A big concern for India's Gen Next

Apr 11, 2011

In this issue:
» Indian youth not too keen on college education
» MFIs in trouble with funds drying up
» ETF vs. physical gold. Which is better?
» China's growth story in danger?
» ...and more!

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Indians have often fancied themselves as proficient speakers of the English language. People, who do not speak the language well, are often subjects of humor. It is considered to be elitist if one has a good command over the language. So much so, that most schools in the urban cities have English as the first language. Even for the rural schools, English is important to learn.

In fact, our Anglophonic needs (need to speak in English) stem from the fact that English is the global language. It is a language spoken by the 'rich' western nations. It is also prominent amongst those nations that are major exporters.

Time and again, it has been stated that one of the reasons for India doing well in the services sector is its Anglophonic ability. This has been cited as a prominent reason for China not doing so well in the same sector. So it would come as a big surprise to all that as per the study conducted by a leading magazine, India ranks quite close to China in terms of its English speaking abilities. In a study of 44 nations, China ranks at 29 while India comes in at 30.

The reason for this could be that India has just become more complacent in terms of its teaching. Unfortunately, the government has been concentrating more on getting more people within the net of the 'educated'. The quality of education is getting completely ignored in the process. And like it or not, English is important for all. It is the way to remain competitive on the global stage. And we have seen this point being proved in the country's service sector. While we may have outpaced China for now, but the latter has been giving a major push towards the language. And if this continues, then India's 'competitive advantage' especially in the service sector may be lost for good.

Do you think English is important for the youth of the country to learn? Share your comments with us or post your views on our facebook page.

 Chart of the day
Continuing our discussion on the Indian education, we came across another interesting piece of statistics that we thought we should share with our readers. This time it is on the percentage of college age population who are actually enrolling in college. (College age population has been defined as the population in the age group of 15 to 24 years). And the picture here is not so good. As reported by a leading daily, India ranks the lowest in this percentage amongst its BRIC peers. One of the reasons for this could be that the country has concetrated primarily on the primary education. All the government's thrust and focus has been towards primary education. As a result, the number of colleges and universities are still quite low when compared to the number of people who wish to enrol in them.

Data source: Wall Street Journal

Microfinance institutions (MFIs) in India were once touted as the next big thing. India has a large unbanked population. Thus, opportunities for financial inclusion are huge. However, post the Andhra Pradesh (AP) crisis, where a spate of farmer suicides led to the tabling of a microfinance bill, MFIs are now finding it difficult to survive, let alone grow. They are having problems servicing existing bank borrowings. And they are facing additional threats of borrowers defaulting on repayments and banks refusing to lend more money to them. In February 2011, borrower collections fell to as low as 20% in AP. This sector was earlier used to recovery rates of over 90%. Meeting client's credit requirements, high operational costs on the field and even keeping offices open are becoming more and more difficult each day. Some survival strategies being adopted include downsizing operations, cost cutting, etc.

Either way, some MFIs see light at the end of this dark tunnel. They expect banks to free up funds to the sector over the next few months as liquidity concerns abate. However, one cannot now expect fantastic growth rates from this sector as seen in the past. Or, fantastic IPO valuations, as seen in the case of SKS Microfinance. We believe that slow, but steady growth will be more beneficial for the sector. At least this will ensure that the development goal is seen through, and not just a way to make quick profits.

With gold prices hitting the roofs, you may be thinking of investing part of your funds into the yellow metal. And it's very likely that you may have this question: Should I buy physical gold or invest in gold ETFs (Exchange-Traded Funds)? We'll try and help you understand the merits and demerits of both the avenues.

Before the ETFs were introduced, we had very little choice. We could either buy jewellery or gold coins and biscuits. The good thing about owning physical gold is that you can hold it in your hand and feel assured about it. A digital contract note may not give you that pleasure. However, there are solid reasons that ETFs are a much better mode of investing in gold. One, it saves you from the dangers associated with owning physical gold. Your gold ETF cannot be robbed. Secondly, there is no scope for getting duped by a jeweler. Gold ETFs do guarantee the purity of the gold. Further, physical gold is taxable under the wealth tax law, whereas units of gold ETFs are not. Also, the ETFs give you a lot of flexibility since there are basic units starting with one gram. And lastly, such units can be easily exchanged for either cash or the underlying gold itself. And the prices they offer are pretty much in sync with the ruling market price of gold. Given all these reasons, we believe it is wiser to invest in gold ETFs than in physical gold.

The Wall Street Journal has made an attempt to highlight three key points that can change the economic miracle that is China into an also-ran over the next few years. The first one has to do with the bursting of property bubbles. In an economy where bank rates are set below inflation and stocks are often seen as run by shady management, real estate offers the only option to invest money and watch it grow. However, there is a limit to which even the property markets can absorb money. Experts feel that the limit has long been reached and the property bubble could well burst within the next 2-3 years. Numbers are also doing the rounds that a property bubble burst could shave off 2.5% from the Chinese economic growth.

The second point to worry about is that of rebalancing the key drivers of Chinese economic growth. The dragon nation's earlier strategy of focusing on massive investments and exports is no longer having the desired impact. Thus, it is imperative that in order to preserve growth, China will have to shift towards a consumption driven economy. However, the magnitude of the challenge is so big that the rebalancing efforts could well topple over along the way.

And then there is this threat of political unrest. One needs only go back to the Tiananmen Square protests of 1989 to understand the economic fallout from such unrest. The Chinese Government would sure be wary of such a threat.

Thus, there you go. Three real and distinct threats to the China growth story. It will be interesting to see how the dragon nation deals with them should any one of them take a turn for the worse.

The Indian stock markets lost further ground after opening the day on a weak note. The announcement of Feb IIP number at 3.6% as against 3.7% in the previous month came as a disappointment. At the time of writing, BSE Sensex was trading lower by 155 points. Realty and auto stocks are leading the losses. However, stocks from the FMCG and IT space are witnessing marginal gains. Most of the Asian stocks markets have closed in the red led by Malaysia and Hong Kong. European indices have also opened weak.

 Today's investing mantra
"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." - Warren Buffett

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25 Responses to "A big concern for India's Gen Next"


Apr 28, 2011

well, i do think that the strongest nation can be built up by knowing so many international langauge.
and an idea should be of indian goverment to take the initiate of learning english from the very begning of each and every school..........................


DC Sekhar

Apr 16, 2011

I work with a lot of chinese suppliers and I find that the chinese are way behind the Indians for speaking in english. The rankings may not be reflecting realities. While our technical / professional english language is good, we should gain command on literary english also.



Apr 13, 2011

Anglo-phonic needs is absolutely essential for those who wish to perform well in the job market particularly in the international scenario.Language skill is an rare inborn quality so anyone cannot master any language at any stage of life and that make it so important in deciding your first language at school.



Apr 13, 2011

English is important if we want to progress in life. This is accepted by everybody including politicians and other prominent persons who fight for regional languages as they enroll their own children in convent schools and send them to foreign countries for higher education. English knowing people take interest directly or indirectly in the affairs of the country and thus effectively manage its policies and programmes. Rest of the people remain dormant and accept whatevwer is happening. They are led and explioted by the active people. So we have to spread the learning of English for more and more people to get involved in managing the nation.


Sharad Singhvi

Apr 13, 2011

There is no doubt that India is reaping the huge advantage and tremendous (unintended) benefits, thanks to Lord Macaulay's push for English for entirely different purpose. I am rather surprised at the low ranking of India in the survey as I recently returned from China with an impression that 99% of the people we interacted do not know a word of English.



Apr 12, 2011

No denying that English is playing a front role in opening up job opportunity to our youths. We cannot afford to loose this great opportunity. At the same time there should be a clear cut national level policy on the languages to be taught and learned at schools and colleges. And this should be binding on all the citizens irrespective of the state they belong to. Every one must learn the mother tongue of the place of his birth and schooling and the language the family and the locals speak. This enables each to identify with the local people and the society. These languages teach a lot of our tradition and value systems in life. We should also identify with our nation by having one language which is spoken by all irrespective of the place of origin. This will give us an unique identity of our own as Indians. No doubt that Hindi has to be this language. No one state should be allowed to deny this privilege to its people due to parochial and selfish flimsy reasons. There fore it is important that we have tri linguistic formula. This will be uniform for all the schools, irrespective of affiliations and other links.
There has to be a national level policy and should be binding on all schools in the country.



Apr 12, 2011

Good English is most important to stay ahead in services and other sectors. Unfortunately the local governments push towards regional languages at the cost of English is misdirected and harmful to the country's interests.



Apr 12, 2011

Our Government is interested in spreading Hindi only. Whereas China is not only concentrating on improving the English language skills of its citizens, but also they are teaching Hindi to their children to meet the Indians in their home turf! India should taka a lesson from China instead of boasting about its software prowess!


Sonny Jacob

Apr 12, 2011

There is nothing wrong in "quality learing" of any foreign language. In India, English is a common 2nd language- which is fairly understood in all states after respective mother tongues. Accent may vary largely. But who speak right English? Not even the Brits. Go to London suburbs and this can be proved.



Apr 11, 2011

some clarity is required on whether ETF units can be exchanged for physical gold?

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