March 19, 2020

The Great Pushback

January 08, 2020

CBSE to ZBSE - The Innovation Nation

image from MIT Review
When resources are limited it is creativity and its first cousin, innovation, that allows us to get ahead by achieving more with less. In practical terms it translates into the importance of R&D in corporates, or its precursor, research in academia. Which is why publish or perish has been the guiding mantra for those seeking tenure -- or permanent employment -- in US academic institutions. Since the US is the fountainhead of the most innovative ideas in STEM and related disciplines there must be a positive correlation between innovation and publications. This is the logic used in China where it is mandatory for all academicians to be prolific in publishing papers.

This policy has resulted in interesting developments. First, China -- and Chinese researchers embedded in US academia --  lead the world in terms of the sheer number of papers published. Second, a large number of these papers have been found to be of poor quality if not actually fraudulent. Third, and most interestingly, China still needs to employ thousands of hackers to break into and steal industrial and scientific knowledge from US companies and institutions. This weakens the linkage between published research and real innovation. Perhaps China is doing phenomenally well in fundamental research but until we have greater transparency through the Bamboo Curtain, we remain sceptical.

This lack of correlation between publication and innovation is an outcome Goodhart’s Law, first enunciated by the British economist in 1975 : Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.  Marilyn Strathern puts it more succinctly -  When a measure becomes a target, it ceases to be a good measure. This means that while publications may be a good estimator of innovative thinking, when people are tasked to publish for the sake of employment it ceases to be an estimator of anything at all. Anybody who has been in the vicinity of academic publishing would know that acceptance of a paper for publication depends on (a) choice of an ‘acceptable’ subject (b) the ‘methodology’ of research and ‘style’ of representing it and (c)  the ‘literature review’ and ‘references’ that weave a delicate but readily perceptible network that cycles through a self-sustaining ‘citation index’. The originality of the idea or the elegance of its implementation has little impact on the acceptance of a paper in a scholarly journal. As long as it looks, walks and quacks like a duck -- oops, like an academic paper -- then it must be an academic paper worth publishing. [ Public disclosure - this author has only two papers published in non-Indian academic journals and so could have an issue with sour grapes! ]

This obsession with publications masquerading as research has now infected academia in India as well. So much so that the Director of one IIM, as holy a cow as one may find in Indian academics, has decided that actual teaching should be outsourced to contract teachers while tenured faculty, freed from such mundane distractions, should focus on publishing papers. Which is actually a joke because - at least in the area of management - the ability to architect a complex solution and execute a commercially viable project is a far better evidence of innovation than publishing a paper based on dodgy data collection and p-value based testing of pointless but statistically significant hypotheses. But unfortunately, university ranking mechanisms and  regulators like the UGC and the AICTE have latched on to publications  as measures of excellence. Hence we are back to this concept of publish or perish without any thought to its correlation with genuine innovation.

In fact, such borrowed measures of academic prowess have their roots - at least in India - in the larger story of the lack of innovation in the economy. Who decides on what is meant to be a good student in India? First, academicians and then, more importantly, corporate executives, mostly engineering and management graduates, who decide on whom to hire and from which colleges. What is common to all such decision makers is not innovative or original thinking but a history of having cracked entrance examination in their student days. That is why they like examination crackers, or people like them. The entire edifice of corporate and academic India is brimming, not with innovators, but with those who have been able to game the entrance examination system.

Entrance examinations like CAT and JEE were once designed as estimators of intellectual ability. But again, in a perverse reaffirmation of Goodhart’s Law, cracking these tests have become the end goal for all students. The JEE rank that was once a good measure has now, after becoming a target, become worthless in evaluation. Kids with original ideas will never be able to game the system with coaching classes and the thought conditioning necessary to reach the colleges that will take them to companies that in turn could come up with original ideas. Hence Flipkart will always be a copy of Amazon (without its cloud technology) and Ola and Oyo will be copies of Uber and Airbnb. Even when wildly successful, there is nothing original in their products and services. Nothing like Skype or WhatsApp, let alone molten-salt nuclear reactors or CRISPR will originate from them.

So is there an alternative? Is there anything else that could seek out people with raw and native talent? Is there a way to eliminate artificially difficult entrance examinations, like JEE, that only the best coached and best prepared can crack? Once upon a time, long long ago Class X and XII marks were good estimators of talent but with state boards competing to give 90% to all, that option has been ruined.

What if the percentile rank, instead of the absolute marks, in the normal  Class XII examination becomes the yardstick of measurement for college entrance? The immediate objection would be that different boards with widely different number of students are not really comparable. The top 5 percentile in a small board like Tripura may not be comparable to the top 5 percentile in a large state like Maharashtra. What if we mandate that everyone should take the one, common national CBSE XII examination?  either in addition to the state board or as an alternative? This may sound good but there is the danger of rigid centralisation and the concomitant spectre of a single point of failure.

What we could do instead is to redefine the country in terms of education zones and create a Zonal Board of Secondary Examination (ZBSE) for each zone. This will be analogous to the Indian Railway network being managed through sixteen railway zones like Western, South Eastern, East Central and so on. Each such education zone will cover more than one state and may even span state boundaries depending on linguistic and cultural similarities. Each ZBSE  will  conduct its own X, XII board examinations based on a syllabus that takes into account both national perspectives and regional diversity and on a schedule that reflects local convenience. State boards would become irrelevant but even if retained, students should be allowed to take ZBSE examinations in their respective zones of domicile irrespective of the schools that they physically attend.

With educational zones in place, the percentile marks in both ZBSE X, XII examinations should be used as the primary selection criteria for admission to all Central Universities and all UGC funded institutions. In addition to the percentile on aggregates, different disciplines like engineering or liberal arts could use the percentiles on specific subjects or groups of subjects. This will free students from the need to sit for any artificially constructed aptitude test for college entrance and instead, focus on a traditional broad based, multi-subject ZBSE school curriculum.

Recruiters from the authors generation have always used Class X, XII marks as an effective measure to discriminate between candidates and having ZBSE marks, that ensure better parity across the country, will reinforce this method. Colleges that look for good placements will now have to run after students with good ZBSE percentiles instead of the other way around. So truly good students will enter good colleges, and then get good jobs or go for research.

Instead of a top-down philosophy of publish or perish, a bottom-up approach using ZBSE X, XII percentiles for college entrance would be a superior mechanism to recognise and reward true talent in the innovation nation.

November 21, 2019

India’s Tryst with Thorium

Time for India to lead the world with thorium power plants

Global warming is a source of concern because it is believed to be leading to drastic changes in weather patterns.  This could cause serious damage to both the economy and the ecosystem. The burning of carbonaceous fossil fuels, coal and oil, are said to be the most important cause for global warming because they lead to the discharge of carbon dioxide into the atmosphere and this in turn traps solar heat through the greenhouse effect. Hence many activists have argued against the usage of coal and oil, in thermal power plants and internal combustion engines, and demand conversion to electric power. But while the usage of electric power is certainly clean, electricity itself needs to be generated somehow -- it just cannot appear by magic in those two or three holes in the wall.

Two clean sources of electricity are solar and wind and activists have long argued that these should be the basis of electricity generation in the future. However anyone who has seen the vagaries of the weather knows that neither sunshine nor winds are predictable or persistent and so it is difficult to run an entire industrial society based on these two resources alone. Though environmental-fundamentalists would argue that it is indeed possible to work with solar and wind alone any pragmatic analysis would show that these are at best good supplements to more stable sources of energy. In fact, solar and wind power system have many problems too -- especially in the huge requirements of land and the maintenance of highly distributed equipment, but that would be another story.

Thermal power plants based on either coal or nuclear energy are, in fact, the only two options that we have for reliable generation of electricity. Frankly coal based thermal power systems are not as bad as they are portrayed to be because all the carbon dioxide is generated at one location and there exists excellent technology to trap and contain this carbon dioxide but somehow the popular consensus is that coal is bad. And if coal is bad then nuclear power is far worse because it leads to Hiroshima, Nagasaki, Chernobyl, Three Mile Island and Fukushima.

This negative perception of nuclear power is wrong and is based on outdated knowledge. In an article in the previous issue we have seen that   as far as India is concerned, thorium is a nuclear fuel that (a) is safe, since it can be used with the thermal breeder technology that has a low risk of explosions (b) generates far less radioactive wastes so that  containment and management is much simpler and (c ) is readily and easily available without having to go begging to international regulators of non-proliferation. After all,  2011 USGS estimates put global reserves at 1.91 MT of which 50% or 0.963 MT is in India.

Why is it is that we have not moved on thorium? Is it that our scientists are ignorant or our engineers incompetent? No. Not at all ...

Homi Bhaba, who laid the foundations of atomic energy in India was very much aware of the vast potential of thorium in India but the route to and through thorium is not easy. The primary goal of the global nuclear industry was to build bombs with plutonium, not generate power. So the primary focus of almost all research and development in both the US and in Russia was along the uranium and plutonium route. India alone, under Bhaba’s guidance was interested in thorium because it would lead to cheap and abundant energy from India native resources. But this is a lonely path, that India has had to tread alone, until China realised its importance and has jumped onto the bandwagon.

Then Bhaba died in a plane crash in 1966, shortly after he had made a casual statement that India could build a bomb in 18 months. While it was obviously never proved, journalist Gregory Douglas had quoted a retired CIA officer Robert Crowley who claimed that this accident was a CIA operation to block India’s nuclear aspirations.  This is very similar to the case of Nambi Narayan, the father of India & ISRO’s cryogenic engine who had a number of  false cases registered against him by rogue IPS officers -- Siby Mathews, KK Joshua & S Vijayan -- of the Kerala police at the instance of a Western spy agency. All the cases were eventually thrown out by the Supreme Court but ISRO’s cryogenic engine program along with Mangalyaan and Chandrayaan was set back by over 15 years. That is another tragic story.

Bhaba’s plan envisaged a three stage approach to sustainable nuclear energy based on the availability of both the technology and natural resources. First with uranium, then with plutonium and finally, after the accumulation of adequate fissile plutonium, India would start with its abundant thorium reserves that will last for a very long time. The plan was that by the early years of the 21st century, in the decade of the 2010s, India would be in a position to begin with the thorium technology.

In accordance with this plan, the Advanced Heavy Water Reactor (AWHR) has been designed to use thorium but before it can be put to use, the entire Atomic Energy Program has to be freed from a slew of politically motivated constraints. Environmental activists with little knowledge of technology but well connected to the media have painted a fearful picture of impending disaster. Politicians and NGOs with the backing and funding of US and European social activists have leveraged this public fear of nuclear power to create political opposition. These agitations obstruct land acquisition and delay the building and commissioning of nuclear plants. The worst example of how foreign funds have been used to thwart India’s national interest is the violent and virulent opposition mounted by Catholic Church backed organisations against the Kalpakkam plant, near Chennai -- the first fully indigenous facility for the full spectrum of nuclear power technology. Similar agitations backed by the Trinamool Congress have sabotaged the proposed nuclear facility at Haripur in West Bengal.

While the danger from radioactivity is a reality, media hype has made it into something that is far larger than what it really is. For example, the Fukushima disaster is said to affect “32 million people” but the number of actual deaths would not be more than 500 which is small compared to the 20,000 people who died in the tsunami that actually triggered the accident. Similarly, the total number of deaths caused by the Chernobyl accident has been estimated to be between 4000 and 16000, spread over 30 years. While these numbers are large, these should be seen from the context of the 140,000 people who are killed in road accidents in India every year. Similarly, while the Trinamool Congress was up in arms against acquisition of land for the Haripur nuclear project, there was no similar urgency or frenzy in tackling the silent proliferation of deadly arsenic in the groundwater that is used by over 26 million people in South Bengal.

No technology is perfectly safe and nuclear energy is as good as or better than many other competing technologies. India has both the thorium as well as the technology to use it to generate all the energy that we would ever need without having to beg, or spend, for oil, uranium or even solar panels. It is time for the political leadership to take a hard stand and drive India to its long awaited tryst with thorium technology. For a change, let India lead the world.

November 19, 2019

Thorium - cleaner, safer & abundant

All discussions on nuclear energy revolve around uranium and plutonium, the stuff with which we can make atom bombs. But not too many outside atomic energy circles would have heard about their close cousin, thorium, which is another natural element that can be used like uranium to generate nuclear energy. In this article, we explore how Thorium can be a cleaner, safer and more abundant alternative.

image from

Elements, like hydrogen (H), helium (He), carbon (C), oxygen (O) all the way to uranium (U) that are found in the Earth’s crust are defined in terms of the number of protons in the nucleus (the atomic number) and the number of protons+neutrons (the atomic weight). Chemical properties are determined by the atomic number and elements that share the same atomic number but have different atomic weights are called isotopes of each other. Thus the common Carbon 12 and the relatively rare Carbon 14 are isotopes that both have 6 protons but have 6 or 8 neutrons respectively. The atomic weight determines the nuclear behaviour of atoms.  Under specific circumstances, certain  isotopes of some elements  disintegrate to generate isotopes of other, lighter elements and in the process release energy. This is called nuclear fission. The traditional route to generating nuclear energy involves the collision of a neutron with the nucleus of an isotope of uranium, namely U-235. This results in the fission or break-up of U-235 atom into barium-141 and krypton-92 atoms along with the release of three more neutrons and lots of heat. This heat is used to generate electricity but the three neutrons can  cause fission in three other U-235 atoms. If this happens too fast, we have a ‘military’ nuclear explosion but when carefully controlled, it leads to the steady release of immense amounts ‘civilian’ nuclear power.

Uranium and thorium can both be used to generate nuclear power but there are  fundamental differences in the way these two neighbouring elements in the periodic table can be used. To understand the difference we need to distinguish between elements being fissile and fertile. Atoms of  fissile elements like uranium 235 (U-235) split apart, or experience fission,  to give rise to ‘lighter’ elements and release energy as heat. Atoms of fertile elements like uranium 238 (U-238) can be converted to fissile elements like U235 and only then can be used to build atom bombs or generate nuclear power.

U-235 is the only fissile element that occurs naturally but it forms only 0.7% of uranium that is mined. Hence, the uranium ore, that is 99.3% U-238 needs to be processed to increase the concentration of U-235 to at least 5% before it can be used in nuclear reactors. This is a complex operation that needs sophisticated and expensive centrifuge technology. The U-235  in the enriched fuel undergoes fission, releases energy and neutrons. These neutrons can behave in two ways :  (a) Fast moving neutrons hit and split other U-235 in a chain reaction to continue generating energy, that unless curbed or moderated by eliminating neutrons, can create a nuclear explosion or (b) Slow moving neutrons are absorbed by the fertile U-238, that surrounds the U-235 fule, to create fissile plutonium 239 (Pu-239) plus many other trans-uranic, toxic and radioactive by-products.

Since U-235 is very scarce, the Pu-239 that is generated from abundant U-238 becomes the real nuclear fuel for the subsequent phase of operations.  This fissile Pu-239 can be used to both build atom bombs or generate nuclear power. But this Pu-239 has a problem. On being hit with neutrons, as in the case of  U-235 fission,  only 65%  of the Pu-239 undergoes fission and the other 35% ends up as useless Pu-240 that is highly radioactive and toxic that needs secure and expensive storage facilities.

Because of Pu-239’s one-in-three absorption problem, the reactor cannot make as much fresh radioactive fuel to replace what is being consumed. The ‘spent’ fuel cannot generate sufficient heat and has to be processed to remove the unusable and useless, but still radioactive parts. So a lot of uranium and plutonium is eventually not used but remains radioactive for thousands of years and leads to significant and dangerous pollution of the environment.

The chances of useful fission of Pu-239, as opposed to conversion to the useless Pu-240 can be increased if we stop slowing down the neutrons and allow them to travel fast -- as in fast breeder reactors. But fast neutrons can lead to run-away chain reactions and subsequent nuclear explosions and so are inherently dangerous. So the choice is between the danger of a nuclear explosion or that associated with generating mountains of toxic radioactive waste. This is why uranium based nuclear power is unpopular.

Fortunately, the use of thorium can remove both these problems.

Thorium 232 (Th-232) like U-238 is fertile but not fissile. However like U-238, Th-232 can absorb neutrons, fast or slow, and gets converted to Th-233 and subsequently to uranium 233 ( U-233) that is fissile, just like Pu-239 and can be used to generate more energy. So both U-233 and Pu-239 can be generated, or bred, in breeder reactors that create more fuel than what they consume. But unlike Pu-239 where only a fraction of Pu-239 undergoes fission and is used, the U-233 route is very efficient because almost all of it can be used. This means that almost all U-233 (more than 95% compared to 65% in Pu-239) is consumed to generate energy and so there is far less radioactive waste left over. Moreover, U-233 does not need fast neutrons for fission and so there is no need for the accident prone fast breeder technology. The far safer thermal breeder technology is good enough.

Th-232 is a replacement for U-238 but not the crucial U-235 that is required to kick start the process of fission of U-235 and generate the initial shower of neutrons that convert fertile Th-232 to fissile U-233. This no different from the enriched U-235 that is required to convert the fertile U-238 to fissile Pu-239. Except that Th-232 is far more abundant U-238.

If we leave aside the uranium found in sea-water, which is very difficult to extract, then the total quantity of thorium found in the earth’s crust is more than three times that of uranium. Even though not all of this is exploitable, this is still a bonanza because, unlike U-238 ( and Pu-239) most of the energy in  thorium (Th-233 / U-233) can be extracted and used. Hence thorium reserves will last much longer than uranium and for us in India, there is a double bonanza, because India has the maximum known reserves of thorium in the world.

Known and exploitable reserves of uranium ore across the globe are estimated to be about 7.6 million tonnes (MT) of which only 0.138 MT  (1.8%) is in India. Thorium has never been explored as intensively as uranium and estimates of reserves differ. 2005 IAEA estimates show global reserves of  2.8 MT out of which a good 21% or 0.519 MT is in India. 2011 USGS estimates put global reserves at 1.91 MT of which 50% or 0.963 MT is in India. The Government of India’s own estimates, as reported by the Prime Ministers Office in 2016 in Parliament state that our coastal areas have 11.935 MT of Monazite sands of which 9-10% ( ~ 1 - 1.1 MT) is thorium dioxide and that too on the easily accessible beaches of the Bay of Bengal. All estimates agree that India has the largest known reserves of thorium.

So as far as India is concerned, thorium is a nuclear fuel that (a) is safe, since it can be used with the thermal breeder technology that has a low risk of explosions (b) generates far less radioactive wastes so that  containment and management is much simpler and (c ) is readily and easily available without having to go begging to international regulators of non-proliferation.

Who could ask for anything more? Strangely enough, one could!

Thorium is also the preferred fuel for a radically different type of nuclear reactor -- the molten salt reactor (MSR) -- that has been proven to be far more safer than anything that we have today. MSRs have many benefits but the key is that if and when things go wrong, as in a power failure, the atomic ‘fire’ in the MSRs shuts down automatically. This is very different from the case of Chernobyl, Three Mile Island and  Fukushima where the failure of cooling systems led to an explosion or a meltdown. MSR is a stunning new technology that is inherently safer, but the key point is that MSRs are so thorium friendly that many people confuse one technology for the other even though they represent two completely different aspects of a new generation of safe nuclear technology.

So what is India doing with Thorium? We will explore that in the next article.

November 12, 2019

Sridhar Mandir @ Sonamukhi, Bankura

This beautiful terracotta temple lies unknown and uncared for in the village of Sonamukhi, Bankura, West Bengal.

If you are in the vicinity, you can check it out

October 22, 2019


Physics, Economics, Cybernetics, Aesthetics … and now Digitalics. What is digitalics? Just as the  zeitgeist -- the spirit of the times -- captures the changing mood as we move along the arrow of time, digitalics represents the current state of the weltgeist -- the spirit of a new hyper digital world where we find ourselves today.

This digital world is the new, happening place that none of us can, or even wish to, escape from in our personal, social and professional lives. Whether it is checking your WhatsApp or Facebook timeline, moving money on NEFT, marketing products on social media, hiring on Linkedin, listening to the voice of the customer on Twitter or cutting e-Waybills for your trucks that move across state borders --  everything happens in the digital world. Or rather where the digital touches the physical in the tangled web of click-and-mortar. That is digitalics at work.

Digitalics is different from computer programming, computer science and even from information technology as much as, say,  physics is different from manufacturing science. The underlying principles may come from physics but in manufacturing we create new, unique and useful products without which modern society cannot move forward. Tata Motors implementing SAP software or installing a new welding robot is an example of information technology whereas Uber devising a new way to connect the users, owners and drivers of cars in a way that is optimum for each is an example of digitalics at work.

Traditional management practices  have been significantly impacted by the emergence and acceptance of these new tools and techniques from the digital world. Moving beyond IT systems that were focussed on one, operational, aspect of the business, digitalics is now a necessary skill that is required across all management functions irrespective of the business domain. The democratisation of technologies like the smartphone means that these are used both by the guard at the gate to keep track of visitors and by the CEO at the airport lounge to have a video conference with his global team. It also means that managers in traditional roles must not only be familiar with terms like deep learning, cybersecurity, IOT and blockchain but must also be knowledgeable enough to consider integrating these tools  into the enterprise that  she manages. That is why managers need to understand digitalics.

Digitalics is more than just a subject that can be explicitly defined through the curriculum of  a standard 3-credit course in a B-School. It encompasses a wide range of concepts, ideas and disciplines that will imagineer --  imagine and engineer -- new applications for the hyper-digital world. It is a way of life, like sanatan dharma, that weaves itself into the warp and weft of the modern management process.

Business management has traditionally been viewed as processes that are clustered into buckets like Finance, Marketing, Operations, OB & HR. But today, these management verticals are twisted beyond recognition by powerful developments in horizontal technology like data science and fintech. That is the power of digitalics at work. 

A dimensional view of management today would have:

Management Verticals Technology Horizontals
Management Verticals
Technology Horizontals
Data Science
Social Media
Artificial Intelligence
Internet of Things

Digitalics is the art and science of optimising the productivity of  people, products and processes that glitter at the intersection of management verticals and technology horizontals.

September 24, 2019

MSME and the Five Trillion Dollar economy

How to create a three dimensional framework consisting of a rugged digital marketplace, corporatised vendors and trained managers that will catapult the Indian economy into the big league.

image credit clrskills

Handicraft Fairs -- or HastaShilpa Melas -- are a regular feature in Kolkata, where artisans from the rural areas come, show and sell their products. The Micro Small Medium Enterprises (MSME) Department of the West Bengal Government has, through the Biswa Bangla initiative, set up a number of permanent, fairly upscale retail outlets to help these people sell their products. Some of these outlets are probably profitable, as is the one in Kolkata Airport, but a majority of them, in district towns and elsewhere, suffer from a lack of footfalls or well heeled buyers. Frankly, this is old wine in new bottles. We have had in the past, Khadi & Gramodyog initiatives under various names in different states, as in Manjusha (West Bengal), Poompuhar (Tamil Nadu), Kairali (Kerala), Lepakshi ( Andhra / Telengana), Pragjyotika (Assam) and so on. While the quality and demand for such products is quite high -- the author has seen Bishnupur dokra, that sells for Rs 150 in Bankura, being sold at Rs 1200 in Mumbai and for $150 in the US -- the bureaucratic machinery that manages these marketing operations are too incompetent and arthritic. So these government organisations are not really able to exploit the market and help the artisan earn a respectable income that takes them out of their low-income-group status.

While the logistics of delivering products across large distances is perhaps the single biggest challenge, there are many others, including product selection, new and original designs, branding, marketing and promotions. These are alien challenges for our bureaucrats who are used to a command and control environment but are routine matters for anyone who has been in the retail business. What we really need is a way to introduce these retail specific skills, or competencies,  into the handicraft / MSME business but here we run into a new problem -- that of scale. MSME operations are far too small to be able to afford the kind of people or the technology infrastructure to get their product across to the customer. The noise in the market is far too  high for a marketing message from the hinterland to reach the local state capital, let alone the big national and international markets and then convert into viable sales transactions. Then there are problems of delivery, collection and in some cases refunds. What we need is scale and for that the only solution is consolidation. But even that is easier said than done.
The Digital Marketplace

Mr Gadkari and the MSME Ministry of the Government of India has recently proposed the creation of a national eCommerce portal or  a digital marketplace where MSME units can sell their products online. This is definitely a worthwhile idea and could be a first step on the route to consolidation. But in the absence of any further details, it is difficult to determine whether the Ministry has really thought through the myriad issues that are critical for the success of an online venture..

The author, who was an internet evangelist in his professional career as a technology consultant, has first hand experience of what it means to set up some of the earliest eCommerce initiatives in India -- and then see them fail in front of his eyes! Not all the (1999-2001 era) high technology that was available with a leading multinational technology company could help clients create a truly viable eCommerce operation in India. It took another ten years and people like the Bansals who eventually managed to copy the Amazon model and create a stable platform that is still running today. Since then, there have been many others but while these may have managed to scale up at a national level, they are still nowhere when it comes to the likes of global giants like Amazon and Alibaba. But in all such successful cases, it is not just technology -- which is necessary but not sufficient -- that is the deciding factor. There are many other issues.

So what are the other issues? and how should one address them? Let us identify the issues but without the arrogance of claiming to have instant solutions, let us instead, work towards identifying those who have actually solved these problems and get them to participate in a possible solution..

Let us admit upfront that government employees are not the best people to operate an eCommerce business. Running such a portal is essentially a trading or entrepreneurial activity that is best done by someone who has it in his, or her, blood! Such people do not work for the safety and security of a sarkari job but would be found owning or heading some of the biggest retailers in the country today. Can such a person be poached and appointed as the head of the sarkari eCommerce enterprise? Not really, because even if such a person comes in, he or she would be quickly stifled by the bureaucratic red tape and will either sink into sarkari sloth or, what is more likely, resign and run back to the private sector.

The Retail Partner

Instead, the government must partner with a global major like Amazon, Walmart -- it may be too dangerous to allow Alibaba into such a strategic initiative -- and float a special purpose vehicle (SPV). This SPV would build, operate and run a full fledged digital marketplace in the country. This task is far from simple. Companies like Flipkart have invested a huge amount of time and money to acquire and operationalise the expertise to not just sell products but to sign-up vendors, build the delivery and return infrastructure, capture and report product and vendor ratings, ensure secure yet inexpensive ways to collect payment, arrange for refunds, handle customer complaints on poor products and shoddy delivery, and finally promote the platform as well as individual products through aggressive discounts, special deals and events. Without all of this and more, no digital marketplace can succeed and yet building all this up from scratch will take far too long. Hence the government needs a partner who has already done this and will not be learning from scratch and reinventing the wheel.

Choosing such a partner may not be very easy or non-controversial and so a transparent process is very important.  Government could also explore the possibility of partnering with multiple companies  and create separate SPVs that  could be allocated different geographies. Such territorial partition could be on the basis of either sourcing or distribution. We could either have the marketplace sourcing from different parts of the country but selling everywhere, or -- and this would mainly be for exports -- we could have each marketplace sourcing everywhere but delivering only in specific regions outside India.  Once operations have stabilised such geographical restrictions may be removed so that  these companies can compete with each other or even merge to create larger companies that can stand up to global competition.

The process of defining the ownership structure for such SPVs and the choice of retail partners should be done with due care and with the blessings of the CLB, the CBI, the CAG, and even the Supreme Court perhaps so that we do not end up with a CoalGate situation. But once this process is complete, the government must take a complete hands-off approach and allow retail and logistics professionals from the partner company to operate the business as a PSU with a  government stake lying between 26% and 49%

Other government agencies like India Post, Railways or the UPI payments infrastructure can be also be linked to the marketplace but not at the cost of efficiency. Use of  government owned infrastructure should be a decision of the management and not an imposition by sarkari bureaucrats.
The MBA-Lite

Other than the actual operation of the digital marketplace, the government must also play a very important role in educating the vendors, that is the artisans, on how to use the marketplace effectively. Most of the MSME vendors who deal with handicraft items are in reality individual artisans or, at best, family enterprises who know very little about how to deal with modern internet platforms and international commercial agencies. While many of them may have bank accounts, thanks to the Jan Dhan initiative, the use of credit cards or other forms of digital payments may prove to be a huge challenge .. and then there will be issues like GST and eWayBills

But if they have to step out of the backwaters of their native village and integrate with the global economy through this digital marketplace, then these village artisans must learn how  modern businesses work. This includes but is not limited to the basics of accounting, finance, operations, logistics, sales, marketing, brand building, business law and even IT systems. Without this knowledge, the poor artisan will continue to be  poor and the benefits of the marketplace will accrue to the baniya middleman who will exploit the artisan and take a lion’s share of the profits.

To train the artisans, the MSME Ministry would need to arrange for short term management programs, an MBA-lite if you will, that can be delivered in the local language at locations close to where the artisans live. These could be either free or at very subsidized rates with the ministry bearing the bulk of the cost of developing the courses, translating them into different languages, printing text books and paying the teachers. Or even better, the MSME ministry could tie up with local B-Schools who already have the expertise in these areas and pay them to prepare and deliver short, simple courses against a common minimum syllabus.
Employee Owned Vendors

In fact, we need to go beyond the MBA-lite training program and put together a comprehensive vendor development, or rather vendor maturity, mechanism. This can be done by encouraging the formation of either cooperatives or, what is even better,  private limited companies. But these companies should be owned by the artisans and craftsmen and in turn employ the owners themselves to produce the artifacts. This structure of employee ownership will reduce the possibility of exploitation of employees and also of the mischief created by unscrupulous trade unions run by political operators. However, one significant challenge in this approach would be the ability of a group of artisans to manage the complexities of running a company that operates under the Companies Act. There are numerous compliance related issues and a rural artisan may find it impossible to cope with all requirements.

This is where the government can really think out of the box and create a cadre of trained management professionals. These need not be the traditional engineer-MBAs who inhabit the corridors of corporates and who would not be interested in the salary levels that these companies can initially offer. What we need instead are people who would have the basic, MBA-lite, management skills and  would also be familiar with the digital world. They should not only be able to manage a small company but also use the digital marketplace that the MSME Ministry has planned for. Once trained, these people would be placed in the artisan-owned  private limited companies and the salary for the first three years could be reimbursed by the government. In fact the government could appoint them on contract for three years and depute them as manager-CEOs of these small, artisan-owned companies for the duration of the contract. If the company does well and the owners are happy with his or her performance, the manager-CEO will continue with the company on mutually acceptable terms after the government contract is over. Otherwise the company looks for a new manager-CEO and this person would be on his own but with three years of valuable experience.  Finally, in the unlikely event of the company being unable to find its feet in three years, there must be a quick and painless way to liquidate the company and return the net asset value to the owner-employees. The government’s obligation would be limited to paying the salaries of these manager-CEOs for three years plus the costs associated with incorporating and, if necessary, liquidating the company.

The MSME sector created nearly 15 million jobs per annum in the last five years but in terms of value added, its contribution to the manufacturing GDP is only about 6 - 7%.  To increase this share and to make MSMEs into engines of economic growth, we need an enabling environment. Creating an ecosystem of employee owned and professionally managed companies would ensure that the MSME digital marketplace has a steady supply of professionally made products to sell both within the country and beyond its borders. Not only will this increase GDP and exports but will help India make the transition from being an informal economy to one that is incorporated and managed in a professional manner. This will encourage the flow of institutional credit, both from banks and at some point of time, from the stock market.

The economic potential that is latent in MSMEs can only be unlocked if we can create this three dimensional framework consisting of a rugged digital marketplace, corporatised vendors and trained managers. Once this framework is in place, artisans in the rural areas would be able to integrate their activities with the national and global economy. With access to credit, information, knowledge, ideas, processes, products, competition and markets they would be able to scale up and transform, not just in quantity and quality but also in the nature products that they manufacture and sell. Creating a powerful powerful distribution channel in partnership with a global eCommerce brand and feeding this channel with goods that are produced by thousands of professionally managed and employee-owned companies could be the way to realise the Make-in-India dream. This in turn could pave the way to the five trillion dollar economy that the country is aiming for.

About This Blog

  © Blogger template 'External' by 2008

Back to TOP