Piecemeal Reforms

"For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail"        
                                                                            -Benjamin Franklin

This adage speaks about how due to lack of attention to little things, disasters happen. This is also the story of Indian Reforms 2.0, the ones which were undertaken by a PM who as FM executed the opening up of Indian economy.
Let us look at how it all began in the 2nd innings. NDA before moving out enacted a bill to restructure the collapsing power sector of India called The Electricity Act 2003. When UPA got elected in 2004, the new PM understood that Indian Power sector needs a massive restructuring and in turn huge investments. This was made a priority in 11th five year plan and a target of 78000 MW of additional capacity was targeted. In a country where 8 hours load shedding is a norm even in mega cities like Gurgaon and Noida, power sector reform indeed is the need of the hour and the targeted capacity addition was estimated to take $164 billion of investment, $78 billion in generation and remaining in transmission. For a government with $194 billion revenues in 2011, it was obvious that the mega target cannot be achieved without the help of the private sector. So government opened up the electricity generation to private sector and the media chorused the "reform" as one which will change the country for good. The move also captured the fancy of the private sector which invested in a big way. Tata Power, Essar Group, Reliance Power bid and won contracts for establishing Ultra Mega Power Projects (UMPP) in various states. The plan looked simple. The private sector will generate power using the coal and gas provided by state owned monopolies like Coal India, GAIL, ONGC etc. The private companies will be given land by the state government to set up the plant and they will also be allowed to hold captive mines for fuel to generate electricity. The pvt players will then sell the power to the utility companies owned by the respective state government at the cost for which they won the bids. For instance, Tata Power won the bid to establish a UMPP at Mundra at Gujarat where it will generate power from coal (in this case, coal was imported from Tata's captive mines in Indonesia) and sell it to state government at Rs 2.20. The plan looked flawless and everyone seemed to be happy. But once tried to execute it, all hell broke loose. To start with, state governments took forever to do land acquisition and give the clearances for the project. Clearly, the state governments did not share the enthusiasm of the center to reform power. Next was the environmental ministry, which initially delayed the clearance for mining especially near the ecologically fragile zones. The usually subdued ministry suddenly became belligerent under Jairam Ramesh who in one instance blocked the approval of a project which he had pushed hard as the minister of state for power a few months ago. Again, ministries under the government failed to see the bigger picture and kept squabbling.
Next came the bigger problem, getting the fuel. While generation was simplified, the process of getting fuel was still under the monopoly of few players who were caught napping when ambitious plans were laid. For generating, 78000 MW, Coal India, ONGC and GAIL will have to tap the resources at a comparable rate. Something they were never able to do. The government attempted to speed up this part by allowing private players to do tap natural gas and Reliance won the KG basin contract. Unfortunately, Reliance ended up doing everything else other than tapping the gas from the basin and the output was pretty much like public sector. Government also allocated coal mines to these power generation companies and private players to work around the lethargy of public sector players. But this allocation went grievously wrong and supreme court stepped in to get the mines de-allocated as most of them were allocated to relatives of politicians. The scandal which became famous as Coalgate dried up the fuel lines of power plants in India. There were many more issues and players which came into play like the supreme court putting a full ban on coal mining in many areas due to illegal mining and encroachment into ecologically fragile zones. For the time being, let's ignore it and just understand that as a result, the power generation companies ended up with little fuel or no fuel and ended up running their plants at a capacities as low as 20%. This "precious power" which they generated after everything was "sold" to state electricity boards. Now SEB (electricity boards of state governments) which is responsible for transmission of power are treated like their personal possession by politicians. As electricity is a highly subsidized and politicized utility in India, the burden of all the free power doled out by state government is taken by the utterly loss making P&Ls of these companies. The companies were never used to paying for the power they got and hence in most cases did not pay the private companies for the power they "bought".
Basically what happened was, a piece meal reform. The reform which was undertaken to clean the power sector was executed badly with no support from state governments or its machinery. The Electricity Act 2003 clearly asks the state governments to convert the state electricity boards as individual transmission companies responsible for their revenue and expenses and hence reform the transmission part of the system. Even with multiple deadlines, this was ignored by the state governments and the so called reforms only happened in the power generation sector.
The story of piece meal reform continued on to FDI in retail this week when Indian parliaments opened up FDI in retail in 18 cities of India (if we take the number of cities which satisfy the conditions required to be satisfied to set up stores in the states which are going to allow FDI). We allowed FDI after seeing the experience of our neighbor. China allowed FDI in retail in 1992 and saw huge investment coming to the country, mostly in the form of MNCs setting up manufacturing facilities or giving contracts to Chinese manufacturers to make products for them. It helped a lot that China had a developing manufacturing sector which could seamlessly take these orders and in a few years develop into a global hub for all such orders. China's and later Indonesia's experience with FDI in retail also showed that Asian habits creates an Eco system where both large and small retailers can co-exist. The essence of this phenomenon is our eating habits. We like to eat fresh and hot food as against canned food. As a result, we generally shop at 2 levels- first in the beginning of the month for all basic supplies at a big retail center in the city and second daily for perishable items like milk, vegetables etc at a small retail shop in our neighborhood. Data shows the number of small shop owners have actually increased in China and Indonesia in last 10 years. So I don't buy the argument of Walmart killing all the Mom & Pop stores but like the Electricity Act, it is also a piece meal reform due to 2 key areas which are still not reformed. First one is our manufacturing structure which is in a bad shape thanks to our RBI governor's obsession with inflation and our poor power sector (yes its all bloody connected). The second one, something which even Mr Arun Jaitley carefully side stepped (I liked his "Indian sales boy and girls of US stores selling Chinese goods" which majorly touches the manufacturing problem) is that of Indian agricultural produce marketing laws. A vast majority of states governments in India don't allow retailers to buy directly from farmers. Instead they have to buy the produce from designated mandis or village wholesale markets from middle men who get the produce from farmers at very low rates due to their monopoly in the field. With these laws prevailing, middle men will continue to thrive. With Walmart and Tesco in, they will make more money with increased number of buyers. So the fundamental problem of farmers not getting enough compensation is not going to change. FDI in retail is just another case of piece meal reform and I don't expect anything to change with this so called reform.
That leaves you to think, then why did the government work so hard to get it passed. FDI in retail is a signal to the stagnant investors to kick start the investments because now the government has undergone a metamorphosis. It has got rid of a belligerent TMC and it's random leader and have got a duo of opponents from UP supporting it with the same old reasoning - protect secularism (read keep BJP out). It was the same trick for which the top corporate houses of India fell for when the government parted ways with the Left on atomic deal. Seeing the "commitment" of the government for getting country's power problem solved, private sector put forth bids in large number and won contracts for power plants expecting the government to show the same commitment in getting the entire power supply chain reformed. We have already seen how the hope got bellied against partisan interests of petty politicians all over the country. Will the investors, both domestic and foreign fall for the signal again this time, only time will show?

Marriage Economy

Some of my friends are going to hate this post because I have again done what they chide me for - connecting 'everything' with economy :)

Today morning, I came across a matrimonial ad in Times of India (actually a friend sent it to all of her mallu friends including me saying that there is a gold mine on offer). The 9cm x 9cm all India ad on the third page of TOI main edition asked for "extra brilliant, highly qualified, well cultured groom for a highly educated mallu girl" and must have cost  the "rich, international businessman" father (apparently ad gave this detail also :)) around 8 - 9 lacs to run it. The ad marks the beginning of a complicated operation called Arranged marriage. Next the "rich father" will have to set up an office to study and shortlist hordes of applicants who will send their resumes complete with Photoshop edited photographs. By the time the "rich father" comes out with a shortlist of entries who will be lucky enough to meet his daughter, he would have spent around 15 lacs. Add to it, the expense of marriage ceremony, reception and ofcourse gold, the father (who is not that rich anymore) would have spend a lot of effort, money and time on the operation.
Seeing the amount of money deployed and people employed, the practice called arranged marriages, which is now largely confined to the subcontinent and SE Asia is a heavy boost to our economy. If I take the case of South India especially, where dowry is masqueraded as gold and other gifts, the marriage triggers a heavy purchase of gold, silk and property. This happens irrespective of the price of the products. So one can see that gold at Rs 31000 is still in demand in southern state of Kerala and its no surprise that Malabar Gold, the gold largest player in Kerala is also World's third largest jewelers in terms of volume.
Let us now look at pre-nupital market, it starts with a search. With so many constraints like religion, region, caste, sub-caste, family background, education, profession, behavior and horoscope, the search mechanism for the right groom/bride is an industry in itself. The industry, run traditionally run by small time local brokers and high society match-makers is one of the latest to move online and have been segmented and specialized so much that there are companies which run separate websites for various sub-castes. The websites offer young men and women opportunity to do "blessed dating", a dating process which has the blessing of their families and society as the girl/boy satisfies most of the constraints put forward by them. These websites also has helped in removing "3 minute decision making", a phenomenon inherent to arranged marriage. A few years ago, I accompanied a friend when he went to meet a girl his parents have short listed for him. The meeting happened at the girl's home and the boy was given the girl's resume earlier itself. After the families spoke and liked each other (as our tradition goes, first the families like each other and then the bride and groom), my friend was allowed to speak to the girl. He was with her for approximately 3 minutes and the minute he came out, his parents asked him "Did you like the girl? Can we promise them?" To my surprise, my friend said yes and they were happily married in a month. Years later, I saw Deutsche Bank interviewing their candidates for 3 hours before giving them an offer. While DB took 3 hours to decide on a person who may stay with them for 2 or 3 years, a decision for life time was made in 3 minutes. This is a practice which is integral to arranged marriage. Intuitively, this may sound weird but most arranged marriages last for life time bearing testimony for the success of blitzkrieg decision making. I feel its because after the decision is made, the groom and bride accepts that there is no way back, a feeling that allows them to compromise and live on. The arrangement would have worked so far but with the new generation repealing the idea of compromise in anything, the system may find it doomsday soon. I remember a friend telling me that a guy whose proposal came to her home wanted a dating period of 3 months before deciding to go for her or not, a idea which horrified her parents :) So the new age matrimonial websites innovated and found a solution for the problem by functioning as quasi dating websites for people belonging to same community and within all the constraints their society asks for.
Another group of people who sustain themselves on marriage economy are private detectives. With extreme mobility and too much of money at too early an age, the new age youth is living a western way of life. It becomes important for the parents to check out if the bride's/groom's behavior conforms to the traditional ethos they follow. Hence the Sherlock Holmes and Watsons of this world profile the targets and certify their behavior.
If more and more young people start finding their partners on their own, a large number of organisations will be adversely affected sending tremors through the marriage economy. So before you propose your girl friend, think about the damage you are gonna make :)

Applying some Marketing concepts

I tried to apply some of the marketing ideas I learned and designed a brochure for Kairali resorts, Kannur :) Please check it out and give me some feedback-

https://docs.google.com/open?id=0B3hvyHkD8je7R2dtdmhBVnZVMGc

When tourists are packed off!

I recently took a package tour to Singapore by Akbar travels. I will strongly recommend against the tour package by this particular company because of the following reasons –

• ·         The tour package is advertised as Singapore tour but has 3 days in Malaysia, 2 days in Sri Lanka (during transit) and 3 days in Singapore.
• ·         To cut cost, the company booked our flight on Sri Lankan air. So we were forced to spend 1 day each at Colombo to and fro during the journey. The worst part was the pathetic treatment and delays at Colombo immigration. They kept us waiting for hours and ate up all the time which could have used for Colombo city tour otherwise. When a passenger complained to the immigration officer who was loitering around giving system error as the reason for delay, he got angry and told the passenger to go back to her home country if she had problems. Finally we got 2 hours to see the Colombo city
• ·         The food was arranged at cheap restaurants with no proper facilities to cater to the large groups of tourists. Only exception was an Indian restaurant in Malaysia called “Gateway of India”
• ·         The accommodation was arranged at hotels outside the city adding to the commutation time. In Malaysia, the hotel was in not so good locality which turned dangerous at night. The exception was the accommodation provided in Sri Lanka by Sri Lankan airways. Both ways, the resorts were exemplary sea side resorts – Jetwing blue and Club Dolphin. The staffs at club Dolphin were rude to us when we were trying to leave in hurry but Jetwing blue Negombo was a exemplary in every respect – property, service, food and staff. I will definitely like to go back there for a vacation.
• ·         The tour is very badly managed. In Malaysia, you are given just 2.5 hours at Genting highlands. By the time, you figure out which rides to try out, it was time to leave.
• ·         The remaining two days in Malaysia was spent on visiting chosen shopping outlets of the tour provider. Obviously the travel company should have got a good cut out of the chocolates and watches the tourists brought from these retail outlets.
• ·         In spite of having 3 days in Malaysia, we were not taken to the best destinations in KL like the aviary (Bird Park), National Museum, Islamic Museum etc. Basically every destination with an entry fee was kept away from. The tour package boasts of an experience where all the charges are taken care of. So to increase their margins, the tour operator takes care that only destinations with no entry fee are covered.
• ·         The worst was the way the ticketing was done. The return ticket for the group was not booked on the same flight and the representative of Akbar travels who was with us left with the first group leaving 15 passengers in Sri Lanka to take care of their own travel.

Akbar travels charges a premium for the ‘superior’ services they provide to the tourists. But the truth is that their tour is as bad as any other small time tour package provider. There were a lot of cases where the tour could be improved with good management and the operator Akbar travels didn’t even seem to realize this. So if you are planning to go on a package tour to South East Asia, Akbar travels is not a good choice.

Welcome to Genting Highlands……Now let me pick your pocket!

Malaysia looks like a developed country from every angle. Kuala Lampur airport is one of the biggest and best in the world; six lane highways take you from the airport to KL city. The route is covered on either sides with lush greenery of evergreen forests which is dotted intermittently only by skyscrapers and beautiful residential layouts. After the bad experience in Colombo of being stuck without money and phone, the first thing I did in KL was to get some Malaysian Ringgits and buy a local SIM with that money. The famous Maxis SIM cards were missing in the vicinity of the airport, so I bought a digi card offered by telenor.

We moved to our first destination in Malaysia – Genting Highlands, a theme resort and casino at a height of 6118 feet above sea level. The now famous Resorts World took birth on these highlands of Genting when a visionary Chinaman Lim Goh Tong concocted the project. Uncle Lim (as the Malaysian saying goes about his casino - "It's very tough to win money from uncle Lim"), one of the richest men in Malaysia (when he died) is said to have come to Malaysia from China with 1 ringgit in his pocket. He then worked hard and built an empire by converting a forested highland into a world class tourist destination. To attract people from every spending category, he built a theme park, a casino and large expanse of malls and shops. Anyone who comes to Genting will end up spending a lot. Every ride, shop and attraction in Genting is designed to encash your emotion. For instance, you will be snapped at various points during your amusement park ride and the pictures will be offered to you at 30 ringgits. Because the tourists feel the ride was once in a lifetime experience, they readily pay for the ride. The best part is that even after spending big, you feel happy about it. You feel that you just had a great time and you deserved this break and a spending spree after all the tough days of work.
Lim Goh Tong made money in construction and mining and investing everything he had in Genting. None of his wealthy friends were ready to invest in his 'crazy' venture because they thought his idea of building a resort at 6118 m was never going to be possible. So Lim did it alone. It took him 3 years to cut a road through the forest. He set up his own power plant and created a drainage system to make the highlands suitable for construction. His efforts bore fruit when the then Malaysian PM visited Genting and granted him the permission to operate the first casino of Malaysia as a reward to his single handed effort to attract tourists to Malaysia. Lim and Genting never looked back; the resort grew in strength and Lim added new attractions in a rope way, theme parks and new resorts. After Genting, Lim also created another integrated resort in the neighbouring Singapore. More about the Sentosa, Singapore resort in the post on Singapore.

Genting also has the world’s largest hotel in terms of the number of rooms. The first world hotel has 6118 rooms (same as the height of the hill in feets) and is a sight worth seeing in the evening with the large plumes of mist engulfing it. The skyway cable car taking tourists from the foot of the hill to the resort is the best attraction in Genting. The engineering marvel will take you on a ride over the lush evergreen forests giving you an experience that’s breath taking. Although the establishment with its mega hotels, fascinating rides (some of them only exist here in SE Asia) and the fastest ropeway in the world is an experience in itself, the service quality is terrible. Almost none of the theme park staff knows English and they are rude to the visitors. One could see the resort staff working without any interest in their jobs all throughout the day and showing maximum energy levels at 5:30 pm when the theme park closed for the day. Visitors were sent back although the scheduled closing time of the park was 7 pm. Lack of maintenance was also visible in most of the rides.

Resorts World is a huge establishment now and they have theme parks in Sentosa islands, Singapore, Manila, Philippines and New York, USA. With expansion into newer economies, seems that the Lim family’s focus has moved away from their first resort. Genting now is money making machine grossing around 3 million ringgits for the family every day. So everything at Genting is about fleecing people. Prices of articles are nearly 4 times the rate outside and the 28 storied One World hotel cram rooms at every possible nook to set the world record. The room will deny you of even basic facilities like room service, wi-fi and even drinking water. With all its positives and negatives, I feel that Resorts World, Genting Highlands Malaysia is an avoidable place. Most of the rides can be experience at Universal Kingdom Singapore under better service quality.

The Demon King’s Golden Kingdom

If you had slept through your trip from Kerala to Sri Lanka, you will not realize that you are in a different land. Sri Lanka resembles the God’s own country in many ways. Be it be the long rows of coconut trees that line up the tarred highways, houses with tiled roof tops or sound of the rumbling sea at a distance.

“Sri Lanka got independence from British in 1948” our guide quipped. “British did a lot of good work over the 140 years they were in Sri Lanka. They build our railways, 5 star hotels and a good road network. They would have continued their good work but unfortunately we got independence in 1948”. I was a little taken aback by the eulogy for colonists by the oppressed.  As we moved on seeing the city of Colombo and hearing more from our Sri Lankan guide, the similarity I had weaved in my mind started dissolving. The first difference I could see was the blatant disparity between rich and the poor. Our guide took care that our tour bus went through the rich localities of Lanka and we were all given a perception of a developed country. But the intermittent slums which littered the lands gave us the actual picture of the golden kingdom build for Ravanna by the mason of gods. The vehicles running on the roads were mostly imported from India. There were Altos, Swifts and Nanos. Tata Nano infact is a big hit in Sri Lanka and is extensively used as Nano taxis there. But I was surprised to hear that the prices of vehicles are very high. It seems Nano costs almost 10 lacs after the large import duty imposed by government. The price of nano is around 3 - 4 time more than it is in India and almost equal to the price of Alto, the market leader of Sri Lanka. Initially, I thought the high price of cars are a strategy used by the Lankan government is keeping its roads less congested. They cannot expand their city roads, so only way to keep the roads commutable is by reducing the vehicles- If you cannot solve the problem, delay the problem.Later I found out that the Lankan government had actually sliced the duty on cars but immediately rolled back the same after the large number of car imports drained all its foreign reserves.

Most of our tour concentrated in an area called Colombo 7 aka Cinnamon gardens. The tour showed us the freedom square first and moved on the famous buildings of the New Lanka – Bandaranayike convention centre, Cultural auditorium etc. Interestingly all these structures were build with Chinese money donated to the Lankans. The President of Lanka Mahindra Rajapaksa is getting abundant helping hand from the Chinese which is using to rebuild his country, he liberated from LTTE. Chinese money is also building the second international airport and port down south. Interestingly, Chinese is trying hard to impress the large Budhist community in Sri Lanka and trying to build a network around India. I have a feeling that this is a bit of paranoiac work from Chinese as we all very well know that India is no match for China with all its internal troubles. Whatever investments Chinese do for Sri Lanka, Budhists  world over are never going to support them against Dalai Lama, so the big brother of Asia may not reach anywhere with this strategy.

After the city tour, we returned back to our resort called Club Dolphin. The resort is well build and is one of the favorite destinations of European and American tourists. Because of the this same reason, the staff will treat you like shit. The welcome drink and initial ritual will work fine but when it comes to peak hours, they will quietly ignore you and will tell you to wait if you press your case.

We then moved to Colombo international airport for our flight. Everything in that airport is substandard. First you will face an uncontrollable mob at the entry terminal. People will all be rushing in and the security staff will just toss your baggage in and out the scanning machinery. Once you are through with the entrance, you reach a large line of shops selling "authentic" Lankan stuff in dollars. Next you will be faced with security check-in staff with outdated metal detectors. The system is so poor that they will ask you to remove every piece of metal from your body before getting yourself scanned. You will have to remove your shoes, belt and I was wondering what they will do about people with metal implants within their body. Finally, we boarded our Sri Lankan air flight at 11:35 pm in the night. Tired from the day long trip, I slept off immediately only to woken up by the air hostess at 1:30 am for dinner. Imagine, 1:30 am and dinner made up of noodles pushed towards you. After the “dinner”, I went back to sleep again; again to be woken up a smiling air hostess at 4 am. “You will have to go through security check at Singapore airport now” she said. “What? But I am going to KL, why will I get a security check here” I asked. “You will have to sir, as our flight is goes via Singapore” she replied. Now imagine the heights – You are woken up at 4 am in the morning to take a walk through an airport which you are not even getting down at. As we had no choice, we went through the turmoil of taking a walk through the legendary Singapore airport and getting ourselves scanned and checked. I never really understood why Singapore was doing this. Singapore airport is one the most crowded and successful airports in the world. Surely, they don’t need to take people though such jokes to show off their possession. May be Singapore knows the quality of security in Sri Lankan airports and so was being doubly sure.

All in all, I feel that Sri Lanka is a beautiful country, very similar to Kerala in its geography and topography. Its sun, beaches and food are lovely and worth a tour. The best thing about Sri Lankan tour is that after a tour, you realize that India is a great place after all.

Menacing trip on Kerala roads

At 3:15 pm, we realized that our train left at 2:30 pm and we will have to find a different mode of transportation to take us to Cochin. As an obvious choice, taking a long car trip from Kannur to Cochin came downing on us all. 7 hours of travel on Kerala roads, phew! The thought was not a very welcoming one.
The mishap occurred because our ticket booking expert (my sister) confused 1430 hours of railway train with 4:30 pm :( She finally claimed that the confusion came in because the train number was 16306 which she confused with the departure time. :p Anyway finally, we were on our way to Cochin by road at 3:30 pm and then the adventure began.
Traveling on Kerala roads is like playing NFS. You are first exposed to narrow alleys fulls of speeding vehicles, most of them faster than you and all of them angry at you because you have just tried to trespass into their territory. Then roads wind, twist, bank and turn at random points giving the driver a formula one driver experience. Everyone seems to be speeding to catch a leaving plane, they are all honking and screeching, asking you to move faster or give way. All this can be endured but no sane driver will ever want to fight the real monster on Kerala roads - the transport buses. These omnipresent mode of public transportation are typically driven these days by school dropouts with absolutely no sense inside their brains. The drivers are kids aged between 20 - 25 years, ones who have acquired their driving license a few weeks ago. If I was getting a feeling of NFS, I think the bus  drivers were trying to create a road rash effect, making the roads hell for everyone around.
The fundamental problem of Kerala roads are much more deeper than the kids and their high seats(bus driver's seats) from which they look down upon the roads. Kerala has very little space for roads but our economy is heavily service driven. We import almost everything and our people travel a lot as part of their jobs. Owning a vehicle is a status symbol here and having a car is a must before you get married. All these adds up to our burgeoning number of vehicles while our roads are still at the widths they were at during British times. Add to it, the obsession housed by most against giving away their land for road and other infrastructure projects and you end up having highly winding roads which nauseates you after a few kilometers.
The problem can be solved only if infrastructure development is tackled in a cleverer manner. The idea of land bonds which was proposed by IIMK to Kerala cabinet was a move in this direction. But like all other great ideas given to government, this also is stuck somewhere beneath those red taped files.    

Hypocrite's oath

Recently on a trip to Mumbai, I met a guy working with the largest consulting firm in the world (in terms of projected revenues as the consulting LLP firms never really publish their revenues). He was a pass out from a top B-school in the country and has been at his work for last 2 years. We spoke about various things and somehow the discussion came to the high fees charged by B-schools and how a high salary is imperative to pay off the loan. What I heard next was unbelievable, the consultant from the firm started boasting that he never ever paid even a penny of his educational loan back. He should be earning a minimum of 25 lacs every year and still is finding it impossible to pay off a loan worth 8 lacs. The hypocrisy from an highly educated Indian surprised and disappointed me at the same time.

I was more surprised to find out that consultant from the firm was not alone in his 'heroic' act. There are a lot of students, graduating out of top institutes of this country, creating more NPAs for the poor public sector banks which gave them loans at the time of need. To find out more, I spoke to the manager of a bank near a top educational institute. The bank was into giving educational loans to students earlier but stopped the practice as NPAs went through the roof. He told me that nearly 50% of the loans given to the students were NPAs and the only data they had of the students were mobile numbers which were disconnected and 'permanent addresses' which didn't exist. It sounded to me that the systems in PSB were so full of loop faults that students found it easy to cheat. The incentive to cheating grew when they found that people who cheated are getting along without any issues and the domino tumbled.

When one look closer into this phenomenon, one can see that the deluge of NPAs started in ayear when the top Indian B-schools increased their intake and economy ran into a bad patch. Students who came into these institutes with hopes of high salaries suddenly found themselves with an average job and a high EMI. They found it easier to default the EMI. The defaults may have started with an intention of delaying the payment. But when they saw there were no repercussions, they got bolder and got used to the defaults. Soon the people who landed up with good jobs found that their own batch mates were enjoying a privilege unavailable to them and wanted to join the bandwagon. So the domino effect started.

My reasoning may give you a hint that that I'm putting the blame on the banks and the system rather than the meritorious professionals who decide not to pay their dues. If the education they received at India's top schools have not given them even so much values, I think we are a failures as a nation. We have failed at creating individuals who cannot separate the right and wrong and lacking long term vision and we have failed at establishing institutions which could create such individuals.