 This is Vijaya Kulkarni. I think some more of Vijay Kulkarni's family would be joining us. Some senior colleagues and friends of Vijay K. A few students, teachers. And I would also like to welcome people who are joining us through video conferencing of the larger TFR family. So we have people from the TFR Kulabha campus. Thank you for joining us here. It's very nice to have you. We have a group from the National Center for Biological Sciences in Bagular, NCPS. And we were also to have a group from NCRA but due to some unfortunate circumstances there, they were not able to join. I am very happy to be standing here in this auditorium, the Vijay Kulkarni auditorium in fact. To remember Vijay K as we have been doing every year. This is the 14th Vijay K Memorial Lecture. Just to recall, Vijay K as he was known, all of you here have got some write up about him. But very briefly, he conceived and founded the Homewawa Center for Science Education. Along with Professor B.M. Uthgaukar and Professor Lago in 1974. He was first project leader and then the first director of the center. And his main focus was on education of first generation learners. The center began with various projects both in rural areas in Maharashtra and in urban Maharashtra and the Mumbai Municipal Schools. And a large number of projects were taken up in the initial years of the center. Which led to a building up of experiences on the field which turned out to be very valuable for the future of the center. He led the center from strength to strength. In 1994 he retired. But before that the center had moved from a few classrooms in Nanachuk Municipal School to this very well endowed campus here. So that was I think his big achievement which led the foundation for what was to come later. He passed away unfortunately in 2002. And since then this lecture series has been instituted in his honor. So let me begin first by paying our respects to Professor Vijay Kulkarni as founder director. And also say that it is doubly an honor for us that Dr. Narendra Sathav is here. And I came to know only recently that he was actually quite very close to both Professor Vijay Kulkarni and B.M. Murgaoka. And they used to have a lot of discussions together. Without knowing this and knowing that Dr. Narendra Sathav was coming. I could imagine Vijay Kulkarni just sitting here in this auditorium and thoroughly enjoying the talk. Because he was very interested particularly in economics. But he was interested in generally everything around him. He was also a very well-read person. Dr. Sathav is a well-known economist, policymaker, educationist, social scientist and a best-selling author. Most people at least in Maharashtra know him as a best-selling author. He holds a PhD in economics from Indiana University and USA. And currently he is professor and Durgapay Deshukh chair in social development, equity and human security at the council for social development in New Delhi. He was for a few years vice chancellor of the University of Pune and people in Pune University still remember the new initiatives that he took there. For many years for more than three decades he was the chief economist of the Reserve Bank of India. He was with the Reserve Bank of India and chief economist for many years. He served as a member of the planning commission with responsibilities covering education, labor, employment, skill development, social justice and employment. He was a member of the National Advisory Council chaired by Sonia Gandhi. Dr. Zadav has written or edited 30 books including 12 books on Dr. Ambedkar, 6 each in English and Marathi. Compressing an intellectual biography and three volumes of speeches each of three volumes, writings of two volumes each. He's edited a trilogy on Rabindranath Tagore and his other books are called Re-emerging India, Monetary Policy, Financial Stability and Central Banking in India. There is a book on the Untouchables published by Simon and Schuster. A book called Outcast a Memoir which is a sort of free translation of his memoirs in Marathi which is a highly successful book. And Monetary Economics for India published by Macmillan. His memoirs are called Amsa Baap and Ami which was published in 1993 and it broke several records. The first edition was sold before publication which is very rare for a book in Marathi. It has now gone into 185 editions and about 7 lakh copies of this book have been sold. Of which it's been translated into about 20 languages, you know Indian and other languages. But of these copies sold, 2,75,000 have been sold. You'll never guess they have been sold in Korean, Korean language. And he is very well known in Korea because of this book and it's held up as an example. So Amsa Baap and Ami refers to the relationship between him and his father and how his father was instrumental in... I'm not sure many of you here have read the book, was instrumental in his education and his progress afterwards. Which is a very inadequate I think description but it will have to do for now. His author 30 major official reports around 200 research papers delivered numerous lectures. His recipient of 67 national and international awards for his contribution to the fields of economics, education, literature, culture and social work. They include four honorary dealing degrees and the title of Commander of the Order of Academic Palms. That's an English translation of the Government of France in 2011. And interestingly this award was instituted by Napoleon Bonaparte in 1808. And in 1866 it was extended to non-French nationals. And Dr. Jadav is the first recipient of this commander which is the highest of these awards. So we are really fortunate to have Dr. Jadav here and really looking forward to this lecture. Today's program we will begin with another nice event which we do every two years at the time of the VGK Memorial Lecture. So this is the Homibaba Award in Science Education which is awarded to a member of the TFR family for excellent work in science education. And of course most of this work happens at the Homibaba Center. And this year that is the 2014 award is to be awarded to Professor Vijay Singh who is with us. And the award carries a citation. So we will have the award ceremony and then we will begin with the lecture. So I would first request Dr. Narendra Jadav to present the Homibaba Award in Science Education. I will just read out the citation. For Professor Vijay Singh in recognition of his scholarship and extensive contribution to science teaching. For introducing innovative approaches to problem formulation and problem solving. And for steering the Olympiad and National Initiative on Undergraduate Science programs. You know Professor Vijay Singh has been a long time colleague and we are very happy about that. A citation and it is of rupees 20,000 given by the KFR. So this year we have an honourable mention and Mr. Anand Khaisas has received this award. But I think Mr. Anand Khaisas has a long time member at the Homibaba Center for many years. He was a contemporary of Vijay Kulkarni and a very dear colleague. I mean Vijay K was his mentor. So it is very appropriate that he is getting the award today. In recognition of his wide range of activities in science communication, astronomy, outreach, material development and writing introductory science books in Marathi. He himself happens to be a bestselling author for children's books in Marathi. Before beginning the lecture, I would like to request my colleague Professor Subramaniam to present a bouquet to Dr. Zadav. Mrs. Vijay Kulkarni, Professor Vijay Singh. Thank you Professor Jayesh Sri Ramdas for a very generous introduction. Professor Jayesh Sri Ramdas, Dean of Subramaniam, Sri Mati Vijay Kulkarni and Vijay Kulkarni is several other family members, distinguished in YT's faculty, staff and students of Homibaba Center for Science Education. Well friends, it's indeed a great pleasure as well as an honour to be here. And I feel greatly honoured to have been invited to deliver this 14th Vijay K Memorial Lecture. And I am very happy indeed to come to this August institution. The last time I came here was to meet and interact with Mr. Vijay Kulkarni. I had the privilege of coming here in the early 1990s and we worked together on Maharashtra, Vishwakosh and everything. And I used to come here quite frequently to meet him and debate with him on various issues. And I remember several occasions when I met him and Professor Rukhgaoka together. And I continued to carry on memories of my association with Sri Viji Kulkarni. What strikes me most is not only his commitment and passion for the work that he was doing, but the values that he cherished. And he had many qualities and all of you know that. In fact, he began his career in DIFR in the year when I was born in 1953. But I have known him closely when he was the founder-director of this institution. Many of you may not know, but he wrote very well in Marathi. And science education was very closely involved. And as was mentioned by Viji this afternoon, he had a special feeling for the first generation learners. Probably that was another bond between me and Viji Kulkarni because I am a first generation learner. And we really struck very positive vibes and cord between us. And we used to debate and discuss all kinds of subjects. And I completely agree with Viji that he would have loved to sit here and listen to me and debate and ask questions on what I am going to speak about. He had in fact going out of the science education area because for him there was no limit to the interest. He was interested in so many different subjects and issues and he would debate and discuss in a very positive spirit and he had his own unique sense of humor that I distinctly remember. And Viji had just reminded me that during those days, in the early 1990s, he had actually organized my public talk and a debate in Brahman-Sevamanda in Shivaji Park. He organized that and it was a debate on a sensitive set of issues and it was a very well conducted debate. And I am thankful to her for reminding me of that debate. So one has many fond memories about this great scholar, great teacher and above all a great human being called Viji Kulkarni. And therefore I take it as a special privilege that I am here to talk about a subject that I am delivering this 14th VGK Memorial Lecture. And I am going to talk about subject which was very dear in a way to the heart of Viji Kulkarni. I am going to talk about the global economic scenario and the future of the Indian economy. Now one may say that what role science education has or what role the economics has in science education. Economics is a science or an imperfect science at that. But I believe that there are two subjects which have transcended all disciplines and everybody must know minimum of two subjects. One is economics and the second is law or constitution in particular. And I believe in that that everybody no matter what is your field of work you must have a basic knowledge of these two subjects. Economics as well as law and I am doing something about both. You may like to know that 20th of this month, 20th September I am going to start playing yet another role. I am going to be a TV anchor man and there is going to be a TV show that will start on 20th of September every Sunday morning. This is the TV show on constitution and I am getting the best minds in law together. You know Supreme Court judges and lawyers and social workers they have been brought together to educate people particularly the younger generation about the constitution. The title is going to begin in Marathi and I am the anchor man of that. I have designed and developed the whole thing. So every Sunday morning it would be there from September 20th 10 o'clock in the morning and it is going to be on four channels at the same time. This is again creating a history because no program has ever crossed two channels. Even Satyamya Jayate was three channels. This is going to be telecast in four channels at the same time. But that's about the constitution, about the law. The other subject which is my bread and butter for a very long time is economics. And everybody must know because everything that happens in your life you don't have to be economists to know the basics of economics because your life is perpetually being affected, influenced by happenings in the global economy. And of course it has implications for the Indian economy as well. Therefore as a part of your general knowledge you must know what is going on. Now for example stock market crash that took place sometime back. We saw that. In August of 2013 the Federal Reserve Bank of the United States, their chief, the chairman of Federal Reserve as they are called, he made an announcement of some kind that we are going to change our policy in certain manner. You know what was the immediate effect? Within 24 hours stock market in Mumbai had the biggest ever fall and the rupee shot up to 67.5 rupees per dollar. So even a small statement made by a Federal Reserve chairman affects your life here and immediately in this integrated world these things affect everything, affects everything else. And therefore you must, you know, so you can't say that well this is none of my business. You know what happens, what the Federal Chief is saying there or what's happening in America, how does it matter to me? No, it very much matters to you because you have investments here and it's going to take away the value of your investment. So this is not a part of expertise that you need to have but you must understand what is going on and you must understand that in a very simple, I'm going to try to tell you this whole story in terms of a very non-technical terms so that everybody understands. You are very bright people and I'm sure but you may or may not have studied economics. I will make sure that everybody understands exactly what is going on in the simplest possible terms. So I'm going to, now the latest, if you see the events, you know the latest big shock that we had was Chinese devaluation, devaluation of Chinese currency. It has affected us immediately, Chinese devaluation. Before that, Greece, crisis in Greece, crisis in Greece is such a small country it should have no significant effect on the world but there were the major crisis which has shaken the world and the world is still not recovered from that. You and me, everybody is affected, everybody around the globe is affected. Before that there was a European Union crisis. Before that there was a global meltdown. Before that there was yet another crisis. So the world economy is passing through a number of metamorphic changes and I want to tell you the story about all these changes starting from the end of the Second World War. To understand what is going on now, you must understand how the world economy has evolved all these years and along with the evolution of the world economy how the Indian economy has evolved. So in the context of the evolution of global economy I'm going to track the evolution of the Indian economy A, and B, what are the current dominant issues in the global economy and third, how these issues are likely to impact on your and my life tomorrow and in that sense what is the future of the Indian economy. That is what I'm going to talk about today broadly speaking. So let's start with the basics. You know, how is the well-being of a nation major? Well-being of a nation is typically major imperfectly but that is the common way in terms of GDP, the gross domestic product. That is the value addition that all the Indians make will be aggregated and that is called GDP, the gross domestic product. Gross domestic product is a relatively new concept. You know, it came in the 40s or there about. One American scientist, an economist, he thought differently. He said that everybody computes GDP, every country had that and the numbers come out quarterly basis in real terms, in nominal terms and the gross comparisons are made. All that has become a standard part of the conventional wisdom. But he said, he asked a question, what must have been India's GDP 2,000 years back? What must have been China's GDP 2,000 years back? You know, there was no data, there was no concept of GDP but he did something very interesting and he built up. He wrote whatever evidence he could collect, he put it together and he came up with predictions which will shake you. For example, he estimated that India's share in the global GDP in the year 1, when the Gregorian calendar started and when Jesus Christ was born, just imagine. What was India's share at that time in the global economy? That share was 31.5%. So nearly one third of the global GDP came from India alone. India was a little bigger than what it is now but what is the share of India in the global GDP today? It is less than 3%. So from 31.5%, although we talk about India becoming an economic superpower the fact of the matter is that we were superpower for a very long time. They did not call it superpower but going by these numbers we were superpower. In fact, in the first two millenniums from the year 1 to year 1,000 first millennium, China and India were the real superpowers, what we call superpowers now. 150 years India would be leading, number one, then 100 years China would be leading. Then another 75 years India would be leading and then China would lead. So they were taking turns in remaining at the helm of the global economy for a very long time for the entire first millennium. That came down, there are lots of things happened in the interregnum let's now jump from there to the Second World War. At the end of the Second World War, the present economic structure of the world that you see around was decided at the end of the Second World War. The year was 1945. The war ended in 1945 but it was almost over in 1944. So in 1944 there was an international conference held in the United States in a place called Bretton Woods and that conference is the most famous or historic conference. It's called Bretton Woods Conference. Now India was not an independent country at that time. Nevertheless, India was given the status of an independent member to participate in that and Dr. Siddhidishnu who became India's first Indian governor of the Reserve Bank of India much later he represented India, he led the India's delegation to that conference. That conference decided the future of the world economy. They took many decisions but some of the most important decisions were they created three organizations of all the member countries in the world one was the IMF, the International Monetary Fund, the second one was World Bank and the third one was General Agreement on Tariff and Trade, GATT or GATG which was in 1995 converted into what is now called International Trade Organization. That was the first decision. Now what is the difference? A lot of people, IMF and World Bank are on the same street in Washington DC and they are just across each other but there is a difference of world. The simplest way to explain the difference between the IMF and the World Bank is that IMF is like intensive care unit whereas the World Bank is like a gymnasium. So when countries are in trouble, when you have no money left, you have no foreign exchange left, where will you turn to? When you are in that kind of situation, you go to IMF because IMF will give you assistance for these kind of problems when the country as a whole is in trouble. When there are balance of payments problems, when you have no foreign exchange left, reserves left, you go to IMF. World Bank on the other hand is like a gymnasium. It is a gymnasium in the sense that you go there for long term health. So you go to World Bank as a country to get loans for very low interest loan for public sector projects. That is where World Bank comes into the picture. So the difference between the IMF and the World Bank is IMF is like an intensive care unit. You don't go there by choice but circumstances sometimes force countries to go to IMF. World Bank on the other hand is like a gymnasium and that goes on helping the poor countries in their developmental efforts. Now this was one decision made. The second decision that was made was very, very important. The second decision that was made was that this was not a disformal decision but this was an understanding that who will lead the world, who will lead the world economy, which countries would be the engines of growth for the world economy and it was decided, it was unwritten law. The three groups of countries will lead the world, will be the engines of growth for the world economy. First would be of course United States. Second one would be the Western European countries and the third one would be Japan. So it was understood that these three countries will lead the world. These three groups of countries will lead the world and if one of their falters, the remaining two will come forward to take on the mantle of maintaining the momentum of global economy. If two out of three falters, the third one will always was expected to come forward and take on the mantle of maintaining the momentum of the global economy and this went on happening almost uninterrupted in an uninterrupted manner unabatedly for as long as 55 years. From 1945 to the year 2000 this went on happening. Minor glitches here and there but this was generally the rule which changed in the year 2000. But between these two time periods between 1945 to 2000 there was a major turning point to the global economy. There were several but I am focusing on the main ones. The major turning point for the global economy was 1991. This was also critical year for India and India also had a major turning point in 1991 but for entirely different reasons. As far as the global economy is concerned 1990 and 1991 was a watershed year because it changed the pace of change. Now we all know, we have all heard that only thing constant in life is change and we know all that but the pace of change really started accelerating after 1990 and 1991. Why did it happen? The pace of change or acceleration of change took pace of change, pace of change accelerates. So the change that was taking, change is a continuous process. We are talking about second order derivative probably you will understand that better. No the variable is that the change that is taking place in institutional setup in the growth pattern, in the way people think, the way people work in every which way. And it happened functioning of the global economy, change in the way of functioning of the global economy, that pace of change accelerated tremendously and it happened because of two sets of factors. One of them was political and the second was something close to your heart, technological change. As far as technological change is concerned that was the time because of the revolutionary advances in computers, telecommunications and computers, telecommunications and electronics. Basically because of the technological change, the change that took place then was the turning point. It was revolutionary, revolutionary advances were made in the technological sense in computers and electronics and so on. That was one set of factors. The other set of factors was political one, collapse of Soviet Union and the big power breaking down of Soviet Union into, vulcanization of Soviet Union into number of different country. The end of the old war between Soviet Union and United States, coming down on the Berlin Wall, these are very very important significant factors. So because of the political change that was taking place under the Perestroika etc in Soviet Union and so on but set of political factors and set of technological factors. A combined result of both was that the pace of change accelerated tremendously after 1991. This happened for the global economy as a whole. 1991 was also a year of a major change, a turning point for India as well but as I said for a completely different reason. We had one of the biggest economic crisis that took place in India in 1991. In fact our foreign exchange reserves in India they had dwindled to a level of less than 1 billion dollars. Now how do we judge the adequacy of foreign exchange reserves? Typically whether or not your foreign exchange reserves, why do you need foreign exchange reserves? Basically you need foreign exchange reserves to pay for your imports from payment therefore every country has a foreign exchange reserves kept with themselves and that is typically kept with the reserve bank or the central bank of the country. That is why it is called the reserve bank of India or the federal reserve. They can maintain the reserve. Now foreign exchange reserves are maintained by them basically to pay for imports and what had happened was in 1991 over a period of time our foreign exchange reserves were going down gradually then the pace had accelerated because we were exporting much less than what we were importing from other countries which meant that the foreign exchange reserve that we had we were drawing down on our foreign exchange reserve and a situation came where we had only 1 billion dollars. The adequacy of foreign exchange reserves is typically measured by the number of months of imports it can finance. So the rule of thumb at that time was that every country particularly a developing country like India should have foreign exchange reserves which will be able to pay for 3 to 4 months of our import requirement. In 1991 we had a situation where we had foreign exchange reserves which was barely sufficient to cover 15 days of our imports. So we were on a brink of a default. Now India had had an impeccable track record of honoring all our external obligations but in 1991 we came perilously close to a default when you don't have money you don't have money to pay. Now suppose that all our imports are stopped what would happen? 76 percent of our oil is imported. If we stop importing if we have no money to pay for imports we can't import oil. Just take an example if we stop importing oil what will happen to all the industry? All the industries would have to close down from footwear to pharmaceuticals all industries will be closing down and just imagine the kind of unemployment that would create and the kind of social address that would create. So it was really a precipice we were on a brink of a default. So that was a turning point for us. Now one thing which is unique I think for India is that this is great thing about our country that when things are normal we keep fighting with each other but whenever there is a crisis we all become one and when we address the crisis as one people we convert that crisis into an opportunity and that is exactly what happened in 1991. There was a change in the government. Dr. Manmohan Singh took over as the finance minister of the new government and then he unleashed a set of economic reforms which was then called and even now sometimes people call it new economic policy. That new economic policy was new to us it was not new to the world. The world had followed that practice rate but we call it new economic policy. Another short acronym that is used is LPG. LPG until 1991 was always it always meant the liquefied petroleum gas but from 1991 onwards LPG has now made liberalization part privatization and globalization. So that Treesutri the trinity of principles doesn't really capture everything that happened. What happened was much going beyond that but for the sake of abbreviation we call it LPG or the liberalization part privatization and globalization. So we started with that and then our economy took a very interesting turn after that. So 1991 was a very important turn for both world economy as well as for Indian economy and for entirely different reasons. Now look at India's economic record. We became independent in 1947 we started the so called planned economic development in 1951. What was the rate of economic growth between 1951 to 1985-86? It was only 3.5% per year. In fact the 3.5% curiously until that period during that period 1951 to 1986 you take average of 5 years it comes to 3.5%. You take average of 10 years it comes to 3.5%. You take 15 years average it comes to 3.5%. So one of my distinguished predecessors from the member planning commission then from the Raj Krishna called 3.5% as the Hindu rate of growth. It was as if it was the return on our forehead that this country is destined to grow only at 3.5% no more. One particular year we would grow a little bit more than 3.5% another year we would be less than 3.5%. So 3.5% was kind of attached to us and it was associated with us but all that changed from 1991. 1992 to 2002 first 10 years of reform our average growth rate was 6% per year. So we broke the so called barrier of 3.5% growth. I still remember the years in 1994-95 the first time we rose more than way above 3.5% by 7% everybody thought that was a flu. The next year we did it again. Then maybe there is something it had to achieve a hat trick what in cricket they call hat trick 3 years in a row of 7% growth then people realize that we are not bound to grow by 3.5% alone. We can do better and we did. So the average growth rate for first 10 years 1992 to 2002 was 6% per year. In the interregnum what was the next turning point after the 1991 turning point the next turning point was 2001 that is much less well known to common masses but economists all know that. What happened in that year is that all the so called engines of growth that I had mentioned which was the unwritten law that United States, Japan and the western Europe will work as the engines of growth that first hand changed in the sense that Japan has been having all kinds of troubles from 1992 onwards. So Japan has been in trouble. What happened in the year 2001 was that United States after a prolonged very strong expansion the US economy started slowing down. So naturally going by that unwritten law everybody expected the third engine of growth namely the Europe to come forward and take on the mantle of maintaining the momentum of global economy and that did not happen. So first time in 55 years we had a situation where all the engines of growth of the world economy they started slowing down at the same time. So important was this turning point that we economists gave it a name we called it synchronized global slowdown. So all the engines of growth slowing down at the same time. There is a corollary to this. When that happened two countries suddenly catapulted to the global stage. First was China and second was India. And we have in effect although the world community does not recognize it we are the engine of growth modern new engine of growth for the world economy and the whole. Or until recently China won it still continues to be and I will give you the details of that later. The point is this China please understand China and India they emerged on the global platform as the engines of growth new engines of growth very powerful contributors to the stability of the global economy. The westerners still do not accept that willingly that nobody calls us engines of growth but we are if you look at the growth rate of China and growth rate of India and if you did it back the rest of the global economy would be in recession. So we have been contributing to the stability of the overall global economy. I will come back to that point later. Between China and India please understand something very important that we started our reforms in 1992 after the crisis of 1991. China started 13 years before us. 13 years before us and without any crisis you know without any crisis in 1978 they started taking the measures which were called by India later new economic policy. They started doing the privatization. They started doing the liberalization. They started doing the globalization. In fact I have to tell you this. Then Xiaoping was asked one of those years he was asked in a public interview that you are a communist country. He was asked you are a communist country. Then how do you follow these capitalist policies? Because still a lot of people have this completely outdated notion of capitalism versus socialism versus communism and so on. These results no longer are operating. They operate only in the mindset of the people because they are overly simplistic now but he was asked that you are a communist country politically speaking and why are you doing these capitalist reforms and these measures? The answer is something very very important. Everybody who has the leftist leaning must listen to that. There are a lot of people in the heart of heart they have this leftist leaning. I also have but you know we have to think twice before you see the reality. He said that I don't give a damn. The European said I don't give a damn whether the cat is black or white as long as it catches the mice. So whether it is communism or socialism or capitalism I don't give a damn. The point is that whether we are achieving the results in terms of growth and please note that China became the first country in the history of humanity to record more than 10% growth for 25 years in a row. No country. It was inconceivable. But China achieved that and followed by India. I said that between 1992 to 2002 India's growth rate accelerated from 3.5% earlier to 6%. 2002 to 2005 our growth rate accelerated to 8% and 2005 to 2008 our growth rate accelerated to 9.3% per year. So we were very close to the magical double digit growth of 10%. That was when Dr. Abdul Kalam started talking about India becoming a superpower India becoming a developed nation. Because China had achieved that China was growing at the rate of 11% and India became the second fastest growing country in the world at that time in 2008 growing at the rate of 9.3% per year. That is when the third turning point came and the third turning point came from the United States of all the countries. Earlier the crisis used to take place in developing countries but here the crisis took place in the United States and that was called the global meltdown. It started with a simple housing crisis which was called sub-prime crisis. The financial system in the United States they gave loans to borrowers who were not worthy of borrowing. So they were sub-prime. They were not the prime borrowers they were sub-prime borrowers and that's why it is called sub-prime crisis and that spread like wildfire and because of the interconnected world that spread like wildfire to other parts of the country as well other parts of the world as well including India. So everybody was affected. Can you imagine the United States growth rate sunk below 0. It was minus 3.5% growth. It's not growth it's a negative growth. Western Europe minus 3.3% Japan minus 3% China affected from 11% we came down to China came down to 9% India and there was a big debate at that time some of you who have been watching TV at that time I was the only one who was saying that India is not anywhere near recession but lot of people started saying that we are also going to have a recession. Why were we saying that? That was very unscrupulous of some of our industrialists to say that we are also nearing recession. What is a recession? Recession is if you have negative growth for 3 consecutive calendar quarters that is the technical definition of recession. We were at 9% from 9% you can't go to below 0 and stay there for 3 quarters in a row. That was impossible. But some people were saying that. You know why? The reason was very simple. America came out with a package of $800 billion bailout package. Twice. First $800 billion then another $800 billion. This was unheard of big package to salvage the financial system. Even the western Europe came out 5 top countries of the western Europe they came out with a combined package of $1.3 trillion. China came out with a package of $482 billion. So there was feeling or hope by some people that in India also will have a package. Some of the industrialists were saying that we are also nearing recession and they were trying to tell the government that elections around the corner 2009 elections were around the corner. The elections around the corner the recession is coming and we will have no choice but to retrench our people. So if you don't want that would be very tough for you for the election. Therefore you must come out with a package and give us something to us like a big package that has come in the US and elsewhere. Government of course is never that stupid and the government could see through the game and we did not have any big package but we had our own measures and we came out of that very quickly. In fact those days there were three possibilities that we talked about whether the recovery of the world economy, whether it will be U-shape or V-shape or W-shape or L-shape. L-shape is the horrible thing that you fall and then stay at the fall level for a long time that is L-shape. You would be the easiest one where you go down and then take a quick up turn and you achieve a U-turn so to say. That would happen in about a year or so. The second one was V-shape recovery that means you go down very sharply and they also come up very sharply but it takes about two years or little more than two years. W means you go up, come down, go up again come down and it goes on in this exact pattern. These were the examples which were being given. Interestingly while the United States was coming up very slowly and they were struggling to come above the zero level growth. They were in the negative range, they were struggling. Western Europe was struggling, Japan was struggling, India and China made a quick comeback within one year, one year and three months. China had gone down from 11% to 9%, China bounced back. India had gone down from 9.3% to 6.9%, we bounced back to 8%. So China and India showed their own resilience to come back. Having made the comeback we were thinking that we will now go back again to the high growth trajectory. We have shown the resilience, unfortunately the fourth turning point came and that was the European crisis. European crisis hit the world economy in 2011. What is the European crisis? In Europe 27 countries have formed a kind of one country-like union which is called European Union, 16 out of them have given up their own currencies and have a common currency called Euro. Every member of European Union is not part of the common currency like Britain. Britain had a pound sterling and a currency, they maintained a separate currency but all others, 16 of them have forsaken their currency and merged their currency into what is called Euro. Now this is a very interesting experiment which is about 50 years old and it is a pan-Europe one group is to be created and things have been going well but it got rudely shaken recently. What happened was in the European Union to make the long story short, there are big countries in European Union like France or Germany or UK and then there are small countries like Denmark and very very small countries as well. One can say that to a large extent the big countries in the European Union have exploited the small countries in the European Union although they are part of the same union. So what happened was five countries situation has been terrible in the last few years and these countries have been abbreviated as PICS, Portugal, Ireland, Italy, Greece and Spain. These five countries which are where acronym is PICS, they are doing very badly their unemployment rate is very high, the government debt is very very high for example a country like Greece, their total debt is 177% of their national income of their GDP, that's a terrible amount of debt. So they have been living beyond their means and others were helping them within the European Union particularly Germany but now things have become very difficult. Now what has happened is that the party cannot go on, making a party or borrowed funds cannot go on forever. So what happened was Greece of these five countries are all in serious trouble but the worst was Greece. What happened in Greece was that IMF has pumped in money, Germany and other members of European Union they have pumped in large amount of money in Greece as loans. Now what has happened is that Greece was unable to pay back the loans because if you borrow and use the borrowed money for creation of productive assets then you have ability to repay your loan but if you are going to use your borrowing for consumption there is no way you will generate surplus to pay back the loans. This is how the party just cannot go on. So it became very difficult for Greece to pay back. What happened was that IMF had put all kinds of conditions at the lender they have to to ensure that the money comes back. Even Germany and other countries they were also demanding their money and then there was election in January. What happened in Greece is very very interesting. In Germany when there were elections, in Greece when there were elections the results were declared on 25th of January 2015. There was one party which said that we don't like these restrictions that foreigners are putting on us making appeal to the nationhood and all that. They said that if we come to power we will disregard all these restrictions. Who are these people putting restrictions on a sovereign country like Greece? When you needed money and you borrowed it and you said yes to everything and now when the money is to be paid you are saying that we will not pay and our self respect is very important blah blah blah. And that was the election campaign where this political party which is left in blind party they took a position that if we come to power they never hope to come to power. They started saying that their main election campaign was that if we come to power all these restrictions will go. We will say go to hell. And strangely enough that party came to power. Now that became a very very difficult situation. Now when you are in power how will you deliver? Because you have to pay, you can't cancel the loans just like that. Can you imagine they actually took a referendum? Referendum that whether to go back on our word and they succeeded. This is not success of course. The ruling party called the foreign lenders as terrorists. Can you believe that? They called the IMF and other lenders as terrorists officially. And in the referendum they won because people said that don't worry about the rest of the world. And then all kinds of things happened. Finally they patched up a deal. Now Germany has put in a lot of money there. And there also you know Merkel is responsible to her own population, her own countrymen. And so all kinds of things happened. In fact Greece went to the extreme. Today ISIS there is a big refugee, large number of refugees are going out of Syria and Iraq. This ISIS kind of problem. And we have all read the touching story of Islam. But this is going on. Do you know that Greece has actually been encouraging people to take the route of Greece to go to the north part of the other part of the Europe. Nobody wants to go to Greece. But they are giving access and they are threatening others. Then if you don't solve our problem, give us loan to pay back your loan. Give us more loan to pay back your loan. And that is what willy-nilly the European Union had to do that. The lenders in European Union were forced to give them more loans to pay back. That means only buying more time. It doesn't solve the problem. So all kinds of complicated things happened. And that was the Greece was in big news until two months back. The latest one is what is happening to China. China has devalued its currency back to back in three days in a row. They devalued their currency aggregating about 3% devaluation of the currency. What does that mean? What is the devaluation? Let me clarify some of the concepts. These concepts are, misconceptions are very common in our country and everywhere else in the world. For example, a lot of people think that strong currency means strong economy. Absolute nonsense. Strong currency does not mean strong economy. And weak currency does not mean weak economy. There is something far more to it. But this is so common, if you remember, some of you might remember, Lal Krishnan had said once upon a time that if we come to power, rupee would be as strong as Himalaya. And that had a lot of appeal with people that strong currency means strong economy. When I was teaching in the United States while doing my PhD, that Ronald Reagan was the president, and I was teaching and I used to get my American students that my blood would boil if I were an American. Because that was the time when President Reagan used to say that strong dollar is the strong great American dream and all that. At that time, what happens when your currency is stronger than what it should be? To understand the meaning of devaluation, you must know this. It's like a moving target and you have to hit the moving target. The target changes at every point of time. Now, if your currency is, when you devalue your currency, what does that mean? When you devalue that currency, that means that if dollar is 50 rupees and rupee is devalued, the dollar would become 60 rupees instead of 50 rupees because the exchange rate is the price of one currency in terms of another. So when you devalue your currency, that means for every dollar you get more rupees than earlier. What does that mean? That means that the foreign currency price of your exports will go down and domestic currency price of your imports will go up. If foreign currency price of your exports goes down, the rest of the world would be buying more from you so your exports would be more. Whereas the domestic currency price of your imports rises, that means people will find it very difficult to buy the imported goods and therefore the imports would go down. So in one stroke, if you devalue what is expected to happen is that your exports would go up and your imports would go down and therefore your balance of payments would be more in balance. That is the basic theoretical position. China did this. Now, China's devaluation means what? It means that their exports will rise further. China is one of the largest exporters in the world but China's growth rate is slowing down. There are all kinds of financial market problems going on. Stock market has been coming down. China's growth rate has been coming down. So there is a perception that China is finally slowing down. In fact, there was an absolutely foolish news item that came in the papers two months back and a lot of people believed that. The headline carried by many of our economic daily scattered news that India has overtaken China, absolute nonsense. China's growth rate from 11% is coming down and now it has come to below 7%. India's growth rate of late is rising and we have crossed 7%. So their growth rate is coming down. Our growth rate is going up and we have crossed each other at 7% level or there about. That is good but not good enough. This doesn't mean we have overtaken. It only means that for this particular year, India's growth rate is higher than the growth rate of China which is welcome and nice. But that doesn't mean India has overtaken because until 1990, India and China were at the same level of economic growth and development. Today, China's per capita income is five times the per capita income of India. So they have increased by leaps and bounds and they are way ahead of us. So crossing their growth rate for one particular year does not mean India overcoming China. I wish it had but we have a long way to go. It only means that India's growth rate for this particular year is going to exceed a little bit more than China's growth rate which is welcome, good but not good enough. Let's be realistic that we have still a very long way to go to overcome China. That may or may not happen but we hope that it happens in distant future. We are nowhere near that and I want you to understand that. So what has happened now is that China devaluing its currency, China's growth rate is slipping, financial stock market is collapsing and it has immediate impact on us. What is happening there is this, that Chinese Premier, Mr. Jin Ping, felt that he has to keep this notion of China's strong growth, that notion has to be maintained and he believed and he has said that several times, that one of the strongest indicators of the stock market should be continuously it must keep going. So he did everything possible to create an environment where the stock market would keep on growing. People sold their houses or used houses as collateral to make investment in the stock market. That is the last thing that you should be doing but when the market is going up and up and up, those who are not benefitting felt that they are losing out and therefore by hook and crook people tried to put their money into stock market. Now that worked very well for quite some time but finally all parties come to an end. When the growth rate started slowing down there was an apprehension and then that is fed by, stock markets are fed by a very large amount of foreign direct investment particularly the portfolio investment that is coming into the country and they started withdrawing. So that accelerated the fall of the Chinese stock market. So devaluation is one way that they have thought about it took everybody was surprised and as you are aware in the Indian stock market crack worldwide the stock market cracked and right now the rupee dollar rate has again gone to a very high of close to 67 rupees. Now this is very high. Why is that happening? See Chinese devaluation is one thing but at the same time what is important is what is happening in the United States. United States has a policy, a monetary policy which is called quantitative easy. What the US did was to bring the economy out of the recession minus 3.5 percent growth in 2008 that I was talking about. What the United States did was to come out with a very unconventional monetary policy and they announced that every month on a specific day the Federal Reserve will buy the American securities from the market which means that they will be pumping in large amount of dollars in the domestic economy, very large amount. So buying the government securities and pumping the dollar cash into the economy that is what was called quantitative easing and there were three phases of quantitative easing QE 1, QE 2 and QE 3. In August 2013 the reference that I made earlier in my speech the Federal Reserve chief said that we are going to stop our quantitative easing we are going to taper it off. So rather than buying 8 billion dollars of securities and pumping that much amount of dollars we will reduce the amount. Only that statement triggered a crisis in India and everywhere else because you know why? Please understand this. This is very very interesting. It's like a thriller. Americans the growth rate was very down. They wanted to keep their interest rates as low as possible so that investment would be promoted and the growth will pick up. To keep the interest rate down the best way is to pump the money into the economy. That is the expansionary monetary policy that they followed. By pumping in very large amount of dollars they were keeping the interest rate down. In fact the American interest rates were below close to 0%. So what will happen if you are an American with a lot of money? You are keeping money in the banks in America would give you half a percent of interest rate. So what would you do if you have large amount of money and there are lots of people and institutions with very large amount of money? What would they do? They would look for better returns elsewhere in the world. So large amount of money went to China. Large amount of money came to India. Why was Indian stock market booming when the growth rate was not picking up? It was entirely because of 47 billion dollars came from portfolio investment into the Indian stock market. Double that amount was given to the Chinese market. Now when in 2013 August they made a statement that we are going to taper off immediately they were the reaction. Then they backtracked and they said no we will not do it now. Why are they talking about it now? They are talking about it now because US economic growth is now taking place. So from the minus 3.5% they have come above zero and they are doing reasonably well 2.5% growth. So the money with the growth picking up the federalism does not any longer need to keep the interest rates very low. So that's why they don't need to go on pushing the dollar balances into the economy. So that is why they have announced that we are going to stop now. This quantitative easing will be stopped because we do not any longer need very low interest rate. The moment they have said that and the announcement has been made from 1st September it is supposed to happen anytime it can happen now. That is why the stock market has crashed last week and there have been so many other effects. Now what has happened is that the US economy now that it is doing well the quantitative easing has been stopped or discontinued. And what they are saying is that we will discontinue quantitative easing. Having said that that means that the interest rates will go up. If interest rates in the US are going up those people with lot of dollar balances who have kept money in China and in India that money is all going back. Part of that is going back where they need to send the money elsewhere. If you are getting at home the rate of return which is good enough then why should we take a risk of sending it elsewhere. I am making it very simple. There are many shades of complications here. But essentially there is a fear that large amount of money will go back. What has come into India and China as a portfolio investment in the stock market. A sizable part of that is people are afraid that sizable part will go back. What does that mean? If the portfolio investment in the Indian stock market is going to go back how will it go back? That means that the institutional investors will sell their shares and get the money and take it back. So if everybody starts selling the shares that they are investing what would happen to the stock prices? They are going to crash and that is what is happening today. So this is the situation where we are going to the future looking into the future. India is the fastest growing country in the world today. We have many problems but believe me we are still. In fact for the first time earlier we were the second fastest growing country in the world. Now we are the fastest growing country in the world that is where we are. We have many problems but going into the future India is looking at the bright spot. If you look at the world economy, if you look at as I mentioned before China and India both have been, have been really the engines of growth in the last few years although it is not expressly recognized by the authorities and by Americans or generally what we call westerners although they don't recognize the fact of the matter that India and China have been contributing a lot to the global financial stability and the global economic growth. Now with China slowing down what will happen in the future? Will China go on slowing down? We don't know but please understand that the money which we are very strangely poised right now. Suppose that China continues to drop its growth rate continues to decline. The largest amount of foreign investment that has been made in the stock market particularly the portfolio investment that will go back. While going back if India looks good now a part of that may actually come back to India that can automatically stabilize the picture. So a part of money will go back from China part of money will go back from India you know portfolio investment but because now India is looking much better than China for now if we have credible reforms in future right now there are problems and we know that GST reform is held up you know land reforms are being held up and there are many problems but if we are putting if we are seen as putting our house in order our growth rate is very good and if it is projected to be better if we are making the efforts to take the right steps in that direction what may happen fortuitously is not only the money going off out of India may slow down A and B money which is going back from China a part of that may be diverted and may come here which will become a voranda for us. So we are at a critical juncture where going from here to the future I think we have a lot of promise but we need to put our own house in order and take all the reform measures which are imperatively needed. If we do not do that then you know the advantage that we have is going to wither away. Let me only mention one point and conclude we are enjoying what is called demographic division. I am sure many of you might have heard this expression very important the average age of India today is about 24 and by 2020 the average age of India would be about 29 years. In 2020 when average age of India is 29 the average age of China would be 37, average age of United States would be 38, average age of Western Europe would be 43 and average age of Japan would be 48 to 49. So we are today blessed with a large and growing young population. Earlier population was seen as a big problem right we have a population institute right around the corner. Population was considered the problem today no longer takes it as a problem it's not the absolute size of population it is the age composition of the population that really matters and that is where we are very fortunate and that is what is called demographic division because having a large and growing young population naturally use a lot of head start for the country to grow even better going by the world history or track record of the western country. Now we are there but I have never been tired of saying this that this demographic division is not automatic just because we have large and growing young population doesn't mean that we are going to automatically become superpower it depends on how and whether we harness this demographic dividend and what is the way to harness this demographic dividend? The only way to harness this demographic dividend is to focus on education and still development. If we do not do that mind you if we do not harness this demographic dividend the future generations will never forgive us because we will be creating mouths to feed but not the hands that can work and if that happens the demographic dividend that we talk about would actually become a demographic nightmare because the entire social stability can come down with demographic dividend frittered away and demographic disaster visiting us and I am sure the powers that we will take the appropriate steps to harness this demographic dividend in the interest of the country as a whole because this is a window of opportunity that becomes available to any country for 15 years or so after 15 years this opportunity would be gone. This is an opportunity which comes in the lifetime of a nation only once and we have that opportunity now if we don't use that, if we don't utilize that, if we do not harness this demographic dividend I think our future would be there would be a demographic disaster and we cannot complain we will have to blame only ourselves but I am sure we will do the right thing at the right time the way VG Kulkarni taught us all by his own action, by his deeds and therefore while paying the highest tribute to this great scholar and a great personal friend VG Kulkarni delivering this 14th Memorial lecture in his honor is a distinct privilege for me and I thank the organizers for having given me this opportunity to pay my tribute to see VG Kulkarni. Thank you, thank you very much. Thank you very much Dr. Zato for a very informative as well as a very provocative talk so I am sure there are a lot of questions and comments. If people who are joining my video conferencing would like to ask any questions I request you know someone to sort of coordinate that in the groups and so just you can just pick your questions. We will take few questions man typically for Memorial lectures there are no Q&A but I will take few. I will, I will. As a matter of interest we sense that it lashes very badly and consecutive 2 days per day then we go in almost in the similar manner whether it will have a long term a good effect or only short term. No, no you see first of all please do not take stock market as a barometer of economic health it's a very imperfect barometer because you know typically the stock market reacts to even rumors news, leaked news reports everything because it's very sensitive therefore it should not be taken as a barometer of the country the economic health so when it falls very steeply there is a paper profit blown away but that there are a lot of people who are waiting in the wigs to enter those who have missed this opportunity so they get this feeling that now that the market is down now today yesterday the market was in the 14 months low right it went below 25,000 now a lot of people think that this is a good opportunity we have missed out on the bandwagon so let's join and take the benefit this is how it works so there is no one to one correspondence between stock market going up and down and the economic strength of growth of the country. Sir, thank you very much. Yes Brigadier, we'll give a chance to him and then Brigadier sir. Is it on? Yes. I'm not a professional economist but I enjoyed your talk thoroughly so very nice. I have a couple of questions. What is the demographic advantage which India has? It has to have lots of young people but I think what much of it is virtual is so called advantage. Only these people, people who are mostly young people are provided with a large load of useless people who are young, useless old man doesn't hurt useless young man hurts so one is that maybe you have some better thinking on that the other is about the flight of capital from India if U.S. does that increases the rate you see at the moment the capital which comes they get 6%, 7%, 8% from India if they take it back you get 2%, 2%, 3% they are stupid. Ok. This is only in mention they will not, they call a short while they might take a few billion dollars much of it will stay as long as and India cannot support that it is stupid for India to think that dollars unless we can put it into some assets which allows us to pay back otherwise that could be a thought of a, on our back Sure. Thank you. Thank you sir. I will take your second question first. There is a distinction that needs to be made between what is called direct foreign investment and portfolio investment. Direct foreign investment comes into the actual factory etc. you know it is the real investment that doesn't go back immediately that depends on their perspective, their vision for India's medium term future so that is not fickle minded. We are fickle minded is likely to be the portfolio investment Joe Stokes made Allah. Now there what you say is correct that here they can get 6% return and there they are getting only 2% return so why would they give up 6% return to go for 2% The reason is it is not the nominal rate that is to be compared what we have to do is to risk adjusted rate of return if they perceive the risk of keeping money here to be higher then the risk adjusted rate of return will not be 6% and if they consider domestically zero risk then the risk adjusted domestic low rate of return would not be as low as what we make it out of but that is their individual decision that not you or me can decide because we have given them freedom to come in and that is why they can come in and once you give a freedom to come in we have to give freedom to go out also never mind that. About your first question I did say that I would not say useless because nobody in my mind is useless everybody has some divine quality in him or her everybody God has not created anybody completely useless even old people nobody is useless but your basic point is absolutely correct sir that we have to have skilled people having more people is no fun that is why I said that we have to harness this demographic dividend and the only way we can harness this demographic dividend is by focusing on two things one is education and second is skill development Kaushalya Vikas is probably the most important one now I will just give you a number to indicate how far behind we are in skill development you know we have missed the bus already you know what is the percentage of youth in India which has a formal or informal on the job training of sorts which will be called technical skill training less than 10% formal and informal combined this proportion in South Korea is 87% that is the big difference and we have really a long way to go so when Prime Minister Modi says that this is a skill in India that is for future we have recognized it very late and a lot needs to be done and I can tell you that in the previous government I was in charge as a member of planning commission of many things including skill development and there were very ambitious plans were afloat I will just give you a very simple example in India can you think about doing a PhD in welding is unthinkable unthinkable because we have a kind of rift in our TVET technical and vocational education system we have a kind of dichotomy from general education you cannot go to this technical education from technical education you cannot go to general education there is no horizontal pathway nor there is any vertical integration that is possible that has to change in fact what is being created initiated by Dr. Manmohan Singh earlier we don't hear about it but there was a talk that we must have national skill framework national skill framework and I was the chair of the committee and we prepared the draft about it and all the skills have been divided from the level 1 1 is like primary education to 10 which is like PhD so for general side as well as for technical education and there would be in future horizontal pathways and vertically you can go up now if a boy or girl goes to ITI first of all good students don't go to ITI and those who go to ITI they do a course and there is a terminal one there is no vertical integration possible at best there is one advanced course that is it they can't come back to the general screen nor the people in general screen can go there that will change in future in fact and I can see it 10 years from now every university will have a skill and a component and there would be some universities which have skill-based universities only so that is recognition is now there and we are moving in that direction although we are late I am very hopeful for the future Brigadier, no Brigadier is ready Sir, thanks for a wonderful explanation there are few sort of things as part questions firstly sir like President Roosevelt the second one he is in a depression creating massive public works for absorbing the young people without jobs I agree some of them have to have wonderful skills but some could be used I mean you know much better than me like the old Kalan canal for linking Kavari and the roads and so on and so forth the second part sir the other acronym mentioned in fashion is BRICS you didn't give us an idea about Brazil Russia the way it is coming up sir it can stare down the United States the rest of the European countries are in Ukraine and they have to back off so their rise at South Africa if you could just give us some on your first question you use the word depression I use the word recession what is the difference between a recession and a depression recession as I said is you know if your GDP falls goes into negative range below 0% for three quarters in a row that is a recession we are nowhere near recession depression is extreme case of recession where you know when was the great depression took place 1931 there hasn't been a depression since 1931 at that time the growth rate had fallen you know the GDP of the world global economy had fallen by more than 25% unemployment was 30% in some places so this is the great depression 1929, 1930 and 1931 we are not even close to recession so depression is something which is the nightmarish kind of thing we are nowhere close to that we don't have to worry even as far as the recession is concerned we are nowhere near recession and not likely to be so the question of public work now what you are saying is absolutely true and that is why Mahatma Gandhi Narayega was started that is the modern version of public works that we were talking about where for 100 days you give assured job to people but it was not only a job creating one important thing was to also create rural assets for that like bonding and you know a lot of things that can be done in the rural economy that was not done in a big way but I can assure you Mahatma Gandhi Narayega is the modern version of the public works that we were talking about and that is the unique thing in the world there are many problems with that but essentially the scheme is very very good and very very useful about bricks you know although I did say that I did not utter the word bricks but I did say that India and China are not recognized formally as the engines of growth like the other countries were doing see there is a group of countries which are coming up these are called emerging market economies EMEs and there are many of them these are the emerging market economies the countries which were developing countries developing countries is a very large group among them there are some which have shown a lot of dynamism they are not industrial economies as yet they are not advanced countries as yet but they are very, they are class apart from the other developing countries which are slow growing and poverty and all kinds of problems continue to do that among these countries these are countries which are called emerging market economies among the emerging market economies there are some which are considered systemically important emerging market economies what is systemically important what happens in Timbuktu will not affect the rest of the world but what happens in India is going to affect the rest of the world so we are systemically more important than others in the sense that whatever happens in our country has a larger or noticeable effect on the rest of the world now among them there is a among the emerging market economies 20 of them have formed a group they are not all emerging market economies earlier the industrial countries had a group of 7 7 top industrial countries were part of it so now it became G-8, G-7 that earlier it was G-5 really there is only G-1 and that is United States then there was the G-5 then it became G-6 then it became G-7 then it became G-8 and today it is G-20 so along with the advanced countries many countries like BRICS countries have joined them it has Mexico and other countries too but the word BRICS refers to Brazil, Russia, India, China and South Africa these are considered to be most important systemically most important systemically most important emerging market economies so they are participating in the G-20 deliberations and at the same time they have a group of their own now they have a bank of their own which is going to be acquired in China as you are aware so BRICS bank is coming up so BRICS is an informal group of these countries 5 countries which have joined hands and they are working out some collaborative energy there was a question here sure sure no question from ladies students or faculty members I don't like that ok yours will be the last question so this one question and then that put the last as you said that getting that democratic dividend education and skill development absolutely what is happening because I am in education principle what is there in other countries children are selecting their own field of study what exactly happening is going to be where that this course that course here we are not allowing that that is the one is and second thing is what do you think about that present day scenario which is moving skill development how many years it will take our country to move ahead this is that gap what you said is rightly we are already in late how far it means what best we can do for our children at the age group and the generation to move that pace ok first of all yeah there are two parts of your question the first part of your question is about the freedom of choice you know we still have this completely obsolete and archaic distinction between arts science and commerce nowhere in the world this kind of stupid systems will exist another wise chance of putting in your city I did my best to break this down but with limited success it is going to move going to go away it will happen but it is happening very slowly I spent nine years in United States and I can tell you that I am very impressed by their system in the sense that nobody knows their major when they go to the college and they keep changing their major and you take subjects from art history to electronics and you go on trying finally you arrive at some subject which has a great appeal to you and then you zero in on that subject but this in our distinction if you go to the arts you are stuck there suppose that you go to arts and you don't like it you have to come back and start all over again why? there is no horizontal pathway why? but now we are moving toward the credit system and semester system where you know one of the nice rules that I made as a person in charge of education is that I don't want to give long answers but I want you to know that there is a kind of caste system in our educational institutions there are central universities which are very few they have no budget constraint they can get any amount of money and they are catering to very small we only talk about IITs and IITs nonsense what is the mainstay of our higher education state universities and they are the ones which are worst affected because the central government doesn't give them money because they are state universities and state governments raise their hands and say we don't have money to give so as a result they are falling between the stool they are the ones which are suffering our quality of our education is hampered because 91% of students go to state universities which are completely devoid of the funding sources that can come from either state government or central government so with a lot of infighting a lot of effort I put together a scheme which is called Rusa Rusa is the Rashtriya Uchchatar Shiksha Abhyan Rashtriya Uchchatar Shiksha Abhyan which is like education for all like Sarva Shiksha Abhyan for school level this is Uchchatar Shiksha Abhyan under which 95,000 crores were supposed to be given to the state universities because nobody talks about state universities when we talk about higher education we will not talk about higher education no that is not it how many students they are catering to as compared to the total very small 91% go to the state universities which are in the worst possible effect so 95,000 crore rupees are supposed to be going to them over a period of 5 years regrettably after the change of government I don't hear much they have not even I have not seen the education ministry utter the word Rusa but I am told that it is still functioning I don't know how effectively that remains to be seen but that is the way to go and we need to do that now one of the thing that has been done very cleverly there is that this money is not going to be distributed to various state universities we have linked it up to their ability to do the academic reforms so those universities which are willing to do the academic reforms would be given more funding those who are not willing to go for reforms that is the attitude of some state universities they will not get any funding so by tying up this with the academic reforms and what is the most important academic reform that we have suggested that introduction of the credit system and the flexibility and the choice and this gradually this distinction between art, science and commerce must be gone and that is what we were trying in the previous government now what stance this government takes it's not very clear to me as yet but I hope they will continue to move in that same direction the other recommendation of Rusa also also to have the council for higher education for every state that they have already established most states have established for skill development every state must have skill development that was recommended then implemented I personally went to all the states in our country and made sure that in every state they have a skill development authority every union territory has its own skill development authority so that has been created let us see how those reforms are taken forward but the more delay that we make the lesser would be the benefits that would accrue to us all of us as the Indian citizens and we should be mindful of that final question from that young lady there yes sir, so as you spoke about the education system but there is a lot of unemployment in the country which leads to poverty basically so what do you think which provision should be amended for eradicating poverty and employment from the country there is no shortcut solution to creating you know to removal of poverty and creating employment today the situation is this take the case of engineering in engineering do you know that survey after survey have shown that between 40 to 70% of people who have engineering degree are completely useless for the job so what has happened is that they have see what has happened in India is that there are people who have certificates but no skills and there are people who have skills but they don't have certificates this is a very big problem now today if you see this year the situation is in many engineering colleges there are what 80,000 seats are lying vacant because people have become conscious they realize that quality is very important earlier getting admission to engineering college was impossible, now it is possible but then the quality is indifferent you can't be indifferent to the quality and therefore smaller colleges which have come up you know by politicians etc they are not doing well at all there are many seats which are vacant earlier people used to pay extra money to get in there so we have to have the education system which is conducive to creating jobs which will be the jobs needed for the future so we have to align these two things together if it is not aligned this is not to say that pure sciences have no role to play they are in their own way very very important but generally speaking these two things must go hand in glove and it can happen today the unemployment in India the numbers are very very there are all kinds of data problems about it but without going through all that let me only say that youth unemployment is the highest we are talking about demographic dividend and we are talking about youth unemployment being highest because they don't have the skills or they don't have the skills which are required on the shop floor typically speaking typically every company I will give you an example of Apprenticeship Act this is a classic example do you know we had an Apprenticeship Act which was amended recently again I chaired that committee which did that now in the Apprenticeship Act can you imagine there is a provision that even employer does not recruit X number of apprentices here she can go to jail there is a provision like that 1961 act the government was saying that the industry doesn't come forward and does not take enough people and government is saying that industries are not taking these people and industry has been saying that the rules are so draconian that we don't want to touch it we don't want to get involved in that we have one of the until last year we had one of the lowest level of apprentices when there is so much scope for Apprenticeship so this has been changed now that act has been amended it has become more amenable and while doing that very funny thing happened it was amended very practical, proactive and all that somebody played a trick and when the final proposal came to Planning Commission after going through many rounds my report was discussed, debated and all that and final recommendation some bureaucrat and I don't mind sharing the Labour Secretary then put a small rider there that any company which is taking 100 apprentices they must give 50% of them a regular job now this is the 100% guarantee of the failure of the scheme no employer would like to have this compulsion of hiring 50% of the apprentice it has to go both ways because of that there were all kinds of problems were created and then finally the new government has amended that and the new act I hope will really take off so employment or poverty is something which cannot be removed by a magic wand what we need is very specific efforts which are taking a holistic view taking into account the social realities of this country if we don't do that I think the situation will go from back to back I will give you another simple example and I tried that in Pune University it worked very well take the case of the soft skills do you know that in our country we don't pay any attention to soft skills at all how many doctors have you seen talk without using the acronyms or without using the jargon how many lawyers can tell you exactly what is wrong with you lawyers have their own angle but you know professional we don't teach the communication strategy at all communication must become part of every subject no matter how great you are in technical terms but if you can't relate to ordinary people your knowledge is useless you have to be able to communicate and that you know I started something called soft skills program in Pune University and it became enormously successful what I did was you know I said three things are very important students are coming from all over you know poor category schedule car schedule drive first generation learners and so on some of them are extraordinarily bright people they have great knowledge they just don't have the polish they don't have the finish on the other hand a upper middle class higher caste person from Mumbai he looks very smart he knows all the manners he knows how to dress up in a ten minute interview he or she always makes it these people in spite of bigger they don't know how to dress up they don't know how to enter they don't know how to address the question this is a reality I started conducting programs for them and you know University invested a lot in that and I tell you the effect was enormous enormous you know their success rate became ten times more than what it was earlier so it can happen they have all the potential I can tell you one final thing that Indians really are I am not saying this to please anybody here but I assure you that Indians are obviously the smartest people on this earth among all the countries I have studied in the United States and I can give a couple of examples the average level of intelligence in the United States is extraordinarily poor they have extremely intelligent people mostly those who have come from elsewhere but general American population when I was teaching you know this is a science education crowd I was teaching finite mathematics to begin with and one of the students who was sitting with me I was telling her that if you take a logarithm of a number and take antilog of that number you go back to the original number she looked at me and said gosh you are such a genius anybody in the 7th standard knows that this is what will happen in India in a rural part they think that this is genius take the case of you know multitasking is a word that you know multitasking do you know that nobody in the world can do as good multitasking as we do nobody, nobody does and you know in America I landed myself in trouble when I said that the only multitasking that an average American can do is to read a magazine while sitting on the potty that is the height of multitasking that Americans can do on the other hand look at our country go to a small place of 5th standard fail do you know he is doing 7 things at the same time you know he can do that very easily it has nothing to do with education this is the multitasking I will just give you one final example here there is a word called in Sanskrit ashta vadhani ashta vadhani means a person who can look at or attend to 8 things at the same time ashta paellu is different ashta paellu is versatile versatile means doing different things at different times of time different points of time whereas ashta vadhani means a person who is looking at 8 things at the same time please show me this word in any language of any country in the world you will find that there is none it is there only in Indian language because multitasking is something that comes very naturally to us so we have the great potential we have the great potential but we need to harness that for the best benefit of the individuals and for the country and I hope we will do that I thank you all for very good questions thank you very much once again for wonderful talk and leaving us on a very optimistic note thank you thank you Dr. Jadhav for scintillating talk I think we have enjoyed it enormously and I am sure that this energy and enthusiasm will rub off on us and so that is what gives us the content of the talk so thank you very much and thank you especially for making arrangements to come despite the unexpected troubles that we had I would also like to thank the members of the family of Shiviji Kulkarni with grace this occasion it is wonderful for us that you come and support us with this activity your being here is a source of inspiration for us and helps us to be in touch with the message and vision of the founder of this institute so thank you very much to all the members who have come I also thank the friends and colleagues of Shiviji Kulkarni who have come and they come I think every year and again it is a great source of inspiration for us thank you very much this function and this occasion is doubly graced by the Homi Baba award ceremony and I thank them for gracing the occasion with their presence the two awardees were Sir Vijay Singh and Sri Arnabasas thank you very much I would like to thank my colleagues who helped in organizing this lecture making initial contact with Dr. Jadav Sri Sunadne Dr. Sochanola and others and the director who supported this whole activity enthusiastically and made this lecture possible I would also like to thank the technical support staff who read all these wonderful arrangements for several kinds of broadcast I think many people are getting the benefit of this lecture and over the internet as well as over the video conferencing facility and I thank them for the support and I thank the colleagues from HBCSE friends who have come, other guests who attended and also many of the people who are not present here but who are part of the audience and I thank all of them from other centers of TFR who also gathered to hear Dr. Jadav's lecture so thank you now I invite all of you to climb up the stairs and join us for a little bit of a walk and we will be there tomorrow and after that we will be meeting my viewers people coming over I have a question I have a question I have a question I am curious, you are the survival of e-commerce I will come back again and give you a long talk on that I will chat I am curious