80th Annual General Meeting
February 15-16, 2008

Special Address by Mr Montek Singh Ahluwalia, Dy Chairman, Planning Commission

I want to apologize for this somewhat unusual way of proceeding because you started with the Prime Minister. I believe you had everybody else in expert sessions. Most of what is needed to be said has been said. I was saying to Suman and couple of friends that in these matters I am struck by what my friend Larry Summer said a short while ago somewhere and he said that the only interesting statements are those about which reasonable people should be able to disagree. There are too many statements we make, who is not in favour of inclusive growth. What I would really like to do is to respond to question which narrow down our general propositions into more focus question which would put one on the maps so to speak. I suggest that we have 10 questions and then give me the freedom to answer any five. Questions that are not answered, you can send me an e-mail.

Let me handover to the first questioner.

Question from Mr Suman Singh

We are very happy that 11th plan has allocated much larger resource for education, agriculture and health. What is the role that the Planning Commission can play in the delivery mechanism because all these three subjects happen to be state subjects as well and is there any role that we from the private sector in partnership with the Planning Commission and I am using the word Planning Commission because we have to find our own ways of dealing with states. Is there any way that we can partner with Planning Commission in the delivery mechanism ?

Question from Rajnikant Marfatia, Surat

I would like to know whether the change in approach in agro sector can influence the change in the growth sector and probably is it possible that we can reach double digit because this sector may not require many changes in the policy either in the finance sector or monetary sector. This may call for some execution of projects indolently and probably it might influence the course of development drastically.

Question, Crossover Venture, Mumbai

My question is today we applaud China for double digit growth but it took about almost 15 years since the reforms were initiated. What kind of reforms have we initiated so that we can benefit same kind of sustainable growth for over decade.

Question, from Dr Shanbagh,

In the 70s, we had priority sector and that was all about inclusive growth, if I may put it that way and there were 4% loans for the priority sector. Why is it not possible to do the same for education and make it inclusive instead of having quotas and all those works which really are obsolete mechanisms?

Question from Mr Arvinder Brar, Mantec Consultants

I would like to draw your attention to the export sector. As you know dollar/ rupee issue is concerning the export sector and I must say that I don't know what role the Planning Commission can play to rein in the Finance Ministry because it is not only the question of levying things like minimum alternative tax and service tax on export but it is not only about money but it is also about the procedure being so time consuming and such a lot of harassment, for example, in the export sector it says that you will be refunded the service tax. That is just on paper because you can never get refund. I would like the Planning Commission to see how you can bring in the practicality into this and also how to really support the export sector because this is very important for the country.

Question

License permit raj is still choking the education sector. We can be one of the finest education centers in the world. Instead of spending $3 billion on outsource we can earn $3 billion. How do you free them so that we can create best institutions in the world ?

Mr Mohan, EC Infosystem

Currently the energy markets in the country are closed. Does the government plan on opening the markets for competition?

Question

How can the concept of public private partnership be implemented in the rural development areas?

Question

What is the role that Planning Commission is viewing towards the IT sector in translating this double digit growth towards the common man ?

Question, Business Standard

The government has estimated 8% growth for the current financial year and IMF has forecast 8.2% growth next year but the Planning Commission has targeted 9% growth throughout the 11th plan with terminating year growth of 10%. Where dos the target stand now when the economy is going downward ?

Mr Y K Modi

We all realize that infrastructure is the great bottleneck coming in the way of faster growth, specially in manufacturing. I would suggest that if a case study be done by Planning Commission that how Metro in Delhi is able to deliver on time, on cost and in the morning our President was saying that Rs.48,000 crores has been the overrun and many many years on many many infrastructure projects specially roads and ports and bridges etc in India. So it is not that it cannot be done. Delhi Metro has shown that it can be done. Why can't that model be followed in other infrastructure projects?

Mr Harsh Pati Singhania

Very simple question we are talking about double digit growth and I didn't hear anybody articulate about this whole issue of relatively high interest rate that we are going through and interest arbitrage between rupee funds and the foreign funds, could that take us away from keeping the double digit growth ?

Mr Rajiv Ranjan Roy, Indo Asian News Service

I am from a village from one of the north-eastern states of the country. I just want to know how long the people on the margins will have to wait to taste the flavour of economic boom and double digit growth and all these good things we have been talking about ever since the economy was liberalized.

Dr Ahluwalia

Some of the questions are very focused, so let me indicate the ones that I don't feel belong to this particular session. The practical problems of service tax and so on or I can tell you the Planning Commission does not get involved in this at all. So this is something you have to take up with the Finance Ministry. So with your permission I won't address that particular question. The other question. I see a number of themes that have come out, there is infrastructure failure issue. The agro sector, the emphasis that we are giving to the agro sector has come up as an issue, the role of education has come up as an issue. Many issues can be grouped under these categories plus, of course, the whole question of sustainability of growth in the light of different projections that have been made, policy constraints etc. So I just respond to them not in the order in which they appeared but in an order where I am reorganizing the question.

One question that I am often asked by the press which says you said 9%, yesterday Finance Minster said something else, day after tomorrow the IMF says something else, what's all going on? Let me be very clear about it. The Planning Commission's 11th plan target is an average of 9% growth for the five year period beginning this year and ending 2011-12. To my knowledge, nothing has been said about growth in the current year and next year takes them outside the range of consistency with 9%. I accept the estimate of growth in the current year which is after all given by the CSO of 8.7%, we ourselves have thought that it would be near 8.5% but in the last few months, I have been consistently saying between 8.5 and 9 and I am very happy if it turns out to be 8.7%. I do think that people often tell me that the economy is slowing because in the previous year it was 9.6 %. Yes it is lower than in 2006-07. I don't think we should be too concerned about whether it is more than 8.7 next year. The IMF has said 8.2 for the next year. The IMF links what happens to the global economy with what happens in the domestic economies and I think there has been a lot of talk about decoupling, coupling etc. Some people tend to argue that we are not really affected by what happens in the world's economy. I don't share that view at all in the sense that it is utterly illogical to say that we are well positioned to benefit from global growth but we are completely insulated from global downturn. It just does not make any sense. Quite frankly, if the global economy slows down we should expect the Indian economy to slow down. The difference is that industrialized countries are used to be growing at 3%, they might grow slower, we are growing much faster so we will also slow down but that does not mean that we are going to recession or to very low growth. I have seen lot of estimates down in the IMF and their view is that if the global economy slows down or the industrialized country slows down by 1%age point of GDP, then emerging market economies, depending upon where they are would slow down between 0.5 to 1% for every 1% knocked off the industrialized country. I think that is not unreasonable estimate. My own feeling is that India would be at the lower end of that range but this does mean that if you want to knock 1% the industrialized country, I think we should be willing to knock something little above 0.5% of our growth rate. I don't believe there is any macho advantage in asserting that even if you slow down, we are going to ramp up. We can always push an economy. These are questions about what are equilibrium growth rate. Basically, the important thing is that if we are on 8.75% now, then even if there is significant slow down for a year in industrialized country, India could still be growing at 8% or little above 8%.

Whether we can grow at 9% as we have targeted depends upon what happens to the global economy in the next 4 years. To my knowledge, IMF has made no projection beyond this year and next year. So, if there is a bit of slow down for one year and then the economies pick up then we should expect to see similar movement here. I don't se 9% target of the Planning Commission is at all altered. That is not to say we have declared some kind of high growth self sufficiency. We are part of an integrated global economy and the future of the global economy is going to impact on India's future. We are all interconnected. So that is my answer to that question and link to that is the issue of interest rate. This is not something that the Planning Commission goes into a great length. I would say it is general characteristic of a well managed economy that is ought to be able to cost along at relatively modest interest rate. It is more difficult to imagine growth rate at very high interest rates. It is obviously easier to imagine growth stimulus if the interest rate in real terms is modest. But, at the same time, macro economic management requires variation around this, some basic median or optimum level and, therefore, in the short run, it is not unusual for interest rates to go up or to be high, they could be lowered by conscious act of policy. I know that in the market there is a great feeling that our interest rate, again here all the very same people who want to assert that we are completely decoupled from the global economy, often want to know why we are not coupled to bank interest rate. I can understand you use whatever argument you can. It is a legitimate issue that if the world slows down you would expect that the normal signal would be to moderate interest rates to counter that slowing down but this is very early in the day and the Reserve Bank has to look at multiplicity of factors. I am not explaining what they have done but I don't envisage that the 9% growth which is a medium term forecast is not being sort of projected on the assumption of consistent and sustained high interest rates. It is also important to remember that short term interest rates are very different from long term interest rates and it is quite possible to jack up short term interest rates not affecting long term interest rates too much, lower short term interest rates not affecting long term interest rates too much. So from the point of view of growth prospects of the economy, what matters is not the overnight rate, what matters is what is happening to the longer term interest rate in the system. I don't think that one should judge from anything that you see in the last week or next week a signal about the long term interest rate. From my point of view, much more important than the interest rate is the development of healthy financial system which will be able to sustain the volume of financing needed and at the moment the constraints on providing finance for lot of infrastructure are not just high interest rate. There are issues whether the markets are deep enough, it is well known that in India we have huge treasury market in fixed income but not that good market for corporate bonds. If you are really talking about the economic growth, specially if you are talking about the economic growth in a period when profits begin to slow down, then you need to have deep and liquid bond markets where companies that are moving away from raising capital from the equity market to take advantage of leveraging possibilities and that is really not something we should judge by looking at what is happening at the interest rate, that requires judgment about whether the financial sector is developing and getting reformed and moving forward at the pace that we wanted to. Obviously in every area, things never move at the pace that we wanted to, otherwise we would have taken 15-16 years to do the reforms at the pace we did. We are highly pluralistic of what Amratya Sen called 'an argumentative society' and so everybody has got to have time to make their own arguments. So the pace of change has been slow in this country but I do believe that on the financial sector, there is a clear sense of the direction that we want to go and that will be brought about but I think the development of bond markets is priority area and it deserves high level attention. It is getting attention from the government. It is not by the way something which is just held up because some little policy change is politically controversial, I want to emphasize that. This is really a matter of lot of institutional development in the financial system and it is not going to happen overnight but I think we should be very clear that that is the direction that we wanted to go. The Planning Commission in consultation with the Finance ministry has set up a high level committee under Dr Raghuram Rajan, Professor in the Graduate School of Business Chicago, to give us roadmap of what should happen in the financial sector and this committee has been at work for last 6-8 months and they will submit a report in few months time. One of the interesting things about this report, as a conscious decision, that it does not include any public servant. Nobody from the Finance Ministry and no body from the Planning Commission except the convener to do the administrative staff. Raghuram Rajan has been asked to chair a committee which includes only private financial people and academic, some people from the IIM, some from the financial sector. The idea was that they should present road map for the next 10 years. It is not an immediate agenda issue. I told Raghu that we don't want your report before the budget because this is not a quick fix kind of thing. Take your time and produce a report that can be debated in next 6-7 months and then over a longer period we can work out what needs to be done. That is very important area but we need to be patient and we need to build certain amount of consensus in how to move forward. On the growth side, those are my basic responses, nothing that I see including the slowing down this year. Frankly as someone who grew up when we kept defending the growth rate of 3.5% has not unreasonably given Indian circumstances, it is very difficult for me in a single sentence to say we have slowed down to 8.7. I think in this respect China's extraordinary growth rate for which it deserves the applause of everybody, is seriously distorting perspectives. The fact of the matter is only a handful of countries that have achieved high growth and most of them have really done 8-9% over sustained period, these 10-11% growth rates are really very very rare. So basically I think the economy is on a reasonably strong trajectory and I am assuming as long as the world does not collapse and I think it won't collapse, we will overcome whatever short term blips there are in the system.

Let me now turn to the issue of agriculture. I think someone said agriculture sector is important and the changes that it requires are not very difficult. At least that is how I read the question. I do want to say that agriculture strategy is very critical for the government strategy of inclusive growth. If this is also response to the question raised at the very end by the last questioner, how long do you have to wait for all the benefits of growth to be evident to everybody? It is one of the clear structural weaknesses of the last 7-8 years that agriculture slowed down after 1996. This analysis is laid out in the 11th plan document but you will forgive me, it is bit self indulgent, but if I repeat it in case for those of you who haven't carefully read the document from beginning to end of its 1000 page, the fact is agriculture grew at about 3.6% between 1980-96, thereafter it went to 2% and below. In the last 3 years, it has picked up and actually as it turns out, the average growth of agriculture in the 3 years including the current year is actually 4% though we don't want to claim that these 3 years represent the change of trend but it is nice that 3 years are certainly better and it might suggest that something is changing. I don't agree with a view that what is needed in agriculture is somehow without controversy. Actually it is very very difficult and the main thing is very complex. In the late 60s and early 70s when the government picked on the Green Revolution, that was a major change and it was not a single point change but it was single objective of new strategy. The wheat seeds allowed 200% or 300% times increase in yield with a little bit of support in terms of water and fertilizer and there was part of the country which was well suited to, so we never tried to have Green Revolution for the whole country. We are happy to say food is very important, Punjab, Haryana, later on western UP, let's concentrate everything there and it worked and farmers took to it and so on.

The present situation is different, I don't think we have comparable quick fix solution of a particular crop in a particular type of seed. What we do have is knowledge that the difference between the yields that people are getting on the farm and the yields they can get with the existing technology but providing the farm management practices are optimized, what is called precision farming these days. There can be 100% of this. To do that you need lot of inputs, lot of knowledge, lot of access to timely input, you need right kind of seed, you need the ability to deal with pests as and when they arise, you need marketing. There is big difference between marketing wheat and marketing bell peppers or marketing mushroom or whatever because these things require the demand they make on the logistics chain or cold chains. Farmer's knowing exactly what people want to sell in the retail is much greater than when you are dealing with cereals. So it requires a change on the field, it requires transfer of technology to farmers, it requires focus on multiple products. Our assessment is that demand for food grain is not likely to grow by more than 2.5% per year in foreseeable future. That is not easy because for the last several years, food grains use has been stagnant and we are trying to address that issue through this food security mission. Even if we were to get 2.5% growth in food grain, we won't get 4% growth in agriculture, unless we get 6-8% growth in non food grain agriculture which means horticulture, livestock, dairy, poultry, fisheries and every one of these involves perishable and every one of these involves very different approach, marketing approach and actually the controversy there is that this will involve very active involvement in the private sector. It is not going to happen if there is not active involvement. The moment you say an active involvement of the private sector, it does raise fears on part of many people and I spend lot of time when I meet state governments trying to persuade them that we are not actually talking about corporate farming which is at present no-no in the sense that the system would not allow corporations to go and buy large amount of land and introduce modern farming but the system should allow corporations to go in for contract farming and arrangement with farmers who remain owners of their own land but produce to preset requirement. There are many egal changes that are necessary including Agriculture Produce Marketing Committee Act and in the last 3 years several state governments have amended these acts but interestingly but the effectiveness of the amendment depends upon whether the rules are notified and there are many states that have amended the act but the rules have yet to be notified. This is an example of why things don't change just because somebody announces that the reforms have been done, it takes a bit longer but I am persuaded that changes actually underway and that means you saw the controversies that grew up in connection with the modern retail into the country. I think government quite rightly held back the issue of foreign investment in retail because that is the subsidiary issue. First issue is do we want modern retail or not and quite interestingly when the issue of modern retail came up, we have all the usual concerns articulated, expressed fear of loss of job, what is going to happen to existing traders etc etc. These are issues that will take little time to get resolved but we need to resolve all these issues together and underneath at all the most important issue really relates to the management of water. All the inputs you can think of, the most important input in agriculture is water and we are in extraordinary situation where we have irrigation, we are misusing it and we don't have irrigation, we are not investing enough in water conservation and watershed management. That is a very very big role and it is a public sector role and I think the Planning Commission is trying to persuade the government that we need to not only put in resources or we need to put them in a manner which is technically well informed. That is not very easy to do and it requires action on the ground level, it requires building up of capacity at the ground level, it requires cooperation of people at the ground level and so on.

Somebody asked a question what can Planning Commission do to implement at the ground level and the honest truth is these are subjects, rather responsibility of the states. So technically the one thing that the Central Government can do which it does is to write the cheques/ give the money. Many state governments feel that in the interest of federalism that is all we should do because after all they are sovereign government and they are responsible, they are elected etc, so why are you sitting there imposing all kind of conditionality. There are two views on this and I think the political consensus at the moment is not in favour of central government simply writing cheques and handing them out, there is some sort of expectation that we should make sure that schemes are somehow reasonably designed. The problem with that is when we over design a scheme, the complaint is you got parameters which don't make sense in the individual local area and that creates lot of problem. One good example is the National Rural Employment Guarantee Programme where the programme is focused hugely on people working largely movement of earth to improve land productivity and is meant to be a very local scheme and you can't use more than 40% of expenditure on non wages and you can't use contractors. I find occasionally the state governments tell me that in certain areas which are extremely rocky, it is simply not possible to have effective employment programme within those constraints. There are other examples that one can think of. In one of the new programmes we have launched for agriculture which is the RKVY- Rashtriya Krishi Vikas Yojna - that explicitly recognizes that the central government should not be laying down guidelines. What it says is that what needs to be done for each state to achieve what its expectation is within 4% growth target what needs to be done is very state specific and crop specific and not every state is going to be producing wheat and rice and so on, so we are encouraging the states to evolve, define, develop district plans that would lay down what you are going to do in each district, given its particular circumstances and given its particular resource constraints what do we need to do for agriculture to do well and that is done at the district level. Based on agricultural plan evolved out of that kind of decentralized planning what we have said is that as long as state government maintains its expenditure based on base line of last 3 years, maintains its expenditure in agriculture, we will take up a large share of the increment in order to achieve the district plan they are talking about. This involves some evaluation of the district plan. So there is some mechanism where with each state you sit down, you bring in whatever experts you have, the National Rainfed Area Authority etc., look at their state plan, come to a conclusion is reasonable, check whether the state is actually spending at least the same amount of money that they were doing in the recent past and then top that up with central assistance. Central assistance could be for very different thing for state to state. The specific content that is being assisted is being evolved at the state level. Actually it is quite complicated and I just hope that with this renewed focus, we will, in fact, get to a situation where a lot of good state level design plans will get around to being implemented and these state level design plans have to be based on recognition that agriculture has to diversify, it is not just food grains issue and that has to be taken within frame work in which marketing and private sector linkages become important. So, quite frankly, the private sector could play a very useful role in interacting with state governments and helping them to design schemes that the private sector likes. I don't see any reason why FICCI or any other industry association shouldn't actually evolve state specific wish list and say look, in your case this is what we think we should do and engage in a dialogue with them. There is a role really and this, to some extent, addresses the issue what can private sector do for rural development because I think the transformation of agricultural growth to 4% growth target will depend on private sector initiative at the farm level, obviously supported by government's effort in terms of infrastructure development and also supported by private sector efforts in the linkage between the farmer and the market. There is lot of scope there. Of course, private partnership also includes CSO - Civil Society Organization, NGOs etc. the government is giving strong positive signal about the importance of these institutions and the potential role they can play. The only difference is we can't fund NGOs. The message we are going to give is we are going to fund local authorities. We are finding ways of putting initiatives in the hands of district panchayat, block panchayat and so on and we are asking them to formulate plans which will have to be evaluated. In other words, this creates demand for CSO that want to work at that level to help formulate these plans or to monitor them or any of these things. In my view, one of the biggest contribution that NGOs and voluntary sector makes in getting involved in this ground level activities, is they are able to attract some of the brightest of our younger people.

The result of this, and I have seen this on the ground, that the quality of the human resource input that you attract in this manner is quite different from what can be attracted by the public employment at that level. I mean you would be creating an environment in which public functionaries at lower level will be interacting with people who actually represent very highly skilled labour and human resources and so forth. The impact that this can have in improving quality etc and even in enthusing people that this is very important, can be very great. I have seen endless examples of that whether people running schools, people running health clinics and so forth, I think from the public point of view the demonstration that in a rural area it is possible to run very very good school or health clinic with modest resources. In the 11th plan we have quoted whole box devoted to the work of Abhay and Rani Bhang in Gachroli District of Maharashtra, very backward district and they have been working effectively in the health area running a clinic, hiring local people to act like what we call Ushers in the public sector system. The results are dramatic. Infant mortality rate dropped to half. These are results that are not coming up in the public sector side of the system and yet the public sector is spending huge amount of money, no CSO operation by itself, with no matter how much corporatd support can compete with the scale of public sector resource flows. Their real role is to demonstrate if things are well managed, with some motivation the resources being made available are capable of producing huge results and that should be multiplied and people keep talking of corporate social responsibility. Quite frankly, I think any time the corporate sector support such activity is doing huge favour to the rest of the system and they should publicize it and they should be proud of it and I think the other advantage is that when you get this sort of involvement, even the newspapers turn up in order to report the story. Otherwise if you have good public sector clinic which is doing good job, nobody bothers to report it. So we need a lot more of this kind of activity and these are very small things in manner of speaking but when I have seen the difference between dead in the water kind of public sector outfit which just is not doing anything and very active, well run outfit, some of them are just well run in the public sector, many are well run because there is lot of CSO involvement, that can make a very big difference. So that is another set of question that we have.

There were questions on education and issue of quota, loans, licence permit raj. We recognize that education is hugely important and we are reflecting that at the first stage of planning process is you put your money where your mouth is. It is very easy to write the literature and not give more money you cannot accuse us of doing that. We are putting lot of money into education but share the view of everybody and we said that in the plan providing the money alone will not achieve the end results. It is not just implementation. In the case of education we need to consider what is the central reform needed in the system that would make it perform better. In primary education it is true, in secondary education it is true and even more true in higher education. In the higher education area particularly, if we are going to grow at 9% and achieve whatever our friends and well wishers abroad keep tangling before us as a possible goal, lot of reports says by 2030 something, India would be the third largest GDP in the world and so forth but it is quite clear to me that it is not going to happen unless at the higher education skill development level we see a sea change. The truth is we were lucky that we started out in the higher education level with very good endowment and in a way like the Chinese on physical infrastructure we build the education infrastructure in advance when we needed and for a long period these guys just immigrated. Over time it looked as if the supply is pretty good when we were growing at 5% - 6% and the moment the economy accelerated to 8- 8.5% touching on 9, it is very clear that skill constraints are beginning to bite.

It is also true that when we are moving into global economy where basically our own human resources are being globalised, they can be hired out to whoever, it is out there in the market who is looking for talent, we better have lot of these resources around otherwise we are competing top level resources, we are competing with everybody in the world. Mere fact that they are Indian give you some advantage but not an overwhelming advantage if you can't actually retain them and the present position is that we need a huge expansion in the educational system but we also need huge increase in quality. This goes two ways - quality side of it, the National Knowledge Commission has said a lot, there is lot of wisdom what they have said. We in the 11th plan have said similar things. The bottom line of which is that we need to reform the existing system. So I agree with the view that there is too much license quota raj in education, it is not going to be easy to overcome resistance. Le'ts be clear. We have been talking about license quota raj in industry for 20 years before we actually got about changing it, so don't think just because somebody writes a report he is going to change, there is similar battle to be fought over time. The real problem is that there is too much complacency that look if we produce the IITs and IIMs what is the problem? Let's just replicate them. The real problem is if you try to replicate the IITs and IIMs you won't get the IITs and IIMs because it is a fact that IITs and IIMs are not able to recruit new staff because of the fact that wage differential has now become so large that it is very difficult for them to do this. How do we handle this problem? A short answer is we are working on it. We really need couple of years of people saying unthinkable things and there are many unthinkable things, for example, can you have world class university without having global teaching. Should we be planning on university that has global teachers. If all our big hotels are managed by foreign managers, should not there be some foreign faculty in Indian university to make it look and feel global. That is a big issue and if you want to do that what are the changes you have to make are really difficult issues to address. Let me come to specific question you raised about quotas and so on. I am totally in favour of switching to scholarship cum loan basis and as a matter of fact in the 11th plan we have said that rather than funding the university, we should find the students. After all what is happening today is you are funding universities and they bring in students and charge them virtually nothing and there is no way of determining whether university is doing good job or not. Whereas if we would give the same money to the student and let him/her choose the university, there would be an element of competition as to where they would go. This can be done very easily by simply saying that let's say we decide that at a base level, for an ordinary degree, not one that is very professionally oriented, may be the fees should be 12000/- a year, for people who don't deserve the scholarship and this can be combined with scholarships so that if somebody comes from lower income group and needs money, give him 100% scholarship. Anything above the base level should be borrowed by from the banks and we have said that we should consider a National Student Loan Guarantee Corporation that should underwrite these loans. So banks don't have to ask for collateral or any of these things. My view on this is by the way, we are talking now about loans to fund professional courses. In the years ahead, it will no be very likely that a person getting such a degree and having a good job is going to default or national student loan corporation would give loan when he actually has job. If he does it he won't get a credit card and the truth of the matter is the desire to protect credit history will ensure that only those who really can't afford to pay will actually not pay and that is fine, that should be written off. I will go further and say if somebody takes a loan and becomes teacher, after 4 years write off the loan, if somebody goes to hospital in an urban area, write it off after 4 years and if he goes in rural areas, write it off after 2 years.

There are any number of things we can do. But the core assumption here is do this and raise the fees and there is no point in doing this if you are not raising the fees. This is a huge problem. I suggested this in a national meeting of Vice Chancellors that had been called in Delhi. After I left they all passed a resolution saying this is completely unrealistic. Don't think that the universities don't want to do it either. I visited China and talked to some of the universities there, briefed our own people on what is going on. The Chinese are much more practical and are taking bold steps to upgrade their university system, they have increased fees in university four folds. In last 3-4 years, they have introduced mechanisms where Chinese teaching in universities abroad are encouraged to come back for short period, teach in Chinese universities and the globalization in that sense of Chinese faculty is really impressive. This needs to be known more and message needs to be spread out more. In the 11th plan, we have recommended that the present regulatory system of the UGC as well as the All India Council for Technical Education needs to be reviewed. I hope that we will set up formal mechanism to review that and during that process, if industry groups are interested in pushing forward specific proposals, they should work on these things so that there are actual suggestions made which can be discussed.

I should mention in the context of public private partnership in education that the government has announced that we will have model schools, apart from the higher education business where we have said we want public private partnership in university, so I would invite FICCI to make proposals what are the kind of public private partnership that you want to fund and support in Indian universities. The existing rules allow quite a lot, more than people think. We have given a clear signal that universities should look actively for this and I think if industries were keen to push for these ideas, you may find receptive audience. In the case of schools we have said, there would be one modern school in each block, 6000 blocks in the country have one modern school, half of those will just be the centers helping the states to set up public sector school or upgrade an existing public sector school but the other 3000 should be public private partnership. So I would really encourage FICCI to come up with its own programme that this is what it believes it is willing to do and offer to the central government that since industry is willing to do XYZ, this is the model that we should follow, we are currently working on what exactly would be the form of public private partnership that we would be willing to encourage. This is another area where very specific proposal could be made. Part of the problem on public private partnership is it is not clear how much participation in decision making is the private sector interested in, in order to participate. If you say 100% then it is unlikely to be accepted but I don't think the government should say zero. I put your money on the table and will see you next year. It should be something in between and for that we need to work out exact models.

These are some of the areas which are on the table and we are trying to work out what we can do. I am sure I have missed many things for which I apologize and invite you to send me an e-mail if you like to pursue the matter.

Thank you.