new indian express – Pertinent Observations

JEE Results

Exactly ten years ago, they used to give a sum total of 3400 ranks for IIT-JEE. Typically, to get an engineering branch at one of the “big 5” IITs you needed to be in the early 2000s or better. Back then, there were ~40 people from Bangalore who made it to the merit list (I’ve forgotten the exact numbers but if I remember right, at least 30 people from Bangalore JOINED some IIT or the other). About 1.2% of all successful candidates back then were from Karnataka (for IIT/JEE purposes Bangalore = Karnataka since there are no other centres in the state).

JEE results for this year came out yesterday. Most of the second page of today’s The New Indian Express is spent in giving footage to people from Bangalore who got a rank. This year, they gave out 13,100 ranks, of which 58 were from Bangalore – 0.5% of all successful candidates. And you have the New Indian Express which puts the headline “City Students crack IIT by the dozen”. Yeah, five dozen out of thirteen kilopeople is worse than three dozen out of three kilopeople. But anyway…

Back in my days, there was one decently established factory and a couple of fledgling factories in Bangalore. The established factory (a small scale industry by national standards) had 100 students, of which over 30 got ranks in the JEE (and about 20 actually joined IIT). Today the same factory has some 500 students. And surely not more than 58 of its students could have cleared the JEE! And then there are several other factories in the city. Don’t know if any of them have done significantly well.

Madness. Sheer madness. I had written about this before.

Postscript: I must admit there is a small bit of hotteuri (stomach burn) at the amount of footage toppers get nowadays. Back then, it was an advertisement by the coaching factory in all major English dailies in the city, and little else.

Postscript2: This post might sound like one old thatha sitting in his armchair and ranting. It is meant to be that way.

The other side of the long tail

There are several people who talk about how the advent and the popularity of the internet has resulted in markets in many a long tail. Without loss of generality, let us just take the market for writing here. Several niches which were earlier not served since there wasn’t enough of a dedicated audience in a particular geographical area for a certain set of articles and so no one bothered to write and disseminate them.

For example, it is unlikely that there was enough of a “market” for a series of posts on the Studs and Fighters Theory in the days before the internet – a market big enough for a newspaper or a magazine or a journal to bother publishing. Now, the internet not only allows me to publish it without effort or cost, but also lets me know that there is enough of a market for this kind of a series for me to bother publishing it rather than just explain it to a few friends in a smoky bar or cafe.

Now, the funda is that sometimes the long tail can exist in geographically coherent markets and not online! For example, all of yesterday, while at work i was frantically searching for sources to follow the BBMP election results. Everyone led me to this TV9 video streaming but it didn’t open on my office network and I couldn’t find any other live sources that were constantly updating the results. I had had similar problems following the results of the Karnataka Assembly elections two years back.

It was then I realized that the “traditional market” can itself be the long tail! For example, the amount of information I found about the elections in this morning’s papers was really impressive – in fact, the much ridiculed ToI had pretty good coverage of the polls, as did the Deccan Herald or the New Indian Express. Earlier in the morning, yesterday, too there were the Kannada channels which focused exclusively on the election results.

What I’m saying here may be fairly obvious, but just wanted to point out that long tail need not refer exclusively to the new media, or new channels. When you look at it in certain ways, several of the traditional media are also catering esssentially to a long tail, though when there was only the traditional media, no one really used the term.

Talking of BBMP elections, take a look at this graphic that was presented in the Deccan Herald today. Don’t you see a pattern in this?

The impact of Rs. 2/kg rice

In the supplement of yesterday’s The New Indian Express (one of the six articles is here: http://epaper.expressbuzz.com/NE/NE/2009/07/12/ArticleHtmls/12_07_2009_412_002.shtml?Mode=1), it was argued about how the combination of NREGS and cheap rice (most states provide or promise to provide 25 kg of rice per month per poor family at Rs. 2 per kg) is destroying the rural economy.

One day of work under the NREGS gives a person Rs. 100. Half of that will go into buying rice for his family for the ENTIRE MONTH. Extending this argument, twelve days of work under the NREGS will feed his family for the whole year. Given that the staple is taken care of,, there is little incentive for the villager to work to earn more. And so there is a severe shortage of farm labourers, other rural workers, etc.

When the NREGS came about, some people applauded it saying that it would ensure that minimum wage laws would now be met. Given that people were now assured of a certain sum (say Rs. 100 per day) for doing meaningless stuff like digging and filling holes, they would go to do other harder and more meaningful work only if they were paid more (and you need to take into account that “real work” takes more discipline, hard work, etc. than it takes to wrok for a welfare program – so the NREGS actually pushed up the minimum wage for farm labour to much higher than Rs. 100).

Now, with various states coming up with cheap rice schemes, the whole thing has gone topsy turvy. Given the subsidized rice, it is now possible for the worker to earn enough for his staple food by just doing a few days of work under the NREGS! The only need for him to work elsewhere, and possibly harder, is to pay for his “luxuries” (considering the price of subsidized rice, requirements and NREGS pay, it can be shown that 100 days of NREGS work can pay for all the essentials).

Given that the essentials are taken care of by the combination of NREGS and cheap rice, the only reason that the worker will need to do actual (i.e. non-NREGS) is to help him save, or for “luxuries”. Yes, some workers will have special needs for money at different points of time because of which they will take on the extra work, but if you aggregate the supply of work, you will realize that the ‘hurdle daily rate’ for the worker to accept “real work” becomes really high.

Since the worker doesn’t absolutely need the money, he can now become the price-setter in the job market rather than being a price-taker. So what this effectively does is to push the “minimum non-NREGS wage” really high indeed (I can’t intuitively put a number on it, but it could be as much as Rs. 200). My bet is that a lot of rural-economy-produced goods will turn out to be really expensive next year since a lot of producers might choose not to produce them given the high cost of labour.

Quite a few commentators have said that the NREGS is a noble scheme for empowering the poor, and given that most of the ‘work’ done is meaningless, it can be replaced by simple cash transfers. The problem is that if that is combined with yet another welfare measure such as cheap rice, it can create severe distortions in the market.

The moral of the story is that if you want to help the poor, please go ahead and do so. What you shouldn’t do is to help them twice over – that can result in severe market distortions like the one that the express article talks about. What is needed is greater coordination between the centre and the states in the welfare measures.