Thursday, May 30, 2013

Book Review: The Ocean in a Drop

Seeking 5th Space 
The name as is pithy as the book itself. ‘The Ocean in a Drop’ tells an interesting story and raises questions that should be asked, but for obvious reasons are not. For example, is the much-touted Gen-X factor in India - the young voter below 25 who holds the aces in any election, success stories of the rich, famous and youthful, the teenage and early adulthood prodigies – should these be considered real or mere mythical media creations?

Ashraf Patel, Meenu Venkateshwaran, Kamini Prakash and Arjun Shekhar from youth developmental NGO Pravah, explore the various ramifications of India’s Inside-Out Youth Leadership in this offering from Sage Publications. Their efforts have the backing of partners like Community – The Youth Collective, The Sir Ratan Tata Trust and Oxfam India.

 Why is only 6.3 per cent of the current Lok Sabha members between the ages of 25-40 years, even though 50 percent of the population lies in that range? Why is India, the youngest nation on the planet ruled by the oldest federal cabinet?
The book says it was not always like this. Young people constituted as much as 26 and 32 percent in the first and second Lok Sabhas respectively. So what has happened? Have young people become so self-absorbed that they do not want to contribute to society any longer?

On the contrary, it suggests that the answer may lie in the fact that we have lost the link that connects the journey from Self to Society. The authors argue that this vital link can be re-established in a learning experience called the journey from Self to Society. The book calls for building up a youth-friendly, youth-led 5th Space that nurtures youth leadership. Youth are confined to four spaces today -family, friends, lesiure career/education.

It argues that this 5th Space, has in fact, traditionally existed, earlier in the form of the Independence Movement and later through various student-led movements in the 1960s. Agitations like the Narmada Bachao Andolan (NBA) and the recent India Against Corruption have mobilised the young in large numbers. Some media reports – somewhat incorrectly – have gone so far as to call New Delhi’s historic Ram Lila Maidan an open school of democracy, but then they have not seen JP’s anti-Emergency rally there in the 1970s, as I did as a student.

The book believes that to organise such a 5th Space though, “it must be co-created in partnership with young people; however you need trained and non-judgmental facilitators to support them in this endeavour.’’

Its central narrative revolves around attempting to change the youth paradigm itself and put question marks against some well-established norms of the society, a sort of a turning things on their head. Says the book,“India is a very ‘young country,’ they say. Fifty-four percent of our population is below the age of 25, and the rest are trying to look that way. But the balance of power still lies with the old people, whether in politics, business or or in ordinary homes; age and position still command authority. And that, we believe is Indian culture. However, the fact remains you are young only once. And you mind is full of doubts and questions. This is, in fact, a good thing for society. A stone thrown into a stagnant pond creates ripples. But our ponds are too sacred to throw any kind of `stone’ into them. We expect young people to simply accept this is what it means to be an Indian. Without the power of discovery or deeply felt experience.’’

The scholars argue that at home, work place and just about everywhere, we demand and get obedience; “then, we lament the lack of passion in our young people – their pursuit of narrow, material goals at any cost. But who has created this monster, if not society itself.’’

The book is an outcome of interacting with many people, as NGOs would in the course of pursuing their daily profession. It is reflected in the annexure where the key informants who provided the background, and presumably the foreground, for the narrative are mentioned prominently. It is an interesting mix, to say the least, and wide ranging. Detailed interviews have been conducted with Delhi University dons, prominent and not-so-prominent leaders of political parties, NGOs, youth volunteers and even a gurdwara sevadar.

In the course of their research, the authors used the opportunity to talk to 30 odd octogenarians and view the youth struggle, opportunities and complexities of their times through their prism, when their world was young.

As duly mentioned in the Acknowledgment, each interview turned out to be as fascinating as the other. It certainly helps the authors draw an evocative contrast with the present.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, May 29, 2013

Saving a crippled telecom infrastructure. Tough task.

With demand for high-speed Internet on the rise, optical fibres appear the only medium that can provide relief. But there are bottlenecks. Worse, the failure to execute a pan-India fiber optic installation plan can lead to a disastrous outcome.

According to a 2012 ‘State of the Internet’ report by Akamai Technologies, the average broadband speed of internet in India is 0.95 Mbps, while that in China is 2.1 Mbps. Even Philippines, Vietnam and a host of other countries that you would term “Third World” record internet speeds far greater than in India. And since we are already talking comparisons, Asian countries like Japan and South Korea are years ahead of India with 10.5 Mbps and 14.7 Mbps of average Internet speeds respectively. And India? Thanks to 40 million copper loops (last mile connectivity count as per TRAI) spread across India and owned mostly by state-run telcos MTNL or BSNL (of which only 50 per cent can support even 1 Mbps of internet transfer), except for rare glimpses of real broadband connectivity, internet users (on various devices including tablets and mobiles) in the country are still feeding on “pseudo-broadband” connections! The advent of fiber optics can however improve the situation. But given the current ecosystem, fiber optics in India appears a thing of the future.

Lack of infrastructure is one of the reason why accessing world class internet speed has been a dream for an average Indian. The present co-axial cables are of no match to the optical fibre cables which can transmit the data over a very long distance, without any significant loss.

The expansion of optical fibre networks in the country has not taken off as per TRAI’s recommendations made two years back (the National Broadband Plan). The plan had outlined a target to deliver Internet at an average speed of 2 Mbps per household in the country by 2012. As mentioned before, we are sitting at 50 per cent achievement rate. Reason – in the absence of an alternative, fiber optics networks have not increased adequately. India’s excessive dependence on copper based DSL (Digital Subscriber Line) has worsened the cause. Optical fibre’s share in the overall telecommunication mediums is an insignificant 0.53 per cent, while DSL has 86.53 per cent (as per TRAI’s 2012 report).

Policy issues have also restricted the growth in the sector. While speaking to B&E, Chandan Kumar, Deputy Director – Fixed Network Solution, Huawei India, says, “The biggest regulatory issue is ‘right of way’. Obtaining the right of way before laying down the network is time-consuming. It also reduces the ROI on the project for the investor.” Right of way (for permission to dig up roads) is obtained after paying money to respective municipal authorities.

However, not everything on the policy front is disheartening. There is good news for rural India. Recently, the government announced a plan to connect more than 250,000 villages through a high speed optical fibre network. The project is expected to be completed by end-2014. Laying out of fiber optics will also help city dwellers get rid of the menace called ‘transmission towers’.

Policymakers, and public and private operators of voice and data services should take inspiration from beyond national borders. Finland has become the first country in the world to recognise broadband internet access as the legal right of every citizen. Every citizen of that country has the legal right of accessing broadband Internet at a speed of 1 Mbps at present. By end-2015, the Finnish government has announced that this would be raised to 100 Mbps. South Korea has more then 94 per cent of its population using broadband connections. Looking at these initiatives at various national levels, the Draft National Telecom Policy 2012 of the government of India seems a dead duck.It is however heartening to see some private players in action. Call it an impelling mental force, with hope to do good to communication technology in India, where consumers are being bombarded with newer devices every day, but little do they realise that a dangerous situation awaits. By 2014, we will run out of copper cables that will be usable for carrying additional broadband signals. And why is this a potential ominous sign? Currently close to 90 per cent of our mediums that transmit telecom signals are copper DSL cables.

Therefore the other 10 per cent of mediums will thereon get overloaded with fresh broadband frequencies, disrupting and killing quality of services for users already feeding on that small chunk!

The handful of private brave souls that are striving to make fiber optics a present truth include names like RIL and Bharti Airtel. RIL is executing a $10 billion plan to build one of the most advanced telecommunication network in the world. The company has put Alcatel-Lucent to the job. Its subsidiary Reliance Infotel has also tied up with Himachal Futuristic Communications Ltd (HFCL) to lay optical fibre network cables in Delhi, Mumbai and other cities. RIL is expected to launch its 4G services on this network by end of this year. While Bharti Airtel already operates 83,389 km of optical fibers in India, Tata Communications is yet to mark a pan-India presence in this respect (though the company currently has a 9,280 km-long TGN-EA system that connects India to Europe).


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Saturday, May 25, 2013

Movie Review: Inkaar

Up the down staircase in cheatland!

First things first. Film-maker Sudhir Mishra has his heart in the right place, for sure. His standout Hazaron may still be his best effort but every single film that followed indicated the right intent. If those didn’t quite make the cut, it was more because he is a lesser film director than he is as an evolved, cinema-literate, articulate and culturally-rounded individual forever flattering only to deceive…

Inkaar is the latest offering from that unfortunate bag of confusion. The promise is seductively red-hot: relevant, topical and totally spot-on for the new workplace of a globalised and consumerised India 2013. The backdrop too (Advertising Agency – the want-makers spinning out words and images that romance your wallet!) is very urbane and identifiable in today’s consumerist India and the sexual harassment theme is a hand-grenade ready to explode! In short, theme and setting is hugely eye-ball friendly for the urbane metro audiences keen to see a play-off and power-play between mentor and student, man and woman, colleagues dealing with a subject everybody knows but nobody discusses.

CEO, Rahul Verma is an attractive (chauvinistic) man who mentors copywriter (ambitious) Maya Luthra, teaching her the ropes of writing great campaigns … and reading between the lines. Along the way, they have an affair. So far, so good. However, when Maya – on her zoom up – decides to play her role as NCD and throws her weight around (as only a smart woman can) boss-man and lover Rahul sees red! Allegations and counter-allegations, insults, yelling, tears and heartbreak changes to sexual harassment charges, with both vehemently denying their part in this bizarre charade. The climax is too silly to expose, so you guys need to see it for yourself, okay?

The film has left everyone saddened and confused because Mishra has – once again – let gone a fabulous opportunity to portray this deadly modern malaise in an effective cutting-edge manner. It frequently appears to mimic a Bhandarkar movie where fiction dramatises fact in compelling fashion. The lines are clichéd and situations phoney. Being an Ad professional and knowing the scene inside-out, I can vouch for the fact that while Adville may not be as cerebral and arty as many pretenders make it out to be, its nowhere near as cheesy and fluffy as shown! Creative license has really gone to town! The style of narrative is interesting – flashbacks going back and forth – and the lead players Arjun Rampal and Chitrangada Singh certainly look the part. They do their best too to lift a script that is weak, confused and directionless. Ambition, greed, politics, manipulation, lust… what a combustible set of ingredients!

Unfortunately, while Rashomon-style, it suggests there is always more than one way to look at every issue and Disclosure-style, Maya unleashes loaded lines about woman-power, Inkaar is a very interesting premise gone horribly wrong. Truly for filmaker Sudhir Mishra. Is raat Ka Subah just does't seem to be turning up!


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

Friday, May 24, 2013

Stranded

On June 9, 2009, TSI highlighted the plight of a little known community – the Bihari Muslims stranded in Bangladesh. The cover story titled History’s forgotten orphans spoke of the persecution that the Urdu speaking Biharis faced in that country. Urdu-speaking Muslims from eastern UP and Bihar working in the Railways and the Jute Corporation settled in what was then East Pakistan. However, having no affinity with Bengali Muslims, they found the social, cultural and even political atmosphere less than congenial.  Things worsened when they opposed Bangladesh’s bid for freedom. When the country was formed, they faced brutal reprisal, their lands were snatched and most were relegated to slums. None of this got out to the world. Initially, Pakistan repatriated some of these people, the process stopped dead in 1993, leaving several stranded. While many articles on this issue have appeared on many forums since, including the UNHCR website, TSI was one of the first to shed light on the issue.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Tashkent strikes the high notes of revivalism

Combining diplomacy and panache, an Uzbek woman initiates a rather glamorous revolution to put her country back on the cultural map of the world

Experts and political scientists, while discussing the merits and fallouts of the disintegration of USSR, often leave the social impact behind. Naturally, in spite of achieving a degree of religious and political freedom along with sovereignty, the nations in Central Asia suffered on the social front from the disintegration of the Soviet Union. Every nation in the region tried to supplant it with their home-grown version of social initiatives, with limited or no success. But there indeed is a surprise exception: Forum of Culture and Arts of Uzbekistan Foundation, more commonly known as Fund Forum.

Uzbekistan, a doubly landlocked country in Central Asia, has seen its star rise and wane in the last 2000 years. Its cities, especially Samarkand and Bukhara, once centres of art and culture, saw decline in status during the second half of the last millennium till Uzbekistan declared independence from Soviet Union two decades ago. However, limited economic opportunities, dependence on a single resource – in this case, cotton – and rugged and often uncooperative relief has held back the country from realising its full potential. Although it had managed to hold on to its HDI ranking, the going had become especially tough in the first few years of independence. And it is here that Fund Forum came into play.

The core initiative of the Fund is towards youth and social projects and actions, children's art, fashion and design, sports, holding festivals, exhibitions, concerts and charity events.

Led by diplomat and academician Gulnara Karimova, the daughter of President Islam Karimov, Fund Forum can be adjudged a curious mix of a non-governmental organisation and a civil society initiative. In fact, while talking to TSI, Karimova insists that it is an experiment in itself that combines the “Uzbek elements” with the classic, orthodox, Western definition of civil society.

A graduate of a Tashkent university, New York Fashion Institute of Technology and Harvard University, Karimova served as envoy and adviser for the Uzbek Embassy in Moscow for two years. She also served as an Ambassador in Spain and at the UNO Office in Geneva. It is her experience in world diplomacy and her personal contacts that drives Fund Forum. In fact, if ever an organisation epitomised its founder in the true sense, it is Fund Forum.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

Saturday, May 11, 2013

The auto bloodbath

Going by how matters have been in the past year, there is little hope that India’s auto industry will grow beyond the single-digit mark in FY2013-14, even if macroeconomic indicators and economic sentiments improve substantially

Is it any surprise then that every automobile company in India and its third cousin has been making a beeline for the Indian market? Is it any surprise that states like Haryana, Maharashtra, Tamil Nadu and Gujarat are fighting pitched battles to attract automobile companies to their states. Is it any surprise that the quick decision of Narendra Modi to encourage Ratan Tata to relocate his Nano manufacturing plant to Gujarat in the aftermath of Singur added spice and polish to his already glowing halo? And why not since the numbers being bandied about have been so jaw droppingly awesome. The same E&Y study predicted that the size of the Indian auto industry will balloon from $25 billion to $110 billion by 2020; the value of exports will rise from $3.5 billion to $30 billion and the size of the auto components industry too will balloon from $26 billion to more than $110 billion by 2020.

So what happened? Far from maintaining the much touted growth momentum, auto sales have actually crashed in recent months. The decline in sales has been so widespread and so precipitous that 2012-13 is guaranteed to register an actual decline in numbers as compared to the previous year. And hardly anybody seems to have been spared from the onslaught. Hyundai has seen sales falling more than 16% y-o-y in March 2013. Tata Motors has had to suffer the trauma of a more than 60% fall in sales in the same month. The only company that seems to have come up smelling of flowers in the aftermath of his bloodbath is Mahindra & Mahindra, whose gamble on the rising popularity of multi-utility vehicles seems to be paying off.

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles

Friday, May 10, 2013

Letters to the Editor

An effective summary
At the outset, our sincere thanks to Business & Economy magazine for including 3M as part of its analysis on the topic of “Reverse Innovation.” The cover story had a very effectively summarised importance of innovation in developing economies such as India and the critical role it plays in enabling and driving change in the global market which really leads to reverse innovation. The author has also very neatly categorised reverse innovation into three major areas of relevance to the local and global markets. One area where I would like to see a deeper analysis is the role played by ‘home-grown’ companies in reverse innovation. Perhaps this could be a topic of a separate article by itself as there is a lot going on in this area.

Raja Krishnamurthy
Research & Development Head, 3M India

Setting a high standard
Business & Economy magazine is a nice read. Being a professor, I have an inclination toward high quality research & analysis and I must accept that your team is setting a high standard for others to follow. I prefer going through my journals online and your magazine has always been able to cultivate my interest as it is refined. In fact, going through your website I have seen some very interesting cover stories on “Mergers & Acquisitions” and “Worst CEOs”. Without doubt, your edit team has a better outlook than most other journals. I must say your team is doing a great job and hope it continues to do same going forward.

B. Tom Hunsaker

Assistant Professor of Global Management, Thunderbird School of Management


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Wednesday, May 8, 2013

How learning by practically doing leads to higher productivity

A look inside an auto plant reveals how learning by practically doing leads to higher productivity

In essence, the plant and its workers were starting over; they were about to make new products in a new way. Previous studies have found that large efficiency gains from learning by doing are realised quickly as a plant ramps up production, so observing the plant at this early and crucial stage allowed us to closely scrutinize how learning by doing occurs.

Our analysis began with the first shift, which was the first week that more than 100 cars were produced. They excluded the first few weeks when a small number of prototypes were made to iron out any major problems, to train line workers in their new tasks, and to familiarise them with the new team-based production process. A second shift began seven weeks later. Second shift workers were trained by observing the first shift in action the week prior to the start of their own shift.

We find clear evidence of learning by doing at the car assembly plant. Eight weeks after the first shift started, the average number of defects per car dropped by more than 80%. Quality improvements continued beyond the eighth week but were much smaller. First-shift defect rates fell by another 10% until the end of the observation period. Unlike the first shift, the second shift did not initially experience a high defect rate. In fact, when the second shift started, the group’s defect rate was much lower than that of the first shift, which already had been running for several weeks. The second shift was able to come in and do a pretty impressive job from the get-go. Throughout the production year, the second shift continued to have fewer errors than the first shift.

Second-shift workers were probably on average less experienced, because shift assignments are largely based on seniority at the plant and most experienced workers choose to work the first shift. Still, the study finds that second-shift workers were at least as efficient as those in the first shift. These results suggest that the knowledge gained by first-shift workers through learning by doing was somehow passed on to the next round of workers.

TRANSFERRING KNOWLEDGE

Workers were assigned to a team that would be responsible for five consecutive operations on the assembly line. Whenever there was a problem with a particular operation, workers would go to their whiteboard and write down the problem. Plant managers would walk around the assembly plant visiting teams about every two weeks to help address issues on the teams’ whiteboards.

Together they would decide which problems they could fix and how to address them. Whatever the workers were learning went up on the whiteboard, and it was the managers’ and workers’ jobs to come up with ways to build that knowledge into the production process in a more permanent way. Whether it was altering the layout of tools at the workstations or regrouping the sequence of operations, workers’ suggestions quickly turned into new ways to raise productivity. By the time the second shift started working seven weeks later, improvements to the assembly line already had been made.
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Monday, May 6, 2013

M&A outlook 2013

A lot good was expected to happen in 2012 in terms of mergers and acquisitions. But as the year folded (first nine months), it turned out to be worse than last year. From average deal value to total number of deals, everything witnessed deceleration. Standing on this reality, b&e-icmr conducted a survey among 135 coroprate executives to understand what does corporate India think and expect in 2013. here are the findings of the survey

Pricing of M&A deals in next two years

This was an expectation that the global market had at the beginning of 2012, but so far it has not come true. Instead, both average deal value and number of deals witnessed sharp decline in the first half of the year. Nevertheless, India still looks optimistic as 64% of the respondents believe that average deal size of M&As will go up in the next 24 months, while 13% expect it to remain at the same level. This confidence stems from the reform initiatives started by the government in the recent past to bring the economy back on track. But going by the events in the third quarter, the scenario does not look very bright, at least in the next year or so. On a year-over-year basis, average deal size in Q3 dropped 12.5% to Rs.43.75 million from Rs.50 million recorded in Q3 2011.

Critical role in M&A

The scenario seems to be the same across the world when it is about the key factors that the acquirers are keeping a sharp eye on. Though the focus on distressed M&As is on rise, Indian corporate managers still believe that the focus will be on targets with better EBITDA and attractive cash flow. 48% of respondents of this survey believe that free cash flow is the most important aspect as most companies are going through a liquidity crunch situation and they can not afford to wait for long for the acquired company to generate free cash for them. Considering the gloomy economic conditions and failure on part of many companies to keep their revenue streams alive, EBITDA is the second most important aspect considered by Indian M&A managers.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Saturday, May 4, 2013

The next frontier

The ban on gutkha products is hypocrisy; it is high time that the government tackled the cigarette industry head on

Last year in April, we wrote an op-ed requesting the Indian government to ban tobacco; citing statistics that proved how the issue was far more pressing than perceived. We even mentioned how “24% of school-going children and 5 million children under the age of 15 years are addicted to this poison”. However, we have not seen any major policy breakthrough in this regard so far.

A very recent move by 14 state governments to impose a ban on gutkha sales, manufacturing, distribution, transportation, display and storage may be considered as a step ahead towards the reduction of tobacco production by 80% by 2020. However, it has ‘again’ raised questions on the credibility of the government’s intention towards curbing the ultra-strong cigarette lobby. The decision to ban gutkha has received an overwhelming response, but the Smokeless Tobacco Association alleges that “the powerful lobby of cigarette companies” is behind the step-motherly treatment meted out to them.

A recent study published in The Lancet, which is a renowned medical journal, revealed that with 275 million users, India ranks second in terms of tobacco users after China. Another government report says that 26% of India’s population (around 312 million) comprises tobacco-chewers compared to 5.7% and 9.2% cigarette smokers and beedi smokers respectively. India has acquired the shameful tag of being the oral cancer hub of the world. As per the first Global Adult Tobacco Survey (GATS) – India 2010, around 0.9 million tobacco-related deaths occur in India annually as compared to 5.5 million worldwide. So, it becomes extremely necessary to take some action against tobacco industry. But the moot point here is – why should cigarette and beedi escape regulation?

On one hand, 14 state governments have been prompted to ban gutkha and other forms of chewing tobacco products, which are toxic and addictive as per the Food Safety and Standards (Prohibition & Restrictions on Sales) Regulations Act, 2011. Consequently, government officers even decided to raid all gutkha shops and seize products of offending vendors. On the other hand, many reports have exposed that the ban on smoking in public places has had a very little impact. No such drive was executed by the government against sales of cigarettes, which are also being sold within 50 meters of school premises. No state government has taken stringent steps to control that.

In this context, it is well known that powerful lobbying is working in favour of the cigarette industry.

Long back in 2002, former Union Cabinet Minister of Health and Family Welfare, Shatrughan Sinha declared that he had been receiving threatening calls from the tobacco lobby; demanding that he should go slow on placing curbs on tobacco. Later on in 2007, then Union Minister of Health and Family Welfare of the Government of India, Anbumani Ramadoss, who had implemented stringent controls on tobacco and alcohol sales and advertisements to India, stated that 4 CMs and 150 MPs tried to back the tobacco industry. However, he refused to identify any of them.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Thursday, May 2, 2013

Will price control make medicines accessible?

The government’s move to make drugs available at reasonable prices should be supported if such an intervention can help in solving the problem of non-availability of medicines to large sections of our population.

In October last year, the government announced the draft National Pharmaceutical Pricing Policy, which aims to put in place a regulatory framework for pricing of essential drugs. The idea behind controlling the prices of drugs is to ensure that they are made affordable and accessible to all. Drug costs are seen by the public to be the greatest barrier to treatment access and the high cost of medicines is often financially debilitating. According to the Ministry of Health and Family Welfare, cost of medicines constitutes over 60% of the total cost of healthcare. Though cheaper Indian generics have pushed drug prices to among the lowest in the world, medicines, especially for chronic diseases, continue to remain out of reach for many. Over two-thirds of the Indian population has no access to health insurance, with nearly three-fourths of all health spending by the uninsured going towards buying medicines. Also, the shabby state of our public health infrastructure, marked by hospitals that often lack basic amenities, a shortage of primary health staff, and reluctance of doctors to serve in villages, has increased the reliance on expensive private hospitals, adding to the costs of essential drugs that are often prescribed by the doctors there.

To maintain low prices for essential medicines and ensure their availability at reasonable prices, the policy proposes bringing 60% of the Rs.600 billion domestic formulation industry under pricing control compared to 20% earlier. The focus of the NPPP is to strengthen the National List of Essential Medicines by bringing under its cover at least 348 essential drugs in the domestic pharma market under official price control. The NPPP, which is awaiting implementation upon clearance from the group of ministers currently examining it, would mark a big shift from current levels of price control wherein the prices of only 34 essential medicines, accounting for around 20%-30% of the market, are capped.

To bring about a lowering of prices of essential drugs, the NPPP seeks to movie away from the principle of cost-based pricing to a market-based pricing model. Under the current Drug Price Control Order (DPCO), pharma prices of essential drugs are based on their manufacturing and conversion costs, which lead to higher pricing of drugs. That’s ostensibly because leading brands say they have to pump in a lot of expense on marketing. But can that be an excuse for the gouging prices that many pharma brands charge with impunity?

Many leading pharma brands often resort to the practice of rigging the maximum retail price (MRP) to an exorbitant high (even 1,000% of the cost of production), making a mockery of the government’s aim to provide affordable medicine to the public. A recent study by the cost audit branch of the Ministry of Corporate Affairs found drugs like Calpol manufactured by Glaxosmithkline, Corex Cough Syrup by Pfizer, Revital by Ranbaxy Global, Omez by Dr Reddy’s Labs, Azithral by Alembic and several others being sold at a mark-up of up to 1,123% over their cost of production.

To check such blatant distortions in the pricing of pharma products, the government’s draft pharma policy proposes changing to a system of setting a ceiling on the prices of formulations based on the weighted average price of the leading three brands. According to the draft policy, which has been issued by the Department of Pharmaceuticals within the Ministry of Chemicals and Fertilizers, the ceiling prices of formulations will be fixed below the current highest market prices by 0%-5% for over 50% of the medicines of the NLEM-2011, and this reduction will be more than 20% for over 30% of such medicines. So the price charged by leading producers when the policy comes into operation would provide the benchmark for fixing the ceiling.
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles