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Wednesday, 8 July 2015

One Rank , One Pension ( OROP )

As against 14 lakh serving military personnel , there are some 25 lakh retired military persons , in India , today

They are demanding , " One Rank , One Pension "

In simple terms :

> Col Mhatre retired in 1985 , with last drawn salary of Rs 10,000 pm

> Col Chari retired in 2000 , with last drawn salary of Rs 50,000 pm , and

> Col Patel retired in 2015 , with last drawn salary of Rs 100,000 pm

They all served for 30 years at the time of retirement

As per present Pension Rules, by way of pension :

> Col Mhatre may be getting Rs 2000 pm

> Col Chari may be getting Rs 10,000 pm

> Col Patel may be getting Rs 20,000 pm

Under OROP , all of them would today , get Rs 20,000 pm !

And as salaries keep climbing , with each passing year , they will all keep getting the same amount as pension, as the latest retiree in the same rank , who has put in same length of service , at the time of retirement

A kind of " Indexation " , aimed at neutralizing the ever-rising " cost of living " which is same for all three retirees !

And , the argument goes :

" Why not ?

Those who are serving , get their " cost of living " neutralized thru DA ( Dearness Allowance ) which automatically keeps rising every month , as CPI / WPI etc rise !

Why should early-retirees be made to suffer , for having been born earlier / served earlier ? "

One cannot find fault with such an argument !

But if OROP is implemented , the Governments ( Central + States ) must get ready with answers to the following :

> Will this lead to similar demands from millions of retired para-military forces and Police personnel , in all the States ?

> Could this lead to similar demands from all retired Civil Servants , at the Centre as well as , in the States ?

> Can this demand find an " Echo " in all retired Municipal / Panchayat employees , all over India ?

> Will private sector retired employees make similar demands on Corporate Employers ?

After all , no retiree ( of any kind ) , can escape the ravaging effects of ever - rising inflation ( cost of living ) ! Be rest assured , they will all be justified in making similar demands !

This raises following further questions :

> Will this set in motion , a Vicious Circle ?

> Will this make India , a " High Cost Economy " ?

Only time will tell

But one thing is crystal clear

Each succeeding generation will be required to bear the burden of ensuring that its preceding generation manages to live a life of dignity , which could well run into Rs lakhs of Crores !

I cannot escape comparing this potential scenario with the present Greek Tragedy , where almost all citizens ( whether serving in Government or in private companies ) ,

> Retire at the age of 50

> For the rest of their lives , draw a pension equal to 90 % of their last drawn salary !

I am not against OROP

I am for creating awareness of the issues and for starting a National Debate

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hemen parekh

09 July, 2015

hcp@RecruitGuru.com

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Tuesday, 7 July 2015

Median Salary ?

In a company , median salary is where half the number of employees are getting more and the other half are getting less than that salary number

Till a few years ago , all limited companies had to get the annual salary of their top management ( directors ) , approved by the Department of Company Affairs . And while approving , DCA applied some internal " guidelines " ( - who should earn how much, and no more ! )

Companies learned to guess , as to what figure would pass the muster !

I believe , nowadays , this is left for the shareholders to decide

A few years earlier , companies were required to publish in their Annual Reports , a section called " Employees Details "

In this section , they were required to publish full details ( Name / Birth Date Edu. Qualification / Date of joining / Current Exp / Past Exp / current salary etc ) of all the employees drawing more than Rs 3000/- per month

In a few years time , in case of a few large companies , this section ran into hundreds of pages , as salaries kept rising

So the limit got progressively raised to Rs 6000/- pm and later to Rs 12,000/- pm , until one day this requirement got dropped

No doubt , this section was most sought-after by Headhunters / Bridegroom seekers , and avidly researched by all employees across the companies to find out where they stood in comparison with their colleagues !

Then , in 1978 , came Bhoothlingam Committee report

It recommended ( which got accepted by DCA ) that the compensation differential between the lowest and the highest salary in a company should not exceed 10 times !

But that committee never laid down any " Upper Limit " for the salaries of the lowest paid workers - which kept rising , month after month , since the DA ( Dearness Allowance ) was linked to Consumer Price Index , which kept galloping !

On the other hand , Companies were not able to raise the annual salaries of their directors , because of ceiling imposed by DCA !

As a result , this differential ( of no more than 10 times ) , kept shrinking !

I remember having projected the annual growth rate of the salary of the lowest paid worker in L&T ( where I worked ) , to estimate that it would overtake the Chairman's salary , within a few years !

Now contrast this with what Business Line ( 06 July , 2015 ) reported as follows

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Name of Top Honcho ........ Ratio { Own Salary / Median Employee Salary }

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* Y C Deveshwar................................. 439

* Mukesh Ambani................................ 205

* Aditya Puri....................................... 117

* Vishal Sikka...................................... 116

* Chanda Kochar................................... 97

* Azim Premji....................................... 89

* Sikha Sharma.................................... 74

* Deepak Parekh................................... 19

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I hope this " market determined " and " democratically arrived at " managerial remuneration will continue without outside intervention

What companies want to pay their lowest paid workers and their highest paid top honchos , should be left to their shareholders

But when it comes to the salaries of High Court / Supreme Court Judges or Government Secretaries , is it not a travesty of justice that , after 25 years of service , they get paid , less than the starting salary of some 24 + fresh graduate MBAs ?

In a company called , " India Inc. " , we , the citizens are the shareholders

It is high time we start rewarding our " Top Honchos " , commensurate with their responsibilities !

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hemen parekh

08 July 2015

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Sunday, 5 July 2015

A Gordian Knot ?

Is black money issue a Gordian Knot that cannot be unraveled ?

One gets that feeling while observing the NDA governments attempts, viz:

> Setting up of SIT

> Signing bi-lateral treaties with foreign countries for exchange of info on bank

accounts held by Indian citizens in these countries

> 90 day window for declaring assets held illegally in foreign banks

> Proposal to grant minor tax-concessions if payments for petrol / diesel etc is

made using credit cards

> Legislating that sundry kinds of payments are to be made thru banking system

> Introduction of Gold Bonds

> Introduction of stringent laws for punishing tax-evaders with jail terms, etc

Could not UPA government have done all of these in the past 15 years ?

And , if they could , why did they not ?

I could think of only 2 reasons , viz :

> Either UPA government did not think that any of such measures could solve the

black money problem , which is in the nature of a Gordian Knot

OR ,

> UPA did not want to solve this problem !

After one year of NDA rule , people are asking :

" Why is this government , which has within one year , launched some epoch-making economic and governance reforms , continuing to tinker with the black money issue ?

Why is it focusing on unearthing black money stashed away in foreign banks, which constitute no more than 5 % of the black money hiding within the country ?

Why is all the emphasis on " past " black money declaration rather than on prevention of " future " black money generation - which goes on unabated ? "

I sincerely believe that NDA wants to put a permanent stop to black money generation

But , it just cannot think " Out-of-the-box " as Alexander the Great did when he simply cut the Gordian Knot with his sword rather than try to untie it !

It is still not late for NDA to do the following :

> In the first instance , instead of increasing the personal Income Tax rates with

each higher slab , reduce these ( eg : 10 % > 9% > 8% > 7% ..... )

> If this " Inverse Taxation Regime " makes people want to declare more and

more income , in order to get into higher tax slab , then next consider total

abolition of Personal Income Tax !

In a nutshell :

> Take away incentive to hide income

> Motivate people to declare ALL income

> Celebrate Wealth Creation

> With no Personal Income Tax to be paid , everyone will insist on making /

receiving all payments officially thru banking channels

> Do not tax people at the point of income generation ( Source )

> Tax them at the point of income expenditure ( Destination ) eg: GST

> Boost national " Savings Rate " to 40 % ( never a Greek Tragedy ? )

> Enable savings to flow into Infrastructure Bonds ( Railway / Ports / Airports /

Smart Cities / Highways / River Linking / Solar Power etc ) , rather than into

non-productive assets

This is NDA's " Moment of Opportunity " - an opportunity to re-write history !

There is no surer / simpler / faster way to bring India's 400 million poor people

out of abysmal poverty .

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hemen parekh

05 July , 2015

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Friday, 3 July 2015

The Missing Link

MOIA ( Ministry of Overseas Indians Affairs ) has just launched a web site :

www.emigrate.gov.in

Without doubt , a very useful initiative to protect the interests of ( mostly ) , manual workers taking up jobs in Gulf Countries

The site requires registration from :

> Foreign Employers wanting to hire Indian workers for posting abroad

> Indian Recruitment Agencies working on behalf of such Foreign Employers

> Indian Companies taking their workers abroad for executing projects

emigrate.in , even provides some data about approximate prevailing wages that Indian workers may expect to get in a few foreign countries

So , what are the missing links ?

> This web site is meant to be used only by various Government Agencies

and what it calls , " Partners " ( ie : Foreign Employers / Indian

Recruitment Agencies / Indian Project Exporters )

> It does not host searchable databases of ,

* Manual job vacancies available abroad

* Manual workers ( Unskilled / Semi-Skilled / Skilled ) available in India

Now consider the following :

> These days , most every country is facing a slow-down of its economy

> As a result , Foreign Companies are under pressure to cut costs

> To cut costs , these companies are often retrenching employees

> For the same reason , these foreign companies are " Outsourcing "

their " Back-Office Jobs " to India / Malaysia / Indonesia / Philippines etc

> In nearly all countries , unemployment is steadily rising

> As a result , there is a strong resentment against foreign workers

> Since foreign workers work for lesser wages , they are looked upon as

snatching away jobs from native population

> Soon , thousands of illegal migrants from North African countries , who

are currently flooding the European countries - and facing strong local

resistance - will start rushing to Saudi Arabia and other Gulf countries ,

which are today , primary destinations of manual Indian workers.

For reasons of religion and language , they will score over the Indians

Also consider scenario closer at home in India :

> India adds some 12 million people to its workforce each year

> Of these , some 3.5 million are " Graduates "

> These graduates are unemployable as " Workers " , since they do not

possess any " Manual Skills " ( Carpenter / Electrician / Plumber etc )

> And they don't want to work as " Unskilled Labor " - at home or abroad !

> Some 430 lakhs of them are already registered with 900+ Employment

Exchanges - which can find jobs for only 1 lakh per year !

> These 430 lakh resumes ( applicants ) are unavailable for searching and

short-listing , by any Foreign or Indian Project Employer, visiting ,

www.emigrate.gov.in

> Nor does emigrate.gov.in , carry any searchable listing of jobs abroad,

which these 430 lakh jobseekers can search and directly "Apply Online ",

without having to depend upon the intermediaries ( recruitment agents )

At this stage , it is worth asking ourselves :

> Are there clear - and present - indicators that physical export of Indian

Manual Labour is bound to sharply decline in next 2/3 years ?

> On the other hand , is there a clear opportunity for India's millions of

graduates , to offer their " Digital Back Office Services " to Foreign

companies , who do not face as much resistance to " Outsourcing " as

they do with physical presence of Indians on their own soil ?

Virtual office operations carried out from India and delivered over

Internet , are inconspicuous ! And a god-sent opportunity for

India's teeming self-employed " Freelancers " , who can deliver such

services at globally competitive prices.

> Is it not the right time for Central Government to become "Proactive"

and launch a Virtual Employment Exchange ( VEE ) , as outlined in

" W3F ( World Wide Work Federation ) ",

described on my personal site hemenparekh.in ?

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hemen parekh

04 July, 2015

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Thursday, 2 July 2015

Shape of Things to Come ?

In the annals of Robotics , 02 July , 2015 will be remembered

On this day , an assembly line robot , in Germany's Volkswagen factory grabbed and crushed a worker against a metal plate, killing him

It is too early to say whether this was an act of ,

> Human negligence

> Technical failure , or

> Beginning of the Ray Kurzweil's prediction, when the brains of the

Computers and Human beings will merge seamlessly to constitute ,

what he called " Singularity " ( so feared by Elon Musk ! )

Whether - and when - humans will reach such an " Event Horizon " or not , it is high time , Governments of the World , formally adopt and legislate , that the robot manufacturers shall build into their creations, the 3 laws first pronounced by famous science-fiction writer , Isaac Asimov

These laws are :

1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.

2. A robot must obey the orders given it by human beings, except where such orders would conflict with the First Law.

3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.

Now consider this :

> India is already a " Software Super-power "

> Prime Minister , Shri Narendra Modi , launched on 01 July , a Digital

India campaign to transform India's e-Governance and lift millions of

India's poor , out of abysmal poverty

It would be a glorious achievement of India's computer scientists , if they develop and undertake, to supply to the robot manufacturers of the World , a license-free software algorithm , incorporating Asimov's 3 " Laws of Robotics "

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hemen parekh

03 July , 2015

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