Slowdown over? MBA job offers suggest so

When a global financial crisis struck markets across the world two years ago, with several countries finding their economies in recession, MBAs from the finest institutions found job offers shriveling up on campus. But a global management education survey conducted in 2011, shows that the market for B-school graduates seems rather robust, with over 50% of students surveyed receiving job offers before they graduate.

The survey involving 4,794 soon-to-be-graduates from 156 management institutions worldwide, conducted by the Graduate Management Admission Council (GMAC), which runs GMAT, a globally accepted entrance test, found that 54% of B-school students had job offers before they graduated. This is a significant rise from last year. Only 32% of the final year batch of B-school students in 2010 had job offers before graduation.

But the optimism this year needs to be tempered with the fact that the figures haven’t yet touched the dizzying heights that they had reached in the year 2000, when 70% of all B-school graduates had job offers before graduation. But when compared with a slump in 2003, the upswing seems to be a lot quicker this time round. “I firmly believe that the current recovery is based on stronger fundamentals, as corporates are now more pragmatic after having learnt from the last few years,” says Madhukar Kamat, CEO and MD of the Mudra Group. Kishore Biyani, CEO of Future Group, feels that a sharper fall this time has itself brought positive change.

According to V.K. Menon, Senior Director, careers and admissions at the Indian School of Business, Hyderabad, MBA hiring patterns lag behind business cycles, both during an upturn as well as a downturn. “When there’s a downturn there’s a great deal of cost-cutting in companies, with employees losing their jobs. When the business cycle turns, there is some optimism, but companies are wary of taking any quick decisions, or hiring in a hurry,” says Menon.

Some, like Milind Sarwate, Group CFO and Chief HR officer at Marico believes that, both during an upturn as well as a downturn, there is an “over-reaction” when it comes to hiring patterns, with companies hiring more than they need on the one hand, and firing more than they need on the other. He too, feels that hiring patterns are a “lagging indicator of the economy.”

The good news is that the Asia-Pacific region has contributed the most to the job offers that candidates have received this year (67 %). “It’s but natural that Asia has fared well, as many Asian economies have recovered faster, and some never went through a stringent recessionary phase at all,” says Kamat.

“Clearly there are two worlds; while on the one hand, you have the developed countries where job creation is still an issue,on the other hand, you have the emerging economies in the Asia and Pacific region, where there’s still very strong economic growth,” feels Nitish Jain, President of the S.P. Jain Centre for Management, Dubai, Singapore.

Source: The Times of India, May 11, 2011

Focus on higher education to leverage demographic advantage

The global marketplace and indeed the world economy is changing rapidly and these changes are impacting the way we do business, earn a living and grow within India as well. About 51% of India’s population is less than 25 years old. While this gives India a large demographic advantage, states in India need to focus on education to ensure that an educated and appropriately trained/skilled workforce is ready to tap the opportunities of the time. However, increased government spending on education since 2007 notwithstanding, 142 million children in India are denied primary and secondary education and a third of the nation’s population cannot read. Clearly, with the Indian economy growing rapidly, fuelled by the rise of knowledge-intensive and hi-tech sectors like ICT, automotives, pharmaceuticals and others, states must ensure quality education to enable Indians reap the benefits of economic growth.

In order to understand which states in India are prioritising education, we considered four indicators higher secondary school enrolment, government revenue expenditure on education, number of universities and women’s literacy rates. These indicators serve as good pointers to the condition of education in a state and impact on economic growth.

Small states target education as the recipe for growth; need more focus
The hill states of Uttarakhand and Himachal Pradesh will benefit from high per capita school enrolment figures, which are much higher than the national average of approximately 3230 students per 100,000 people, even as their GDP growth rates are above the national average. Meghalaya, Tripura, Haryana, Goa and Delhi are other states with healthy GDP growth as well as school enrolment figures. These, except for Haryana, are also among the top 10 states in terms of per capita revenue on education, arts and culture. This indicates that education is a clear priority in these states.

Women’s literacy is another dimension and the one widely seen to have a big impact on economic growth. Many small states fare well in this regard. Kerala clearly stands out with exemplary female literacy rate (87.72%). The state also shows healthy school enrolment figures, good government expenditure and adequate infrastructure.

The fact that these states are small both in geographical area and population requires them to pay attention to the quality of their human resources if they have to attract investment and successfully harness their natural endowments. For instance, both Uttarakhand and Himachal Pradesh have focused on creating industrial zones. The success of these industrial zones depends on the availability of employable talent locally, besides power, cost of land, logistics and government incentives.

From a competitiveness perspective, these states would need to align skills imparted by the institutions in the state with the skills to be required by the industry in the future. States, therefore, need to make a realistic projection of labour that would be required by the industries the state is promoting as well as by those industries that already exist, and then focus on developing institutions that can train people who can be placed in these industries. This is the key to enable people to avail of the opportunities within their home state, instead of being forced to migrate to other states or metros for employment.

Large states daunted by task of educating masses despite adequate infrastructure
Tamil Nadu and Maharashtra are the only two large states with good higher enrolment figures for higher secondary school. Other large states such as West Bengal and Karnataka, that have healthy GDP growth, and even Bihar and Andhra Pradesh, that have substantially higher GDP growth than the national average, show poor per capita higher secondary school enrolment. Madhya Pradesh scores low on both counts. Large states, with the exception of Tamil Nadu, Maharashtra and West Bengal, are also at the bottom of the list when it comes to female literacy.

Educating a large population is a challenge for big states. If we look at the figures for government expenditure, this is evident. Large states do not figure among the top 10 spenders per 100,000 population. Yet, West Bengal spends more on education, arts and culture than Tamil Nadu and Maharashtra that show good enrolment figures. Madhya Pradesh and Uttar Pradesh spend the least per capita on education.

Ironically, these large states have the best infrastructure in the country. Uttar Pradesh has the largest number of universities (29), followed by Maharashtra (27), Tamil Nadu (22), Andhra Pradesh (20), Madhya Pradesh (19), Bihar (17), Karnataka (16) and West Bengal (14). However, the quality of education imparted by these institutions is a matter of concern. States such as Madhya Pradesh and Uttar Pradesh are neither able to adequately fund their educational institutions, nor retain quality faculty. Inadequate employment opportunities for graduates further strengthen the cycle of out-migration, leaving such states bereft of their knowledge workers and lowering the motivation for profit-making corporations to invest in these locations.

This has, however, been changing in specific cities where centres of learning, corporate will and attractive location factors are fuelling clusters of industry in specific verticals. Bangalore in Karnataka has emerged as a hub for the IT industry and so has Hyderabad in Andhra Pradesh. Uttar Pradesh has world-class institutions like the Indian Institute of Technology (IIT) at Kanpur, Indian Institute of Management (IIM) at Lucknow and the Banaras Hindu University (BHU) at Varanasi, but has been unable to develop industries around these to harness the resident knowledge from these places and employ the graduates. The standards of state-level universities that attract local students must also be simultaneously raised while local employment opportunities are created.

Low-performing states need urgent intervention to progress
Some of the small and mid-sized states that do not fare so well need specific intervention. Chhattisgarh, Orissa, Gujarat and Nagaland have poor higher secondary school enrolments despite moderate and high GDP growth. Jharkhand, Punjab and Assam have low GDP growth rates and low school enrolment. Other than Nagaland, Punjab and Gujarat, these are also the states with low female literacy.

Rajasthan is on the cusp of both GDP growth and school enrolment. However, Rajasthan has surprisingly high government expenditure on education, showing that the state has prioritised education and is determined to cross over into a better performer in the next decade. States such as Chhattisgarh and Jharkand, which do not have a single university yet, need to urgently create the right infrastructure to raise their human capacity and attract investment.

Long-term benefits on the horizon
States need to focus on the benefits that education provides in the long term. A literate population results in controlled population growth rates over time. High-quality workforce will allow states to boost economic growth by focusing on more sophisticated and value-added industries and services instead of merely continuing to invite investment in basic manufacturing and service activities. The increased productivity that a trained workforce can deliver results in enhanced prosperity and better distribution of wealth, which are the ultimate goals of governments and private sector corporations alike.

Source: The Economic Times, December 25, 2010

Global economic recovery still in fragile zone: IMF chief

The theme is still cautiously optimistic, despite the numbers from the U.S. What we are seeing in the U.S. is a statistical recovery and a human recession. This suggests that the policies to contain the economic collapse have been successful. My judgmentand most peoples judgmentwill be that GDP growth will continue at a moderate rate at least for the next several quarters, said Larry Summers, Economic Adviser to the U.S. IMF’s Dominique Strauss-Kahn said Asia is leading the world out of recovery, but though growth is coming back faster than expected its still fragile.

The consensus from a phalanx of policymakers around the world was that the global recovery is still very delicate , and Asia and emerging markets are zipping back to recovery much faster than the developed economies. Planning Commission deputy chairman Montek Singh Ahluwalia told the gathering, Asia has weathered this crisis …. We would hope in coming years we will move from 7.5% to over 8% next year then get back into 9%. Its going to be domestic investment replacing what has otherwise been export demand. I don’t think the deficit will be more than 2.5% of GDP. In addition, Deputy Governor of China’s Peoples Bank Zhu Min added that the focus in China will shift to a more balanced growth, and to the aim is to boost consumption growth and domestic demand hopefully the international environment is good, he said.

At one level, central bankers, private bankers and economic ministers met for an extremely private chat about what to do about banking reforms, and while Davos is not a venue for decisions, it seems, from reports, everyone agreed that something will be done. Up the road, trade ministers met for a chat about the future of the WTO. The Indian delegation, though somewhat depleted, was still going strong, and the afternoon session on Indias future growth strategy was packed to the back of the hall. This year though, the annual gathering at Davos has left many a bit confused, with no real dominant theme emerging.

Source: Excerpted from The Economic Times, January 31, 2010

Global economic recovery still in fragile zone: IMF chief

The theme is still cautiously optimistic, despite the numbers from the U.S. What we are seeing in the U.S. is a statistical recovery and a human recession. This suggests that the policies to contain the economic collapse have been successful. My judgmentand most peoples judgmentwill be that GDP growth will continue at a moderate rate at least for the next several quarters, said Larry Summers, Economic Adviser to the U.S. IMF’s Dominique Strauss-Kahn said Asia is leading the world out of recovery, but though growth is coming back faster than expected its still fragile.

The consensus from a phalanx of policymakers around the world was that the global recovery is still very delicate , and Asia and emerging markets are zipping back to recovery much faster than the developed economies. Planning Commission deputy chairman Montek Singh Ahluwalia told the gathering, Asia has weathered this crisis …. We would hope in coming years we will move from 7.5% to over 8% next year then get back into 9%. Its going to be domestic investment replacing what has otherwise been export demand. I don’t think the deficit will be more than 2.5% of GDP. In addition, Deputy Governor of China’s Peoples Bank Zhu Min added that the focus in China will shift to a more balanced growth, and to the aim is to boost consumption growth and domestic demand hopefully the international environment is good, he said.

At one level, central bankers, private bankers and economic ministers met for an extremely private chat about what to do about banking reforms, and while Davos is not a venue for decisions, it seems, from reports, everyone agreed that something will be done. Up the road, trade ministers met for a chat about the future of the WTO. The Indian delegation, though somewhat depleted, was still going strong, and the afternoon session on Indias future growth strategy was packed to the back of the hall. This year though, the annual gathering at Davos has left many a bit confused, with no real dominant theme emerging.

Source: Excerpted from The Economic Times, January 31, 2010

U.S. deficit may hit recovery: Obama

U.S. President Barack Obama renewed his pledge on January 30 to make job creation his top priority in 2010 but said it was also critical to rein in a record budget deficit that threatened economic recovery. Obama used his weekly radio and Internet address to remind Americans of the various proposals he put forward in the last week to spur job growth and tame a $1.4 trillion deficit. The White House has said Obama is still committed to a promise he made last year to halve the deficit by the end of his term in 2013. But in his radio address on Saturday, he talked only of reining in the deficit. Obama is due on Monday to unveil his proposed budget for fiscal 2011 that begins October 1, and has said it will include a threeyear spending freeze on some domestic programs.

A Pew Research Center study published this week showed 60% of those polled viewed reducing the budget deficit as a top priority for 2010, up from 53 % in 2009. Obama acknowledged these concerns in his address. As we work to create jobs, it is critical that we rein in the budget deficits weve been accumulating for far too long deficits that wont just burden our children and grandchildren, but could damage our markets, drive up our interest rates, and jeopardise our recovery right now, he said. The size of the deficit is a political hot potato in an election year, with Republicans seeking to paint Obama as a big spender and the White House countering that the president inherited a $1.3 trillion deficit when he took office. Democrats face a tough time in holding on to their majorities in both the Senate and the House of Representatives in the mid-term congressional elections in November. High unemployment, now at 10%, and the size of the deficit could hurt them, analysts say.

Obama noted that new data released on Friday showing the economy grew at a 5.7% rate in the fourth quarter, calling it a sign of progress and evidence that his policies to stimulate the economy were working. But when so many people are still struggling when one in 10 Americans still cant find work, and millions more are working harder and longer for less our mission isnt just to grow the economy, he said.

Source: The Economic Times, January 31, 2010

India’s GDP to grow at 9.2%: CMIE

Indian economic growth is likely to return to pre-crisis levels in the next fiscal year, driven by strong industrial and agriculture growth, a recent review by a think tank showed. The Centre for Monitoring Indian Economy (CMIE) expects the Asia’s third largest economy’s GDP growth to accelerate to 9.2% in 2010-11 from 6.9% in 2009-10. “In fiscal 2010-11, real GDP growth will be propelled by a strong performance by the industrial sector and a robust recovery in agricultural and elite sector. Services sector too is expected to do well,” CMIE said in the report. “A revival in consumer confidence and investment activities will supplement growth in the commodities segment,” it added.

India’s GDP growth slowed to 6.7% in 2008-09 from 9% or more in the previous three years as the effect of global financial turmoil hurt demand, prompting the authorities to unveil a spate of measures designed to boost the economy. The measures helped as the country’s industrial output grew at its fastest pace in two years in November at 11.7%, the economy expanded 7.9% in the September-quarter and inflation jumped to a one-year high of 7.3% in December.

CMIE expects the wholesale price index, the main price barometer, to steadily fall to 7.7% in the June quarter and further to 3.8% March quarter of 2011. The drop in inflation which is seen across primary articles, fuel and manufactured products, is likely to be because of the high base value in 2009-10 and a good kharif (summer) crop production in 2010, it said. Headline inflation is estimated at 8.6% in March quarter, CMIE said.

Source: The Times of India (Online Edition), January 25, 2010

Asia resilient to crisis: ADB

Asia has proved to be more resilient than expected to the global financial crisis with economic growth rebounding after governments adopted supportive monetary and fiscal policies, the Asian Development Bank said today (September 22). The Manila-based multilateral bank raised its estimate of average growth in developing Asian economies to 3.9 per cent in 2009 from a forecast of 3.4 per cent made in March. It also raised the 2010 growth forecast to 6.4 per cent from 6.0 per cent.

But it stressed a regional recovery was not yet on solid footing, and said policymakers risked derailing growth if they withdraw stimulus policies too early. “Underpinning the resurgence was the impetus to demand from expansionary fiscal and monetary actions taken by governments throughout the region, especially China and India,” the ADB said in its updated annual outlook, adding that Indonesia and Vietnam also saw solid economic growth. “Tax cuts, greater public spending, targeted assistance and easy monetary policies boosted consumption and investment.”

The ADB said growth in China in 2009 should come in at 8.2 per cent, up from its March forecast of 7.0 per cent. Growth should surge to 8.9 per cent in 2010, it said. Many Asian economies have pinned their hopes on a strong rebound in China amid persistently weak consumer demand in U.S. and European export markets. For India, growth was projected at 6.0 per cent this year and 7.0 per cent next year, up from the previous forecasts of 5.0 per cent and 6.5 per cent, respectively. “In short, the 2010 outlook is for growth to come back strongly relative to 2009, giving a V-shaped trajectory to developing Asia’s recovery from the world recession,” it said.

Nevertheless, the forecast 2009 growth will still be the lowest since 1998, at the time of the Asian financial crisis. “Developing Asia will only be able to regain a high-growth trajectory if the global economy is growing closer to its potential,” the ADB said. “With external demand from the main industrial countries still relatively weak, it will be difficult for developing Asia to return to the high growth rates of 2006/7.”

On Inflation and Monetary Policy, the ADB said the resumption of growth had taken place against a backdrop of low inflation or even mild deflation. Its forecast for average inflation across the region is 1.5 per cent for 2009, from its previous forecast of 2.4 per cent. It said the threat of inflation remained muted, although it was likely to tick up to 3.4 per cent in 2010. “This is not the time for an exit from expansionary policies — the recovery remains fragile and subject to serious downside risks,” the ADB said, referring to massive amounts of stimulus that many countries introduced during the global crisis. “Pulling away the carpet of fiscal and monetary support before the recovery has a firm foothold may lead to a double-dip decline instead of the expected V-shaped rebound.” However, it added: “Central bankers in the region will want to put a tight watch on monetary policies so as not to encourage asset bubbles that would inflate prices to levels that are no longer justified by fundamentals.”

Source: The Economic Times

ADB optimistic about India’s growth

The Asian Development Bank (ADB) hiked its growth forecast for India today (September 22), saying pump-priming measures and aggressive monetary easing had boosted the outlook for the region’s third-largest economy. The ADB projected India’s economy would expand by six per cent in 2009, up from a five per cent estimate given in March, and grow by seven per cent in 2010, a revision from its earlier forecast of 6.5 per cent. “The government’s strong fiscal stimulus, complementing the Reserve Bank of India’s aggressive monetary policy easing, has successfully brought last year’s economic slowdown to an end,” ADB chief economist Jong-Wha Lee said.

The Manila-based bank attributed its optimism in its 2009 update to a rise in public spending, better capital inflows, stronger industrial output and signs of improved business confidence. Agricultural output in 2009 is expected to be “stunted” by a bad monsoon and exports will be weak, the ADB said. But India’s “adroit economic management in the form of fiscal stimulus packages and accommodative monetary policy has minimised damage from the global financial crisis”, it added. This is “supporting a relatively strong economic expansion again”, the ADB said.

India logged 6.1 per cent growth in the first quarter of 2009, a modest rise on the previous two quarters, the ADB noted. The upturn reflected a recovery in industrial growth to five per cent from less than two per cent in the previous six months. Weak farm production in the second and third quarters is likely to weigh on growth, although a rebound is expected in the final quarter.

The report said growth in 2009 would be driven by government spending, and the combination of fiscal policies and renewed investor confidence should sustain expansion in private consumption and investment. In 2010, forecasts for better rainfall, a rebound in exports as the recession ends in industrial economies, and stronger investor confidence will underpin further economic growth. One potential threat to the economy is domestic food price inflation, which may create a dilemma for the central bank, the ADB said. The Reserve Bank of India will have to keep inflation expectations in check but at the same time not “choke off a recovery”, it said.

Source: The Economic Times