Why Indian MBA’s won’t be affected by the Great Recession

Most of you will be surprised by the title what I have chosen for this article. Why my attention is only on Indian MBA? What about the average worker of the Indian workforce? A banker in a public sector bank, a software engineer, a retailer etc
The reason is simple. The opportunity cost of doing an MBA is very high. Almost all the students take loans ranging from 5-20 lacs of rupees. So there is always the pressure of how fast and easily the loan can be repaid. This in turn is directly proportional to the package you get in your final placements. So it is important that people with highest stakes in the whole downturn game should be well informed where they stand now. It is also imperative to avoid unnecessary hysteria and rumours about the current slowdown.

Recently there was a discussion in one of my class regarding why customers tend to remember more negative experiences rather than the positive ones. There is no clear explanation for the same but yes it is true that people remember things which occur less frequently. And recession and slowdowns are events that occur after relatively long cycles.

Just have a look at these comments coming up on the face book from last 3-4 days:

“If US sneeze, whole the whole world is going to get the cold. They have just delayed it. Experts say it’s inevitable. The problem is we would be amongst the most unlucky ones. Scared and keeping my fingers crossed”

“Given the state of the world, AA+ is the new AAA...”

“4% drop in index is a worrying signal.....”

“Bloodbath started in global markets....Shocked after hearing the bottom estimates from the experts.....”

There is no shortage of muddled ideas in economics. People from different sectors and backgrounds make all these statement every day. But the fact of the matter is that these statements cannot stand the test of a careful economic analysis.
Though these opinions seems to be instinctive and they come out whenever there is slight problem in the global economy, comments like these amplify small issues which can be otherwise be sorted very easily. But once it becomes a global phenomenon it becomes viral and keeps on getting worse.
Everyone seems to be taking about the double dip recession. Double dip or W shaped GDP growth graph means that the economy which was recently in recession comes out of it for a while with positive growth but again goes south in a short span of time and thereby creates the horrifying double dip curve.

There can be three perpetrator of the nose dive of current economy:
1. Euro debt crisis
2. Flat consumer spending
3. Reduced government spending

My personal opinion is that we will not see the double dip recession but slow growth is inevitable.
Now coming to the larger question of why India will not affected by the Great Recession? The answer is simply because as I said above there will be nothing like Great Recession going to happen in the near future. There will be only minor hiccups for example IT exports might get affected.
One would say that almost 50% of revenues of Indian IT companies are coming from US and the plunge in the US markets will be devastating for Indian IT companies. I would say let it be. Let them learn the hard way that there are other opportunities in India and other emerging economies like BRIC countries. They should focus more on Indian clients just like IBM is doing business of $2 bn in the Indian domestic markets. And employees in the IT sector should come out of the cocoon of software development. There are thousands of other things in the world they can do apart from writing codes. Gone are the days when a person who is dismissed from an IT job can afford to sit for 12 months because he cannot find another IT job.

Let us now discuss about the MBA students graduating from prestigious colleges of the country like IIMs and IITs. The beauty of MBA education is that it gives you a wider perspective of things. An MBA student gets exposure about various kinds of subjects like Finance, Marketing, Operations, Consulting and HR. It makes them feel confident that there are enough opportunities in the market. For instance consider the agriculture scenario in China. China has realised that if they want to bring prosperity to its farmers, they have to pull them out of agriculture to other sectors like manufacturing and services. So every year they are pulling out 1% of its agriculture dependent workforce into manufacturing and other emerging sectors.
In India majority of people are dependent upon agriculture but the contribution of agriculture to Indian GDP is still less that 25%. It means that our manufacturing sector needs bright MBA's to bring smiles on the faces of People who are stuck in low paying agriculture jobs.

Manpower Employment Outlook Survey ranks India second after Peru in terms of recruitment programme. The survey, which covered 33 countries, reveals that although the global slowdown will certainly impact the hiring plans of employers in India over the next three months, it has the second strongest hiring capacity globally, with a net employment outlook of 19 percent.

In the worst case if the slowdown is really severe that these MBA graduates can always bank upon public sector companies who are in fact very keen to recruit in the gloomy recession days. I know one of my friends who graduated in 2009 from IIM Bangalore. He got a package of 5 lacs per annum in a famous public sector bank. He worked there for 2 years and then switched at a much higher package. Though his journey was a bit difficult but it teaches us that if we keep on with the perseverance and hard work we will eventually get rewarded.

Apart from following the crowd there is always the less travelled road of entrepreneurship open for anyone. There are a lot of businesses which are seemingly recession proof like hospital, restaurant, growth consultancy, agriculture consultancy, coaching institutes etc.
If going the business way is not your cup of tea then you can think of gaining a PhD from Top ranked institutes like Harvard, Wharton, LSB, LSE etc. or IIT’s and IIM’s in the domestic scenario. If PhD does not sounds interesting to you then try your hand at teaching. With the brand of IIT/IIM you can easily get annual packages ranging from 12-20 lacs in 2nd seed private B Schools in India.

All these statistics brings hope and hope is really a beautiful thing. There is no point in crying over the spoilt milk. The right thing is to keep learning and updating one’s knowledge and skills. No matter how grave the situation is, end of the day it is smart and intelligent people who help the economy to grow and help us realise a world where everyone will be employed and will be contributing towards the development of his nation.

Return of the Ice Age- Can mankind avoid its extinction

Snow laden New Delhi in the year 2030

Ice age refers to a period of long term reduction in temperature which results in the expansion of ice sheets and glaciers around all the continents starting from northern and southern parts of the earth. There are many different reasons for the steep drop in temperature. One of them is the change in the orbital positions of the earth around the sun. One other theory attributes it to the dynamics between earth and the moon system. But these types of incidents are out of control of the mankind and we cannot do much against the nature’s fury.
Then why there is a lot hue and cry over climate change and global warming?
There are reasons for it. The main reason is the man and his unquenchable thirst to exploit other resources and living creatures on earth.
If we look at macro level perspective of the forest exploited each year we will find that some 60000 square kilometres of forest cover is depleted each year. It approximately stands at 3-6 billion trees being brought down each year.

If we look at the fossil fuel scenario it is not different either. Global annual consumption of these fossil fuels results in some 20 billion tonnes of CO2 each year. Natural processes are able to neutralise only half of it. Rest of the CO2 attributes the green house effect which accelerates the increase in temperature. This increasing temperature then lends impetus to the glaciers and melts them undesirably and artificially. So what will happen if the glaciers melt? It is going to just raise the level of seas by some meters. Why should be we worried about it?
The notion that nature will balance everything by its routine and reflexes is totally wrong. This time the damage will be catastrophic and it will trounce the mankind. A new world order may establish and it might take millions or billions of years for life to come back to our planet earth. I don’t think that anyone of us will like to give this gift to our coming generations.
The main reason of our laxity and ignorance of the climate change is the availability and convenience which fossil fuels offers us. There are not many serious attempts being made to find alternative energies like solar or hydrogen fuels. For India, the meagre clean technology budget of 270 million USD is a testimony to it.
Once contacted, one of the powerful European countries replied on the question of fossil fuels, “We have enough amounts of fossil fuels for 2030 and there is no need to worry for a foreseeable future”.
Agreed they have sufficient fuels to last for a reasonable period say 100 years. But what after that? And who will take the responsibility to damage the environment by emitting dangerous gases.
If developed countries are spoiled by cheap fossil fuels, developing countries are doing nothing other than following them. The fact that countries like India and China were not ready to sign the new emission norms in Copenhagen also bring out a very grim picture of the attitude of these developing nations towards climate change.
To understand the pernicious practices of these countries, one only need to spent some time in the financial capital of India- Mumbai. There are some 20 lakh automobiles in Mumbai. They consume a daily of approximately 60 lakh litres of total fuels combined. Just imagine how many swimming pools can be filled with this much of oil!
It takes some 15-20 minutes to cross roads in Mumbai. One would say that with the development, all these things are unavoidable. People have to commute and we cannot ask them to go by cycles or horse cart to the offices. Indeed that is true. But there is a lot which can be done to reduce this eternal traffic and also the emission to half, and also to make some human beings responsible towards their environment and their coming generations.

Most of the upper middleclass in cities like Mumbai all over the world are spoiled by money. The moment they enter a high paying job, the desire to own a vehicle is born in them. When they have enough they become owners of the gas guzzling machines from Honda and Volkswagens’. They want to have the bigger and more powerful machines, irrespective of the fuel it consumes or the harmful gases it emits. More than 80 percent of them are travelling alone in their cars which wastes a lot of road space provided by the government. All of this contributes more and more to the traffic jams and pollution. It also puts an unnecessary strain on the public transport system which is already unable to bear the rising demand.

Since it has become their habit, the government of all countries should take measure again them and teach them a lesson. Some solutions can be to ban the use of big SUVs, ban diesel for private cars, put heavy parking fee to discourage private cars, bring mandate for carpooling and penalise those who drive single.
Some people will say that all these regulations sound insane.

Yes they may be insane, but once people realise that there is a limit to which we can exploit nature, they will become more responsible towards nature, towards themselves and more importantly towards the coming generations. It will also catalyse the research for clean tech energies globally and will help us to get freedom from the Oil cartels and will take us towards a new world order in which snow fall will be only in Greenland and not in New Delhi or Dubai. There will be no more CO2 and other greenhouse gases, there will be no Tsunamis. There will be life for all living beings and that life will be a really happy life.