The wilful defaulter definition needs review; it’s a flawed application of the legal concept of mens rea (meaning intention or state-of-mind and implies differentiating between murder and death by car accident) because loan taking and giving is by definition risk taking with a range of outcomes including default, restructuring, and repayment. We need one definition of default, SEBI’s smart proposal for listed company defaults must be reinstated, and IBBI’s information utility activated. China’s solutions are unacceptable; being listed on the government website of defaulters last week means that Jia Yueting, the founder of $3 billion consumer electronics firm LeEco, can be restricted from using luxury hotels, private schools, golf courses, and airlines. But India’s status quo of even a loan classified as bad often not being known outside the bilateral relationship needs change.

India’s Rs 10 lakh crore bad loans are also a child of the breathless bank loan expansion from Rs 18 lakh crore to Rs 52 lakh crore in the six years before 2014. The decisive actions by the current RBI management team on bad loans break with its immediate institutional past by shifting from a personality cult to institutional solutions.

The over-intellectualisation and running academic commentary masked years of inaction on bad loans that deserve Poet Akbar Allahabadi’s quip: “Platoen ki awaaz bahut der se aa rahi he, lekin khaana nahin aa raha he (The sound of plates has been coming for a long time, but the food is not coming)”. A banking system that recovers its loans is an important part of India’s infrastructure of opportunity. The contours of this system are emerging.

Featured in Indian Express .

Social Media Policy : Invite employees to cocreate a social media policy which meets the organisational goals yet doesn’t deny employees a platform of expression. Through extensive brainstorming and weighing all pros and cons a company wide policy of the do’s and don’t’s can be articulated. The same can be relooked at reasonable periodic intervals. Co-creation shall improve the chances of its acceptance and also make employees responsible for its usage.

Use Social Media for Internal & External Communications – If you cant stop them, its probably better to join them, where they are. Organisations around the world are struggling how to ensure that corporate vision and sense of purpose gets percolated down to every indvidual contributor within the company and in today’s time social media is probably the best platform to choose to achieve this objective. It is easy to relate to and use. It also helps them participate and share actively which enhances their sense of belonging and loyalty to the organisation.

Employees as brand ambassadors on social media – Empower employees to be social media ambassadors of the brand and one can without any doubt expect them to be responsible in its usage and the kind of communication that go out. Inspired by Enid Blyton’s popular “Naughtiest girl is a Monitor” wouldn’t be such a bad idea to make the most errant cases the ambassadors. It has its risks however the upside can be potentially mammoth.

If there is one thing to take away from this, it is the fact that social media is simply just a new medium for an old dialogue. There is no denying the fact that the biggest social media risk is actually in not involving your employees. Statistics reveal that socially engaged employees feel more optimistic about their association with the company and are overall viewed as the most credible voices on a company’s work culture and ethics, innovation and business practices. Employers should focus on fostering employee social conversations, cultivate employee advocacy within the organization and empower employees to shoulder the responsibility of being the voice of the organization. In Margaret Heffernan’s words for good ideas and true innovation, you need human interaction, conflict, argument, debate. Safe to say this is one debate which shall remain inconclusive.

Investment competition between states is increasing even as opportunities for offering investment tax incentives are diminishing. States are left with three levers for differentiation — ease of doing business, infrastructure and the skills of their labour force. Apprenticeships are a non-fiscal alternative to dead-end sub-sidy schemes such as the National Rural Employment Guarantee Scheme (NREGS) but don’t get the attention of state governments because of real and imagined reasons: central government in the driver’s seat, employer reluctance, student unwillingness, low social sig-nalling value, etc. But the natural learn-ing-by-doing and learning-while-earn-ing make apprenticeship more sustain-able, scalable and self-healing than other skill programmes.

We suggest that each state set up a State Apprenticeship Corporation (SAC) as a public-private partnership co-chaired by the chief secretary and the chairman of one of the state’s largest private employ-er. SACs will anchor programmes on state strengths such as tourism in Rajasthan, information technology in Karnataka and manufacturing in Tamil Nadu; target employers with different strategies for companies headquartered and those operating in the state; make employers volunteers by simplifying procedures and recognising perform-ance; create matching infrastructure, and enable higher education linkages.

SACs can work with the Board of Apprenticeship Training under the Ministry of Human Resource Development and the Regional Directorates of Apprenticeship Training of the Ministry of Skill Development and Entrepreneurship to open state offices. SACs could operate from an employment exchange in a state capital and slowly add apprenticeship offerings to employment exchanges across the state. SACs would create an interface suite (website, mobile app, and call centre in multiple languages) for employers, industrial training institutes, polytechnic colleges, private colleges, and students to match demand and supply. Most importantly, SACs would facilitate academic credit for apprentices by partnering with universities within and outside the state. India’s education system is imbalanced—we have 20 million people in physical college classrooms, three million in distance-learning classrooms, but only 300,000 in apprenticeship classrooms—even though we should be indifferent to the mode of delivery. Degrees and apprenticeships complement each other: one has social signalling value, the other employability signalling value, so states can inno-vate in their convergence. Over time, SACs could work with school dropouts by mobilising subsidy money (NREGS, etc) to subsidise apprenticeship stipends, but this should be done in phase two and only after putting in place appropriate processes and plumbing to avoid fraud.

Nobel Laureate Daniel Kahneman says, “Most successful pundits are selected for being opinionated because it’s interesting and the penalties for incorrect predictions are negligible. You can make any predictions you want, and later people won’t remember them.” Policymakers can try but will rarely predict where jobs are created. Apprentices can make the system self-healing — the global experience in this regard is positive. Germany has Europe’s lowest unemployment rate because of apprenticeships, and UK has found that employers gain 26 times their investments on apprenticeship stipends. Recent amendments to the Apprenticeship Act of 1961 create the space for innovation, scale, and higher education linkages for state governments. If they don’t take advantage, then who will? And if not now, then when?

Cities are complicated organizations all over the world but Indian cities suffer the friendly fire of being policy orphans for three reasons. Firstly, State Chief Ministers are unwilling to cut the tree they are sitting on (Bangalore maybe 60% of the GDP of Karnataka). Secondly, cities don’t have the plumbing or mandate to generate their own resources from property taxes. Finally, and probably most importantly, city leadership is either unelected (bureaucrats officers serving as development authority or municipality heads) or impotent (elected politicians city that win elections but don’t wield power). I understand the argument against bureaucrats protecting cities against venal politicians playing a one innings game but the only sustainable solution in a democracy is “real” Mayors. It has taken us 70 years to get power from Delhi to state governments – there has been a massive devolution of funds, functions and functionaries in the last three years – but hopefully the process of getting power from state governments to cities will be accelerated. This needs enlightened state government leadership to look beyond self-interest; this is a big ask from any human but particularly a big ask from ambitious politicians. Politicians at the state and centre face two big human capital decisions over the next decade; civil service reform and the creation of elected and empowered city leadership. Essentially they will give up power with all the costs that entails but they will receive the undying duas of our youth and farmers who can find productive jobs in urban areas.

India’s farm to non-farm and rural to urban transitions are not accelerating because of the bad urbanization that is largely a child of the Constituent assembly where 299 remarkable people between 1946 and 1949 who wrote our constitution missed city governance in their design. We are confident that if the constituent assembly could review their design with the hindsight that this miss is sabotaging their directive principles of education and employment, they would change the laws, structure and design that make cities policy orphans. Why don’t we?

(Manish Sabharwal and Ashok Reddy. The writers are co-founders of Teamlease Services)

A radical reboot of India’s employment, education, and employability ecosystem is making good progress

Solving India’s problems of poverty are complicated by the 10 lac kids joining the labour force every month for the next 10 years – our demographic dividend. But the only sustainable solution to both is recognizing that jobs and skills change lives in ways that no subsidy ever can. I’d like to make the case that India is rising because we finally have a long-term policy vision that recognizes three things; a) India doesn’t have a jobs problem but a good jobs problems and higher wages don’t come from regulatory diktats but formalization, urbanization, industrialization and human capital, b) India needs to move from deals to rules because it is economically corrosive for an entrepreneur who follows a rule to feel she has missed a deal, and c) the government is organized vertically but jobs and skills are policy horizontals that require teamwork across ministries.

India’s unemployment rate – 4.9% – is not a fudge. Everybody who wants to a job has one but they don’t get the wages they need or want. Most jobs in India don’t pay enough to live and most self-employment is self-exploitation.

The project of empowering India’s youth and poor involves declaring war on informal jobs and enterprises while simultaneously creating a Cambrian explosion of formal jobs that pay higher wages.

This explosion needs enterprise formalization (our 60 informal enterprises don’t have the productivity to pay the wage premium), smart urbanization (we only have 50 cities with more than a million people relative to China’s 350 and most of ours have an average rush hour commute speed of 7 km/h), rapid industrialization (50% of our labour force works in agriculture but only generates 11% of GDP) and upgrading human capital (fixing schools, skills and higher education). All this needs replacing the lower ambition of Keynes quip “In the long run we are all dead” with the steady purposefulness of Sardar Patel’s quip that “the best time to plant a tree was 20 years ago but the second best time is now”. I’d like to make the case that rapid changes to our entrepreneurship and human capital regime are laying the foundations of a New India that is employed, educated, and empowered.

Is the role of the government setting things on fire (industrial policy and huge government spending) or creating the conditions for spontaneous combustion (efficient factor markets of land, labour, capital and low regulatory cholesterol)?

Having spent my early career in the license raj, I can attest that the first strategy fails to deliver massive formal job creation because regulatory cholesterol creates companies that don’t have clients but hostages. This is not an argument against the state – if the lack of a state led to job creation than SWAT valley in Pakistan and Waziristan in Afghanistan – would be hotbeds of entrepreneurial activity. An effective state does fewer things but does them better (primary education, public health, law and order, enforcing rules and competition, roads, etc.) while catalyzing entrepreneurship, investment and growth.

India is becoming a fertile habitat for job creation – the abolishment of FIPB, labour reforms, vibrant IPO markets, growing venture capital pool, fiscal discipline, lower inflation, rapid road construction, coming GST rollout, bankruptcy bill, lower corporate tax rates, consolidation of permissions, algorithms to guide inspector behavior, uninterrupted power supply, airport and port improvement, and massive road construction means that first generation entrepreneurs can credibly challenge incumbents because entrepreneurship is no longer about substituting, managing or interfacing with the state. The job is far from done and pending agenda includes a universal enterprise number (replacing the 25+ number issued to employers by various government departments), a PPC portal (moving to Paperless, Presenceless and Cashless compliance could save more than 2 lac trees and greatly reduce corruption), and lower mandatory payroll confiscation (formal employment is crippled by the 45% difference between haath waali and chitthi waali salary deducted for poor-value-for-money schemes). Competitive federalism is an important new lever for job creation; China’s job creation genius was decentralization. The accelerated devolution of funds, functions, and functionaries from Delhi to state capitals over the last few years robs Chief Ministers of their “Delhi” alibi because land and labour markets are local.

The challenge for India’s human capital has never been ideas but execution – you could change the date on the Kothari committee report of 1968 and do well in education reforms and Apprenticeship reforms were the 20^th point in the 20 point program of 1975.

Shifting from poetry to prose in skill development is starting to pay-off; more has been done on skill development with the creation of New Ministry in the last few years than the many decades before that.

The Apprenticeship Act amendments mean that apprenticeship growth rates are more than 150% annually after decades of stagnation. Our target should be crossing Germany’s 2.7% of its labour force in apprenticeships that would raise our current 5 lac apprentices to 1.5 crore. Even though the Sector Skill Council performance is uneven, the high performing ones are creating a superb employer and demand driven skill ecosystem. The conversion of employment exchanges to career centers has begun but needs acceleration. Work has begun on linking skills to school and college; the Right to Education Act is morphing to the Right to Learning Act by shifting focus to learning outcomes and the ban on online higher education that sabotages marrying skills to degrees is being reviewed.

India is on the move because the government now recognizes that our problem is not a bad job vs. no job but a good job vs bad job.

The Apprenticeship Act amendments mean that apprenticeship growth rates are more than 150% annually after decades of stagnation. Our target should be crossing Germany’s 2.7% of its labour force in apprenticeships that would raise our current 5 lac apprentices to 1.5 crore. Even though the Sector Skill Council performance is uneven, the high performing ones are creating a superb employer and demand driven skill ecosystem. The conversion of employment exchanges to career centers has begun but needs acceleration. Work has begun on linking skills to school and college; the Right to Education Act is morphing to the Right to Learning Act by shifting focus to learning outcomes and the ban on online higher education that sabotages marrying skills to degrees is being reviewed.

India is on the move because the government now recognizes that our problem is not a bad job vs. no job but a good job vs bad job.

Policy making is making the leap that science made from classical physics (discrete systems) to quantum physics (everything is interrelated) with improved policy teamwork across Ministries in Delhi and between those Ministries and state capitals. Formal job creation has no silver bullets but Fiscal Discipline, Demonetization, GST, Uninterrupted power, Consolidation of 44 labour laws into 5 labour codes, Skill Development, and much else are a powerful brew. India missed her Tryst with Destiny – there are 300 million people today who will not read the newspaper they deliver, sit in the car they clean, or send their kids to the school they help build – but she has made a new appointment and this is one she will keep because policy has finally begun praying to the gods of skills and good job creation.

Devil wears Prada
Female bosses are accused of being extremely tough on their sub-ordinates. The theory says that women are not natural leaders, and fear their effectiveness. The others just abuse their supreme role as if it were a prize. A demonised female boss from the famous movie, ‘The Devil Wears Prada’, has done no good to this manner of thinking either.

Experts, however, say that the truth is far from the bandwagons. “I do not subscribe to the view. It is possible for both men and women to be effective leaders without being bossy or domineering. A lot of leaders of both genders are choosing a hands-on approach towards increasing productivity,” says Kunal Sen, senior vice-president and SBU head at TeamLease.

Queen Bee is just one, female leaders of this gender face a lot of stereotypes such as they are incapable of managing companies with a large male workforce, and put their family first. And career-obsessed women suffer from lack of balance that a family provides.

Women leaders are subjected to harsh judgements. “Women who rise to higher positions have to work for ten years without a break and only 14% can manage it. Those who make it are also under scrutiny,” Sen adds.

The Suits
Women leaders are advised to think like men and behave like them too, springing the age-old theory that men are built to be leaders. They are expected to mask their femininity with either a poor sartorial sense which does not attract attention, traditional wear which ‘softens’ their image to make them look maternal.

“After I became a deputy manager, my boss told me to dress like a man with pant suits et cetera. He said my team would be more receptive to a man. The next best thing to a man is a woman who dresses and acts like one,” recounts the senior VP, who chooses to remain anonymous. She also informs that she never heeded her boss’s advice and yet remained successful.

Over the last three years the Ministry of Labour has not displayed strategy, stamina or sequencing and unimaginatively equated labour reform with tackling Chapter VB of the Industrial Disputes Act. Its poor performance now make it desperate but it should pursue competition for EPFO (this loots employers by running the world’s most expensive government securities mutual fund and harasses employees with 4 times more dormant accounts than lives one) and ESI (this is India’s most inefficient health insurance with a claims ratio of 45% and Rs 30,000 crore of bank deposits that belong to employees). It should accept moving to a Universal Enterprise Number for Enterprises instead of insisting on a Universal Establishment number to cover for its lack of technology. It should move all returns, challans, registers, licenses, etc online and give India a drop dead date for 100% paperless, presenceless, cashless for 100% of labour legislation.

The National Minimum Wage legislation is baffling because it negates the strategy of using the constitution’s Section 252 (2) used by seven states to amend central labour laws. How can states curate job friendly habitats if a hukumnama from Delhi says that the wages in Mumbai will be the same as Etawah, Kanpur, Kishtwar, or Mysore? The kid we met at the start of this article said he needed four times more money in Mumbai than Gwalior because all the kids who went to Mumbai for Rs 10,000 are back because “Khaana, Rehna or Office jaana nahin banta”. The only way to sustainably raise minimum wages is massive non-farm formal job creation; China has raised minimum wages every quarter for the last four years despite massive increases in productivity (20 people now produce the same GDP that 100 people used to produce in 1990) because of a massive migration to non-farm employment (640 million since 1978).

Legislating high minimum wages is popular with politicians all over the world because voters believe it is a “free lunch”, i.e., it is an inexpensive alternative to higher taxes, has no real costs and helps the poor. But setting high national minimum wages has real costs for India like lower formal employment and sabotaging competitive federalism. But the most toxic consequence of the national minimum wage hukumnama are reserved for our youth; instead of higher wages, their formal wages may be zero. It must be stopped.

This article was published in Business Standard

India’s labour markets are confusing, and I’d like to make the case that, one, India has more formal jobs than we think; two, our primary policy challenge is not creating jobs but wages; and three, creating more formal jobs needs sustained reforms to labour laws and education. Let’s look at all three points in more detail.

First, India doesn’t have “only 7 percent formal employment” but somewhere between 15-25 percent. India’s job information suffers from the Kartar Bhooth problem. Tagore expresses the tyranny of being bound to the past in his amusing yet profoundly serious short story Kartar Bhooth (The Ghost of the Leader), where the wishes of a respected but dead leader make present lives impossibly restrained. The Kartar Bhooth of India’s labour market information is the report of the National Commission for Enterprises in the Unorganised Sector, chaired by the late Arjun Sengupta. I never met Sengupta but am sure he would regret the confusion his report created between unorganised/organised enterprises and informal/formal employment, which has perpetuated the myth of 93 percent informal employment.

Unsurprisingly, a huge unexplained difference between household and enterprise/production data is not unique to India’s labour markets (research suggests that there may be a 30 percent-plus unexplained difference in household survey calorie consumption and food production calories). So not only do we need to improve the frames and plumbing of our survey data but estimating jobs needs de-duplicated administrative data from provident fund, ESI, government employment, Form 16, Mudra loans, etc.

Second, most people who want a job in India have one (our unemployment rate of 4.9 percent is not a fudge), but they don’t have the wages they need because of two large low-productivity clusters in our labour markets: 50 percent of our labour force works on farms, and 50 percent of our labour force is self-employed. Both are “a job” but don’t generate the surplus to pull out of poverty. Farm loan waivers are an emergency response, but states doing them should worry about what doctors call “iatrogenic risks,”  that is, the problems created by the treatment they prescribe.

Sustainably reducing farmer poverty needs what economist Ashok Gulati thoughtfully calls the 4Is—incentives, investments, institutions, and innovation — but the only way to really help farmers is to have less of them. The poverty of self-employment is obvious; the poor cannot afford to be unemployed, not everybody can be an entrepreneur, and many of India’s 60 million enterprises are only viable with self-exploitation or regulatory arbitrage. Sustainably higher wages can only come from the higher productivity of formalised non-farm jobs in urban areas done by workers with higher human capital.

Formalisation resonates with a new OECD framework for labour market health that includes quantity, quality and inclusiveness that proposes metrics like gender employment gaps, the proportion of people on less than half the median income, etc.

Finally, massive formal job creation needs sustained reforms in labour laws and education. For a government that has taken above average risks—GST, demonetisation, bankruptcy code, and surgical strikes—the pedestrian ambition and performance of the ministries of HRD and labour is unacceptable.

Their alibis of vested interests, political economy, or domain complexity are weak and can’t justify not moving forward with second-best or incremental reforms. In labour laws, we should stay away from hire-and-fire for now, but we should: One, reform the poor value for money 45 percent salary confiscation of formal employment by goofy monopolies like EPFO (that has four times more dormant accounts than live ones) and ESI (that only pays out 45 percent of contributions it receives); two, repeal defunct central laws (nine) and merge the balance (35) into one labour code; three, set an 18-month deadline under all central laws for 100 percent paperless, presenceless, and cashless compliance for all touch points (registration, licensing, returns, challans, registers, etc).

In education, we should: One, separate the role of regulator, policymakers and service providers and shift education regulation to the global non-profit structure norm; two, make the Right to Education Act the Right to Learning Act and remove the regulatory cholesterol that breeds corruption; and three, remove the ban on online higher education India’s formalisation agenda is making good progress. Over the last three years, we have added more than 1 crore new ESI payers and 1.4 crore new EPFO payers. Of course, not all these are new jobs, but they are new formal jobs. Policy-making is not about being right but being successful, and it’s always amusing to hear comments like “no GST is better than a multiple rate GST” or “without hire-and-fire or trade union reform, all labour reform is useless” or “RBI’s involvement in NPA resolution is conceptually indefensible”. The best reform is small but sustained reform, and MHRD and MOL get poor marks for strategy, stamina, and sequencing.

India hasn’t had jobless growth; just poor formal job growth. This could change quickly with better infrastructure, lower regulatory cholesterol, and higher human capital. India’s infrastructure is getting better; forcing MOL and MHRD to lower regulatory cholesterol and raise human capital will create millions of formal non-farm jobs.

This article was published in The Indian Express

This new ambition does not imply that India’s shameful poverty is behind us; only that the “bhooka-nanga-pyaasa” condition of 1947 is no longer as acute, chronic or malignant as it was. Recent election results suggest that voters are lowering tolerance for policymakers with stale or weak ambition and want newer, bolder and inspiring policy goals. This shift is hardly surprising: The demands of the youth who show up to our job fairs has shifted from “naukri” to “achhi naukri”. Even the magnificent desert resort, Manvar, halfway between Jodhpur and Jaisalmer, has to pay starting housekeeping staff salaries of Rs 8,000 per month. India’s problem has shifted from providing jobs to raising wages; this needs higher productivity in land, labour and capital. Let’s look at three goals that synthesise this shift.

In land, the 5 per cent differential between rental yields (annual rent as a percentage of sale value) has many parents but is largely a child of spiritual returns on black money where you are not looking for return on capital but return of capital. In countries that are fertile habitats for job creation and home ownership, the difference between rental yields and bank deposits is almost zero. India’s real estate market should become less like Mumbai, with artificially limited quality supply in zoned commercial areas with high rents and huge commutes, and more like Bengaluru, with infinite quality supply in mixed use areas and commercial rentals that stayed the same for 15 years. Reaching this goal needs effective land records, improved suburban infrastructure, title guarantees, mixed use town planning, lower regulatory cholesterol around conversion, city governance and making life for black money difficult (GST, digitisation, less-cash, etc.)

India’s labour market shame is 50 per cent of our labour force working in agriculture (generating only 11 per cent of GDP) and 50 per cent self-employment (the poor cannot afford to be unemployed, so this is largely self-exploitation). We need more non-farm wage employment because not everybody can handle the agony and ecstasy of being an entrepreneur and the best way to help farmers is to have less of them. Reaching this goal needs reducing 45 per cent mandatory payroll confiscation, consolidating and simplifying labour laws, raising manufacturing from 11 per cent to 20 per cent of employment, issuing a universal enterprise number instead of the current 25-plus numbers, adopting a PPC (paperless, presenceless, cashless) portal for all compliance, education reform, apprenticeship expansion, quality urbanisation and more action in the ease of doing business.

India’s current central government borrowing rate of slightly less than 7 per cent set an important benchmark for pricing capital across the economy. But India’s growth potential, domestic saving and the global savings glut naturally position our government for lower borrowing costs. Reaching this goal needs fiscal discipline, lower inflation, lower farm employment, more productive enterprises, higher human capital, more individual tax payers and lower tax rates, effective central bank governance, nationalised bank reform, stressed loan resolution, bond market development, pension reform and much else.

These three goals qualify for what economist John Kay called obliquity: They will be reached indirectly by many parts of the central government working with each other and with state governments. Reaching these goals makes India a fertile habitat for entrepreneurship because they fix the mispricing that bias our three factor markets in favour of people with opening balances or regulatory connections over citizens who only have their own courage and strength.

My pre-1991 career showed me how the licence raj created companies that didn’t have clients but hostages; most of those companies are no longer exciting because animals bred in captivity find it hard to live in the jungle. Reforms changed things. As first-generation entrepreneurs, we couldn’t have scaled our company without the post-1991 infrastructure of private equity, institutional IPO markets and human capital marinated, matured and sharpened by competition. But India now needs bigger ambition.

The latest issue of Nature magazine has research by Starman, Sheskin and Bloom suggesting that humans are not bothered by economic inequality but by something often confused with inequality — economic unfairness. Drawing upon laboratory studies, cross-cultural research and experiments with babies and young children, they argue that humans naturally favour fair distributions, not equal ones. And when fairness and equality clash, people prefer fair inequality over unfair equality.

India has been an unfair economy and society for centuries. Creating an 800 million-strong middle class is the best way to create a fairer India. This creation needs the formalisation, urbanisation, industrialisation and human capital catalysed by three 10-year goals in land, labour and capital. After all, if you don’t have a dream, how can you have a dream come true?

This article was published in The Indian Express

With the beginning of the new financial year and the new headcount budget allocations kicking in at most companies, we will see hiring momentum picking up across industries in the first two quarters. Many first-time job seekers will hit the job market, and many employees at the early stages of their careers will seek newer growth opportunities. According to estimates, 60% of employees from the experience bracket of 1–5 years will look at changing their jobs in the next one year.

Since at this level salaries are not very high—except for A-league management and engineering graduates—the primary decision criterion for any candidate while accepting a job offer are learning opportunities coupled with monetary growth. Often, freshers or inexperienced candidates at an early stage of their career end up misreading the salary offer, making ill-informed decisions on this front. The good old term ‘salary’ today has multiple avatars—CTC, or cost to company; gross salary, take-home salary; pre-tax take-home salary; total rewards; on-target salary; and what have you.

Here are some tips to help you decode the salary offer being made to you, and make an informed decision while accepting the offer.

• Be clear on the total compensation package being offered to you. This package could have both a fixed component and a variable component. It could also include direct monetary components or indirect components.
• The variable components will be payable to you only based on certain predefined criterion being met and as per specified frequency. This payout could be linked to your individual performance or other criterion; for example, company performance or profits, or a loyalty bonus that is given to employees and is linked to their being with the organisation for a predefined time-period. Make sure you understand the criterion and related terms and conditions linked to your variable component payout.
• Find out if the value of indirect components/benefits being given to you would be deducted from your direct or cash salary. For example, if your employer is providing a pick-up and drop facility, is the cost going be deducted from your salary? The same could be the case with the medical insurance cover being offered to you.
• Understand the CTC structure. The CTC structure has both earning and deduction components. While every organisation has its own salary or CTC structure, most CTC structures have the following earning components: Basic, house rent allowance, special allowance, leave travel allowance, medical reimbursement, conveyance allowance. The common deductions are retirement benefits: provident fund, gratuity, ESIC contribution, professional tax deduction.
• CTC versus gross versus net salary. Provident fund and ESIC deductions have both employer and employee contributions. Most organisations include the employer side of contribution as part of the total CTC. Your gross salary will be your CTC net of employer contributions to these deductions. Your take-home salary will be net of all the deductions—employer’s and your own. In India, since the mandatory social security deductions are rather high for employees with salary of up to Rs 21,000 per month gross, the total deductions could be as much as 30% of the salary as per the appointment letter. Further, depending on your salary bracket and other rules as per income tax, there could be income-tax deductions. So your net post-tax salary would be a very different figure from your salary as per your appointment letter.
• Understand income-tax rules and implications for you. If you fall in the tax bracket, check if the CTC structure being offered to you has components which can help you save tax. Common components that can help you save tax are HRA, conveyance allowance, leave travel allowance, and medical reimbursement. Provident fund deduction can also help you save tax. If your proposed CTC structure does not include these components, you could end up with much higher income-tax deductions and lesser take-home salary.

While you should never accept a job offer solely based on salary, decoding the salary offer being made to you is critical for making an informed decision and ensuring that you get off to a positive start in the organisation.

The article was featured in Financial Express

An authored article in People Matters Magazine talks about how the GST Bill will create a single unified market that will benefit will India Inc.; along with inputs from Rituparna Chakraborty.

The GST bill is the big bang reform that is aimed at creating a single, unified market that will benefit the corporates, economy and the youth of the country.

Through the recent passage of the 122nd Constitution Amendment Bill for GST (Goods and Services Tax) in the Rajya Sabha on 3rd August 2016, India has committed itself to replacing the various layers of indirect taxes on goods and services levied by the States and Center, and implement GST by April 2017.

Some of the salient features of GST are: (a) All forms of “supply” of goods and services made for a consideration shall attract CGST and SGST; (b) GST shall apply on “Supply” and all other earlier taxable heads such as “manufacture”, “sales” and “services” have been made redundant and irrelevant; (c) the liability shall arise only at the point of supply; (d) a single document for tax purposes and a single return filed with a central registry; (e) 7 Central Indirect Taxes & Levies and 9 State Indirect Taxes & Levies subsumed by GST hereby.

It’s the big bang reform in the Indian context aimed at creating a single, unified market that will benefit the corporates, the economy and the youth of the country.

Let’s look at the opportunity ahead of us:

• It is expected to make it easy for corporates to predict costs of products manufactured or services rendered across the country and improve enterprise productivity.
• For sectors that have been impacted positively (assuming a GST of 18%), they shall witness an increase in profitability through reduced average tax burden.
• Uniformity of tax structures opens up market beyond favorable territories. At the moment, the complex intra-state variances in tax structures have been a hindrance for many companies to look at nationwide reach.
• Expansion of services, capacity and product range on account of either increased profitability, predictability of costs as well as broadening of the market.
• Less protectionism amongst states and more innovation. The current structure tended to protect local manufacturers to the extent that they became less competitive and invested less in innovation, stunting their possible growth.
• Variablises current fixed costs through seeking input credit.

The sectors which are expected to immediately gain from the new bill are:

• FMCG – Huge savings to be registered for this segment on account of savings in logistics and distribution costs as there would be no need for having multiple sales depots. The savings or gains to their bottomline, one can safely assume, would be invested back into the business by way of introducing new product categories and penetrating deeper across the country. Hiring outlook is expected to improve significantly for this segment.
• Media – Their taxes are expected to go down by 2-4%, lowering their costs. With lower ticket costs, footfalls in theatres and entertainment spots are expected to go up. Film makers and studios for the first time stand to enjoy input credit as so far they were part of the negative list. This means more opportunities for the entertainment industry and as the sector being considerably manpower intensive would lead to newer jobs.
• Auto industry – Over the last couple of quarters, this sector has been fairing well and with about 8% drop in costs, it is expected to fuel more demand. Being a labor intensive sector, this augurs well for job creation.
• Cement – Infrastructure development has been a policy priority and with the positive impact of cement, it would be an added boost.
• Logistics – Probably one of the biggest winners from GST would be the logistics and distribution sector. The changes could reduce transportation cycle times, enhance supply chain decisions, lead to consolidation of warehouses, etc. which could help the logistics industry reach its potential in terms of service and growth. This sector over the last 2-3 years has created a significant number of job opportunities especially for youth who are lesser skilled and have fewer means to livelihood. The positive is expected to open up doors for more youth.
• Ecommerce – The unified market shall definitely lead to smooth movement of goods and products. Finally with elimination of the various layers of taxes, burden of which falls on customers, the ecommerce sector shall witness greater efficiency in costs. This sector has been the go to place for our youth seeking employment opportunities across all skill levels – this augurs well for sustained job creation.

In addition to this, one expects gains for mobile handset companies on account of lower distribution costs, lower product costs, which will spur demand. Elimination of multiple levies shall also help Digital Companies in making deeper forays. Overall, all sectors shall benefit from the streamlined process of filing returns given that there would be a single point of entry, lowered distribution and logistics costs, and increased predictability in costs structures.

Needless to say, to take advantage of the opportunities ahead of us, staff augmentation would be key and that would lead to massive formal job creation.

The five specific consequences of this event are:

1. To explore new territories, to introduce new product range, there would be a need to hire and deploy a distributed workforce nationwide leading to a spike in new formal jobs.
2. Demand for skilled manpower shall go up leading to an added emphasis on building skills across roles and functions.
3. As one cannot seek input credit without ensuring there is evidence of GST being paid by partners, suppliers and vendors, it automatically weeds out informal players or forces them to comply paving way for mandatory formal job creation. In one stroke, laying down the systematic path towards fast paced formalization of our workforce.
4. Labor intensive sectors have received a massive boost from GST and would be leading from the front in contributing to creating new formal jobs.
5. GST creates a positive image in front of global investors making India a lucrative destination for them to set shops – thereby a ray of hope for our youth.

While it is premature to estimate sectoral additions in number of jobs, however, it is safe to assume that GST will create millions of jobs in the years to come. Let us take an example from e-commerce. In the state of UP wherein e-commerce companies were restricted to selling only goods up to Rs. 5000 lest the customer are dragged out of their houses to a tax office to complete complicated paper work, wherein a warehouse in Karnataka has been an unviable option on account of double taxation – all this goes away enabling possibility of higher sales in UP, greater efficiencies in Karnataka, lower cost and faster delivery – each of which can be actualized through the requisite manpower at the right places and in adequate numbers. One can predict that three biggest beneficiaries in the new jobs created would be those in sales, customer service and logistics amongst others.

The wait for GST to be passed has been long, albeit worth the patience and also is a symbol of how there are times when we need to look beyond our idealistic differences and do something that paves the way for a better future for our country and for our youth. For once, good economics scored over politics and cheers to that!

An authored article of Manish Sabharwal in Mint talks about how the 2017 Union Budget recognizes that India’s problem is not jobs but formal enterprises.

A government focused on jobs should focus on formalization, infrastructure and human capital. This budget did a good job on two out of three

The 2017 budget reinforces the government’s strategy of a) sticking to fiscal responsibility and lower interest rates as more effective than tax tweaks or populist spending, b) creating conditions not for setting things on fire but for spontaneous combustion of formal enterprises, and c) adopting the long view where a 10-year plan is not 10 one-year plans. The first point is politically significant half-way into the government’s term because India’s only two fiscally prudent prime ministers, P.V. Narasimha Rao and A.B. Vajpayee, did not get re-elected. The budget reinforces India’s global brand—not hot, not cold, but consistently warm—for the demand side (enterprises and demand) but I wish it was more aggressive on the supply side (human capital).

The budget recognizes that India’s problem is not jobs but formal enterprises.

The budget recognizes that India’s problem is not jobs but formal enterprises. (Of our 63 million enterprises only 1 million are companies of which only 18,000 have a paid up capital of more than Rs10 crore.) Anybody who wants a job has a job—our official unemployment rate of 4.9% is not a fudge—but they don’t get the wages they want or need. Formal enterprises have the productivity to pay the wage premium, and the budget built on GST and note ban to encourage formal enterprises. No tax liability for up to Rs2.5 lakh income, the tax rate of 25% for 97% of enterprises, the re-emergence of labour reform via four labour codes, the abolishment of Foreign Investment Promotion Board, the 25% infrastructure spending increase, the acceleration of road construction, the programmes for labour intensive sectors, 100% village electrification, and reforming the tax department’s human capital and procedures will boost employment.

But it missed low-hanging fruits such as the single universal enterprise number (replacing the current 25-plus numbers), announcing a deadline for enterprise PPC (paperless, presenceless and cashless for all compliance) and fixing the gap between salary on the offer letter and the take-home pay (the 45% deduction for low-wage employees that goes to poor value-for-money schemes operated by government monopolies).

The human capital announcements—UGC restructuring, focus on school learning outcomes, apprenticeships, etc.—were interesting but should have been more substantial. The budget acknowledged the importance of technology in education but did not lift the unjust ban on Indian universities launching national online campuses.

This budget’s structural innovations (early presentation, merging the rail and Union budgets and ending the silly plan and non-plan distinction) probably mean that budgets are morphing to what they should be: a statement of accounts and intentions rather than a forum for reform announcements. But India must recognize that China’s five labour market transitions—farm to non-farm, rural to urban, subsistence self-employment to wage employment, informal to formal and school to work—was easier not because it does not have the fixed costs of democracy but because it started reforms in 1978 at the start of a 30-year supercycle of global growth, manufacturing outsourcing, and global trade openness.

The global weather of the moment—Trump’s election, secular stagnation, the threats of automation, Brexit, etc.—mean that we should hope for exports and manufacturing but can no longer postpone difficult land and labour reforms that will spur domestic consumption driven by higher wage services employment.

One of the most interesting questions in economics is the role of the government in job creation. Ronald Reagan once said, “The nine most terrifying words in the English Language are I’m from the government and I’m here to help”. Much has changed since the 1980s and India’s problems of the state are no longer sins of commission (what it does wrong) but sins of omission (what it does not do). Our government does too much of what it should not do and too little of what it should do. A government focused on jobs should focus on formalization, infrastructure and human capital. This budget did a good job on two out of three.

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This article was published in Mint