Discrimination rife in Indian economy

Male graduates applying for private sector jobs in India are far more likely to progress to the next round if they have high-caste Hindu names than if they have surnames associated with dalit (formerly untouchable) or Muslim origins, new research has found.

Far from being a hangover from the past found only at the margins of a newly meritocratic society, such discrimination is rife in the most dynamic sectors of the Indian economy, according to a joint study undertaken by academics from Princeton University and the Indian Institute for Dalit Studies.

Making use of techniques pioneered in the US to measure discrimination against blacks and other minorities, researchers made 4,808 job applications to 548 graduate level openings advertised in newspapers by blue chip Indian and multinational companies, changing only the names of identically qualified candidates.

Lunch with the FT: Rajendra Pachauri

Appropriately qualified applicants with a dalit name had odds of progressing to the next stage of the recruitment process that were two thirds of those of an equivalently qualified candidate with a high caste Hindu name, while those of an equally qualified Muslim candidate were only around a third as good.

The findings, published in India's Economic and Political Weekly, have been released at a politically sensitive time, with the government threatening to extend a system of quotas to the private sector unless businesses voluntarily boost the number of recruits from disadvantaged social groups.

The private sector has argued that the under-representation of dalits, tribes people and Muslims should be solved by improving the public education system - on the grounds that these communities attend inferior schools - rather than through quotas that would crimp freedom to hire and fire.

India's workers get biggest pay rise

The studies, however, cast some doubt on whether, without government intervention, the self-interest of theoretically economically "rational" recruiters, who would want to minimise wage bills by recruiting from the widest possible pool of qualified talent, would be sufficient to correct the problem.

"Reaching the pinnacle of what the Indian education system has to offer is not sufficient to create full and open opportunity," wrote Sukhadeo Thorat, founder of the Indian Institute of Dalit Studies, and Katherine Newman, a sociologist and director of Princeton University's Institute for International and Regional Studies, two of the academics involved with the project.

"Far from fading as India modernises, the problem of discrimination remains a serious one, even at the very top of the human capital hierarchy," the authors said, arguing that recruiters in major companies continued to "subject low caste applicants to negative stereotypes that may overwhelm their formal accomplishments".

Business groups have argued that mandatory extension of quotas to the private sector would hit productivity. They say the organised private sector, which accounts for less than 5 per cent of the workforce, is already suffering from labour market rigidities, such as the need to secure government approval to fire employees.

Manmohan Singh recently became the first sitting Indian prime minister to acknowledge openly the parallel between "untouchability" and apartheid, describing the latter as a "blot on humanity". His government is poised to establish an Equal Opportunity Commission, whose powers have yet to be defined.

Wipro launches video interviews to save cost

The next time you get that interview call from India's third largest IT services provider, Wipro Ltd [], you will probably be asked to do it via video.

Wipro has already screened hundreds of applicants through video kiosks it has set up at three of its campuses - two in Bangalore and one in Chennai.

The company shortly plans to extend this concept, and install over 1,000 video phones at all its 20-odd campuses across the country. Each campus accommodates over 2,000 people.

The process is simple, according to Dhananjay Ganjoo, vice-president (enterprise), Nortel India. The kiosk comprises a video phone, provided by Nortel Networks, with a 4x4 inch screen. The cost of each phone is around $250.

The candidate walks into a video kiosk and dials a pre-determined number at the given time. The human resources (HR) person or panelist at the other end picks up the phone and the interview starts.

"We implemented this to save on costs, time and eliminate impersonations, given that we recruit nearly 5,000 candidates every quarter," explains Jethin Chandran, GM (IT Planning & PMO), Wipro.

The Gartner Group estimates the procedure can reduce companies' travel costs for recruitment by 15 to 20 per cent.

Video phones also appear to solve the problem of impersonation or fake r�sum�s that have plagued the IT industry in particular, which loses crores of rupees in the bargain.

Last year, IT majors like IBM India, Wipro, Satyam [], Infosys [] and TCS [] had to terminate the employment of thousands of such candidates. And a 2006 KPMG study revealed that 15 to 24 per cent of resumes in India are fake and one out of three r�sum�s mis-represents facts. The study noted that the IT, financial, entertainment and telecom sectors face the highest risk.

"To avoid impersonation, the video phone is equipped with a memory card that can capture the photograph of the interviewee," explains Chandran. The photo of the candidate and the interview results are then digitally sent to a central database.

Technology, note analysts, has been providing firms with innovative ways to cut hiring costs, and save time. Take, for instance, the video r�sum�s from Reliance [] World and Monster.

Reliance World, in association with Ilaza VDO, has VDO Resume - an online system that integrates a video file into the candidate's r�sum�. RWorld has over 240 outlets across the company.

Then we have video conferencing, which is done by companies like IBM, HP, Cisco, Nortel and Nike the world over.

"At Cisco, we use a lot of technology including TelePresence, IP phones, video conferencing, wikis, blogs, etc. to increase employee productivity," said Subash Rao, Director, HR, Cisco India.

He added that, till date, over 37,000 meetings were held, out of which nearly 8,000 meetings included participants who avoided travel by attending meetings over TelePresence, which meant savings of $62 million in travel avoidance.

Ronaldo double gives Man Utd 2-0 win

Cristiano Ronaldo [Images] scored twice as Manchester United beat Fulham 2-0 at Old Trafford on Monday to climb to second in the Premier League.

Arsenal, who won 2-1 at Aston Villa on Saturday, lead with 36 points from 14 matches with a game in hand. United have 33, Chelsea 31 and Liverpool and Manchester City 30.

Ronaldo opened the scoring in the 10th minute, hitting a fine volley into the top far corner from Nemanja Vidic's header. It was his 12th goal of the season and seventh in the league.

The Portugal winger, second to Brazil's [Images] Kaka [Images] for the Ballon d'Or at the weekend, struck again 13 minutes into the second half, rising above defender Dejan Stefanovic to head substitute John O'Shea's cross past keeper Antti Niemi.

Kirsten seeks assurances before becoming India coach

Former South Africa opening batsman Gary Kirsten has delayed taking over as India coach, saying he wants assurances from the players over the job.

"I have heard rumours about some senior players expressing their concern about my possible appointment and I would prefer to have clarity on that before I commit myself," Kirsten told Reuters.

Kirsten had been expected to sign his contract on Monday.

• 'Why do you want a guy with no coaching experience'

"I'm not sure whether the players have concerns or not," said the South African. "I only met (captain) Anil Kumble [Images] on my recent trip to Delhi and he was very supportive.

"If there are concerns then I would like to find out whether they are about me as an individual or the process by which I was interviewed and then offered the job."

Indian newspapers had quoted anonymous senior players as saying the existing management structure was working well and Kirsten's appointment was unnecessary.

"There is absolutely no need for a coach at this moment," an unnamed player was quoted as saying in the Mumbai Mirror.

Kirsten said he was keen to speak to more players to make sure he understood their feelings.

"I'm not going to rush because it's a very important position in world cricket and the decision needs to be made carefully and in conjunction with all the right people but mostly the players," he said.

"You can't coach any team if you don't have the players 'buy in'. I've written to the board to explain my feelings."

Australian Greg Chappell quit as India coach in April following the team's shock first-round elimination from the World Cup.

Why Jet Air is a success and ICAI a failure

Writing her columns for a business daily a senior journalist recently wrote of her experiences of flying to Madrid via Brussels from Chennai in a private airline. Pointing out that the flight in the Brussels-Madrid-Brussels sector on Brussels Airlines 'was an eminently forgettable experience,' the scribe went on to add, '. . . but against that flight of a little over two hours, where the airhostesses were indifferent and no blankets were available on a freezing Madrid morning with the temperature close to zero degree Celsius, the Chennai-Brussels sector on Jet Airways [Get Quote] spanking new A330-220 aircraft was a virtual treat."

Further, she goes on to add, 'After exchanging notes with other international journalists -- from China, Canada, the United States and some Europe nations -- who had all travelled business class -- one was convinced that the Jet experience was indeed special.'

At the outset, this rise of the Indian civil aviation industry as a global player needs some elaboration. What is intriguing in the entire story is the fact that contrary to popular economic wisdom, the civil aviation sector remains as one of the most protected sectors even today in India.

It may be a bit baffling for the reader to note that though foreign direct investment is allowed in this sector -- it is open only for those who do not run airline industry abroad. That is, Pizza Hut, for instance, can invest in the airline industry in India, but not Singapore Airlines. Further, foreign airlines are not yet allowed to operate on the domestic sector. Obviously, the rise was fuelled by Indian capital and managerial skills.

The net result of this strategic protection offered to the civil aviation industry is there for all to see. Crucially, it has acquired the necessary technical, financial and managerial capability to partner the very best globally on its own terms while retaining its Indian identity. This, in turn, helps in building up the brand image of the airlines, industry and of the country.

The lessons behind the calibrated opening of the civil aviation sector are instructive and remain, in my view, an appropriate lesson in our process of globalisation.

Lessons of the accounting sector

If civil aviation is a lesson to emulate, the opening up of the Indian accounting sector is in contrast an abject lesson in mishandling the globalisation process. The Indian accounting sector too has extraordinary potential (because of its substantial numbers, knowledge of accounting and of course the English language) to be a global player but has been subjected to premature external liberalization and without adequate preparation.

Consequently it is becoming an endangered species even within India.

You may recall that the entry of the Multinational Accounting Firms (MAFs) into India coincided with the establishment of the World Trade Organisation regime -- why, it even preceded the establishment of the WTO. That is, as the coordinates for the WTO itself were being finalised, the government allowed the MAFs to enter India.

Ostensibly, this was done under pressure from the International Monetary Fund, which was providing financial assistance to the government in the aftermath of the foreign exchange crisis of the early 1990s.

This un-calibrated opening up was in sharp contrast where countries, notably developed ones, were busy erecting entry barriers and legalising them through the GATS-WTO regime. The impact of the premature entry of MAFs on the domestic accounting firms has been the subject of intense debate within the accounting fraternity with a dominant view holding that the entry of the MAFs had a debilitating impact on the accounting profession in India.

A crucial issue that needs to be factored in here is that external liberalisation of services pitted the unbranded, under-prepared and undersized Indian accounting services with branded services of MAFs. This skewed the competition in favour of the MAFs inexorably, so much so that even after a decade it is impossible to comprehend the emergence of a pan-Indian accounting firm even in the next 10 years.

Consequently, after a decadal experience with MAFs, it is evident that Indian accounting profession is now no longer a potential global force. Rather, it is fast becoming a weakened and marginalised local force. By playing the global game at the local level, the MAFs have succeeded in weakening the Indian accounting profession even within India.

In the context of effectuating our potential in the services sector, experts are of the opinion that India has to prepare for the opening up of the services sector while seeking access to markets abroad.

But for any service provider to dominate at the global level it has to be a dominant national player. And the corollary to this rule is that to prevent the emergence of a national power into a global power it is necessary to render it hors de combat at the sub-national stage. . . just as it has been done with Indian chartered accountants by the premature entry of the multinational accounting firms into India.

Why is the accounting profession in India paralysed? The most important issue for chartered accountants to face foreign competition is to acquire size, become multidisciplinary and acquire global partnerships. In this connection, one of the key impediments is the legal limitation placed on the number of partners in partnership firms, which restricts the number of partners to a maximum of 20.

Secondly, accounting firms in India are not yet functionally multidisciplinary. Consequently, Indian accounting firms are unable to compete with MAFs even within India, while MAFs with their deep pockets can penetrate the Indian market with ease.

What has aided and abetted the continued existence of the MAFs within India has been the virtual capitulation of some of the very best in the Indian accounting profession to these MAFs. In fact, some presidents and council members of the Institute of Chartered Accountants of India in the 1990s were party to their own firms tying up with these MAFs.

These leading lights of the profession were keen to play second fiddle and allow MAFs to subsume their identity and in the process avoid competition. Given these vested interests at play, is it possible for the ICAI to effectively act against these MAFs and protect the Indian CAs?

The net result is that the regulator, the ICAI, has been reduced to becoming an ineffective organisation on such matters. Of course, it does provide comic relief by seriously suggesting dress codes for members (ostensibly aimed at improving the image of the profession!), instead of looking at issues that confront the very survival of the profession.

When lobbying proved successful and when it turned personal

It is, indeed, a fact that the domestic airline industry may have successfully lobbied for protective measures; the fact that they have leveraged the same to emerge as successful global service providers -- surpassing even international standards -- is a matter of great pride for every Indian. This is one rare instance where the industry has defied conventional economic thinking and emerged as a success story.

On the other hand, it is pertinent to note that the ICAI has been unable to leverage its position as the premier accounting body of the nation to set the pace of external liberalisation to the benefit of its members. Obviously, when personal ambitions cloud judgement of individuals, especially of those in power, the net sufferers would be the people at large. This is what happened to the accounting profession.

Much as the ICAI would defend its past actions, the fact of the matter is that younger chartered accountants are keen to take up employment -- a sure sign that the accounting profession is doomed in India.

Want proof? Check out the latest statistics that indicate that less than 10% of the younger members are taking to practice, when 50% was the norm till a few years back. Given this fact it is evident that Indian chartered accountants -- as an entrepreneur -- are a vanishing tribe.

And that would spell the ultimate success for MAFs. For, if the accounting entrepreneur is eliminated within India, it could well mean the elimination of competition at the global level. And that could mean India's potential as a serious global player in the accounting sector is, to that extent, dented.

In conclusion, globalisation is the war of entrepreneurs, who are a rare breed and require nurturing by the State. It is the profound duty of the government to ensure that the entrepreneurs succeed by its appropriate choice of policy and programmes.

It is this success of entrepreneurs that propels the image of the country higher in the comity of nations. America is known by Microsoft, Japan by Sony. If Gates and Akio Morita were eliminated even within their own country by competition, their companies would never have emerged as serious global players, leaving their respective brand images of the countries poorer.

For India to emerge as a global power it needs to unleash its potential in the services sector. Accounting sector is one where it could have succeeded easily with, some game plan. Unfortunately, the ICAI has let down the accounting sector, profession and the nation by failing to calibrate the external liberalisation programme.

This is where the civil aviation succeeded and the ICAI failed in India. And for its sorry state of affairs, the accounting profession cannot blame anyone but itself.

Tips to select a good mutual fund

While equity funds are best for long-term returns, you should also plan your exit as your goals come nearer and reinvest in debt funds.

What funds must I invest in for retirement planning? What funds are ideal for my children's education planning?

Mutual funds are the ideal investment option for funding retirement and children's education. However, they must form only a part of such portfolios. Here's why. Capital protection is one of the foremost requirements of a retirement or education fund. And there is not a single mutual fund that carries a capital guarantee on your principal amount. For this reason, you cannot afford to ignore instruments such as the Public Provident Fund (PPF), National Savings Certificate (NSC) and the likes. While these instruments offer a decent risk-free return on investment, they may not suffice for your post retirement or children's education planning needs.

For this reason you could look at equity-oriented mutual funds to boost returns. But when considering equity instruments, take cognizance of one's time horizon of investment. The longer you can stay invested, the more equity allocation you can afford. Hence, if you are 27 years old and plan to retire at 60, you can invest the bulk of your portfolio in equity oriented schemes. This is true for planning children's education as well. If your child is 16 years old and you need the money in two years, you should completely avoid equity funds.

As you near your goal, you ought to start redeeming your equity investments and re-invest these in safer debt-oriented instruments. Hence when you are about 56-58 years old, you can institute a systematic withdrawal plan and reinvest the money in safer instruments.

The category of balanced funds is especially useful for such life stage planning. These funds invest at least 65 per cent of the corpus in equity and the rest is in debt instruments. When the equity segment of the fund does exceedingly well, the fund rebalances the portfolio, booking profits in equity and transferring to debt. This way, your risk exposure is kept in check.

I want to make an additional investment. Which are the new and good funds that I ought to invest in?

This one is really tricky, especially when we have no clue about the investor's portfolio. When making such a decision, take a good look at where you stand. As a first step you can use the portfolio tool on our website.

The first investment decision must be based on your asset allocation i.e how much of your money is invested in equity and debt instruments. Then you ought to look at the allocation and weightage to various funds and fund houses. In case you are overweight on a particular fund or fund house, avoid these funds. In case you are underweight on a well-performing fund, then channelise your investments to such a fund.

Assess your exposure to large-cap and mid-cap stocks. Accordingly pick a fund that will equate any such deficiency. Though these are basic steps, more often than not such a short exercise will help you plan your additional investments.

Before you consider adding more funds to your portfolio, look at current holdings and try to work with them.

One is advised to look at the offer document before investing. To me, all offer documents look similar. What should I look out for?

The offer document is an essential read before investing. In fact, all mutual fund distributors and financial planners are required to give their clients a copy of the same before the investor signs the application form.

Since these documents tend to be exceedingly lengthy and almost identical, you should at least go through the Key Information Memorandum (KIM) of the fund.

Here are some key factors that you need to keep an eye out for.

Investment Objective: This will explain the mandate and scope of investment. Whether the fund is equity or debt oriented, whether the fund will be multi-, large, mid- or small-cap specific, the level of diversification, the option to the fund manager to invest overseas and other such issues.

Type of fund: Is the fund open- or close-ended? In case of a close-end fund, look at the lock-in period, liquidity window and repurchase options.

Costs: Fees, expenses and loads are other big items to look out for.

Investment: Minimum initial investment, methods of purchasing, redeeming and making additional investments, the time taken for redemption, so forth and so on.

Fund Manager: Number of fund managers managing the fund and information on each. This information is useful to those who would like to check the antecedents of the manager. Most of this information is available in the KIM as well, but if you can spare the time, give a good look to the offer document as well.

How must I decide whether to hold on or to exit a fund?

If we had a rupee for every time we came across such a question! But this one has an easy solution. Ask yourself why you want to redeem your investment. If you need the money, go ahead. Are you apprehensive of the fund's performance? In that case, check out how the fund has done over the past three years.
Look at the year-to-date performance of the fund vis-�-vis its peer group. If we are only a quarter or so into the year then look at the one-year return as against the category. Also look at the performance over the past four quarters. This will clearly specify whether the fund has been a consistent performer over the past year or just has an odd good quarter.

Apart from this you could also look at how the fund fits in with the rest of your holdings. In case it is a theme-based fund, see if the theme still has any steam left in it. If you have other funds with a similar investment objective, pick the better performer.

FIR against Anil Ambani over Sikh jokes

A First Information Report has been lodged against Anil Dhirubhai Ambani Group chairman Anil Ambani and senior officials of Reliance [Get Quote] Communication for allegedly circulating derogatory jokes against the Sikh community through its mobile Internet services.

The FIR was lodged by the Lucknow Gurudwara Prabandhak Committee after an emergent meeting held in Lucknow on Monday, official sources said on Tuesday.

"These jokes are insulting as some Sikhs have been abused. They offend the feelings of the entire Sikh community. We cannot tolerate this insult being heaped on us," LGPC president Rajendra Singh Bagga said.

He said the LGPC wanted a written apology from the Reliance Group chairman, failing which they would stage a nation-wide protest against the group all over the country.

Bagga warned that they would not hesitate to boycott all products of the company if it did not tender an apology. When contacted, vice president, corporate communication (north) Reliance Infocomm, Avinash Jain, told PTI that an FIR has been registered.

He, however, said the company had served a legal notice to the Internet service provider, who is responsible for circulating jokes.