about their lives beyond SSE!

Tell us something about yourself that we don’t know already - any hobbies, talents?

S: I was in the editorial board in school and college, and was a consistent student. Other than that I have stayed in Bombay, Pune, Calcutta, Delhi. Pune remains my favourite.

A: I can beat KKR at table tennis. I have gotten a 0 in econometrics internals.

K: I have stayed in 9-10 cities. In tenth I got 36 in science, 33 in social science, but I got the highest in Pune University.

What did you aspire to do for a career while you were in grad school?

S: Food or Movie critic.

A: Investment Banker.

K: I was busy with all other things apart from studies.

Which colleges are you from? What did you think about the others’ college?

S : SRCC has good fest.

A: Venkys (fest) is good.

K: Symbi has the best student crowd.

How was your transition from Delhi to Pune?

S: Like homecoming. Pune is like home.

A: Lovely.

K: Horrible, it was very tough, not easy. Took me around one year.

!40

MARCH 2015 ARTHNITI

Did you actively participate in extra-curriculars? Fest preparation?

S: I was involved in debates, dramatics, even organized a mass bunk, shut the class, etc. However the teachers didn’t believe that it was me because I was known for being sincere and well behaved.

A: I used to play everything - table tennis, badminton, gaming. I was a ‘nerd’ till 12th standard but I did miss my re-internals due to table tennis. In my years of undergrad, I got  40%, 5%,  and 3% attendance respectively.

K: I am passionate about cooking, photography and editing, and I love driving, And of course I love trekking and teaching!!

What are your future plans? How does SSE factor in?

S: My future plan is to do more research in Urban Policy.

K: To open Ladakh School of Economics(LSE) in 8-10 yrs.

A: Be the deputy director in KKR’s institute.

Name one thing you like about SSE and one thing you wish you could change. (Grading pattern, number of projects, etc.)

S: Colleagues, kids, curriculum are what I like about the college. Processes could be more organised and timely.

A: Colleagues , kids and the liberty.

K: Colleagues, Students and curriculum, I have many opportunities and flexibility in terms of what I want to teach.

Your funniest or most memorable experience in SSE?

S: Feedback received - Geet going to Bhutan, the gratitude I got from him boosted my morale. Best memory I’ll take away from here.

A:Bashing kkr at table tennis with 21-0 score.It was memorable because he was boasting a lot about his tt skills.

K: SIU Football win, I almost cried.

!41

MARCH 2015 ARTHNITI

What do you each think of each other?

S: AP is a great stress buster, funny, learned about good movies from him. KKR has always been a huge help from the start, he’s the first person I would go to.

A: Shreya is studious, a nice colleague, KKR is funny, helpful,  known as the “Soldier of SSE”, knows everything about SSE, is very student-friendly.

K: Shreya is punctual, dedicated, committed, sincere, a wonderful person, good human, always willing to help. She should be more fun. AP is like a 16 yo kid, very candid, straightforward, always ready to help. Never says no.Very nice colleague(s), AP has habits similar to mine. Both performed as soon as they joined. As opposed to other new teachers, who often learn on the job.

How does it feel to be the only male teachers at SSE?

A: We can discuss certain things only with each other.

K: I can do things with AP that I can’t with females. There are certain boundaries with female teachers.

What advice would you give to us?

S: Students need to work hard, in everything, before giving up. Never give up, always try to improve.

A: Graduation is a time when you should have fun and study. Grades are overrated.

K: Be passionate about whatever you want to pursue. Always give your best and don’t worry about what others say.

!42

MARCH 2015 ARTHNITI

Rationale Behind The Irrational By: Nandita Ramesh

Economics is nothing if not for assumptions. And one of the biggest assumptions made concerns the existence of Homo Economicus- a rational being, who has an internally consistent set of preferences within which he tries to maximize his utility.

The truth although, to quote Gregory House, is that everybody lies. While economists would like to believe that humans back up all their acts with practical reasoning, the truth is far from it. Most decisions are based on impulse, emotions and herd mentality, or the tyranny of the majority.

If you shopped like crazy on Flipkart’s ‘Big Billion Day’ when you really didn’t need anything you bought, you probably broke the hearts of economists everywhere. That was an instance of the retailing major exploiting its consumers ‘irrationality’ for its commercial benefit. It created a fake scarcity by plastering ‘sold out’ boards on major categories, to drive a sense of urgency. What’s more, neuroscience research suggests that portions of our brains flare up when we see a discount or lower than expected price. For example, there is nothing that entices us to buy a sweater for ₹500 if we don’t need it. However, if the same sweater is shown to be worth ₹700 but available at a discounted price of ₹500, it will most likely catch our eye. It’s the secret to success of all major sales and offers, much to the horror of economists who believe in rational existence.

There also exists a phenomenon called decision fatigue. Psychologists say that our brains tend to get tired when faced with a lot of decisions and choices at once, and tend to make bad or irrational decisions toward the end due to ‘ego depletion’. Supermarkets keep candy near the payment counter, knowing that tired brains would not be thinking straight, and would buy the candy regardless of trivialities such as wants or needs.

Another popular concept is of ‘hyperbolic discounting’. People and their perception of time seem to be subjective in nature. If you are told that the mobile you want will be available only after 10 days, but a higher, more expensive model is available right now, a person is likely to buy the higher model as it gives him immediate rewards. On the other hand, if the model he wants will be available only after 10 days, but the higher model will be available in 8 days, one would prefer waiting for the model he wants.

We, being as irrational as we are, are also most likely to base decisions on what we have seen or heard recently than on economic analysis. If we see an ad too many times, or a very noteworthy campaign, we are drawn toward the products being advertised, regardless of their prices, quality

!43

MARCH 2015 ARTHNITI

or any other factors that one should consider. Trust, is also a factor that economics fails to consider most times.

If you are leaving this page feeling dumber in any way, or if your reaction looks like the famous Jackie Chan troll, believe me, rationality is overrated. If these irrational decisions are behind the functioning of real life market systems, then who is to say that rationality is of utmost importance. This is the age of behavioral economists. Where understanding decisions is important, we rope in the psychology, anthropology and even biology and neurology behind it all.

!44

MARCH 2015 ARTHNITI

Medieval India: Trade And Commerce By: Abhishek Mukherjee

Medieval India refers to the post-classical era in India. It is marked by the rise of the South Indian Empire of the Cholas in the 9th century to the fall of the Mughal Empire in the 18th century. It can be further divided into (i) The Early Medieval Period (9th to 13th century) (ii) The Late Medieval Period (13th to 18th century). This time period was hugely influenced by many Islamic thinkers like Farabi, Ghazzali and Ibn Khaldun. Other Hindu thinkers whose writings influenced state and society during that period include Sukracharya, Hemadri and Basavaraja.

This article would be covering the contrast and similarities between the Delhi Sultanate (1206-1526) and The Mughal Empire (1526-1857) with respect to their ideas of trade, commerce and industry under different rulers. By this article, we would be able to trace the growth of economic thought through the 13th Century to the 19th Century.

This paper would be covering the following aspects of trade and commerce:

Foreign Trade

State policy

Foreign Trade

The Delhi Sultanate: During this period, India’s foreign trade was carried on by both sea and land. The sea route involved five important regions, viz., The Red Sea, The East African Coast, The Malaya Islands, China and other Pacific countries.

Muhammad Tughlaq (1300-1351) advocated the import of silk and horses. It is to be noted that horses were considered crucial as part of the cavalry, and for ceremonial purposes, transport and pleasure riding. There was a great demand for robust Arab horses during this time.

India’s exports included textiles and food grains. Some of the main trading areas were Patenxy, Diu, Gogha, and Cambay among many others. Cambay was considered the most important of all sea ports. Its residents included rich Hindu and Muslim merchants, craftsmen and traders. It was during this time that an extremely high demand for luxuries is observed.

The trade was mostly carried by land by the Turks and Mongols to Afghanistan, Kashmir and the rest of Asia.

The Mughal Empire: The Muslims dominated the sea-borne trade during medieval times. This was challenged by the Portuguese who, owing to their superior fleets and commercial leverage,

!45

MARCH 2015 ARTHNITI

took over the monopoly of the sea trade, which was later on also shared by the Dutch and the English.

The variety of articles of trade also seems to have gone considerable change during the Mughal period. Imports shifted from being just luxuries to also including consumer goods, raw materials and limited luxuries. Consumer goods consisted of metals for building and military purposes. Raw materials consisted of silk, perfumes, drugs and other necessities. Exports also expanded to spices, opium, sugar and rice.

It is to be observed that there was a favourable balance of trade during the medieval period since exports exceeded imports. This was because both these empires believed in trading goods for silver instead of other goods.

Economic Policy:

The Delhi Sultanate: Ala-ud-din Khalji’s(1296-1316) perennial warfare put an upward pressure on the prices of necessities. He hence took the bold step of fixing the prices of food grains and other essential commodities. He was also able to control the supply of such goods by making the sellers of goods register themselves under the state and sell a part of their supply to the state for military purposes. The concept of subsistence can be seen being implemented in such a way that the sellers were left with just enough for themselves.

He also incorporated the system of tax revenues and debt collection agencies. Such a step was met with discontent among the people, due to their reduced incomes and scarcity of food grains. The food grains that were bought from these sellers were stored in warehouses and were supposed to be used in times of famines and war calamities.

By reducing the profits of these sellers, Khalji was able to create a demand for money. This was met by introducing the concept of money lenders, who, back then were merchants with money to invest. This was seen as an additional income for them.

The Sultan became unpopular because he put the people’s livelihood in danger for his army’s welfare. Moreover, punishments for part payment of their respective shares was very brutal, which made the people even more scared.

The Mughal Empire: A few changes were made to the system of tax revenue collection. The people now had an option of paying it either in cash, or as a crop share. This lead to the rise of townships and qasabas as people now had liquidity and an option of payment. Also, the concept of subsistence was removed and wages moved into the picture. Laws became more professional. Penalties had to be paid in case of default of payment instead of punishments.

!46

MARCH 2015 ARTHNITI

Conclusion:

Thus, we can see the parallels between the two most influential empires in the history of Medieval India. The importance of control over maritime trade routes is evident from the success stories of merchant accounts. Needless to say that the war did have a negative impact on the economy. On some level, it may be argued that such war was inevitable and the measures taken by the rulers was in the best interest of the state. Some arguments can also be made in favour of the strict tax system, which was designed to support the army, and was also a way of making up for excess spending on liquor, entertainment, decorations and ceremonies. Such rulers also gave away precious stones and metals as gifts.

Arguably, these two periods have made contributions to the existing tax systems in India. Moreover, the development of foreign trade policy can also be traced to the post classical school of thought in India.

!47

MARCH 2015 ARTHNITI

Ode On A Grain By: Shradha Kochhar (Batch of 2011-2014)

Let us step into the library of humanity; the legends, the catastrophes, the triumphs and the struggles are set across the shelves of time, each epoch connecting and lengthening the string of man’s story. From the Neander Valley to the New York Sky line, the progress of the human race has been abetted and fuelled by courage, intellect, opposable thumbs and of course, food. If there was ever an oracle of human history that could look over man’s shoulder and foretell his journey ahead it would be the grain that sustains and defines what it means to be alive.

Agriculture giveth life and taketh away.

Man tilleth the soil and maketh hay

Until man learnt the art of cultivation he roamed the earth in social groups or herds migrating from food source to food source and defining the saga of the Hunter Gatherers. The Indian sub-continent stands as a testament to man’s social evolution. 60 million years before I began typing out said “ode on a grain” the land mass, now, India was pushing against Asia and heaving forth one of its most distinctive features—the Himalayas and the Hindu Kush. These ranges made India almost inaccessible by land, but the network of rivers that viscerally criss-cross the country not only made life possible, but allowed it to flourish. The Indus Valley and the Gangetic plains were some of the first sites of sedentary civilizations, giving way to the birth of agriculture in the Neolithic age.

Agriculture took its first primitive steps in India in 8000 BC with the naissance of the Neolithic age. The social structure that we see and recognize today came into being as man settled into villages and towns, notably in the middle-eastern Sumerian cities, and the Vedic civilization. Animal husbandry was realized in the new domestic setting of life. Implements were invented and techniques were refined (the wooden plow, threshing and storage), evidence of both of which can be found in various vedas like the Rigveda and the Samaveda.

So as we turn to the next stanza of my ode we surmise that India has deep agricultural roots. Flipping through the leaves of the agrarian history of India we see that as BC melted into AD the grain that, today, helps define modern governmental policy, the poverty line, inflation, and not to mention the survival of millions, was domesticated—rice. The Indian Gangetic plain was one of the main areas where rice was and is cultivated. If agriculture is the life blood of civilization, then water is at the heart of it; as any child, taking its first steps into the world of science, will tell you that without sunlight and water, plants cannot make their own food, let alone ours; in other words, photosynthesis cannot take place. The ancients understood this fact quite well and the Maurya rulers in 400 BC constructed the Sudarshan Lake in South Gujarat to ensure adequate and sustained irrigation, ironically something the modern day farmer has laid down his life for

!48

MARCH 2015 ARTHNITI

especially in the Vidarbha district of Maharashtra. India became the cornucopia of exotic produce, from spices to dyes and fabrics. India attracted merchants of the Silk route and even the East India Company that established the British Raj.

Let us now leave the leather bound realm of antiquity and enter the modern section filled with the fruits of capitalism and other bourgeoisie delights. The 19th century brought with it the agricultural power revolution as farm implements became mechanized and farming became commercially viable once again, perhaps a precursor of times to come.

20th century India was being ravaged by famine and struggling towards self-sufficiency in food grain. The green revolution of the 1960s and 70s revolutionized Indian agriculture introducing HYV seeds, fertilizers and pesticides. Though still controversial it is hard to ignore the huge increase in yields it brought, especially in the case of the staples; rice and wheat. Today we see about 1/3 of the entire labour force employed in agriculture or related activities, but the share of agriculture in the GDP is only about 14%. To a student of economics or even to someone with a sound sense of logic something does not add up. An ancient agrarian power house is left panting for breath in the wake of modern growth and development. Sectors like manufacturing and tertiary are riding high. With outsourcing the world’s new leitmotif, India is cashing in (or was). The slew of problems plaguing agriculture; disguised unemployment, marginalized farmers, poor credit facilities have led to a weak agrarian sector. Is it time for a change? And is that change Corporate farming?

If we get down to the bones of it corporate farming involves the marriage of capitalistic corporations to the bounty of arable land, to form the modern food industry. Producers and buyers enter into forward contracts eliminating middlemen, the risk of transport and a harassing number of other go between points from field and factory. The purchaser, in this case the company enters into an agreement or contract with a farmer who promises to provide a certain quantity and quality of produce at given date at a predetermined price hence hedging himself against risk. The corporation in turn gets an assured amount of raw material or goods that it can bank upon for quality (not usually so at mandis) and can hence establish the demand and supply of its final product. The conglomerate, according to the specifications of the contract, would provide inputs, managerial advice, even land and labour.

Contract farming and corporate farming share the same last name and are thick as thieves; distinguishing one from the other would take the skills of an economic micro scope. This is not to say that they are identical, but to understand the efficacy of corporate farming it would be easier to open the novella of one such company—Godrej Agrovat Ltd.

Godrej Agrovat Ltd. is an agribusiness company involved in not only procuring and distributing animal feed, palm oil, agri-inputs and poultry but also looks to sustainably increase crop and livestock yield. 2011-12 saw sales of Rs 2439 crore. The oil palm plantation spans a whopping 7

!49

MARCH 2015 ARTHNITI

states, including Maharashtra, Goa and Andhra Pradesh and has 44900 hectares of small holdings under cultivation. If viewed from a macro-economic perspective we might actually be reducing our reliance on imported palm oil and build the way for domestic production and, in the long run, perhaps even reduce the current account deficit by a shade.

With a niche market in agrochemicals and renowned brands like “Real Good Chicken” and “Yummiez” embodying their poultry venture one can see that Capitalism sure can do wonders at “Old McDonalds Farm”, but will it work for India?

Perhaps we have to move onto another genre of the human story to find out.

!50