Very interesting comments by FM Nirmala Sitharaman on ABG Shipyard Fraud of Rs.22,842 Crores!

‘ABG fraud of UPA vintage :Minister, The shipyard account had turned NPA in 2013, says Nirmala Sitharaman’(The Hindu, February 15,2022) makes interesting reading. In her retort to the Opposition parties making a hue and cry about the biggest banking fraud of Rs.22,842 crores perpetrated on banks by the company ABG Shipyard, the minister stressed that the account had turned into a nonperforming asset (NPA) in November 2013, while the UPA was still in power. It could be true. But, why did it took so long (more than eight years) for the fraud to come to light? And from 2014, NDA ,to which the Minister is affiliated to, has been in power till today. Didn’t they know about it? Did they ask the banks why it took so long to bring it to the public notice? And the interesting thing is that she makes a statement that  ‘while it normally takes 52 to 56 months to detect such bank frauds, less time was taken to detect it and take action under the present government ‘.According to reports from the press, the CBI filed an FIR only on February 7,2021.One would wonder why it takes so long for the NPAs to be  detected and the gradual developing of it into a fraud. The incident shows that there is some serious shortcomings in our banking system. Or does politics play a role in it? Rather than blaming each other(the Government and opposition), the Government  and the opposition should have discussed seriously about the steps to be taken for early detection of such frauds. After all, its public money!

 

 

The Travails of Indian National Congress

I have been intending to write about the travails of the Indian National Congress(INC) for quite some time. Ever since BJP won the 2014 general elections  to assume power at the centre, the  INC  has  systematically  been decimated from a heavyweight opposition to a very skeletal one in parliament. BJP only consolidated its position after the 2019 elections. In the lower house, Lok  Sabha, they have absolute majority, while in the upper house, Rajya  Sabha, they are very close to it. I have been studying the development in Congress  over these years to understand what has led INC, the political heavyweight, instrumental in leading India out of British rule and to  declare independence, to  the steep fall in its popularity among the masses. It  has lost its popularity even in the so-called Congress-strong  states.

The sudden decision to write on this has been prompted by the news item: ‘Lack of clarity, cohesion among State leaders in congress: Sonia.’ (The Hindu, Wednesday, October  27,2021).Anybody reading this will get an impression that there is clarity and cohesion at the high command level.  Anybody living in India and reading newspapers  know that these two parameters fall abysmally short  at the national level in the party. If it was there, there wouldn’t  have been any Group of 23, a group of dissenters in the party. And she advised the attendees of her address that ‘the party must ideologically fight the diabolical campaign of the BJP/RSS and expose the government’s lies.’ This is precisely the problem with the Congress. They and their leaders fight on the same plank, just as children fight between themselves abusing each other with the same language and blaming each other narrating the same reasons.

Mrs. Gandhi’s  words clearly indicate that the leadership has no idea as to how to win back their lost glory. There has been no elected president for the party, and Mrs. Gandhi is continuing as interim president. The major problem in the party is that the leadership is clueless. Mr.Rahul Gandhi has been leading as President for some time and none of his ideas of countering the BJP gaining mileage  has succeeded for the last seven years. What does it indicate in simple terms? They need leaders who think radically different  from the present ones. They need to bring in fresh faces at the top. The problem with the party  is that very few of them are courageous enough to question the leadership. Dissent  seems to be a dirty word in the party. Most of the leaders want to just promote themselves  to positions of power  and does not do anything to strengthen the party. What BJP (and Modi though not necessarily right for a PM to do) did was not to spare any efforts to strengthen the party.(That  the strength of the party has made the leadership into an autocratic one may be true but the fact remains the party has been strengthened, whether one agrees to the methodologies or not!)

So, the options available for the INC to bring back some of its lost glory are

1.Think of new leadership at the top as the present top leadership has failed to deliver and unlikely to deliver with the present way of leading the party. Try new people with radically different thinking.

2.Allow vociferous dissent  and debates about how to improve.

3.Don’t fight tit-for-tat with BJP. That is not going to help. Evolve  programmes that will take the party to the masses keeping in mind all those secular values which the party always stood by.

4.Mr.Sonia Gandhi and Rahul Gandhi should distance themselves from the leadership positions  so as to shake out the allegations of being a family-led party.

5.Please note that the results of the efforts may not appear immediately. The party has to allow sufficient time to forego all the debris and to make gains. They should set a target for 2029 general elections and work towards the same.

Travails of Democracy Part II

Further to the Part I posted earlier, there was news that the Government of Kerala has created the fifth Cabinet Rank outside the ministry: the person currently holding the Advocate General’s position has been granted the Cabinet Minister status. And the Government order makes it very clear that the rank is only for the person and holding the position  now and not for the position per se,  making it just another political appointment, the cost of which will be borne by the Government exchequer.

In a way, the decision to make it applicable only to the person and not the post is good  because it won’t be automatically available to the next incumbent unless the Government decides so. But, that it is exclusively for the person currently holding the post and not for the position makes it a political appointment and hence is a threat to democratic principles. This is an example of a glaring shortcoming of the kind of democracy  we have today: once in power, the political party in power can do anything they want and can take the voters for a ride.

Travails of Democracy Part I

We all cherish democracy and democratic processes in our life- be it in the matters of the state or in matters of the organizations where we work. And we all believe that we will be happy to live in a democratic environment. And at the heart of the democratic processes is the voting system. We choose or elect our leaders by exercising our franchise at definite intervals. We enable or assumed to enable a set of chosen  people to be our representatives for , say five years in India, and rule us by being part of  the machinery called government. And , they will rule us for five years uninterrupted(unless some specific grave issues arise),if the political party gets a mandate through the democratic process of majority. Sincerely, we expect that they will do things which will make our lives better or at least will not do things which will make our lives worse.

Before the election processes, the political parties  and the candidates make lots of promises through what they refer to as election manifesto or otherwise individually. With just the idea of winning the election process,  they promise to bring Ramarajya or a Utopia  in the state or the country as the case may be.

And once the majority party starts ruling us, very often the promises are forgotten. The moment they a party gets majority to rule  and assume power, power struggle within the party starts. Every heavy weight in the party, nurtures positions of power and a number of heavyweights may be left out after completing the portfolio allocation for ministers.  Now, these heavy weights outside the inner circle, need to be some how satisfied or taken care of; or else they will create problems for the party and the government from within the party. So the party creates special cabinet positions for such heavy weights: the positions may take different forms  Chairman of Administrative Reforms Committee, State’s Representative in  New Delhi  etc etc as has been happening in the state of Kerala. These special posts need to be given offices and office staff to operate. It results in substantial expenditure for the exchequer. Poor tax payers of the state bear the burden of all such “political accommodations”. All these whims and fancies of political leadership happen when the state is not financially self sufficient and  the government do not have funds to pay salaries to the employees and pensions to the retired employees of certain public undertakings engaged in essential services like public transport.

Can the voters do anything to curtail or curb such actions by the political party in power whenever they are dissatisfied or feel cheated? No way. The voters have to wait patiently for five long years and they  are likely to  forget even a criminal act that happened five years back and will vote either the old group of people or a new set of people without raising any questions about what happened in the past.

A democratic government is supposed to be ‘by the people, of the people and for the people’. Does any of the governments justify this canon of democracy? Or can we confidently say so?

Nobel Prizes

Nobel Prizes

It is Nobel Prize time once again. The whole world watches which of the eminent figures in medicine, physics, chemistry, literature, peace and economics across the world will receive the highest honour in their respective fields. The Prize winners will be recognized and adjudged for their  long years of hard, focused and dedicated work. If one devotes some time to study the past winners, across the areas, it can be seen that many of them worked devotedly  for 20 to 30 years before they were awarded the prize. There were of course exceptions even in earlier days when the Australian father - son duo William Henry Bragg aged 53  and  William Lawrence Bragg aged   only 25 at the time, won it in 1915. But, by and large most of the winners received the award when they were into their   fifties or sixties. Some have won it in  their seventies and eighties.The oldest to have won the award is Arthur Ashkin who won the award in 2018 for Physics at the age of 96!

While there have been no concerns about the years long work  and credibility of most of these awardees, of late some concerns have been raised about the awards for Peace. Awards have been given for creating  catchy slogans, making  fiery speeches or  beginning a stir about a subject of current global concern and popularity. Please remember that Mother Theresa was not awarded the Prize when she started The Missionaries of Charity in 1950; she was awarded it only in 1979.Nelson Mandela was not awarded the prize even though he started fighting against the racist  Apartheid  in South Africa in the 1940s;he was awarded the prize only in 1993! Even Dennis Mukwege, joint winner  in 2018 along with Nadia Murad,  began his efforts  for treating  women who suffered injuries from sexual violence in 1999. The Nobel Committee would increase its credibility if they also start looking into the sustainability of a movement or an initiative by waiting to see the outcomes for a few years. 

Of course, there have been very interesting cases where the Nobel Committee decided to give away the Nobel Prize for some peace  effort in a particular year  in the same year or the next year without waiting to see whether the peace effort sustains. For example,Yasser Arafat, Shimon Peres and Yitshak Rabin were awarded the Prize in 1994 based on the Oslo Negotiations held in 1993. But peace still eludes the Palestinian –Israel border.

Corporate Tax Cut and Economic Growth

There have been lots of concerns about the economic situation in India in the recent past. The concerns were hastened by the reality of the slower GDP growth achieved in last quarter. Since the realization sank in after the presentation of the annual budget by the finance minister Smt.Nirmala Sitharaman and with the gradual emergence of signals of a deep slowdown of the economy, the finance minister has been making lots of initiatives to boost the economy like additional incentives to boost exports, cheaper loans, loan melas, and the like  and the latest, adding a sweetener in the form of a cut in corporate taxes.

I am not an economist in the strictest sense to make  comments on some of these measures which are directed at beating the slow down. Of course, some of the measures may help but by and large the measures seemed to have been taken in a haste. Why I say this is because the honourable minister and her team don't seem to have considered the real problem. It is not lack of funds availability on the part of lenders , it is not that corporate tax rates are high; it is lack of demand for products manufactured by corporates (Bizarre stories like decreased demand for even undergarments make rounds to depict the state of demand.) What will create more demand? Ability of the consumers to buy more goods. This requires that either they have more money with them to buy more goods or with the available money they are able to buy more of the goods which necessitates that producers lower the prices of their goods.

Now, the pertinent question: Will there be a perk up in demand consequent to a reduction in corporate tax rates? Yes, if the corporates pass on the benefits of lesser tax rates to the consumers and/or employees. Yes, also if they generate more jobs for working class by starting new ventures to avail of the lesser tax regime. But, it might please be remembered that job creation does not happen overnight, if at all it takes place. Most likely the promoters will use the benefit of reduced tax for creating new enterprises with the sole aim of garnering more wealth and in the case of existing companies to declare more dividends and to pay larger executive compensations(with them being the important beneficiaries for both).And entrepreneurs are less likely to invest in long gestation and labour intensive projects as these may not benefit them in the short run. And, please remember that they know that if finance minister could incentivize with a tax cut today, she can dis-incentivize  by restoring it any time in future.

What the government should have done was  to use the same amount of money(something like Rs.1,45,000  crores ) to initiate infrastructure projects which would have created more jobs which in turn would have resulted in the labour class having more disposable income with them, which would have led to a perk up in demand for almost all products. This is what great economist John Maynard Keynes suggested in the 1930s and what Barrack Obama did successfully to overcome the severe  recessionary trends in  US  during 2007-09.

Or else, the government should have reduced the tax rates for individuals, rather than the corporates to leave them with more disposable income.

What Mrs.Sitharaman did would definitely enthuse stock markets and its beneficiaries, but may not lead to an immediate economic recovery. Please remember that stock indices are considered to be leading economic indicators and a spike in the index need not be even an indicator.

The Accidental Educationist And The Book "Education of An Ambassador"

Having been a teacher in the higher education area for more than 20 years, initially as guest faculty and later in a full-time capacity, I have been exposed to the realities, concerns and challenges of the higher education, not only in Kerala but across India. One limiting factor is that barring a few years as a guest faculty at a university in Kerala, my experience was mostly with self-financing institutions in the area of management education and not within the university system. As somebody connected to academic world, I have been hearing lot of ‘educational experts’ lamenting on the reality that barring a rare IIT, no universities or institutions are getting a position in the list of top  250 universities in the world. It might kindly be noted that China(including Hong Kong), with which country we always try to make comparisons(surprisingly barring education), has 11 universities in the top 200 universities. Why India, which once boasted of educational institutions like Nalanda and Takshshila, don’t have even one in the top 200? Academic experts and those in power from time to time have been debating on this  for quite some time but we have not been able to break the jinx.

I have been planning to write a paper on higher education in India with particular reference to management education, that being my area of teaching. The ideation stage was almost over, when I happened to read about a book on higher education written by a retired diplomat, Shri T.P.Sreenivasan,  formerly India’s ambassador to the US. His interest in higher education seems to have been kindled by the offer  by the Government of Kerala to be the Vice-Chairman(the de-facto CEO )of the Kerala State Higher Education Council in 2011, a position which he held till 2016.

I began reading the book with a lot of expectations that I will be able to get some different and new perspective on higher education which could be of help to make my paper on education more meaningful and valuable. But alas! I honestly feel that I was thoroughly disappointed by the contents of the book. The book is used more to promote his aggrandizement(he has chosen to proclaim as “ the champion of change and the most visible spokesperson in the Government on higher education”) rather than identify and offer solutions for the problems, challenges and concerns facing the higher education in general in India and Kerala in particular.

After reading the book, I felt like the following:

Ø  Some of the things should have been avoided or reserved for his autobiography, if he ever planned to write one.

ØMr.Sreenivasan bats for increased autonomy for private institutions in the higher education sector.  Is autonomy the panacea for the many ills that affect higher education?

Ø  The suggestion to  establish a number of Academic Cities is another gimmick to industrialize or corporatize education and thereby please the 'edupreneures' of Kerala .

Ø  Many of the proposals may not result in any improvement in the higher education scenario as these changes are superficail; the changes have to be more at the grass-root level.

Ø  Are our institutions capable of producing scientists or technologists today (with large amounts of resources being made available and having access to the latest in science and technology) like Dr.C V Raman or Dr.ECG Sudarshan, who won laurels and world acclaim despite the rather poor facilities existed in our country and acute paucity of resources that faced them? Why is it so?

Ø  The book is a compendium of reports prepared by the Council and submitted the government. And many of the points in those reports are same.There is no real discussion on the real problems being faced by the higher education sector in the state.

Ø  Some of the articles don’t even provide details like date written or sources from where they have been taken.

Ø  He makes sweeping statements that “..the quality of education provided by the state institutions has been rather poor.”.Where is the evidence? Such statements without any supporting evidence have only helped to lead to a loss of credibility.

Ø  Mr.Sreenivasan seems to have been overwhelmed by the lure of foreign universities and suggests emulation of best practices in foreign education. Why don’t we believe in ourselves and create something new rather than copy from abroad?

Ø  Some of the recommendations like creation of a separate cadre for the best teachers as the most desirable incentive seems to contradict the current approach to the people factor in organizations. World over, institutions and organizations are trying to create classless communities even while finding ways to reward the best performers, here he is recommending that an elite class be created.

Ø  He states that ‘Reading, research and writing are as essential for diplomats as for academics.” Why single out diplomats? These are essential things for anybody in any profession if they want to make a mark in their profession.

Ø  He has used the book to criticize the laid-up attitude of the government rather than discuss problems of higher education at the grass-root level.

Ø  He has also shown his support for the idea about alumni supporting their Alma Mater. This is again based on the western thinking. In the west, many of the  alumni in financially rewarding positions offer their support to the institutions from where they graduated. While Industry-Institution partnership is desirable and may be even essential, it need not always be in terms of money.In a country like India,employment opportunities  are rather scarce, alumni can do more favour by making it a point to visit their Alma Mater for their manpower requirement.

Ø  Annexure 4(India IT Summit, Thiruvananthapuram) is a very good piece in the book but has not much relevance to the theme, higher education.

Ø  Mr.Sreenivasan also discusses about faculty productivity without giving any idea about what the term means and how one can measure it.

Ø  It has not provided any worthwhile input to my thinking on higher education and also to the proposed paper.

Ø  Last, but not the least, the comment on the flap that Mr.TPS has joined the galaxy of men like Sardar K.M.Panikkar,M.C.Chagla etc  is a little outlandish!

Are there things beyond reasoning, laws and constitution?

In India, in many of the matters connected to temples and other places of worship, we usually follow some customs or conventions or traditions rather than resort to laws or provisions in the constitution. The constitution also permits  private bodies  and institutions to frame their own by-laws(like Articles of Association for companies or incorporation laws for any other forms) within  the constitutional provisions. While these may be applicable to most of the materialistic as well as spiritual or religious organizations, not every one used to be treated alike. In the case of spiritual or religious institutions or organizations like temples or churches or mosques, we normally tend to follow certain conventions or conventions, in effect, become the rules. One may not muster enough knowledge on why we follow some conventions, however deep we dig, because there may not be any scripture available on this.

Let’s take for example, temples. Many of the questions which the temples have to face are even these days resolved by Devaprasna, a process by which experts in the field sit together conduct the prasna process and then decide. Few, if any, question this primarily because many of us don’t know why we follow certain traditions. When we don’t know or we can’t know, isn’t it better to simply follow traditions and conventions?(First Break All The Rules could be apt in the  management of organizations but not necessarily everywhere.)

A typical issue is in front of Supreme Court now: entry of women in Sabarimala temple. Feminist organizations and their supporters argue that barring women from entering the temple is pure sexual discrimination and hence against constitutional provisions. The ruling government has also supported this stand(after some changes in its stance). But it might please be remembered that the Government had  decided to go by the Devaprasnas earlier in many of the Sabarimala matters.

Is it necessarily an issue to be decided by court? I don’t know. What I know is that there are more serious issues in India- a large number of them in front of the court and a large number not necessarily in front of them because nobody has brought them up- which need to be addressed than an issue like entry of women at Sabarimala. A verdict favouring women entry  might enthrall the anti-discrimination group but might create heart burns for many who believe in traditions.

Reducing Government Expenditure

The Government of India  has decided on 26^th June, 2018 ‘to discontinue overtime allowance given to its employees, except in certain categories like industrial employees, according to an order issued by the Personnel Ministry.’ a news item in The Hindu dated 27^th June says. This is based on the recommendation of the 7^th Central Pay Commission.  It seems that  this allowance was being doled out to even under secretaries of the government. Too bad a precedence which needed correction considering that only lower level employees, basically the wage earners, normally get paid overtime. The same newspaper  also mentions that ‘PM’s security to be beefed up ahead of 2019 polls’. Naturally, this is likely to increase the cost to the exchequer. True, a PM’s security is important for the country despite the startling fact that the security available to us as ordinary citizens of  the country  is almost zero, and  the contention of some doubting Thomases whether he deserves any higher security which is not available to the ordinary citizens. But, it leads to the questions I raised in my earlier post: whether a Prime Minister shall indulge in political campaign, and that too with beefed up security  resulting in even higher costs to the exchequer?

While the move to reduce the overtime for government employees is  in the right direction in order  to reduce costs of the government, there may be or there are lots of areas where costs of running the government machinery (both at the centre and state levels)have to be closely looked at.

1.Too much of entourage with ministers (state as well central)while travelling to attend various functions/events. One usually sees a convoy of state cars on a minister’s trip.

2.Government functionaries(like police constables in Kerala) being used for duties other than designated for. In Kerala, we always complain about paucity of police personnel to be employed in law and order requirements.

3.The travel and communication expenses of ministers and legislators borne by the government.

4.Government officials usually use high end cars for official travel. In a country where capital is scarce and where there is a need to conserve capital and reduce costs, why don’t we think  of subscribing to simplicity? Why we have no Manik Sarkars as CMs and PM across India?

5.Whenever new ministers take charge, they spend  a lot of money in refurbishing the official residences and replace the furniture and other equipments.

6. There are any number of wasteful expenditures incurred by the government, the list of which will be too long.

The propriety of a Prime Minister as Head of State!

I write this as an ordinary citizen of India, without any political affiliations or interests.Yesterday(June,22nd), most of the newspapers carried the news that Prime Minister Modi yet again, for the fourth time since 2016,refused to give an appointment to meet the Kerala Chief Minister Pinarayi Vijayan. It seems that the PM doesn't have time to meet the head of a state in India but has ample time to travel to the far east(Dehradun) to participate in the mass yoga and also to travel to different parts of the world so frequently(one can conveniently ignore the hilarious trolls doing rounds on this).

He also has time to stay away from the headquarters(Delhi) for weeks together to campaign for the party in elections(remember Gujarat and Karnataka in the recent past)! Please note that given the state of politics in India, nothing will happen if the PM stays away for two weeks from the HQ except that it will cost the treasury a tidy sum.And, the burden will be on the poor, genuine tax payers.Once elected as PM, isn't one head of the country rather than of a political party? And, being in power such people as Prime Minister or Chief Minister can make promises which those not in power will not be able to.
May be it's time for the CEC to frame a new set of guidelines for election campaigning.

Back to Blogging once again!

I had taken a break from blogging for some time, may be a little too long.I don't want to offer the routine excuses.I intend to be regular from now on!

Exit, Voice and Loyalty: Responses to Decline In Firms, Organizations and States

Recently, while I was reading a book on corporate governance(Ownership & Control: Rethinking Corporate Governance for the Twenty-First Century  by  Margaret M.Blair ), I came across an interesting  reference to a book there, while the author was discussing the shareholder behaviours .According to Ms.Blair, Albert O.Hirschman argued in his book , Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations and States, if participants  in an enterprise  were able to exit freely , they would not be very  motivated to use voice to try to reform the enterprise, whereas, if  they were unable or constrained in their ability to exit, they would be more likely to find effective ways to use voice. The book was published in 1970. I was not sure of getting a copy. But when I searched , found that the book was available.  As I could not resist the temptation, I immediately  went ahead and purchased a copy even though it is priced high for the small book it is. But now I feel  happy, satiated and am able to explain why certain things happen in certain ways in organizations. Also, why certain organizations  do not take corrective actions  and go down the hill. And, I could use the arguments there  to explain  why independent directors on boards, even with enormous power legitimately vested  with them,  normally do not raise any voice  against even atrocious behaviours of promoters or management but meekly resign.

Take the case of an organization. An employee  may disagree with the management on many things  and may have lots of concerns about the way the organization is managed. But he may not openly raise his concerns if he is able to get another job, equally rewarding. According to Hirschman, ”The presence of the exit alternative can therefore  tend to atrophy the development of the art of voice”. But if an employee has difficulty in exiting, may be because of his age or qualifications or his nature of commitment or due to any other reasons, he will raise his voice rather than make a silent exit. And in certain types of organizations, like a family, exit option usually does not exist. Voice could be the only available option. The analogy could be easily applied to an enterprise-customer relationship.

Voice can take many forms. It can be through individual  or collective petition to the management directly or through appeal to a higher authority  with the intention of forcing a change in management , or through various types of actions and protests, including those that are meant to  mobilize public opinion.

And loyalty   is a key aspect in the battle  between exit and voice because as a result of loyalty, members may postpone their exits and also use the voice option with great determination and resourcefulness, according to Hirschman. And in the case of loyal people, the chances of voice to function effectively as a corrective mechanism if voice is backed by the threat of exit.

In most of the cases of corporate governance failures, directors, especially the independent directors(IDs), meekly resign without raising any voice. They do so because of three reasons: One, there is no loyalty factor necessitating voice, two, they can easily get another directorship elsewhere, and three raising a voice might jeopardize their possibility of directorships elsewhere. So far, to the best of knowledge, there have been only two instances of  IDs raising their voice against decisions of owners or management. One was in respect of Coal India, where the IDs raised their voices against the majority owner, the Government of India as certain decisions made by Government and to implemented by the company was harmful for the company as an entity. Another instance was in respect of DLF, which was involved in some murky land deals with Robert Wadra, the son-in-law of Ms.Sonia Gandhi, the UPA chief, where the IDs categorically denied  receiving any information on such deals and raised voice against the promoter and management.

The book gives wonderful examples how will customers react to quality problems and also many other economic and national aspects where exit, voice and loyalty are involved. A classic book which every senior manager must read.

A Step In The Right Direction By SEBI

It has been reported by ET that SEBI might consider imposing caps on the number of Independent Directorships a person can hold.(“SEBI Mulls Five-Board Cap For Independent Directors”, Reena Zachariah, 10/01/13). While in general, the cap is applicable to any director, the recommendations are going to be even more stringent in the case of CEOs of listed companies. CEOs can think of becoming Independent Director(ID) only in two other companies. There is only a handful of IDs in India who sit across  as many boards as the law permits.  While the exact number of directorships by a person  can take on is debatable even when he is not a CEO elsewhere, the multiple directorships  can set a severe limit on the time that an individual can devote to a company. Mr.Deepak Parekh was reported to be critical of the proposal on the ground that there is a paucity of good directors and many companies have not been able to fulfill the criteria laid down by SEBI and also because Ids are required to sit on the boards of subsidiary companies.

It is not surprising that Mr.Deepak Parekh, Chairman of HDFC is critical of the proposal. Deepak S.Parekh, while he was Executive Chairman of HDFC, was independent director on  12 publicly listed companies and also was on the board of a number of private and/or unlisted companies. His remuneration from these companies used to be more than Rs.1.00 Cr. ‘Professional director’    R.A.Shah( 88 years old), is still chairman at 4 companies, Vice-chairman of a company , director on seven companies and alternate director on another six companies, in addition to being Senior Partner at the solicitor firm, Crawford Bayley. The annual report of Biocon for 2011-12 where Mr.S.N.Talwar is an ID, lists 44 companies where he is either Chairman, Director or Alternate Director. Earlier the law  permitted  upto 15 directorships in public limited companies with no restrictions on directorships in private limited companies but the new Company Law 2013 has reduced number of directorships in public limited companies to 10 and across all companies to 20.

But such multiple directorships actually put lots of pressure on director time, and can lead to lack of attendance or at least dilution of their expected duties, leading to a denigration of the very institution of IDs.Estimates by Carter and Lorsch  (2004) put the time to be devoted  by any Non-Executive Director  (NED)for a company from about 80 hours(for a stable and satisfactory company situation and industry complexity  and where the board plays a watchdog role) to 320 hours (for a challenging company  situation and industry complexity where the board  plays the pilot role).Hence, any NED/ID will have to devote about 10 to 40 days to each company depending on the nature and complexity of the companies.

According to James O’Toole, Professor at University of Southern California, while commenting about Robert Townsend  wrote that Townsend(2007) “castigated dilettantish professional directors who sit on twelve boards and contribute to none.” Townsend himself had written  in 1971 on outside directorships and trusteeships for the Chief Executive, said:”Give up all those non-jobs. You can’t even run your company, dummy.”(Townsend 2007)

Mr.Parekh’s concerns that there is a paucity of good directors and many companies have not been able to fulfill the criteria laid down by SEBI must be put at the doorsteps of the companies and their boards . The Clause 49 regulations have been in place for more than  8 full years now. What have  India Inc and their boards done to train and make the availability of director candidates better during this period? In fact, a large number of aspiring director candidates have been trained by various bodies like IOD but to the best of my knowledge, very few of them have been successful in getting nominated for ID openings. The companies must try out new candidates by casting the net wide rather than restricting themselves to look at a given/very limited set of IDs who are already overloaded.

When print journalism falters and disappoints

I have always been a fan of Economic Times, the first business daily in India. A  reader for the last 35 years and a subscriber for 33 years, the paper has unquestionably helped me in knowing more about business, finance, economics and management. I used to cherish  the unconventional approach and to a very large extent the courage it demonstrated in being very focused. I was also fortunate and privileged  to get three or four of my articles published on the edit page of the paper.

But, of late, the very focus which attracted me to the paper seems to be losing, leading to disappointments. For example, the paper on June 15 carried an article by Reshmi Dasgupta on the edit page about the media Baron Rupert Murdoch’s divorce from his current wife Wendi Deng(“The Media Baron, the Wives and Making Decisive Splits”).Had the piece been about  the economics of divorce, I wouldn’t have cared much. But sad to say, it had nothing  much inside that deserves to be published  in a business daily, much less  any positioning on the  edit page.

The paper may lose its  hardcore followers, unless  the editors  take special care to be more focused.