Showing posts with label IIPM Think Tank. Show all posts
Showing posts with label IIPM Think Tank. Show all posts

Friday, October 05, 2012

Methodology

A Quick Run Through the Two Phases of The 2010 B&E-ICMR B-School Survey

First phase:
ICMR prepared an initial list of 200 B-schools in India that have been providing full-time management courses for at least the past three years and which were also the most-recalled amongst the student fraternity (sample size of 2050 students who are currently pursuing a management course, spread across five metros). This initial list of B-schools comprised both private and government-affiliated institutions. Subsequently, ICMR conducted a perception survey amongst MBA aspirants, management students (who are currently pursuing their MBA) and executives from the corporate world. The survey was based on the parameters of awareness, recall, legacy and image & perception. A sample of 5500 respondents was thus covered in the study across the cities of Delhi, Mumbai, Kolkata, Bangalore, Chennai, Pune, Hyderabad and Ahmedabad, using a structured questionnaire. Based on the frequency of responses, the final list of top 30 B-schools (from amongst the initial list comprising 200 B-schools) was shortlisted.

Second Phase:
The final ranking was based on the average of weighted scores per parameter (details below) given by the esteemed panel of experts. The respected panel of experts comprised Naresh Gupta (MD, Adobe India), Girish G. Vaidya (Director, Infosys Leadership Institute), V. Balakrishnan (CFO, Infosys Technologies), Dr. Brian W. Tempest (Former CEO, Ranbaxy & current Chairman, Religare Hichens & Harrison Plc. & Chairman, Advisory Board of Lancaster University Management School, UK), Dr. Wilfried Aulbur, (MD & CEO, Mercedes-Benz India), Dhiraj Mathur, (Executive Director, PWC), Sandeep Aneja (MD, Kaizen Private Equity), Michael Boneham (President & MD, Ford India), Capt. G. R. Gopinath (Former CMD, Air Deccan & current CMD of Deccan 360), Gautam Dutta (CEO, PVR Cinemedia), K. M. Nanaiah (MD, Piney Bowes India), Neetasha Joshi (Head – HR, Tata AIG Life Insurance), Brian J. Manning (President & MD CSC India), Alok Bhardwaj (Senior VP, Canon India), Danish Khan (Head – Marketing, Sony Entertainment), Sumeet Nair (Chairperson, Fashion Foundation of India), Subrata Dutta (CEO, Samsonite), Mehmood Khan (Founder President, IIM Alumni Europe), Ranjana Smetacek (Director – Marketing, Fortis & Escorts Group), Pankaj Dubey (National Business Head, Yamaha India). Each panelist was provided with the write-ups (sent by the participating B-school) and detailed secondary data generated by ICMR for the 30 institutes based on the following parameters:

1. Quality & Volume of Course Contents; weightage:40%
2.Quality & Volume of Industry Interface; weightage:15%
3. Quality & Volume of Research & Writings; weightage:15%
4. Quality & Volume of Global Exposure; weightage:15%
5. Placement & Packages; weightage:15%

It is important to note here the weights given to the parameters in question. We firmly believe that the most important factor for any B-school to be ranked upon has to be necessarily its course contents. This factor is what differentiates the world’s leading management institutions from the also-rans. No amount of teaching, interface, exposure is helpful unless the course structure is world class – and that is the reason why this factor has been given a 40% weight by us, while all the other factors have been assigned a weight of only 15%.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Monday, September 10, 2012

“The few defaults are due to Migration & Natural Calamities”

M. R. Rao, CEO, SKS Microfinance Ltd.

Launched in 1998, SKS Microfinance is one of the fastest growing Micro Financial Institutions (MFIs) in the world, which has served more than 5 million women members in poor regions of India till date. Of course, the company has been in the news for the wrong reasons following the unceremonious exit of its ex-CEO Suresh Gurumani. Current CEO M. R. Rao talks about the company’s business model and challenges it faces:

B&E: Tell us about SKS’ entire delivery mechanism. What are your other major business growth drivers?
MR: SKS targets the poor and upper poor class. The upper poor class consists of families earning Rs.25,000-Rs.50,000 per annum like medium farmers, small entrepreneurs and families falling just above poverty line like landless laborers. This is the segment of the poor that can most benefit from microfinance. Overall, SKS’ target constitutes of rural (74%) and urban (26%). Through its NGO, Swayam Krishi Sangam, SKS works with the ultra poor or the destitute who need far more intense involvement and a kind of spoon feeding to nurture them and make them use their loans effectively. SKS provides the ultra poor with vocational training, social awareness and health awareness over an 18-month period and also provides these families with assets, which they are taught to manage.

Apart from income generating loans, SKS also offers insurance products jointly with Bajaj Allianz. We have covered nearly 2 million lives across our network with this product. SKS also provides life enhancing products like water purifiers, mobile phones and solar lights at a better prices than the existing market price. Also, SKS is providing housing loans and education loans, which are in the pilot phase. This February, SKS has tied-up with Metro Cash & Carry to supply inventory to SKS members who have Kirana stores.

B&E: How does SKS Micro Finance define its eligibility criteria?
MR: SKS follows the peer-lending model developed by the Grameen Bank of Bangladesh. There are two parts involved – formation & administration of the group. A group is a collection of five individuals who come together to gain access to credit. Groups are the building blocks of the peer-lending model, and strict credit discipline starts with strong groups. SKS uses five-member groups. Experience has shown that a five-member group is small enough to effectively enforce group peer pressure and collective responsibility on a unanimous basis. Groups must be self-chosen as only then will members be able to serve as guarantors to each other. Groups must have the following characteristics: Poor, close proximity of members, no close relations in order to avoid personal problems, mutual trust and the adult members should not be above the age of 55 years.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Saturday, September 01, 2012

IN THE FAST LANE

Last year’s slowdown was a blessing in disguise for the public sector behemoth SBI, forcing it to become truly competitive. And the bank has only moved ahead since then. Avneesh Singh finds out how

Financial inclusion may be a buzzword for India Inc. but when it comes to groundwork, a majority of them falter. But not this “Banker to Every Indian” for whom ‘inclusion’ is about carpet bombing the Indian geography with its presence, a strategy that has seen it (leave aside the associate banks) reach over 12,450 branches and 16,584 ATMs across India. In fact, in the next two years, the drive is barbarically brobdingnagian (if one could use such a term) for SBI wishes to now get 1,00,000 un-banked villages in its connectivity map! What’s more? At a time when trust was witnessing a free fall, this bank everyday attracted more than `1.7 billion average deposits (during FY2010). While deposits were up by `620 billion (a 8.36% yoy growth – from `7.42 trillion in March 2009 to `8.04 trillion in March 2010), gross advances too were up by `929.40 billion registering a growth of 16.94% from `5.48 trillion in March 31, 2009 to `6.41 trillion in March 31, 2010.

Not surprisingly, the net interest income rose by a significant 13.41% to `236.71 billion in FY 2010 (up from `208.73 billion in FY 2009). And the reason for all this is interestingly in one area. When banks were shunning retail customers, SBI took the lead in lending to the ‘shunned class’ and consequently became the single largest retail lender in India (education loan up by 34.61%, auto loan up by 45.44% and housing loan portfolio up by 31.69%). Even in corporate lending, SBI diversified its loans across segments, thereby minimising the probability of loss. In fact, the large corporate loans reported a significant jump of 18.51% during the last fiscal. But that does not mean that it has completely ignored the bottom of the pyramid, which for the fact makes over 90% of India’s total population. As part of its microfinance programme SBI has credit linked more than 1.71 million self help groups across India with cumulative credit of `115.62 billion.

When asked about the secret behind this stellar performance, S. K. Bhattacharya, MD, SBI told B&E: “performing well has become a habbit for employees at SBI. No doubt, top management devices strategies and policies, but the real business takes at the branch level. So, it’s the employees of the bank who should be credited for this performance.” Further, thanks to a resurgent focus on maintaining a cost effective operating architecture, the bank has successfully brought down the average cost of deposits by 50 basis points to 5.80% and kept its net NPA (non performing assets) at 1.72% (of gross assets) as on March 31, 2010. In fact, the ratio of high cost bulk deposits to total domestic deposits too has come down from 10.74% in March 31, 2009 to 1.79% in March 31, 2010.


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Wednesday, August 29, 2012

Have movie-makers ended up distorting

Image is to the mind what perception is to the soul. Have movie-makers ended up distorting both in an attempt to deliver ‘happy’ stories?

If one reads the research papers by anthropologists like Desmond Morris and by authors like Barbara & Allan Pease, one can draw how these movies are an additional burden for the already-very-different-species called men and women! According to their researches, men and women have evolved differently. “Nest-defenders, to safeguard their family’s survival, needed to be able to pick-up small changes in the behaviour of their offspring that could signal pain, hunger, injury, aggression or depression. Males, being lunch-chasers, were never around the cave long enough to learn to read non-verbal signals or the ways of interpersonal communication,” as quoted in one of Allan and Barbara Pease’s books, Why Men Don’t Listen & Women can’t Read Maps.

While the above may be true, it’s difficult to ignore in the film the tender moments, the glances and words, and even more difficult to deny oneself the possibility of a life so complete. After all, dreaming is the first step towards fulfilling a dream! But living and working towards just one dream (of love) isn’t the brightest idea either!


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Wednesday, July 18, 2012

Can we Move Out at All?

India’s Traditional Transport Systems Including Road, Rail, Air and Water never got their due Importance from Successive Governments.

The very essence of the phrase ‘national priority’ often gets diluted due to the number of times it is used, reused and misused in our country. It’s almost as if everything is national priority depending on how hyped up it is at a particular point in time. In that context, it is indeed debatable whether reforming and modernising India’s transport systems, including road, rail, air and waterways, were ever ‘national priorities’ in the sense that we expected it to be. On both technological advancement and security, India’s transportation systems seem to have fallen way behind when compared to our economic progress. And the gap is only increasing with time.

Indian Railways, which spawns across the nation connecting almost all cities and towns, is still awaiting modernization and suffers from many shortcomings. During the last 20 years, Indian Railways added merely 1,648 km, which is less than 90 km per year. Given the population size, we have very less rail route length per capita. According to the Centre for Transforming India, when it comes to roadways, New Delhi saw a mere 20% increase in road length and an alarming 132% increase in vehicles, which has led to a congestion cost of Rs.40 billion per year and a loss of 2.5 productive hours every day in Delhi alone. And this is the state of the capital; one can imagine the plight of the rest of India.




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Rewritten Global Management case books

In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books

In sharp contrast to IBM, the bosses at GM continued churning out monstrous gas guzzling cars even though they realised that nimbler rivals like Toyota and Honda were steadily taking away market share from the company. The false prosperity of the George Bush years and the Americans’ crazy love affair with SUVs made it appear as if the bumbling and stumbling GM might just pull through the imminent debacle. That never happened, and GM had to face the mortification of bankruptcy and a state sponsored bailout.

I am pretty sure even diehard skeptics who dismiss the ‘strategic’ importance of changing strategies for survival and growth would be convinced by now that changing strategies at the right time does matter even in a world tormented by Black Swans. But there is another sucker punch in this tale of changing strategies. Leaders like Deng and Gerstner often had the luxury of decades to contemplate the necessity of changing strategies – or changing course midstream if you may say. Leaders of the 21st century, whether of nation states or of corporations, simply do not have the luxury of time anymore. Change that occurred at a glacial pace once upon a time, now happens at a speed so blinding and dazzling that even battle-hardened veterans fail to grasp. Information technology is playing a key role in dictating the pace of this change; as is the relentless march of globalization. In effect, the time needed to change strategies is becoming so compressed that changing strategies often acquire the shape of what would be once considered a change in tactics.

Once upon a time, there used to be a Test Match played out over five days. That dictated its own strategy as well as a change in strategy. Now, we are ruled by 20-20 cricket. So, the captain, who could earlier adopt and then change strategy over a span of 450 overs, now has just 20 overs to do the same. Things are not very different in corporate boardrooms as change constantly gathers pace and keeps surprising us in a Black Swan manner. It is no longer enough to realise that you need to change strategy. You have to do it damn fast if you want to survive.

Perhaps that is the real Black Swan impact on nations and corporations!

GM’s Detour trick
The new gm is all about change – smaller, fuel-efficient cars, customer-centric approach, focus on emerging markets and most importantly, profits. pawan chabra writes about how GM’s strategic shift saved its day.

For decades together, General Motors was exalted as a symbol of American success. A success that would only be got by thinking big, making big and selling big. Today, it is cited as a failed American freighter. Its very DNA got the better of it, forcing the Detroit giant to detour. Precisely fifty years back, GM had grown into a Godzilla-making factory. It had embraced vertical manufacturing and its list of offerings either included products designed to match up to the budgets of luxury car buyers, or live up to the fancies of truck-lovers. Its audacity clouded its vision – the downfall was imminent. And so it happened in January 2009, when GM filed for bankruptcy. Fuel-guzzlers do not please a nation which is battling with rising unemployment. Not even if they carry a GM warranty. Change it needed, and change it did. From 51.4% of market share in US in 1961 to 30% in 1990, and to under 20% today, GM is a story of how a King-turned-pauper, finally realised that serving the middle-class is as important. And the fact that it still has a strong change of making it to history books as a phoenix of the modern capitalist world, is because all the three CEOs who followed Rick Wagoner (Fritz Henderson, followed by Ed Whitacre, followed by the current CEO Dan Akerson) during the past two years, have appreciated this change in mindset.

Cut to the present, and any GM insider who has lived the horrors of the downturn will confess that GM investors giggle more while talking about the muted GM DNA, than while ranting about the world-record IPO on the 18th day of November last (which helped raise $23.1 billion and marked the comeback of the company on NYSE). Muscular brands like the Saturn, the Pontiac, the Hummer and the Saab, no longer take shelter in GM’s umbrella (the company sold them about a year back) and the $80 billion in losses, accumulated over a period of four year, could soon become a thing of the past. The world is staring at a new GM, with a new strategic vision, take the differentiating leap ahead with its consumer-friendly and smaller offerings.


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Enter ‘Tactical’ Strategy

In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books

THE ART OF ‘TACTICAL’ STRATEGY IN A 20-20 WORLD

In the good old days, winners knew that strategic changes and shifts were the key to survival and success. But they also had the luxury of time to implement strategic shifts. In the 21st century, winners not only have to change strategy; they have to do it very fast, and very often.
By : Sutanu Guru

So you are one of those doubting Thomases with mystic leanings who believe that in our world, the best laid plans of men and mice go awry because the random usually overwhelms the calculated. You have perhaps read or heard about the book Black Swan by Nassim Nicholas Taleb, where the unexpected barges in through our back door so unexpectedly that it is often futile to draw up strategies for the future. In such a scenario, tactics, of course, become akin to the spin of a coin. So you think that adopting strategies doesn’t really matter and changing tactics can be as much fun as a blind date in a dark room.

I admire your nonchalant reverence towards the random and the unexpected and your irreverent indifference towards those two much abused words – strategy and tactics. I wish I could also drink from the well spring of mysticism that you draw upon. But I look at dozens, scores and hundreds of cases where the right change in strategy and tactics has worked wonders for nations as well as corporations. Changing tactics are so frequent that there would not be enough space even in a 2000 page book to recount them. Let me tweak your mysticism and cynicism a bit by citing just two sets of contrarian examples – one from the realm of nation states and the other from the realm of corporations.

Back in the 1970s, both India and China were considered to be virtual basket cases when it came to economic performance. The two countries were simply too huge to be ignored completely; but that was that. In China, the ‘Great Helmsman’ Mao Zedong had adopted such a bewildering array of strategies that tens of millions of Chinese citizens simply perished. Most Chinese found it difficult to feed themselves every day. And the Communist paradise that Mao had dreamt of had actually turned into a living hell for a majority of Chinese citizens. Being subjects of an authoritarian and totalitarian state, they couldn’t even protest their lot. In contrast, Indians were protesting loudly by the 1970s. Bizarre economic strategies adopted by Jawaharlal Nehru – and even more so by his daughter Indira Gandhi – had made India one of the worst performing major economies of the world, along with China. GDP growth rate in both the countries was abysmal; starvation deaths and the spectre of a famine were still all too real; the middle class had virtually no access to the cornucopia of goods and services that their counterparts in other countries were devouring with relish; and poverty reduction had become a bad joke.

That was the precise time when one country – and its leaders – deliberately and consciously went for a huge course correction, a monumental and hitherto unimaginable change in basic policies that could easily be termed a historic strategic shift. Deng Xiaoping, a comrade who had marched with Mao, decided that the colour of the cat was not important as long as it caught mice. Deng unveiled a historic opening up of China that had not happened for hundreds of years. It was Deng who allowed the animal spirits of entrepreneurship and capitalism through the back door, even as he maintained a facade of being a dedicated socialist. It was China under Deng that invited multinational corporations from America, Europe and Japan to set up factories to exploit the cheap labour available there.

The rest, as they say, is history, as India – that delayed its own strategic shift by more than one and half decades – still despairingly and wistfully talks about the ever remote prospects of catching up with China, while China shares the high table with the sole superpower America and blithely talks about G-2 being a reality. I won’t bore you with numbers and statistics here to showcase how far ahead China has moved. But I would definitely point out one stark lesson of this: strategies do matter and it is even more important to get the right time to change your strategies. Of course, dedicated fans of Nicholas Taleb might say that China is lucky Mao didn’t kill Deng Xiaoping when the latter fell out of favour with the Communist regime. I would say fans of the random and the unexpected are lucky in their mystical skepticism.

Those are not just nations whose future gets changed – for better or worse – by changing strategies. It applies even more brutally to corporations across the world. Let me cite the example – once again without boring you with numbers and statistics – of two giant and iconic corporations to showcase the importance of strategy and the critical importance of changing strategy. By the late 1970s, it had become evident to prescient analysts that both General Motors and IBM were heading for trouble. Both were behemoths that were not willing to change with the times. Of course, for an overwhelming majority, GM and IBM looked so invincible that even whispering about them heading for calamitous and life threatening times was considered to be blasphemy. One was the juggernaut that dominated the automobile industry of the world. The other was another juggernaut that completely dominated the computer industry of the world in those days. Throughout the 1980s, as technologies started changing and evolving rapidly and as rising concerns about the future prices of gasoline worried consumers, both IBM and General Motors stuck to their old strategy.

But then, in what could also be described as a Black Swan kind of phenomenon (!), Louis V. Gerstner – a man with no prior experience of the technology industry – took over the reins at IBM in 1993 after successful stints in American Express and RJR Nabisco. By the time he took over, even the biggest fans of IBM were resigned to the fact that the giant was virtually on its knees and slowly and painfully heading for extinction. Gerstner realised that a complete rehaul of strategy was the only way he could save IBM and he did exactly that despite stiff opposition of entrenched old timers. He rammed down the strategic changes, abandoned the OS-2 platform, decisively moved away from mainframes towards ‘service solutions’ and tried damned hard to become extremely customer focused and process oriented, than product obsessed. By the time Gerstner retired 10 years later in 2003, the remarkable turnaround of IBM was such a talked about story that the media shy Gerstner even churned out a bestseller aptly called ‘Who Says Elephants Can’t Dance?’


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Understanding and Solving The Great Indian Onion Price Crisis!

There seem to be two commodities that are all set to face each other in a combat mode.  If on the one hand, bidding at IPL-4 is breaking and making newer records by offering otherwise affordable players, almost unaffordable bids and making them out of the reach of smaller teams, then on the other hand, an affordable and staple vegetable – the onion – is all set to make newer records with its price rise, again making it unaffordable to almost every consumer!

The prices of onions have been exponentially shooting up since December 2010, mercilessly burning the pockets of consumers at large! As per figures released by The Ministry of Commerce and Industry, the wholesale price index (WPI) for food climbed up by more than 12% in the first week of December 2010. Comparatively, onion prices have shot up by anywhere between 80 to 150% during the same period across the country.

What has been intriguing is the manner in which the government has dealt with the entire crisis! It is not that the government is not aware that the onion is an integral component of its citizens’ food baskets, and more so for the ones below the poverty line who barely survive – still, the government maintained its lackadaisical attitude towards the crisis. It is also not that the government was unaware of the fact that climatic challenges had created havoc for the crop in Maharashtra – still, the government chose not to take preventive action. It is also not that the government was unaware of the fact that hoarders in our country await such opportunities and make a killing by further creating supply bottlenecks – still, it chose not to intervene adequately. It is also a fact that the government knows that onions have a legacy of bringing down governments – but it still chose to remain silent! So much so that in the month of November, when onions were taking more time than normal to reach the market from Nashik (due to untimely rain), the government and authorities didn’t put into place any measure to check the expected price rise. And what followed in December was bloodbath, as onion shipments were reduced by almost 270%, thus escalating the price by 150% in a period of seven days. What is most paradoxical is that instead of tracking and acting upon real time information, the Minister for Agriculture was busy issuing export licenses, which had to be revoked immediately after the crisis! And mind you, such illogical issuing – and then cancelling – of export licenses is not new. The same was done for sugar and wheat sometime back.

It is not just about onions – the distortion in prices of essential food commodities has been at a crisis point for a long time now. There have been numerous reports which document the kind of exponential gaps (at times, to the tune of 400%) that exist between the wholesale and the retail prices of essential food commodities – but no concrete action has been taken by the government. As a kneejerk reaction this time, what the Ministry of Agriculture did to contain the price rise of onions was to ban exports on one hand and to permit imports on the other. It did give a temporary relief, but clearly, was a hasty and illogical call. As per reports, the onions that were exported to countries like Pakistan for Rs.20 per kilo, had to be imported back at Rs.45 per kilo! Not to forget that Pakistan too eventually had to put a ban on exporting to India.

The truth is that onions would keep burning the national pocket till the time structural changes are not made in the agriculture sector – and this is no secret, given the yawning gap that exists between production, storage and distribution! In the given environment, taking advantage of these gaps, those are the retailers who make merry perpetually, and the hoarders who wait for their pound of flesh in times of crisis! And the consumers, particularly the poor, are made to bleed at all times. Although people might debate that the production of food grains is subject to the vagaries of nature – and that nothing much can be done about it – the fact is that even after 63 years of Independence, our irrigation infrastructure is shameful! The truth is that by now, we should have created such an irrigation infrastructure, that our dependence on nature should have been negligible. But then, the same has been a monumental failure! And similar is the state of distribution and storage infrastructure. It needs no Einstein to realise that taking advantage of these bottlenecks are the middlemen who have been exploiting these inadequacies to the fullest! And the irony in the entire episode is that while prices of crops like onions are going up by 150%, it is the farmer and the consumer who is losing it all. And shamefully, the government allows this to happen not once, not twice, but repeatedly!


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Taming Inflation or Killing Growth?

Really, this UPA government and its scatterbrained, harebrained and brainless approach to serious policy making simply takes one's breath away. Despite brazenly false assurances by many top honchos of the government, the rate of inflation continues to rise and give nightmares to the aam aadmi. So what do our esteemed and revered policy makers do? They (in this case, the RBI – and one has to be a fool to believe the nonsense that the RBI is truly independent of the Finance Ministry) once again raise interest rates and play the charade of doing something worthwhile to tame inflation.

These fantasyland policy makers will fail to answer some basic, commonsense questions about the nature of inflation in India. Will higher interest rates lead to a fall in the prices of onions? Does the persistent and recurring raising of interest rates mean that Indian citizens will see lower prices of petrol in the near future? Or will they lead to falling prices of cooking oil, milk, vegetable and spices? Equally important, will the raising of interest rates lead eventually to a rise in the prices of LCD televisions, mobile phone handsets and laptops?

You and I know that is not possible. So why this nonsensical obsession with interest rates? The policy makers themselves – RBI included – admit that the recent spurt in inflation is caused primarily by the rise in prices of food items and other "essential" commodities. They themselves admit that supply constraints have been playing a large role in the recent spurt in prices. So how will a hike in interest rates solve these problems? How will it positively affect more than 600 million Indians earning less than $2 a day, who have mostly nothing to do with interest rates or the banking system, except taking loans at astronomical rates from local moneylenders? Will the farmers of Nasik immediately start growing more onions? Will the rain gods become more benevolent and stop ruining crops? Will the global oil industry bow down to the diktats of the RBI and redress the imbalance between supply and demand?

You and I may not be economic experts spouting jargon the way some of these lordships do. But surely we know this much: That a hike in interest rates eventually leads to an increase in the cost of capital and discourages investments. Interest rate hikes could possibly control or tame demand led inflation – if at all they do anything. Surely, it doesn't solve anything when supply is the problem. In fact, higher rates will inevitably damage investment and growth.

And who gets hurt most by higher interest rates? People taking loans. So housing goes beyond the reach of the lower middle class family, as do many consumer durables. Worse, large Indian business houses have access to global financial markets for cheap funds. High interest rates hurt the small entrepreneur who has to depend on Indian sources. In effect, we are perpetuating elitism – both at the level of the consumer and the entrepreneur.

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