Launch of the Leadership Programme in Infrastructure Management

The Indian School of Business to launch a specialized certification programme in Infrastructure called the Leadership Programme in Infrastructure Management (LIM) on August 25 in New Delhi.

There is a huge emphasis on infrastructure in India, Africa and other Asian countries, and in the next few years, the industry needs good leaders who can understand the multidisciplinary challenges of the sector and drive the nation into the future. To fulfill that pipeline, mid-career professionals in the industry need to be equipped with the necessary skills and competencies relating to multiple disciplines such as strategic planning, finance, economics, law, social and environmental issues, public policy and other subjects. This needs a structured programme of learning. The Leadership Programme in Infrastructure Management (LIM) is being designed to cater to this need.

The design and delivery of the LIM is a collaborative effort of the Indian School of Business’s Centre for Executive Education and the Punj Lloyd Institute of Infrastructure Management. Inputs and feedback from leading academicians and industry experts have been incorporated at the design stage to enforce academic rigour and to ensure that the programme is best suited to the needs of the infrastructure industry.

Through an integrated combination of research, education and impact, the Punj Lloyd Institute of Infrastructure Management strives to be a transformative force for the infrastructure sector in India. The Institute has worked together with the Centre for Executive Education at ISB to put together a research-based education programme aimed at the infrastructure sector. This will be a hybrid programme based on in-class as well as technology-assisted learning and will be the first-of-its-kind in the industry. The programme will teach management principles in the context of the infrastructure sector – enabling managers in the sector to run their operations more professionally and efficiently and thus become capable leaders to lead the sector to new heights and global standards. Pradeep Singh CEO, Mohali Campus and Deputy Dean Indian School of Business.

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Comments on the Revised Draft Indian Financial Code

The Ministry of Finance had recently  released the Revised Draft Indian Financial  Code (“Code”) for  public comments. Mandar Kagade, Analyst at  the Bharti Institute of Public Policy submitted his comments on some of the salient proposals of the Code  with suggestions for reform. Please the submissions here.

Disclaimer: The views expressed in this comment paper are solely and exclusively the author’s own and do not necessarily represent the views of the Bharti Institute of Public Policy, Indian School of Business.

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The Indian Financial Code Draft II: Catalyzing “Too Big to Fail” In India?

By Mandar Kagade, Analyst, Bharti Institute of Public Policy

The Indian Financial Code has proposed to constitute the Financial Stability & Development Council (“FSDC”) pursuant to Chapter 76 of the Code with the objective of fostering the stability and resilience of the financial system by identifying and monitoring systemic risk and taking all required action to eliminate it. I submit that despite the otherwise laudable objectives, the existence and the functions of the FSDC in its current form create a significant risk of “Too Big To Fail” moral hazard in the Indian financial markets.

First, the FSDC through its Executive Committee is tasked to designate certain financial service providers (“FSP”) as “Systemically Important Financial Institution” (“SIFI”). While such identification is important as it alerts the markets about the location of concentrated risk, the identification itself creates implicit moral hazard among the market constituents and potential counterparties because it sends a strong signal that the given FSP is irreplaceable in the financial ecosystem. Once investors and potential counterparties know that a particular FSP is a SIFI, they have a strong incentive to not monitor its financial health themselves because they will rationally discount the risk that the SIFI will be allowed to fail. Put differently, the cost of capital required by investors and counterparties for doing business with the SIFI concerned will be at a discount to its real cost of capital. This lack of market discipline is likely to induce a further moral hazard among the shareholders and the management of the SIFI concerned as they will be motivated to take “headsI wintailsyou lose” risks as they will internalize all the profits from taking the extra risks and will “socialize” the losses among the taxpayers and the counterparties, if the bets go wrong.

Second, it is arguable that the FSDC and the regulator concerned will themselves monitor a designated SIFI pursuant to its mandate under the Code. However, I submit that since the FSDC and the other regulators are situated outside the SIFI, any monitoring, however rigorous, will only happen with a time lag. As the great financial crisis of 2008 (“GFC”) teaches us, the downward spiral from a merely illiquid FSP to an insolvent FSP can take place rapidly.  As such, monitoring from the outside leaves the SIFI (and consequently) the financial system at large, exposed to failure.

The FSDC is modeled on the lines of the Financial Stability and Oversight Council (“FSOC”) constituted by the Wall Street Reform & Consumer Protection Act, 2010 (“Dodd-Frank Act”). Like the FSDC, the FSOC too has the mandate to identify a SIFI. However, in contrast to the Indian Financial Code, the Dodd-Frank Act also mandates that the FSOC act to promote market discipline by eliminating moral hazard. The Indian Financial Code fails to provide any explicit mandate to the FSDC for elimination of moral hazard. Of course, not to say that the Dodd-Frank Act eliminates moral hazard altogether; as discussed, the very act of identification of a SIFI itself leads to implicit moral hazard. However, if we are to retain a super-regulator at all, then we are better off curtailing its  discretion to resort to bailouts by explicitly prescribing that it balance its systemic risk concerns  against the competing objective of moral hazard mitigation. I propose to submit comments on the same lines to the Ministry of Finance. It is to be hoped that the lawmakers implement the proposal.

This post was first published in IndiaCorpLaw on August 3, 2015.


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India needs a realistic debt restructuring framework

By Mandar Kagade, Analyst, Bharti Institute of Public Policy, ISB

The Reserve Bank of India (RBI) recently announced the Strategic Debt Restructuring (SDR) scheme in furtherance to the framework for revitalizing distressed assets in the economy that was notified in February this year.

The SDR scheme empowers a group of lenders (called the joint lenders’ forum) to convert their loans into equity (and thereby assume control) in the event a borrower who is in restructuring fails to meet the deadlines prescribed for meeting certain viability milestones. The idea driving this reform appears to be that of deterring errant promoters and increasing the powers of resolution given to lenders, with a view to lowering the percentage of non-performing assets (NPAs) in the banking system. The SDR scheme may, however, not be as effective as it otherwise could be owing to certain features RBI has prescribed.

Lenders may choose to use their powers of conversion subject to the approval of 75% of lenders in value and 60% in number. This appears to be a difficult threshold to meet in a distressed debt situation with multiple lenders. Imagine a scenario where the largest lender holds 50% of the borrower’s debt and the balance is held across four other lenders (say, 12.5%, 15%, 10%, and 12.5%). In the light of the threshold prescribed by RBI, the conversion will require the approval of three lenders. Suppose the largest lender is well-motivated to convert the debt into equity (and then exit through a sale to a third party) but the other lenders are unsure of conversion. This can happen, for example, due to information asymmetry concerning the extent of liabilities and claims on the borrower’s balance sheet and uncertainty surrounding finding a buyer for the purchased equity. Accordingly, they will withhold their approval and the senior-in-value lender cannot execute the conversion, even when that might have been valuable.

Media reports suggest that such differences between small and large lenders already exist given the reluctance of small lenders to convert their debt. It is early days but one cannot rule out coordination failure that will blunt the SDR scheme.

One solution to mitigate the risk of such coordination failure is to permit the largest lender in value to buy out the smaller lenders at a mutually determined price (and then convert the aggregate debt into equity). Enabling a secondary market in distressed debt will also mitigate the risk for the third-party purchaser when the lender(s) sells the equity. This is because the prospective purchaser will have to deal with fewer sellers than otherwise to purchase a strategic stake.

However, the SDR scheme as it exists at the moment lacks provisions that will enable the large lender to consolidate the debt in the manner discussed. RBI should suitably change the scheme to catalyse limited secondary trade in distressed debt that will mitigate the risk of coordination failure among lenders. Borrowing an idea from the US bankruptcy code, another solution could be to amend the SDR scheme to allow a “cramdown” on the dissenting lenders through a court-directed process.

The other inhibiting feature of the SDR scheme appears to be a bar on the promoter group to be the third-party buyer when the lender(s) exit. While on bare reading, the bar appears reasonable (as the promoters’ “failure” to meet the viability milestones brought about the conversion in the first place); it appears that the promoter group may be useful in the sale process in some ways:

1) Finding a third-party purchaser to own and manage the distressed borrower company is likely to be difficult given the information asymmetry concerning true value of its equity. The promoter group is more likely to know the value better than the third parties. Furthermore, the promoter group also brings to the table specific human capital; the potential third-party purchasers lack that.

2) Lastly, but perhaps more pertinently, the bar on the promoter group to become a prospective purchaser appears to reflect a bias and cultural stigma against bona fide business failure. It may be noted that the cases under the SDR scheme are not those of “wilful defaulters” where the promoters have siphoned off funds or otherwise committed fraud; the failure to meet viability milestone guidelines could be a genuine business failure and should not per se bar the promoters from bidding for purchasing equity from the lenders.

This article was first published in Live Mint on July 2, 2015.

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‘Scale in India’ a must for Make in India

In their article, , Piyush and Seshadri argue that Make In India will happen when small manufacturers are able to connect to the larger global supply networks. The current equilibrium of low productivity, outdated technologies and disconnected supply chains can not be sustained if modern manufacturing enters India. Rather than uproot them enmass their suggestion is to transform the supply base. Their warning is timely because already cheap imports are pushing Indian firms to non-existence.

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Decoding the Admissions Process for the YLP

To an aspiring professional, there’s nothing more valuable than structured learning and mentoring at the right time. At ISB, we recognize the need for such expert guidance and have created the Young Leadership Programme (YLP) to fulfill the needs of undergraduate students who envision a lasting career in management.

The YLP is open to applicants from around the world. If you are a pre-final year, undergraduate student who can claim outstanding academic performance or prowess in extra-curricular activities, then you would be the ideal candidate for the programme. Applicants from all fields of study such as arts, commerce or science are welcome to apply for the YLP.

The application process consists of three stages and can be carried out entirely online, eliminating the need for physical documents. To apply, a student must remit a fee of INR 1,000.

The stages of the application process are explained below.

Stage 1:

Submission of the following information:

  • Academic information
  • Extra-curricular information
  • Essay as per the topic provided
  • Scanned copies of
    • Recent passport-sized colour photograph
    • Academic mark sheets and certificates
    • Signed statement of integrity
    • One-page resume
    • Student ID card or letter from the college

Once your information has been screened, and if you’re shortlisted, you go through to the second stage of the application process.

Stage 2:

In the second stage of the application process to the YLP, students are required to write and submit two essays. Topics for the essays will be provided. Applicants also need to provide two recommendations in the format advised on the application portal. Scanned copies of the following documents also need to be submitted:

  • Main page of the passport displaying passport number, name, date of birth and citizenship
  • GMAT score (the test centre or unofficial score report would also suffice in lieu of the same)
  • TOEFL score, if applicable

These documents need to be scanned in 150 or 200 dpi in a PDF format.

Completed applications from the second stage are reviewed by the Admissions Office and applicants are shortlisted.

Stage 3:

In the final stage of the application process, candidates who have been shortlisted from the previous stage are invited for interviews. Applicants who are from India are interviewed in person, while applicants abroad are interviewed over voice calls/Skype.

Some aspects to be remembered while applying include:

  • The application at all stages must be provided in entirety. Incomplete applications will not be considered for review.
  • Preference of campus (Hyderabad or Mohali) must be stated clearly to give us a chance to accommodate your preference to the extent possible.

Through the YLP, we aim to nurture and guide tomorrow’s leaders by igniting the spark of excellence in them. Being part of the YLP also provides students the opportunity to join the privileged Post Graduate Programme in Management at ISB, further honing their potential and ensuring that a comprehensive roadmap to success is charted out.

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Know more about the Learning Weekends at YLP

Charting out the right career path is a daunting task for any young dreamer. Harbouring a general idea of the career one wants to pursue is one thing, but knowing how best to create a successful career needs expert assistance from the industry. The Young Leaders Programme (YLP) at ISB bridges the gap between ambitious dreams and reality with guidance and mentoring from experts. This one-of-a-kind programme identifies potential and cultivates leadership capabilities at the right stage of education.

Engineered to accelerate career growth, YLP helps hone future business leaders through structured learning curriculum, mentoring and networking. The programme specifically focuses on undergraduates, training them and providing them the opportunity to be part of one of the country’s most privileged programmes for aspiring managers.

One aspect that sets this leadership programme apart from the others is intensive Learning Weekends. The four sessions of Learning Weekends, conducted once in six months, form the essence of the programme, providing students an insight to what a B-school education requires. Students develop the right thought processes to enhance corporate problem solving abilities in these classes. Their awareness of career options and opportunities is improved upon to ensure that they make better decisions.

At YLP Learning Weekends, experts across domains mentor and counsel students, steering them towards the right career moves. They help students identify and heighten leadership potential. Key skills for managers such communication, presentation and relationship management are also focused on during these sessions. Additionally, students can benefit from networking with their peers, setting up the foundation for successful careers.

The Learning Weekend modules require students to submit assignments which are evaluated by faculty. Based on the evaluation, students are provided feedback. Evaluation summaries are maintained for every student after each module to keep a growth record. This facilitates identification of scope for development for students.

With Learning Weekends, YLP ensures that aspiring leaders enjoy better clarity and sense of direction with respect to their careers.

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Why YLP is Ideal for the Leaders of Tomorrow

The debate over whether great leaders are born or created has been in progress for decades. At ISB, we believe that individuals with latent potential can be groomed to become effective leaders, no matter what their field of specialisation is. Our alumni are testament to this belief. Graduates from ISB have gone forth to hold leadership positions in some of the biggest global brands across industries. Graduates with entrepreneurial mind-sets also establish their own start-ups, defining success on their own terms.

We believe that grooming future leaders needs to start from a much earlier stage than previously thought. Our Young Leaders Programme (YLP) is designed to provide the much sought after learning and guidance, which undergraduates who envision a career in management need. ISB identifies potential leaders through holistic evaluations that consider academic prowess (GMAT scores, collegiate performance), extracurricular activities (to determine what additional skills or leadership quotient candidates can bring to the table), essays as well as references.

The YLP provides students a keen edge through multiple beneficial aspects, the majority of which include the following.

Learning and Mentoring

We understand that students who wish to pursue a career in management often have a lot of questions with regards to the right approach for the best results. At this stage, ideas often require more clarity and direction which are best addressed by industry experts. By participating in the YLP, students get priceless insights and mentoring from experienced leaders across industries. Structured learning sessions ensure that students absorb the critical aspects of management.

Prequel to a Globally Recognised Management Program

YLP students are provided the opportunity to enrol in the flagship Post Graduate Programme (PGP) in Management. Work experience of 1 year 9 months is required to be completed before a candidate is considered eligible for admission to the PGP.  The PGP further equips and shapes aspiring leaders to step out into a competitive world and steer their careers towards success.

Making Connections

A strong network of connections is an extremely important resource for any professional, more so for managers and future leaders. ISB alumni comprise achievers in top management positions across the world and founders of extremely successful entrepreneurial ventures. Students get opportunities to interact not only with alumni and mentors but also build connections with industry peers who serve as indispensable assets for a bright career ahead.

Tuition Waiver

Another beneficial aspect of being a part of the YLP is that students who wish to pursue their PGP at ISB can avail tuition waivers of INR 1 lakh (~USD 1,500). This waiver is in addition to any merit or need based scholarship that the applicant may choose to apply for.

Being part of the YLP gives every student the chance to develop as well-rounded future leaders who can effortlessly lead businesses to succeed. It is the start to a powerful education that will equip them for life.

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Repeal of the “Swaps Push Out” Rule— An Evaluation

By Mandar Kagade, Analyst, Bharti Institute of Public Policy, ISB

The United States Congress recently passed the Consolidated and Further Continuing Appropriations Act, 2015 that made headlines for reasons not at all related to appropriations; it was in the news rather for including provisions that repealed the so-called “swaps push-out” rule (“Rule”) introduced in the Dodd-Frank Act, 2010 in the aftermath of the recent financial crisis. Influential members of the pro-Rule lobby include Nobel Prize winning Economist, Dr. Paul Krugman (likening the repeal to “revenge of the wall street” in a recent op-ed) and Senator Elizabeth Warren, formerly a law professor at the Harvard Law School. Understandably, they, including others, have come down heavily on the repeal of the swaps push out mandate. This post attempts to push back against such rhetoric and argues that repealing the swaps push out mandate is likely to lower (not aggravate) systemic risk and moral hazard that the Rule purported to do.

Briefly, the Rule foreclosed “federal assistance”[1] to all insured depositary institutions (“Banks”) that domicile their swap dealing business in the same entity as the Banks. It permits the Banks to have or establish an affiliate “swap entity” to conduct swap dealing business. The Rule “safe harbored” a few specified swap dealing activities – swap dealing for the purposes of hedging and risk mitigation was permitted, as was dealing in some statutorily defined swaps. Finally, the Rule permitted Banks to deal in credit derivative swaps subject to the condition that they be cleared through a central clearing counterparty (to mitigate the counterparty risk that swap counterparties are exposed to).[2] On the other hand, the Rule excluded Banks from dealing in structured finance swaps (having asset backed securities as the underlying for example) and other non-structured finance swaps that were outside the purview of the relevant safe harbor statute. The purpose of the Rule was to “ring fence” the speculative activities of the Bank from the more traditional maturity transformational intermediation that Banks performed so that excessive risks from the speculative activities have no spillovers to the broader economy through the Banks. This is further to ensure that the speculative activities of the Banks do not benefit from the implicit capital subsidy that Banks enjoy by being part of the federal deposit insurance system (supervised by the Federal Deposit Insurance Corporation, FDIC).[3]

Before proceeding further, a word about the repeal provision is in order: The repeal provision adds to the exemptions already described above, and permits the Bank to conduct all non-structured and structured finance swap activities, provided they are, a) for hedging or risk mitigation purposes, or b) the securities (that are the underlying of such swap activities) are approved jointly by the relevant prudential regulators in terms if the type and the credit quality.[4]

As pointed out above, there was a strong push back and shrill rhetoric arguing against the repeal. The fact that the banking lobby included the amendment in the unrelated law on federal spending was seen as the powerful “Wall Street lobby” arm-twisting the Main Street to get its way. Media reports about certain lobbyists having actually drafted the repeal provisions augmented the view and proved to be a public relations nightmare for Wall Street generally.

The politics of the repeal however only reflect the political economy of financial regulation in the United States. Every time a financial crisis precipitates, lobbying groups and the politicians advocating greater regulation use the opportunity to impose extensive regulation—mostly without adequate cost-benefit analyses. The popular outrage that marks every expose provides the perfect opportunity to risk monger for political and “turf-enhancement” purposes. The Dodd-Frank Act, so also the Sarbanes Oxley Act (that was passed in the aftermath of the Enron scandal) are testimony to this fact.[5] So, it appears to be a case of double standards to protest when the opposing lobbying groups succeed in moderating some extreme regulations down the road.

Politics apart however, criticism of the repeal appears overstated for the following reasons:

- Contrary to the belief, pushing out swap dealing to affiliate swap entities is likely to increase systemic risk, not decrease it. This is because of the fragmented nature of the United States financial architecture. Under the Rule, Commodity based swaps would be within the domain of the Commodity and Futures Trading Commission (“CFTC”), and the Securities & Exchange Commission (“SEC”) had the jurisdiction to regulate security-based swaps. Banks were permitted to retain a “Swaps Entity” as affiliate, but such affiliate was mandated to comply with the requirements of either the CFTC or the SEC as appropriate in addition to the Federal Reserve. Multiple regulators having jurisdiction over the same/similar financial product can lead to regulatory arbitrage and let the risk aggregate in the system through instruments that have laxer regulator. On the other hand, the Federal Reserve is the sole regulator (backed up by the FDIC intervention in zone of insolvency) if Banks conduct swap dealing activities on their own balance sheet and as such no such regulatory  arbitrage issues exist with respect to its supervision of the Banks’ swap dealing activities. Further, since the swap activities expose participants to counterparty risks, prudential regulator like the Federal Reserve that have access to the entire balance sheet of the Bank appear to be arguably better suited to regulate the swap dealing activities.

- Finally, since the Rule nonetheless permitted the Swaps Entity to be an affiliate of Banks, it failed to isolate the Bank from the systemic risk component that the Swaps Entity was exposed to while at the same time, making the source of that risk to the Bank one step removed from its prudential risk regulators.  In a nutshell, the swaps push out rule had dubious benefits at best.

- On the other side, capitalizing an entity separately and transferring the technology there entails costs and smaller/regional banks potentially would not incur the expense of doing so; as such, their local clientele will be constrained to purchase hedging instruments from third parties at higher cost than hitherto. Overall therefore, the swaps push out rule would have made risk management costlier. Further, as Patrick Bolton has argued, there are economies of scale and scope in retaining both the traditional lending and fee-based services (like swaps) in the same entity that the Banks lose out on, by divorcing the two. For example, Banks may use the information they obtained through lending to also offer swaps to a trader-borrower that wants to hedge its commodity exposure for example. Note that these economies of scale also enable Banks to pass on the savings to their customers such that the latter are able to hedge their exposure at a much lower cost. The society as such would have lost out on such gains under the swaps-push-out framework.

- A review of testimonies of the then Chairman, Ben Bernanke and FDIC Chair, Ms. Sheila Bair reveals that both of them had reservations about the Rule. Ben Bernanke pointed out that other provisions mandating settlement of OTC derivatives through a central counterparty, higher margin requirements and enhanced disclosures are better means to mitigate the build-up of systemic risks in the system. In her testimony, Sheila Bair had pointed out that pushing out swaps activity to an affiliate will weaken the amount and quality of capital that will be held against the activity as a prudential measure and put the swap dealing activity beyond the regulatory supervision of the FDIC.

To summarize, repealing the swaps push out mandate appears to be a move that will decrease systemic risk than increase it and thus beneficial to the society rather than the opposite.  It will enable Banks to serve the risk management needs of their constituents at the same time as enabling the prudential regulators to supervise and monitor them and prescribe optimum provisioning requirements against their swap activities, based on their respective exposures.

Finally, the Congress has delegated the authority to determine the type and credit quality of the underlying asset backed securities (against which Banks may write swaps) jointly to the prudential federal regulators.[6] It appears that the Big Bank lobby will (again) try and lobby the regulators for making this permissive universe as wide as possible.[7] However, the mandate to “jointly” promulgate the type and the credit quality of the underlying asset backed securities will presumably mitigate the risk of regulatory capture at the agency rule-making phase.

[1] Defined widely to include all federal assistance including most notably, federal deposit insurance to such Banks as conduct both traditional lending and swap dealing activities in  the same entity.

[2] (bare text of Section 716 that codified the Rule).

[3] Typically, Banks borrow from retail depositors that lend to Banks on demand on term basis and make loans to corporate and investors that invest the funds in long-term illiquid projects/ assets.  This “maturity transformation” exposes Banks to unique risks (asset-liability mismatch) that may cause their failure in the event the demand depositors demand their deposits back at the same time. (“Run on the Bank”).  The federal deposit insurance scheme mitigates the risk that the retail depositors run on the Bank by insuring deposits to the extent of USD 100,000 in one person and in one account. By thus lowering the risk, the federal deposit insurance system lowers the true cost of capital for the Banks and thus enables them to benefit from an implicit capital subsidy. This in turn enables the Banks to carry out their traditional lending operations without worrying too much about the run on the Banks.

[4]  See  (bare text of the amendment provisions, “The Swaps Regulatory Improvement Act”)

[5] See generally, John Coffee, The Political Economy of Dodd-Frank: Why Financial Reform Tends to be Perpetuated and Systemic Risk Perpetuated, available at,

[6] Supra note 4 at p.4

[7] See Usha Rodriguez, The Political Economy and the Regulatory Sine Curve available at, similarly).

This article was first published in IndiaCorpLaw on December 24, 2014.


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Students tackle Early Childhood Education participating in the 2015 Hult Prize at Indian School of Business

Hult Prize at Indian School of Business is taking place on December 13, 2014 at the ISB campus itself. Recognized by President Bill Clinton and TIME Magazine as one of the top five ideas changing the world for the better, Indian School of Business is hosting its first ever Hult Prize at event.

“It’s not every day that you have an opportunity to change the world. A team of you will be representing all of us at the upcoming Hult Prize Regional Finals happening on March 13, 2015. This is our chance to show the world that our institution is dedicated to Impact. See you in New York!”

The 2015 Hult Prize challenge focuses on Early Childhood Education and will see more than thirty teams competing. These teams are coming from Indian School of Business MBA equivalent programme to test their grit in building a viable solution to this global social issue. Judges for the Hult Prize at Indian School of Business comprise of Sasi Sunkara (Partner, McKinsey & Company), Unmesh Brahme (Country Head, Room to Read), Manish Ranjan (Co-founder & CEO, NanoHealth), Shiva Subramaniam (GVK Biosciences) and others.

Ahmad Ashkar, Founder and CEO of the Hult Prize Foundation said: “Since its inception in 2009 the Hult Prize has seen some remarkable talent emerge across the world, competing with fantastic ideas to solve the world’s toughest challenges.”

About the Hult Prize Foundation
The Hult Prize is a start-up accelerator for social entrepreneurship, which brings together the brightest college and university students from around the globe to solve the world’s most pressing issues. The annual initiative is the world’s largest student competition and crowd-sourcing platform for social good, and has been funded by the Hult family since its inception in 2009. To learn more, visit

About The Clinton Global Initiative
Established in 2005 by President Bill Clinton, the Clinton Global Initiative (CGI), an initiative of the Bill, Hillary & Chelsea Clinton Foundation, convenes global leaders to create and implement innovative solutions to the world’s most pressing challenges. CGI Annual Meetings have brought together more than 150 heads of state, 20 Nobel Prize laureates, and hundreds of leading CEOs, heads of foundations and NGOs, major philanthropists, and members of the media. To date, CGI members have made more than 2,500 commitments, which are already improving the lives of more than 430 million people in over 180 countries. When fully funded and implemented, these commitments will be valued at $87.9 billion.

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Sex Work and the Law: A Case for Nuanced Debate

By Kaushiki Sanyal, Senior Analyst, Bharti Institute of Public Policy, ISB

The debate over legalization vs decriminalization of prostitution is in the public domain with reports that the National Commission for Women has recommended legalization to the Supreme Court appointed panel for rehabilitation of sex workers. The panel, formed in 2011 when the Supreme Court suo motu converted a criminal appeal relating to a murder of a sex worker into a PIL, is in the process of consulting various stakeholders.

The mandate of this panel was to recommend measures for the rehabilitation of sex workers who wished to leave sex work, and conducive conditions for sex workers who wish to continue working in the profession.

Magnitude of the issue

Estimates of the number of women engaged in prostitution have increased over the years. In 1997, a report of the National Commission of Women put it at 2 million, in 2004, a study sponsored by the Ministry of Women and Child Development estimated it to be 3 million of which 36% were children and a 2013 report on sex trafficking by Dasra, a philanthropic foundation estimated that about 20 million women were engaged in the profession. The 2013 report showed that 80% of these women are victims of sex trafficking. Most disturbingly, out of the estimated 16 million women who are trafficked, 6 million are children under 18 years of age. There is however no official estimates available since 2004 of the prevalence of prostitution.

According to the 2013 report, the prevalence of prostitution is highest in states such as Arunachal Pradesh, Andhra Pradesh, Gujarat, Karnataka, Goa, Madhya Pradesh, Maharashtra, Nagaland, Rajasthan, Tamil Nadu and West Bengal as well Union Territories like Chandigarh and Daman and Diu.

Multiple factors lead to women becoming prostitutes, the most common of which are illiteracy, lack of vocational skills, economic distress, migration, desertion by spouse, ill-treatment by parents and family tradition. Most work in miserable conditions leading to different types of diseases, depression and hopelessness. They are also faced with daily violence, constant police harassment and societal ostracisation. Given the informal economy in which they work, they also find it difficult to open bank accounts, get insurance or identification cards.

The threat of HIV/AIDS also looms large –  reports say prevalence of HIV/AIDS among this category ranged between 2% and 38% in India (globally it is about 12%). However, due to their ambiguous legal status, they are unable to get access to basic services including healthcare, education and bank accounts.

Not prohibited, but is it permitted?

According to the Immoral Trafficking Prevention Act, 1956 (ITP Act), “prostitution” is defined as the sexual exploitation of persons for commercial purposes. While it does not prohibit sex work per se, it imposes penalty for keeping a brothel, soliciting, pimping and plying the trade near a public place such as places of worship, schools and hospitals.

In 2006, India moved towards decriminalization of prostitution when it attempted to amend the ITP Act by deleting the provision that penalized soliciting and adding a provision that penalized clients of sex workers who were trafficked victims. However the Bill lapsed with the dissolution of the 14th Lok Sabha. These provisions were not well thought through given that it did not clarify the confusion about the profession’s basic legal status since provisions such as penalizing clients, prostitution in brothels and public places made it difficult for prostitutes to practice their trade legitimately.

What works?

In most of Asia, Africa and parts of the US, prostitution is illegal. Some states in Australia and New Zealand have decriminalized prostitution (no penalty for prostitutes) while Sweden, Norway, Iceland and Nepal penalize the client on the ground that prostitution is an aspect of male violence towards women. Prostitution is legal in most countries in Latin America and Europe and in some parts of the US.

The evidence however is not clear either ways. Some studies do show a correlation between legitimizing sex work and a drop in violence targeting sex workers while others show that it has resulted in increase in human trafficking.

Decriminalising – the way forward

As we re-open the debate about prostitution, legalization  in India may not improve matters given India’s lax law enforcement mechanism as well as cultural milieu. The safest option at this point may be decriminalizing the trade so that sex work is not legalised but sex workers are not harassed and exploited by the police, brothel owners and pimps (middlemen). It would also reduce barriers to essential health services and increase access to education, bank accounts, insurance and voter identity cards. The government needs to play a crucial role by providing credible rehabilitation options if any of them want to opt out.

The recently enacted Criminal Laws (Amendment) Act, 2013 includes provision to penalize trafficking for any purpose. However, the government needs to strengthen its efforts to combat trafficking by dedicating resources, strengthening capacity of existing institutions and encouraging other stakeholders to leverage their own resources and expertise to address this serious problem. Considering the cross-regional and interdisciplinary nature of trafficking, there is a need to build and provide sustainable support to networks that bring together various stakeholders linking source and destination areas, frame common objectives and ensure accountability and effective delivery on the ground.

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The right reforms to pursue for growth

By Prof Rajesh Chakrabarti and Dr Kaushiki Sanyal, Bharti Institute of Public Policy, ISB

It was reassuring to hear the Union finance minister Arun Jaitley emphasize the government’s commitment to reforms across a range of sectors at the World Economic Forum’s recent India Economic Summit in Delhi. These include labour laws, land acquisition and foreign investments.

Jaitley is undoubtedly taking steps in the right direction but a lot needs to be done to make India investor-friendly. Earlier in the year, India’s position in the World Bank’s 2015 Ease of Doing Business rankings slipped to 142 from an already low 134 (out of 189 countries). A closer examination of the ranking shows that India has slipped on all parameters except in protection of minority investors (where it has gained by 14 points aided by the new Companies Act). The other parameters include starting a business, dealing with construction permits, getting electricity, registering property, trading across borders, and resolving insolvency. India continues to remain at almost the bottom of the pile in enforcing contracts.

Jaitley’s chosen reforms—particularly labour and land—are critical for the economy but will probably leave these rankings largely unaffected. It is not clear that the ongoing review of laws will fix many if not all of the problems identified in the rankings themselves. The finance minister’s other comment about choosing reforms that will benefit India is an equally valid one. While the World Bank indicator has, over the years, gained in popularity and reference, its methodology of ascribing scores to arguably complex economic aspects and its choice of elements has been questioned. In a longer scheme of things, one would argue that labour and land reforms should matter more. But as far as foreign direct investment (FDI) is concerned, recent research establishes the link between doing well on these indicators and attracting FDI. One can, however, argue that such results may well be driven by differences of changes in ranking among countries that have got the basics right i.e. labour regulations.

The new government’s focus on labour reforms which will provide a single window where employers can submit one compliance report for 16 labour laws and a new Web-based labour inspection system that will curb the inspector raj is a step in the right direction. However, the biggest issue that the Union government needs to tackle is the problem of skill gap. About 60% of India’s population is within the age group of 15 to 59. Further, between 2011 and 2016, there will be approximately 63.5 million new entrants in this age group, the bulk of the addition being in the relatively younger age group of 20 to 35 years. In order to take advantage of this demographic dividend, India needs to focus on generating productive and gainful employment and increasing access to quality education to enhance the employability of this age group. Fixing the arcane labour laws will clearly improve business ease.

Land acquisition is an equally important and complex area. Jaitley has pointed out that although the law has increased compensation it has made the process more complicated and does not provide exceptions for important sectors such as defence and urban infrastructure making it difficult to acquire land for affordable housing, hospitals, private schools and industrial parks. While these amendments are important, there are other more pressing issues with the law that can have implications for private investment. For example, the requirement of a Social Impact Assessment for every acquisition without a minimum threshold may lead to delays.

The government’s focus on labour and land is a welcome feature, but overnight changes here are unlikely.

This article was first published in Live Mint on November 24, 2014


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World’s Largest Student Competition Comes to Indian School of Business as Students Tackle President Clinton’s Early Childhood Education Challenge

The Hult Prize Foundation recently announced the inaugural Hult Prize at Indian School of Business event on October 1st, 2014.
To compete, please visit for more information.

The Hult Prize is the world’s largest student competition and start-up platform for social good. In partnership with President Bill Clinton and the Clinton Global Initiative, the innovative crowdsourcing platform identifies and launches disruptive and catalytic social ventures that aim to solve the planet’s most pressing challenges. Student teams compete around the world for a chance to secure US$ 1 million in start-up funding to launch a sustainable social venture.
The 2015 Hult Prize will focus Early Childhood Education – a challenge personally selected by President Bill Clinton.

Ahmad Ashkar, CEO and Founder of the Hult Prize, attributes the success of the competition to the shift in the global economy and the millennial generation’s refusal to live in a world with inequality, “We are giving entrepreneurs from around the world a platform to innovate and revolutionize the way we think about servicing the poor.”

The winning team from the Hult Prize at ISB event will be fast tracked to compete at one of the six Hult Prize regional finals events around the world bypassing the general application for San Francisco, Boston, London, Dubai, Shanghai, and a TBD 6th location.

Last year, the 2014 Hult Prize regional finalist beat out 10,000 applications received from over 350 colleges and universities in over 150 countries. The Hult Prize regional competitions will take place on March 13 and 14, 2015 in Boston, San Francisco, London, Dubai, Shanghai and a TBD 6th location.

Following the regional finals, one winning team from each host city will move into a summer business accelerator, where participants will receive mentorship, advisory and strategic planning as they create prototypes and set-up to launch their new social business. A final round of competition will be hosted by the Clinton Global Initiative at its annual meeting in September, where CGI delegates will select a winning team that will be awarded the US$ 1,000,000 Prize by President Bill Clinton himself.

In the words of President Clinton, “The Hult Prize is a wonderful example of the creative cooperation needed to build a world with shared opportunity, shared responsibility, and shared prosperity, and each year I look forward to seeing the many outstanding ideas the competition produces.”

About the Hult Prize Foundation
The Hult Prize is a start-up accelerator for social entrepreneurship, which brings together the brightest college and university students from around the globe to solve the world’s most pressing issues. The annual initiative is the world’s largest student competition and crowd-sourcing platform for social good, and has been funded by the Hult family since its inception in 2009. To learn more, visit

About The Clinton Global Initiative
Established in 2005 by President Bill Clinton, the Clinton Global Initiative (CGI), an initiative of Bill, Hillary & Chelsea Clinton Foundation, convenes global leaders to create and implement innovative solutions to the world’s most pressing challenges. CGI Annual Meetings have brought together more than 150 heads of state, 20 Nobel Prize laureates, and hundreds of leading CEOs, heads of foundations and NGOs, major philanthropists, and members of the media. To date, CGI members have made more than 2,500 commitments, which are already improving the lives of more than 430 million people in over 180 countries. When fully funded and implemented, these commitments will be valued at $87.9 billion.

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Importance of Public Policy In Indian Business Context

By Mandar Kagade, Analyst, Bharti Institute of Public Policy, ISB

Public policy making in India in recent times epitomizes the famous opening lines by Charles Dickens.  Forces shaping policy are much more inclusive, thanks to a politically conscious youth and an accessible social media with a capacity to amplify the message several folds in a very short span of time.  The flip side of inclusivity is chaos; catalyzed by the aforementioned factors, policy making has also become a lot noisier and as such it runs the risk of being high jacked by populist causes.

Public policy in Indian business context faces its litmus test in properly harnessing the inclusive forces shaping it without letting populist regulation lead it astray. Thus far however, India has had little success in achieving this harmony; take for instance the recently enacted Companies Act; it bans independent directors from being compensated in stock options. It also makes mandatory for certain companies to retain a woman on their boards.  A still further measure mandates disclosure of wage gap between the board of directors and the median employee of the company.  While certainly not lacking in good intent, these mandates add to the cost of compliance by the company without necessarily adding value to business. Outside independent directors are otherwise disinterested and least informed about the affairs of the company. Stock options align the incentives of outside directors to those of shareholders and can significantly motivate them to take active interest in supervising the company.[1] Moreover, for that very reason, they are attractive to potential candidates in the independent directors’ market where companies are facing a dearth of quality supply.  But perhaps animated by the media outrage surrounding excessive compensation and stock options during the financial crisis,   the policy underlying the Companies Act prevents companies from utilizing this efficient aligning device.

As a direct cost bearer of bad public policy in corporate and financial regulation, corporate and financial sector thus has a critical stake in ensuring that public policy creates laws that promote efficiency. Given the new found competition in the marketplace of ideas (that the first paragraph underlined), “pitching” policymakers with reform proposals aimed at promoting efficiency won’t be easy; but the task is cut out for India Inc. regardless.

A critical element in this endeavor would be training human capital that thinks like entrepreneurs but operate in public policy vertical to engage and liaise with the policymakers and the government. It is therefore most appropriate that such human capital be enlightened about public policy and policymaking at an internationally acclaimed B-school like ISB. The monthly newsletter to be published by the Public Policy Club is best seen as a small extension of the aforementioned effort.  As India Inc. leverages a stable and relatively pro-business political climate, the newsletter of the Public Policy Club has not arrived a moment too soon.

[1] See David Yermack, Remuneration, Retention and Reputation Incentives for Outside Directors, p. 12, 36 (2003) (finding statistically significant association between the pay-performance sensitivity and growth opportunities of the firm measured in terms of Tobin’ Q and R & D/ assets) available at, See Michael Jensen & Kevin Murphy, Performance Pay and Top Management Incentives 98 (2) Journal of Political Economy p. 227 (defining pay-performance sensitivity as a dollar change in CEO wealth per dollar change in shareholder wealth)

This article was first published in Newsbytes, ISB’s Public Policy Club Newsletter in the October 2014 edition.

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A Closer Look at the PGP’s Five Learning Objectives

The PGP has five primary learning objectives in creating a comprehensive learning environment, but how do these apply to the everyday experience of an ISB student? Let’s take a closer look.

1. Interpersonal Awareness and Working in Teams

Because the ability to work effectively as part of a team is essential in the contemporary business world, our curriculum is full of opportunities for students to learn to work together, designate responsibility, manage conflict and strive toward compromise.

The PGP’s Experiential Learning Programme (ELP), in which teams of students work on a live consulting engagement, is a premier example of interpersonal awareness and teamwork in practice. While the ELP has many benefits — from hands-on experience to exposure in leading edge management research — it shines as the embodiment of this learning objective. After all, what better way to test your interpersonal skills than in a real-world business setting?

2. Critical and Integrative Thinking

The PGP is not just about creating future business managers, but also about empowering future business innovators. Critical and integrative thinking are essential components in learning to identify key issues, draw insightful conclusions and formulate effective responses.

Designed by management education intellectuals, the one-year PGP curriculum prioritizes the ability to quickly analyze situations and inspire outcomes. Students aren’t learning about business theory in a vacuum, but in a holistic environment that fosters a “big picture” viewpoint.

3. Awareness of Global Issues Affecting Business

The 21st century global economy mandates a global perspective in which students must learn to acknowledge and analyze both domestic and global impacts. ISB’s exchange programs with 42 leading business schools from around the world offer an engaging way to expand student perspectives. Outbound exchange programs provide a firsthand look at the dynamics of management in other countries, while inbound programs enhance classroom diversity and peer-learning opportunities on our campuses.

4. Effective Oral Communication

The ability to communicate is a business world requisite; accordingly, the development of organized, clear and persuasive oral communication skills is an integral component of the PGP curriculum. Students work together on projects, in clubs, and in the classroom to not only build strong, confident speaking abilities, but also responsive listening skills.

And because our faculty members live on campus, students also have frequent opportunities for dialogue with leading thinkers in their fields.

5. Ethical Responsibility

Research indicates that today’s business students are more ethically minded than ever before, and the PGP offers the coursework to back it up. While our 2014-15 core curriculum covers the basics of finance, strategy, marketing, operations and IT management, it also include a course on “Responsible Leadership.”

The goal?  Creating responsibly business managers — not only for better business, but for the betterment of society.

At ISB, we practice what we preach. These learning outcomes are not just pedagogical, but also real-world learning imperatives intrinsically built into the curriculum.


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ISB selected to Host local edition of Hult Prize as students answer President Bill Clinton’s Early Childhood Education Challenge and go head to head for US$1M

Hult Prize recently announced that Indian School of Business (ISB) has been selected to host a local edition of the Hult Prize, the world’s largest student competition. The annual Hult Prize awards one-million dollars in start-up funding to the team of students that develops the most radical and breakthrough idea to solve one of our world’s toughest social challenges.

In partnership with the President Bill Clinton and the Clinton Foundation, the Hult Prize is hosting college and university events around the world, in search of its next game-changing start-up. Bodhisattwa Biswas will be leading the Hult Prize at ISB initiative and thinks that his peers on campus have as good as chance as anyone to go all the way and with this year’s Hult Prize.

The winner of the inter-campus event will automatically advance to compete in one of six regional finals happening across the world. One winning team from each host city will then move onto a summer business incubator, where participants will receive mentorship, advisory and strategic planning as they create prototypes and set-up to launch their new social business. A final round of competition will be hosted by the Clinton Global Initiative at its annual meeting in September, where CGI delegates will select a winning team, which will be awarded the $ 1,000,000 Prize by Clinton himself. The President has said, “The Hult Prize is a wonderful example of the creative cooperation needed to build a world with shared opportunity, shared responsibility, and shared prosperity, and each year I look forward to seeing the many outstanding ideas the competition produces.”
Hult Prize at ISB is now recruiting volunteers and teams who are interested in registering for the competition.

To learn more, visit: Welcome to Hult Prize at Indian School of Business

About the Indian School of Business
The Indian School of Business (ISB) evolved from the need for a world-class business school in Asia. Established in 2001, the ISB has successfully put India on the global map of management education by pioneering several new trends in research, promoting innovation and training and nurturing young leaders who not only have an understanding of the developing economies but the society at large. In 2008, ISB became the youngest institution to be ranked among the Top 20 Global B-schools by the Financial Times, London, and since then has been ranked consistently among the top B-schools globally.

About the Hult Prize Foundation
The Hult Prize is a start-up accelerator for social entrepreneurship, which brings together the brightest college and university students from around the globe to solve the world’s most pressing issues. The annual initiative is the world’s largest student competition and crowd-sourcing platform for social good, and has been funded by the Hult family since its inception in 2009. To learn more, visit start-up accelerator for social entrepreneurship.

About The Clinton Global Initiative
Established in 2005 by President Bill Clinton, the Clinton Global Initiative (CGI), an initiative of Bill, Hillary & Chelsea Clinton Foundation, convenes global leaders to create and implement innovative solutions to the world’s most pressing challenges. CGI Annual Meetings have brought together more than 150 heads of state, 20 Nobel Prize laureates, and hundreds of leading CEOs, heads of foundations and NGOs, major philanthropists, and members of the media. To date, CGI members have made more than 2,500 commitments, which are already improving the lives of more than 430 million people in over 180 countries. When fully funded and implemented, these commitments will be valued at $87.9 billion.

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Introducing ISB 360: ISB’s Revolutionary Mobile App

A staggering 4 billion of the planet’s 6.8 billion people use mobile. If the significance of these figures isn’t immediately clear, consider it this way: only 3.5 billion of those same 6.8 billion people use toothbrushes. With mobile growing by leaps and bounds and its impact still approaching critical mass, the takeaway for a thought leading institution like ISB is clear: mobile matters. Enter ISB 360.

During a time when the world’s premier business schools are competing for the best and brightest students, an informative and interactive app offers unparalleled potential to engage international applicants.  The incentives to create a diverse learning environment are manifold. While promoting a diverse classroom perspective which reflects the global economy is paramount, an international student body also raises rankings, increases global accreditations, and brings more recruiters to campus.

ISB’s efforts to engage international MBA students — including everything from exchange programs to short-term coursework — have seen promising results.  Considering that 15 percent of visitors to the ISB website come from mobile devices, the leap to mobile was a natural next step.

ISB 360 offers prospective students unique insights into the PGP experience by addressing critical questions on topics such as fast-tracking your career, shifting careers, embracing entrepreneurism, taking a family business to the next level, undertaking a leadership role, and much more.  Even better? Users can customize an ISB 360 tour to create a targeted view of the program as it applies to their own personal needs and objectives.

Mere days after it hit the market, ISB 360 — available on iOS, Android and Blackberry — serves thousands of users from five continents. And as the app’s popularity continues to grow, its interactivity will also evolve, delivering relevant, real time information to members of the global business community.

With just the swipe of a screen, ISB 360 gives prospective students a rare insider’s perspective of the PGP and life at ISB, in general. The combination of an intensely competitive business school marketplace and technologically savvy, knowledge-seeking applicants calls for something more than the usual measures.  ISB’s response speaks to the innovative and progressive culture for which the school is increasingly known.


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How do sellers price cars with trade-ins?

When buying a new car, does the decision to trade-in your old car matter for the price of the new one? Recent research by Prof. Anthony Dukes of the University of Southern California and the Indian School of Business suggests that it does. He and his co-authors Prof.Ohjin Kwon, Prof. S. Siddarth, and Prof. Jorge Silva-Risso found that a consumer with a trade-in hands over more money to the dealer than consumers without a trade-in.

In the article, “The Informational Role of Product Trade-Ins for Pricing Durable Goods”, forthcoming in the Journal of Industrial Economics, Prof. Dukes and co-authors theorize that sellers of durable goods for which dealers accept trade-ins — like cars, boats, home appliances and musical instruments — can utilizea inferences about the buyer’s willingness to pay based not only on his or her decision to trade in the old good but also on its characteristics. The researchers focused on automobiles, testing their theoretical model with data from new-car transactions in the premium midsize sedan category between 2001 and 2005.

The results indicate that dealers infer a higher willingness to pay and charge higher prices to consumers who trade in a used vehicle than to those who do not.

“The most important finding of our research is that your decision to trade in your old car tells the dealer something about you and your insensitivity to price,” said Prof. Dukes. “It might be why car salespeople often ask you, soon after stepping into a showroom, whether you’re trading in your old car — even before you discuss terms of the new car.”

Moreover, dealers charge even higher prices to those consumers who trade in used cars similar to the new one.

“For example, if you’re buying a new Toyota and trading in an old Toyota, the dealer may infer that you were happy with your old Toyota and probably are not considering Honda, Nissan, or any other competitive brand,” Prof. Dukes explained.

How significantly does this information affect the final price? Buyers with a trade-in pay an average of $329 more than those who do not trade in their used cars. In addition, compared to a buyer who trades in a vehicle of a different make and model than the new one, a buyer pays $51 more if the trade-in is the same make as the new car and $110 more if it is the same make and model.

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Myths and Misconceptions Standing Between You and the PGP at ISB

Our reputation as a leader in the world of business education continues to grow, but there’s chance you may not know us as well as you think you do.  Let’s take a closer look at some of the myths and misconceptions surrounding what it takes to gain admission to the PGP at the ISB.

1. The GMAT number.

Our admissions process focuses on the holistic evaluation of a candidate, not on a test score.  The average GMAT score for admitted students ranges between 600 and 780, with a quarter of candidates actually scoring below the mythological number of 700.

So what are we looking for in your application? Our admissions process prioritizes quality and competence over all else. Your application offers you the opportunity to dazzle us with your unique credentials and accomplishments, of which the GMAT is only a small part.

Don’t count yourself out if your GMAT score is less than 700. We’re ready to give you a chance, but you have to give yourself a chance first.

2. The Million Dollar Question.

An MBA is a significant investment in your future as a business leader, and there are indeed associated costs. However, they may not be as steep as you think. ISB’s Rs. 25 lakh fee is all-inclusive, comprising tuition, living and boarding expenses. Compare that to the Rs. 50 to 60 lakhs you might pay in tuition at a comparable global business school — with an additional Rs. 20 to 30 lakhs in living expenses – and ISB starts to look like a deal.

Furthermore, our accomplished visiting faculty from the world’s best b-schools offer premier access and exposure to resources that would cost at least triple anywhere else.

Factor in that salaries for PGP grads start high and grow exponentially in the years following graduation, and attending ISB is clearly money well spent.

ISB RoI-01

3. Placement Matters.

Planning for a career in finance but concerned that your ISB degree won’t make the cut? Our alumni will be the first to tell you otherwise. Firms like Ambit Capital and Kotak Bank regularly recruit ISB grads for sought after careers in research, sales, trading and corporate finance.  And with international placements including Goldman Sachs, Deutsche Bank, Citi and a host of others, the PGP opens doors.

Did we happen to mention that in addition to several venture capital and private equity funds which annually cherry pick from PGP grads, Axis Bank returns every year to select 10 women to join their team? Having said that, the ISB is far from an exclusive home for blue-blooded finance types. After all, where else can a dentist become a venture capitalist?

If these or any other myths stand between you and the PGP, we urge you to take a closer look and see for yourself what it takes to become a contributing member of the ISB community. We would be lying if we said your CGPA didn’t play a role, but that part is up to you.



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The Evolution of PR – Edelman perspective

We were privileged to have on campus Mr. Robert Holdheim, Edelman CEO – Middle East, Africa, South Asia CEO, along with the Ms. Ipshita Sen, Head of Operations & Employee Engagement and Mr. Pankaj Suri, India HR head.

Edelman is the world’s largest independently owned public relations firm with revenues of over $734 million annually and a 5000 strong employee base. Edelman India’s operations consists of 400 people in offices across 11 cities including Mumbai and Hyderabad, and their current client base includes the likes of Unilever, Starbucks, Microsoft, Pfizer, HP, Johnson &Johnson and nearly every other big brand that you can think of.

Robert spoke about the Evolution of PR within the changing Marketing Communications space. The 5 big changes :
1. Explosion of media channels
There has been an explosion in the number of media channels available to the consumer with the advent of YouTube, Social Media, Blogs etc. India remains one of the few markets in which traditional media such as TV and newspapers are actually growing.
2. We live in a multi-screen world
No longer is our news and media consumption only through a single screen i.e. TV. Computers, Cell phones and Tablets have made the consumption of media pervasive and a 24×7 affair.
3. Stories are social
It’s not one-way dissemination of information anymore; it’s become a two-way conversation with Twitter and the likes leading the way. A photograph posted by an Australian showing that the subway served to him was not 7 inches crossed boundaries within a span of time, spreading the news worldwide (Link to article).
4. Every company has to be a media company
Content is king. Every company needs to develop content and be a media company in order to successfully manage its online presence.
5. Stories last forever
In today’s digital age, information is both searchable and persistent. No longer can companies get away with gaffes without repercussions, as there are no do-overs.

Three things that haven’t changed
a. Time and attention is still finite
Information overload is all consuming. Our time and attention is limited and has become an even more valuable commodity.
b. We love a good story
Good stories are both easy to tell and easy to remember. The order of the day is to create compelling content that is memorable.
c. Content is king
PR is no longer only about press releases. PR is now about creation and dissemination of content.
Robert ended by giving an example of the bleeding edge of communication – the Creative Newsroom. A prime example of this is the Oreo “You can still dunk in the dark” Tweet (Link: during the 2014 Superbowl during the famous power out at half time. At at time when advertisers pay $3-5 mil per ad, Oreo stole the entire Superbowl with this one tweet for absolutely free.

Kavir Kaycee
Class of 2015

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Fostering a Community: Student Clubs at ISB

ISB’s commitment to creating the world’s future business leaders involves far more than classroom learning. In addition to innovative programs and world-class faculty, ISB’s student clubs offer access to continued enrichment through leadership, social and personal experiences.

Coordinated and managed by ISB’s Graduate Student Board (GSB), student clubs — which are student-led and organized into teams — offer competitions, events, and activities across a diversity of student interests and talents. From the Energy Club’s annual Energy Summit to a student jam session with the Music Club, the campus is abuzz with enrichment opportunities.

Let’s take a look at a few of the ISB students who have led some ISB clubs:

  • Anmol Rastogi, President of Hyderabad’s Business Technology Club – Anmol uses his passion for technology and international work experience to lead the club in organizing interactive seminars in which participants apply technology to everyday business problems. He also leads the club’s collaborations with other student clubs, including Healthcare, Manufacturing, Retail, and Consulting.
  • Bhavna Choraria, President of Hyderabad’s Women in Business Club – Bhavna reports, “I believe in the importance of accepting the existence of diversity in this world and its direct relation with one’s overall learning & development. After all, as pointed out by Thoreau, it’s never too late to give up your baseless prejudices.” Bhavna spearheads organized speaker sessions, alumni interactions, workshops and seminars which provide industry and functional exposure to students.
  • Shõan Shinde, President of the Arts & Creativity Club – Shõan says: “The job of good art is not to please the eye; it is but to create turmoil in your head and your heart – to make you question, scoff, think, dream and be enthralled.” With a background in the arts and engineering, and an ongoing interest in both, Shõan promotes interactions with established art practitioners while fostering on-campus activities.
  • Ajay Shreenath, President of Mohali’s Quiz Club – Ajay who has a background in Engineering and Physics — leads the club in presenting out-of-the-box, on-the-fly thinking opportunities for students, such as the popular “Pub Quizzes”.

The complete list of student clubs at ISB includes:



Overall, ISB’s student clubs foster an engaged community in which students explore similar interests while interacting with alumni and professionals in their fields. This not only helps promote lifelong connections, but also delivers a deeper sense of personal and professional fulfillment.


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Beyond the Classroom: ISB’s Experiential Learning Programme

We’ve all heard the expression, “Knowledge is power,” but the Indian School of Business (ISB) takes the concept one step further with its Experiential Learning Programme (ELP). ELP students don’t just acquire knowledge within a narrow and controlled classroom setting. Rather, they apply this knowledge to real world business challenges through hands-on practice. The result? An innovative culture which yields unparalleled insights into the global economy tested by firsthand experience.

Fostering Innovation

As participants in the ELP, ISB students integrate classroom concepts into industry experience. Anything but passive observers, ELP participants assume active consulting roles with real companies on relevant business issues. Assignments have included everything from creating marketing and pricing strategies for a branded sports solution provider to developing marketing and distribution methods geared toward accessing rural, off-grid consumers for a solar lighting business.

ELP teams are tasked with preparing consulting proposals, as well as responsible for researching, reporting and — ultimately — making recommendations to the client. Students are guided throughout the process by industry experts and faculty advisors. And while the campus-based arrangement is primarily remote, teams can undertake up to 15 days of fieldwork, ultimately committing up to 800 business hours and earning two credits in the process.

ELP Outcomes

In 2013 alone, students participated in more than 90 projects across diverse subjects ranging from government to technology to consumer products and many others. Not only do participants gain actionable exposure to these industries, but — after working with teammates from diverse cultures and backgrounds — they also walk away with a valuable perspective on the collaborative process.

Perhaps the biggest indicator of the program’s success is that many companies view the ELP as a natural component in their recruiting pipeline. After all, today’s businesses aren’t just looking for critical thinkers; they’re also looking for smart workers capable of solving complex 21st century business challenges. In fact, many students report that their ELP experience features heavily into their job hunt, with potential employers expressing great interest in the program.

During a time when opponents of business education have cited a disconnect between business school curricula and real world issues, the Indian School of Business offers a direct response to the criticism. In light of the evolving 21st century economy landscape, and with employers increasingly seeking employees with global perspectives, the ELP positions students to not merely manage, but lead.


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The Indian MBA: The Benefits of B-School in an Emerging Economy.

Poised for superpower status in the 21st century, India’s emerging economy is predicted by many to become the world’s largest within the next century. A massive democratic population, entrepreneurial spirit, and resource-conscience country, India — thanks to the promise of a stable government and analysts remaining bullish on the equity market — has the potential to rapidly grow its economy while others stagnate. And as the anticipated “Indian Century” gathers momentum, India’s business schools — along with B-schools of other emerging economies — offer aspiring global leaders the unprecedented opportunity to gain unique insights on the fast-growing economy.

The Rise of the Indian B-School

As India’s leading business school, the Indian School of Business (ISB) is well-positioned on the international B-school scene. The stats speak for themselves: in 2014, we achieved record numbers in everything from domestic and international salaries to unprecedented employment offers from Fortune 500 companies including technology and consulting innovators such as Apple, Facebook, Google and Microsoft. A staggering 423 companies (an increase of 21 percent from the prior year) recruited on campus, and the majority of students not only had numerous interviews, but also received multiple offers — giving them critical leverage when negotiating with potential employers.

The fact that ISB is a mere 13 years old and became India’s first AACSB-accredited B-school makes our success even more remarkable. Further enhancing ISB in both reputation and practical relevance are our associations with world-renowned B-schools across the globe, including Wharton, Kellogg and the London Business School. With an increasing number of Indian B-schools expected to receive accreditation and explore similar partnerships in the near future, the shift from a domestic to global viewpoint is well underway.

Marketability in the Global Economy

And with that shift comes the enhanced commodity of international faculty and students: as the Indian higher education sector explodes, a diverse student body is increasingly imperative. At ISB, we have our pick of extremely talented and well-trained students, thanks to an admissions yield of 85 percent; this is fast approaching the 90 percent seen at elite institutions such as Harvard and Stanford.

Grads of B-schools in emerging economies are also in great demand when they hit the workforce. Today’s employers are not only looking for the cream of the crop; they’re also in search of future business leaders with international perspectives. Diversity is imperative, and an international education vastly boosts marketability. Furthermore, Indian B-schools offer students the chance to develop expertise in specialized industry and functional majors so they’re prepared to hit the ground running.

In short, job seekers who want their resumes shuffled to the top of the pile should seek out ways to show their diverse viewpoint, and international study offers exactly that. In conjunction with India’s rising economic star status, the country’s B-school graduates are particularly sought after.

Return on Investment

An added benefit of attending business school in India? The potential return on investment is huge – particularly when you factor in the reasonable cost of living and low tuition fees compared to B-schools in other desirable locations, such as the U.S. and the U.K. And because Indian B-school grads are in such great demand, their earning potential is equally significant.

While India might not come immediately to mind when it comes to business schools, it may in the very near future. Students savvy enough to pursue higher education opportunities in India can gain a valuable global perspective… and a critical leading edge.



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I Diya – the flame burns bright 6th year running

iDiya, the brainchild of ISB’s Net Impact Club, will turn 6 , on the 2nd of August, this year. Launched with the objective of encouraging sustainable innovation and entrepreneurship in the social space, iDiya has evolved year after year, with version 6.0 going international. Over the years, iDiya has seen several ideas incepted and then persevere to be accepted, all for the cause of those who haven’t been as fortunate as me and you. Perseverance remains one of the imperative elements of this endeavor, with both the participants and the organizers (ISB’s Co2015 PGP student community) striving to bring noble thoughts to fruition. In such times when those in need are many and those offering help are few, when the weight of one’s past is a burden too heavy to endure and the onlookers outnumber the helping hands, the need of the hour are not ‘superheroes’ but good men with noble thoughts. And this is exactly the thought that iDiya propagates.The 6th iDiya Challenge-02-Big
iDiya invites applications from teams, with ongoing ventures, or with ventures that are yet to be implemented, in the social space. Ten teams are then shortlisted, and invited on all on expenses paid trip to ISB for an intensive one week boot camp. During the boot camp the teams are trained under the watchful eyes of the ISB faculty. They are assigned ‘entrepreneur mentors’, who mentor the teams, for a specified period, even after the boot camp. The teams also get to interact with potential investors and venture capitalists. Last year, iDiya saw 450 teams, from all across the country, participate!

This year’s launch event saw the iDiya team invite ‘Sudiksha’ and ‘Sankalptaru’, 2012’s 2nd runner up and 3rd runner up respectively. The iDiya team, comprising of ISB’s class of 2015 PGP students, has left no stones unturned to live up to the expectations generated by the work of their predecessors, from ISB’s previous PGP batches. If getting 2012’s success stories weren’t enough, the iDiya team also roped in a crème de la crème of guest speakers, for the launch event.

Dr Ajoy Kumar – Member of Parliament, ex IPS officer and the real life hero of an urban folklore inspiring several Bollywood movies – to name only a few of the accolade laden feathers on his hat of achievements.

Padma Shri Sanjay Dhande – Member of the Scientific Advisory Council to the Prime minister of India, founder director of PDPM Indian Institute of Information Technology Design and Manufacturing and former director of IIT Kanpur – to name a few of the accomplishments in his repertoire.

The success story of the 4th iDiya winners – Purvi Arora and Sangita Kapadia:
Since Idiya 2012, we have registered our company, Reniscience Education LLP. We are an education consulting firm and our core objective is to enable 21st century teaching and learning through our Professional Development programs, student workshops and school partnerships.“The mentoring and guidance we received at iDiya was really helpful. This year we launched our hallmark, one of a kind research conference called City as Lab. This is a 3 month research project led by students in 5th-8th standards in government schools or in NGOs. It will culminate in a day-long event on Sept 20th at the Chhatrapati Shivaji Museum in Mumbai. We have registered 200 students across Mumbai for the event.

To sum it up, the 6th edition of iDiya has the whole campus buzzing. Right from the selfless efforts of the iDiya team, to the revolutionary ideas of yesteryears’ participants and to the wisdom of the guest speakers, 2 aspects stand out – Perseverance and a penchant to give back to humanity. The journey for the participating teams won’t be easy, but donned with belief that they can architect change, for a greater good, will have them raring to go.


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Corporate Governance of Banks- About Time for Some CoCo?

By Mandar Kagade, Analyst, Bharti Institute of Public Policy, ISB

The recent report of the RBI committee to review governance of boards of banks (the P.J. Nayak Committee) recommends that non-executive directors at private-sector banks should be paid profit-based commissions so as to enable the private-sector banks to attract skilled professionals for their non-executive and independent directorial positions.

This is a welcome recommendation; but can be significantly improved upon. As the financial crisis taught us, financial firms are different from non-financials in that the last bearer of risk in the event of their failure is the taxpayer that funds their bailout.

It appears apposite that the RBI should prescribe remunerative tools that align the non-executive directors’ incentives to the banks’ creditors and taxpayers.

One such instrument, which aligns managerial incentives to the taxpayer/ uninsured creditor, is the contingent convertible bond (“CoCos”). Contingent capital instruments are subordinated uninsured long duration debt instruments that are either converted into equity capital or get written off (adding to equity capital) at prescribed triggers as the bank’s capital declines.

Since contingent capital privatises losses as the bank reaches the zone of insolvency and shores up the bank’s capital precisely at the point the bank needs it (but when it is likely very expensive to obtain on the capital markets), banking regulators across the world including the Basel Committee on banking supervision, have recognised it as a means to mitigate moral hazard and systemic risk emanating from bank failure. Recently, influential global banks in Europe too have adapted to contingent capital bonds for remunerating their executives.

These bonds get translated into cash awards for the bank executives, contingent upon the bank executives maintaining the core equity tier I capital of the bank concerned, above a certain prescribed threshold. Contingent capital bonds issued to bank executives align managerial incentives to conserving capital and therefore reducing risk; they are thus application of the contingent capital idea to executive remuneration.

In India, however, perhaps owing to path-dependence, ideas about compensating bank managers and directors in instruments deriving value from debt have received insufficient regulatory attention. However, in the absence of such aligning devices, the non-executive independent directors (and the bank executives generally) may not be incentivised to have regard of the uninsured bond-holder and taxpayer interests when they take decisions sitting as board member, ranging from asset creation, risk management to remuneration.

Paying them in cash induces sloth; remunerating in equity will make them risk-seeking. Regulators and uninsured bond-holders are outside the bank and therefore suffer from information asymmetry; as such, it may not be prudent to rely exclusively on those stakeholders to monitor and mitigate risk in the bank. It is therefore necessary that constituents inside the firm also have the appropriate incentives to monitor and mitigate risk.

Such incentives could be generated by mandating non-executive/ independent directors (and executives generally) of the bank be remunerated in debt-based instruments, especially, CoCos mentioned above. On the flip side, there is divergence of opinion about the accounting trigger; some policy papers and academics have argued in favour of market triggers, like moving average of the stock price for example, for the CoCo to convert into equity.

This is because, accounting-based triggers run the risk of being stale as they are only periodically disclosed. But the argument for making CoCos part of remuneration toolkit is not affected by the debate surrounding the nature of the trigger.

If CoCos issued to bank executives and directors have accounting trigger, they ought to have higher triggers than those issued to the investors, to align their interests strongly to the CoCo investors. Higher trigger for CoCos issued to Directors can in fact convey a leading signal for banking firms to recapitalize.

The RBI has already recognised contingent capital instruments as Additional Tier I instruments in its recently released Basel III Guidelines. The RBI should augment that apparatus by mandating key banking personnel and non-executive independent directors to be paid equally in contingent convertible bonds and equity-based pay so that they have explicit incentives to monitor and account for the creditors and taxpayers in the course of their management.

Such contingent convertible bonds should have high capital triggers on the breach whereof, the bonds convert into junior equity claims. The risk of default that such compensation structure carries will generate high powered incentives for the directors to manage the bank for risk-mitigation consistent with profit-seeking motives.

This article was first published in Business Today on July 31, 2014

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Strengthening Corporate Governance — A Proposal for the New Companies Act, 2013

By Mandar Kagade, Analyst, Bharti Institute of Public Policy

Principle 1 of the National Voluntary Guidelines states that businesses ought to conduct and govern themselves with Ethics, Transparency and Accountability.  One of the ways in which the law monitors that businesses actually conduct and govern themselves likewise, is through the institution of independent directors. Before the enactment of the new Companies Act in 2013, clause 49 of the listing agreement was the only law applicable to independent directors. The new Companies Act for the first time, imparts statutory recognition to the idea of independent directors and prescribes obligations for them. Notably, it significantly enlarges the scope of their obligations to include acting in good faith and for the benefit of members (shareholders) and employees of companies, the community and protection of the environment.[1] Moreover, contravention of the provisions of this section is punishable with fine that may extend up to INR 0.5 million.[2]

The obligation on directors to act in good faith and for the benefit of stakeholders other than shareholders in a sense embraces the spirit that defines Principle 1 discussed above. Directors are after all the alter ego of businesses, and imposing obligations to act in good faith and for the benefit of specified stakeholders makes them accountable to those groups. However, while well-intentioned, this approach of making businesses responsible can have undesirable and unintended consequences; for example, making independent directors personally liable by way of a monetary penalty can further deplete an already scarce talent pool of independent directors because of the financial and reputational risks involved. Moreover, as the interests of various stakeholders are divergent, satisfaction of one constituency’s interests may expose the directors to claims from other constituencies.  How is the Director to decide in good faith, in the face of these realities? Acquisition of a competitor may confer pricing power on the acquirer. While this move will benefit the shareholders, it may not necessarily benefit the community; navigation of such “zero-sum-game” issues could well nigh be impossible in face of a mandate to look after the interests of all stakeholders.

At present, India’s corporate law ethos is rooted in the Anglo-saxon model where shareholder as the last bearer of risk, ought to be protected through voting rights and legal rules. Directors, including independent directors, are elected by shareholders and may be removed by them too. Moreover, Independent directors are outside directors and as such their ability to account for the interests of various stakeholders is severely restricted owing to information asymmetry they suffer from as also the limited time they have at their disposal.  Given these practical realities, enforcing a stakeholder approach in corporate law piece meal, to forcibly make them behave responsibly is a myopic regulation that will more likely harm than do good in the long run.

However, all is not lost for stakeholder approach to corporate regulation. Businesses could still behave responsibly if the structure of corporate law is made suitable for stakeholder approach. One prominent example that appears more suited to this approach is the German model of having dual boards instead of unitary boards prevalent in Anglo-saxon model of governance. The new Companies Act may provide for companies of a pre-defined size to have a dual board mechanism to account for the interests of other stakeholders like employees and the environment while retaining a board that will be an exclusive fiduciary to the shareholders. Companies may have the liberty to “opt-out” of this regime under a “comply-or-explain” model.

[1] Section 166 (2).

[2] Section 166 (7).

The article was first published in Responsible Business India on July 25, 2013

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Women in Management

In the past century, women around the world have made great strides in entering the business world and working toward the levels of pay and responsibility afforded by their male counterparts. However, although women comprise 48.5 percent of India’s population, they represent a mere 26.1 percent of rural workers and 13.8 percent of urban employees, according to Catalyst’s Knowledge Centre.

Moreover, Catalyst continues, women make up only 3 percent of legislative, management, and senior official positions, while only 5.2 percent of them hold positions as board directors. Fortunately, with the Indian market growing rapidly to become the world’s third largest economy by the year 2030, as quoted by the Economic Times, there are projected to be a plethora of opportunities abound for women to take on management and leadership positions in the coming years.

At the Indian School of Business, we hope to leverage these possibilities to their fullest effect, by admitting a good ratio of women into our programme: 231 students constituting 30 percent of our accepted applicants are female. That number has risen steadily, increasing by almost 120 percent in the past 7 years, to now the highest-ever number of women in the Class of 2015, as quoted in the Times of India.

Women get to learn from women, as well: Our faculty is almost 20 percent female. Our emphasis on diversity means students learn to appreciate gender-neutral leadership early in their career, helping to push equality into the next generation.

When enrolling in our flagship Post Graduate Programme in Management, women get the chance to learn in a heterogenous setting from leaders across a wide field of business specialisations. The one-year programme is structured holistically to allow access to several women-specific groups and organisations. Among these is ‘Women in Business’, a student-run professional club that gives women the tools they need to leverage the resources available at-hand, on campus, and achieve their personal and professional goals. Club members often enjoy curated discussions with distinguished professionals from across the industry. Notable discussions have included celebrated social activist Kiran Bedi on ‘Tenets of leadership’, Anusha Bhagat, COO of UBS Securities on ‘The glass ceiling: Exploding myths and crashing stereotypes’, and Women@Google on ”Support systems for women employees and the LGBT community at Google’ among others.

Our students also benefit from Axis Bank’s “Women Leadership Programme,” which has hired large numbers of female candidates in the past two years. Students therefore benefit both while in the programme and once they complete it.

We aim to make the Indian School of Business approachable for any high-performing individual who has demonstrated a desire to transform themselves, including married women as well as female students in need of financial aid. If you have questions, take a look at our Frequently Asked Questions page or get in touch. We hope to hear from you.

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How ‘diversity’ on campus helps our students to rise above.

The 21st century economy is defined by globalism. Shouldn’t our future business leaders be educated in global environments? At the Indian School of Business (ISB), we are committed to the ideal that the best business training runs parallel to what’s happening in the real world. This is why we view diversity not just as a catchy buzzword, but as a campus-wide imperative.

Untapped Resources

Some obvious things come to mind when we talk about resources: capital, facilities, land. It’s easy to overlook one of the most valuable resources of all: people. ISB believes in the power and potential of our students and faculty as individuals and as collaborators. To that end, we strive to create an environment which comprehensively fosters diversity.

But why is diversity so important? Because real innovation is not shaped by a single or narrow ideology, but by the powerful exchange of information between people with different viewpoints. The broader our perspectives and more holistic our approach, the more creatively we can solve challenges, make decisions and push forward. “I think that when you have a number of people pulling in different directions, the solution that comes out of that seemingly conflicted environment is often more efficient and universally applicable than if you had a bunch of people thinking the same thing.”, says Angad Sethi, an ISB student.

ISB students originate from near and far, and we are committed to seeing our international enrollment grow. We are also home to a multitude of ethnic and racial groups, as well as people in all phases of their careers and an increasing number of women applicants.

Our students come to us with a breadth and depth of personal and professional experiences. We count scuba divers, musicians, mountaineers, elite athletes and artists among our students and alumni, as well as surgeons, accountants, dentists, engineers, IT professionals, consultants, pharmacists, patent holders, military officers, government personnel and entrepreneurs. Together, they comprise a vibrant community of broad thinkers with an abiding respect for different points of view. “Every person around is a wealth of information about a new domain. There is something new to learn from every person, every day!”, quotes Abhidha Awadaat, another student pursuing ISB’s PGP in Management.

And it’s not just the students. Our diverse faculty members promote an environment in which a global viewpoint transcends traditional boundaries.

The Spirit of Collaboration

While some b-schools may bring to mind thoughts of cutthroat, every-man-for-himself academic competition, we strive for a different environment here at ISB: rather than pitting individual students against one another, we pit them collaboratively against real world business challenges.

Furthermore, our Inbound and Outbound Exchange Programmes offer students the opportunity to network with people around the globe.

In working together, ISB students learn about the dynamics of management in other countries as well as in India’s emerging economy. They also develop real world skills such as teamwork, conflict resolution and accountability. When they graduate, they take with them these valuable tools — along with an enhanced understanding of the value of open dialogue. PGP ’15 candidate, Gautam Malhotra says, ”Nowhere else would I have gained so much knowledge about different roles and industries in such a short duration. I truly feel enlightened!”

The global business landscape is in a constant state of evolution, and it is the enterprise of the forward-thinking business school to evolve along with it. At ISB, we do more than talk the talk: our commitment to internationalism and collaboration yields business innovators keenly prepared to learn and lead in equal measure.

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The sharing economy

I have been reading with interest the efforts made by several new players to use idle and spare resources to create new business models. I have borrowed the title from today’s NY Times. The idea is as old as B&B. One can rent rooms, cars, computers, labor, etc. Definitely, those in need of employment or additional money can use the business networks to contract safely. It also improves resource utilization. However, safety, reliability, service level guarantees remain a concern. What also characterizes these arrangements is that the contract between the business network operator and the service provider can vary greatly.

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Policy Workshop on Understanding Governance

The Bharti Institute and the office of Shri Baijayant ‘Jay’ Panda, Member of Parliament (MP), Kendrapara (Odisha), jointly organized a Policy Workshop in association with Young Indians (Yi), Chandigarh Chapter on February 15, 2014 at ISB’s Mohali campus. The workshop aimed to provide a platform for youngsters to develop an understanding of important policy issues, the role of MPs, the working of a political offices, approaches to public policy, opportunities in the field and ways for citizens to engage with elected representatives.

Mr. Rohit Kumar, Head of Policy and Research in Mr. Panda’s office, led the first session titled ‘Understanding governance better: Our Constitutional structure’, explored issues such as distribution of powers among the Executive, Legislature and Judiciary, checks and balances, and the three levels of government – centre, state and local (Panchayats and Municipalities).

Ms. Yashita Jhurani, of Mr. Panda’s office and Mr. Gaurav Goel, Co-Founder, Samagra Development Associates conducted the next session titled ‘The MP and his People’. The session focused on explaining the nature of an MP’s role in the constituency and the monitoring and reviewing of projects and schemes including the MP Local Area Development Scheme (MPLADS).

In the following session on “Public policy – Challenges and Opportunities” Prof. Matthew Hull, Associate Professor of Anthropology, University of Michigan and Dr. Kaushiki Sanyal, Senior Analyst, Bharti Institute of Public Policy spoke about issues such as policy making in the digital age, avenues of citizen engagement with policy making and career opportunities in the field of public policy. Dr. Sanyal also presented insights from some ongoing projects of the Bharti Institute.

The post-lunch session featured a talk on “Important Institutional and Systemic Reforms” by Mr. Panda. The discussion included specific references to federalism, electoral reforms, Parliamentary reforms and judicial reforms. The session stressed the need for parliamentary reforms in order to avoid legislative deadlocks on the floor of the House. The discussion also dwelt on the topic on relative merits of caps versus traceability in election funding.

The last session explored the “Dynamics of the Interaction between the Legislature and the Executive” through a conversation between Mr. Panda and Ms. Vini Mahajan IAS, Principal Secretary, Government of Punjab and moderated by Prof. Rajesh Chakrabarti, Executive Director of the Bharti Institute of Public Policy. Ms. Mahajan pointed out that the bureaucracy not only implemented policy but often initiated policy change as well. The discussion highlighted points of difference and areas of much needed collaboration between the two important institutions of governance in the country.

Over 100 participants from diverse backgrounds attended the workshop.

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Why India needs a PBO

By Kaushiki Sanyal, Senior Analyst, Bharti Institute of Public Policy, ISB

This article was first published in Financial Express on April 11, 2014.

The requirement for legislative approval of financial measures is a democratic instrument enshrined in the Indian Constitution. This allows the legislature to keep a check on the government’s spending of public resources. However, there is a sharp disconnect between the formal power and the actual budgetary role of the legislature. A key reason for this disconnect may be because of the design of parliamentary democracies which limit the power of legislatures to either reverse or amend the budget. Other structural reasons for the disconnect may be the limited capacity of legislators to scrutinise fiscal matters, lack of access to in-depth budgetary information and limited time to scrutinise the budget. Over the years, this has adversely impacted the time spent by MPs on scrutinising the budget.

This indicates an abdication of responsibility by Parliament of one of its most crucial functions and does not bode well for the country’s future. While the issues related to the design of parliamentary democracies may be difficult to change, the structural issues can be addressed by putting in place certain measures to help parliamentarians scrutinise fiscal policies in a more robust manner. To that end, this article proposes that Parliament take the initiative in establishing a Parliamentary Budget Office (PBO), which would strengthen the former in carrying out its role of financial oversight.

The concept and the need for such an office in India is discussed here with some examples of PBOs in other countries.

What is a PBO?

PBOs are non-partisan research bodies that provide legislators with neutral and high-quality analysis of fiscal matters that is independent of the executive. Typically, they focus on analysing the full budget cycle, the broad fiscal challenges facing the government and the financial implications of legislative proposals.

A PBO may be established as a statutory body under the direct control of Parliament with a clear set of deliverables. The body could be run as an autonomous institution with an independent board of directors. The head of the PBO should testify before a parliamentary committee on all fiscal matters. PBO should also be subject to audit scrutiny to ensure accountability.

The key advantages of having such a body are: (a) it can raise the quality of debate and scrutiny in Parliament as well as enhance fiscal discipline; (b) it can address the information asymmetry by breaking the executive’s monopoly on information; (c) the information would be available to both majority and minority parties; and (d) a PBO can provide information in a more transparent and timely manner which can enhance citizen participation in the budget process.

At present, budget-related information remains a monopoly of the executive with little scope for independent, high-quality analysis. Also, debates on legislative proposals hardly ever go into their fiscal implications. For instance, the Right to Education Bill, 2008, which required the government to reimburse unaided schools for expenditure on every child, did not provide any estimate for this purpose. Financial Memoranda of Bills only provide the estimated expenditure at the Union level. In addition, MPs in India (unlike developed democracies) are not equipped with well-trained research staff who can provide them with timely and credible inputs. It is essential for MPs to build analytical capacity in budgetary matters in order to be able to hold the government accountable. A PBO can provide MPs with independent, non-partisan and quality research analysis.

A PBO should evaluate complex budget information and produce policy briefs so that MPs can more easily understand fiscal and policy issues. PBOs in different countries undertake a variety of tasks which include producing economic forecasts that are independent from the executive branch of the state, analysis of the budget, examination of fiscal implications of legislative proposals, production of baseline estimates of revenues and expenditures based on current laws and production of policy briefs on present schemes.

Who may use a PBO’s analysis?

PBOs primarily cater to research requests from MPs across party lines as well as requests from parliamentary committees. PBOs in countries such as Uganda and Kenya exclusively cater to requests from committees while Canada carries out service requests from individual MPs but ranks them below committee requests in terms of importance. The US services requests from committees as well as individual legislators.

Should a PBO’s work be available to the public?

A balance needs to be struck between the need for transparency and the need to maintain the confidentiality of requests made by individual clients (this is likely to increase use of the service). All reports of the PBO except those prepared on the request of individual MPs or parliamentary committees can be made public. The on-request reports may be made public with the express consent of the client or may be declassified after a certain time period has elapsed.

The international experience with PBOs

Over 13 countries have established specialised budget offices attached to the legislature including the US, UK, Canada, Australia, Korea, Hungary, Uganda, Kenya, Thailand and Bangladesh. The countries have adopted different models to suit their individual needs. For instance, PBOs fall within the jurisdiction of Parliament in the US, Korea, Uganda and Canada while it is under the executive in the UK and Sweden. The functions may differ too. The US Congressional Budget Office (CBO) provides information on economic outlook, cost estimates of specific legislative proposals, long-term budget outlook, etc. The Canadian PBO provides independent budget projections, fiscal sustainability report, and financial analysis of Bills.

The impact on fiscal oversight in countries with PBOs is difficult to measure though some of the results have been encouraging. The CBO in the US focuses on costing or scoring legislative proposals relative to the baseline. This has helped discourage Congress from making unaffordable proposals. In Australia, the PBO does a costing of different political parties’ electoral manifestos, which can discourage unaffordable election commitments.

An effective PBO can be a useful tool for strengthening the oversight capacity of legislators. However, in the last analysis, it is up to the legislator to take fiscally prudent policy decisions.

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Give Performance Feedback Frequently


When it comes to giving performance feedback, do not wait for the end-of-the-year appraisal session. If you reserve all the feedback for the end of the year, your team members can only work on them going forward. Moreover, they might resent the fact that you have waited far too long to let them know about your viewpoint. Giving feedback as and when an issue occurs helps people to take immediate action and make effective behavioral changes.

Many managers associate feedback with only pointing out the negatives. Your feedback might not only highlight areas of improvement. Appreciating good work and applauding positive behaviors goes a long way towards improving team morale, developing a positive work environment and creating a sense of healthy competition among team members. A balanced and frequent feedback approach will help you to lead your team more effectively and get the best out of it.

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How to make a strong EEO application

The applications for the Early Entry Option (EEO) for PGP are in progress and the last date for the same is just around the corner viz. on the 30th of April, 2014. Have you submitted your applications yet? If not, then here are a few pointers I would like to put across on how to make a strong EEO application. These will help you to increase your chances of securing an admission offer.

First of all, if you have made up your mind and are certain that you will be making a career in management someday, then congratulations! You are already showing some signs of leadership potential which we look for while assessing your application.

Parameters for evaluating an EEO application
When you apply for the PGP through EEO, your application is assessed on the following criteria:

Academic Capacity:
Your past academic performance plays a major role in EEO as it demonstrates that you can meet the academic rigor demanded by the PGP at ISB. This does not mean that you strictly need to ace in your academics. If you have a good GMAT score with a fairly balanced academics score, you stand a great chance too. By balanced academics, I mean consistency in your academic performance throughout and not just your 10th and 12th marks.

Balanced Personal Attributes
Your choice in extra-curricular activities and your involvement in them display your ability to lead and influence people, organize activities and your ambition to see a project to its end not just for the sake of it but with a flair that is typical of a person who is an aspiring leader. You should highlight these qualities in your essays. Your essays should clearly reflect what you are, your personality, your goals and expectations.

Mention your extra-curricular activities (achievements in sports, social service, college events etc.) and your past internships weaving them with your future goals. For example, if you want to make a career in FMCG marketing then link this with your college projects on rural marketing, internship in market research or advertising agency, etc. If you have any work experience, prioritize it in the flow of your essay and highlight the achievements associated with it. Remember that the key to composing a good essay is to be yourself while writing it. Make your essays so lucid that they differentiate you from the rest of the applicants.

Leadership potential
This attribute is evaluated mainly through the recommendations you submit. Recommendations from your college professor, department head, mentor at internship or at NGO/ sports academy etc. are very important when it comes to gauging your caliber as a leader. Be mindful about taking recommendations from people who know you well and can evaluate your abilities and potential thoroughly.If you ask a person who is not well acquainted with you, there is a possibility of them clicking on ‘Unable to evaluate’, an option given with every close ended question, which may go against you. So, when it comes to taking recommendations, the right people are the key than the people from top designations.

To cut this long story short, know that there is no separate weight-age assigned to any of the above parameters. Your application will be evaluated holistically and based on an overall evaluation an admit offer may be given. So, if you are an eager aspirant who wants to join ISB, then work on a strong EEO application right away and submit by 30th of April, 2014.

All the best!

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5 Ways to Make Your Meetings More Effective

“A Meeting is indispensable when you don’t want to get anything done.” - Thomas Kayser

Think about all the meetings that you had over the last week. How many of them were really worth it? Meetings that really energized you, made you take actions, opened doors to new opportunities. And how many of them were just time-wasters? Meetings in which you were having an out-of-the-body, I-don’t-belong-here experiences?

Chances are that most of your meetings were in the second category. And you are not alone; study after study shows that most meetings deliver little compared to the time we devote to them. In the UK, it has been estimated that workers waste a year of their lives in useless meetings. As per one study, the average cost per meeting for Fortune 500 companies is as high as $527.

But you can make your meetings more effective. Here are 5 strategies that will ensure that your meetings are both fun and productive.

1. Ask the question – do we really need this meeting?

This is the first step. Whenever we get a meeting request, most of us agree on auto-pilot. But what if we start by asking the question, do we really need this meeting? Can a quick call or email suffice? Do we need all the 10 people for the meeting or only 3 will be sufficient? Once you start asking these questions, very quickly you will realize that many of your meetings can are not absolutely essential.

2. Make organizing meetings costly

You might think that organizing meetings are cost-less – but all of us are paying with our valuable time. Unfortunately, that is not very visible. Hence, you can make organizing meetings costly by making the number of meetings fixed. For example, you can decide not to have more than 3 team meetings a week. You can declare a no-meeting day once a week. The idea is to set a culture where everyone understands that a meeting is to be called only when it is absolutely essential.

3. Insist on an agenda

A study shows that around 63% of meetings have no agenda. If there is one thing which contributes most to the failure of a meeting, is the absence of an agenda. Think for a moment, if you don’t know what is to be discussed in a meeting, how can it be successful? Even the so-called “brain-storming” meetings cannot start without an agenda. Also, the agenda should focus on the expected outcomes rather than the inputs. It should be crisp and to-the-point rather than vague and diffused. “To decide on the top 3 new features to be included in the next release” is much better than “to discuss the features that we can add in future releases of the software”.

4. Have stand-up review meetings

Since most of the meetings are review meetings, an effective way to get the maximum out of them is to make them stand-up meetings. By making all the meeting participants stand through-out the meeting, you ensure that the meetings are short and only the important issues are discussed.

5. End with clear action points

Many of the meetings don’t lead to clear action points, necessitating further follow-up meetings. Hence you have to ensure that the meeting ends with clear action points that are aligned to the initial agenda. It is important to decide on owners of action points during the meeting itself – postponing who will own what for later might lead to another meeting. Finally, any recurrent meeting should start with last meeting’s open action items before moving on to other discussions.

Economist John Kenneth Galbraith once said, “Meetings are indispensable when you don’t want to do anything.” If you follow the tips above, it might not be the case for your meetings.

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Enhancing stakeholder participation in the policy-making process

By Kaushiki Sanyal, Senior Analyst, Bharti Institute of Public Policy, ISB

This article was first published in Responsible Business India on April 4, 2013

Given the diversity of our country, how can we ensure that citizens have a say in the laws and policies that are made on their behalf? All citizens need to be treated as agents or stakeholders rather than passive recipients. Therefore, allowing them legitimate ways of engaging and participating in policy designing helps in promoting a strong conception of citizenship. This can be extended to include business entities in India. They are affected by the laws and policies of the land and their legitimate concerns merit due consideration of the policy-makers. Furthermore, by engaging with citizens and businesses, the government can benefit from expert knowledge beyond its immediate realm of information, expertise and advice, while at the same time creating opportunities to educate them about policy alternatives. The increasing complexity of policies coupled with pluralism in society makes this engagement no simple task since the policy-maker has to balance competing interests while formulating policies that serve the best interest of the country.

In this article, I describe the various ways of engaging with Parliamentarians that are available to the citizens, list the gaps and propose that allowing lobbying in a regulated manner would not only increase access for citizens and businesses but also bring in more transparency and accountability into the system.

Current opportunities for public engagement

Currently, stakeholders can participate in legislative process in different ways. First, citizens can launch campaigns to raise awareness about the need for a law in a particular sector or changes to an existing law. Landmark legislations such as the Right to Information Act, the National Food Security Act, the Lokpal and Lokayuktas Act and the amendments to the rape laws are the result of long running campaigns by various activist groups.

The government can also seek the help of expert groups such as the Law Commission or ad hoc committees to draft laws. These committees may seek feedback from all stakeholders including concerned businesses about the provisions of the law. Individual Members of Parliament (MP) can be petitioned, who can then introduce a private member’s bill in Parliament. Although these Bills generally do not get enacted, they act as signaling devices to the government about the need for legislation in a certain area.

The ministry may also seek public comments after it has drafted a law or policy or circulate it among select stakeholders. For example, the administrative ministries sought feedback on the Draft CSR rules in the Company Bill; the Draft Land Acquisition and Resettlement Bill and the Draft Water Policy 2012 within a specified time period (generally 20-30 days). In fact, recently the Committee of Secretaries chaired by the Cabinet Secretary has decided that each ministry should proactively publish proposed legislation on the internet and other media.

Once a Bill is introduced in Parliament, it is generally referred to one of the 24 Department-related Standing Committees (DRSCs), which were formed to scrutinize Bills and other policies of the government in 1993. These DRSCs may solicit feedback from the public by issuing notices in key newspapers and the Gazette of India. The public comments are also tabled in the form of a report. However, the level of public engagement varies with different Bills. For instance, the DRSC scrutinizing the National Food Security Bill, 2011 received about 1.5 lakh suggestions from individuals and organizations while only 16 submissions were received for the Agricultural Biosecurity, 2013. Regulators such as the Securities and Exchange Board of India (SEBI), Telecom Regulatory Authority of India (TRAI) and the Reserve Bank of India (RBI) also solicit public feedback on their draft regulations. For instance, in December 2013, SEBI invited public comments on the Justice Sodhi Committee Report on Insider Trading Regulations and RBI sought comments on the Draft Framework for Dealing with Domestic Systemically Important Banks.

After a Bill is enacted, ministries draft and notify Rules (also known as subordinate legislation) to enable its implementation. These Rules may be scrutinized by the Subordinate Legislation Committee, which is empowered to seek public feedback.

Post legislative scrutiny allows the Parliament to review and evaluate the effects and consequences of an Act following its implementation. However, it is not mandatory in India. It may however be undertaken by bodies such as the Law Commission of India, the DRSCs or a specific commission appointed for the purpose that may hold public consultations.

Addressing the gaps

There are primarily two types of gaps in the policy-making process that need to be addressed. One, the limited opportunities for public participation in the policy-making process and two, the lack of transparency about who has access to policy-makers to influence the decision-making process.

I propose a few ideas to address both types of problems.

Increasing public participation in policy making

The Indian policy-making process provides some opportunities of stakeholder participation but there is significant scope for making the system more inclusive, collaborative and deliberative. Currently, public participation is not statutorily mandated, it is done at the discretion of the ministry or committee. Furthermore, there is little attempt to inform the stakeholders of the process of engaging; it remains confined to a relatively small group which is actively involved in advocacy. Also, there is little transparency in the process itself which allows it to be open to manipulation by interest groups.

India could resolve these issues by adopting some of the best practices followed in other democracies. For instance, it could run civic awareness campaigns, devise political internships and fellowships for young people and increase access to MPs and the Parliament. It could also institutionalize feedback mechanisms in the legislative process. The decision on making pre-legislative scrutiny mandatory is a step in the right direction. Further, after a Bill is introduced in the Indian Parliament, India could make it compulsory to refer it to a DRSC (as is the case in the U.K. and the U.S.). There have been instances where important legislation such as the Special Economic Zone Bill and the National Investigation Agency Bill have not been referred to DRSCs. In order to increase transparency in the feedback process, the government could be required to publish a report demonstrating how the inputs from stakeholders have been considered while formulating the law.

Since post legislative scrutiny occurs rarely in India and is a matter of discretion of the government, there is hardly any avenue for citizens to express their views on the implementation of an Act or policy. India cantake cue from countries where post legislative scrutiny is carried out regularly. . In the U.K., it is compulsory to conduct post-legislative scrutiny within three to five years of the enactment. In the U.S., legislative oversight committees review laws on a continuous basis. In Australia, most laws have to be reviewed within three years. Stakeholders’ comments are also solicited as part of the post-legislative scrutiny process.

Increasing access to policy-makers

Currently, industry bodies, big businesses as well as advocacy groups attempt to influence policy-makers in various ways. However, in India, influencing policy-makers or lobbying is synonymous with bribing and any attempt to legitimise lobbying through regulation is viewed as an attempt to legitimise bribery. However, the simple truth is as follows. First, lobbying is not bribing which is an offence under the Prevention of Corruption Act, 1987. Lobbying simply means providing information and expertise to a policy-maker to further ones cause or interest. Second, it is simplistic to assume that if there is no law that regulates lobbying, the activity is not taking place. Third, in a democracy, lobbying should not be viewed as a necessary evil but a legitimate activity of citizens. However, if the activity is not transparent, public interest may be put at risk in favour of specific interests.

Therefore, India needs to enact a law that treats lobbying as a legitimate activity where the rules serve as a tool to enhance transparency in the policy-making process rather than restricting access to policy-makers. This would also ensure that competing groups have reasonably equal access to policy-makers. Many countries such as the US, Canada, Germany and Taiwan have laws regulating lobbying. Most countries require lobbyists to register with an authority and disclose information about their clients and the methods they employ to lobby.

India can adopt a model that suits its own socio-political needs. Requiring lobbyists to disclose expenses incurred is likely to force interest groups to engage in the legislative process through legitimate means. Universal access to information on expenses and details of communications with policymakers would give impetus to more debates in the public domain. Thus, removing the stigma attached to lobbying while at the same time regulating it would provide a means to citizens and business entities to participate in the legislative process transparently.

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It’s The Incentives, Stupid!

By Mandar Kagade, Analyst, Bharti Institute of Public Policy, ISB

This article was first published in on March 25, 2014

In a recently held Board meeting, the Securities & Exchange Board of India (“SEBI”) has decided to amend the Listing Agreement and disallow public listed companies from remunerating their Independent Directors using stock options. This move is catalyzed by the intent “to make the provisions of the Listing Agreement aligned with the provisions of the newly enacted companies Act, 2013”.[1] In 2013, the country gave itself a new Companies’ Act, 2013 (“Act”) that brought in some very significant changes including in the regulation of Independent Directors. The Act prescribed their rights and obligations, the nature of remuneration they would receive and so forth. Most notably, the Act has proscribed companies from paying their Independent Directors in stock options.[2] This was a myopic and regressive step, as we will discuss in the following paragraphs; but one had hoped that the capital market regulator, SEBI at least would continue the status quo for listed companies and advocate the use of stock options for them, where they have been most effectively (and where their use is more justified as well); as things turned out, that was not to be.

The sum total of these two regulatory measures is that all companies will now remunerate their Independent Directors in fees, profit-linked commission (as approved by members) or in stock. But that misses out on appreciating the powerful role incentives play, in regulating human behavior. Directors (and managers) of companies have their human capital locked in their companies. These constituencies therefore have an incentive on the margin to be risk-averse. On the other hand, the shareholders are diversified and therefore care little about the unsystematic (company-specific) risk flowing from a company per se. Their incentives are therefore to see that individual companies pursue valuable though uncertain investment opportunities. Now, imagine an Independent Director remunerated in cash; she will be paid regardless of whether she is vigilant about monitoring the “insiders.” Accordingly, it is natural to visualize the Independent Director going through the motions of attending board meetings and then collecting her fees at the end of her routine. Since her actions in the board meetings are de-linked from her wealth and the stock holders, it is easy to infer that the Independent Director remunerated exclusively in cash would be a bad monitor of shareholder interests. Similarly, compensating management and the Independent Directors in stock will merely make more of their wealth tied up to the Company’s (unsystematic) risk and misalign their incentives from the outside shareholders by making them risk-averse as more of their personal wealth is tied up with that of the company.

Stock options provide the solution to precisely this dilemma because they have no downside and an unlimited upside potential. The asymmetric nature of their payoff structure essentially ensures that Independent Directors have incentives to see that the management of the Company invests the company’s assets in valuable but uncertain projects than they would otherwise, thus creating shareholder value.[3] Little wonder then, as Yermack notes, tying directors’ pay more closely to stock performance through use of options and other equity awards has been a frequent goal of shareholder initiatives in the United States of America.[4]

Other remunerative instruments that the Act permits are profit-linked commissions. Because they are linked to profits, commissions based on profits arguably align the incentives of Independent Directors and the shareholders. But they are an inefficient alignment device as commissions based merely on profits are likely to promote short-termism. This is in as much as profits fail to capture the value of future growth opportunities of the company thus disincentivizing the Independent Director to think for the long term. Furthermore, profit-linked commissions cannot be structured to payout in a staggered fashion without sacrificing the incentive alignment.[5] On the other hand, stock options are linked to stock price that impounds the value of future growth opportunities thus promoting the Independent Director to think long term. Also, stock option plans can be designed so as to vest in a staggered fashion thus incentivizing Independent Director to act in the interests of shareholders in the long term.

Unfortunately, the regulators in India have espoused the very instruments that increase incentive-incompatibility between Directors and their shareholders. It is high time regulators move away from their fixation of cash and permit alignment between shareholders and Independent Directors through market mechanisms.

[1] See Press Release PR 12/2014, SEBI Board Meeting.

[2] See Section 149 (6) of the Act.

[3] See David Yermack, Remuneration, Retention and Reputation Incentives for Outside Directors, p. 12, 36 (2003) (finding statistically significant association between the pay-performance sensitivity and growth opportunities of the firm measured in terms of Tobin’ Q and R & D/ assets) available at, See Michael Jensen & Kevin Murphy, Performance Pay and Top Management Incentives 98 (2) Journal of Political Economy p. 227 (defining pay-performance sensitivity as a dollar change in CEO wealth per dollar change in shareholder wealth).

[4] Supra note 3 at, p.3

[5] This is because, if the commission payout is deferred over a period of time, the opportunity cost incurred by the Independent Director on that payout will decrease the incentive effects linked to such commissions.

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Young Leaders Programme

We completed the fourth and final Learning Weekend for the first batch of the Young Leaders Programme students at Mohali in mid February. We are ready to welcome these students to the regular PGP in April this year. Over the last two years we have mentored the students, given them inputs on critical thinking, team building, building consensus, value creation/value capture etc in addition to giving them inputs on various career choices they can make. We do hope they can use these inputs to chalk out a plan of action while they are at ISB for the next one year and make a flying start to their career thereon.

The key aspects of YLP are the Learning Weekends that include leadership & knowledge sessions with the renowned faculty of ISB and industry leaders. These sessions include structured learning that focus on the fundamentals of management education along with building hard and soft skills. All this, along with mentorship from senior ISB officials & alumni enhances the professional experience of the student in those two years. YLP also provides an opportunity to connect with high-end achievers, great minds, hence, building a network for life. To top it, there is a scholarship of INR 1 lakh for every YLP student. Finally, the YLP ends with the student joining the PGP at ISB with a head-start to his career, enhanced work experience and an edge over his/her peers.

As we have been doing in the past we visited India’s top colleges from various disciplines including the IITs, BITS, HR College, Lady Sriram College of Commerce, et al in order to interact with the prospective applicants. The response as usual has been very enthusiastic.

To be eligible for admission into YLP, the candidate must be in his pre-final year of graduation in any discipline. The selection process is a three-stage one which consists of profile evaluation, analysis of academic and analytical skills, GMAT score, written essays, video presentation and personal interviews. Excellence at every stage is a must to make the cut. The best of the best are the ones who get chosen for YLP.

So to sum it up, the youngsters who make it to this programme are, therefore, ideally positioned to transform into tomorrow’s exceptional business leaders. Because it really isn’t about where one comes from; it is about where one intends to go.

Applications are now open at

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Underestimating liquidity risks: How investors can suffer


Nupur Pavan Bang[1] and Vikram Kuriyan[2]


This article was first published by Moneylife on January 27, 2014


Risk management models used by professional investors often assume that securities can be traded infinitely. When liquidity dries up, especially in a systemic way during periods of crisis, it becomes very expensive to trade.

“When there is rain, umbrellas become expensive. But when there is no rain, nobody cares about the umbrella and the prices are low. The case of Liquidity is similar”, says Professor Yakov Amihud, Ira Rennert Professor of Entrepreneurial Finance at the Stern School of Business, New York University. Prof Amihud has been actively researching the effects of liquidity of assets on their returns and values, and the design and evaluation of securities markets’ trading methods for over three decades.

In conversation with Dr Nupur Pavan Bang of the Insurance Information Bureau of India and Prof Vikram Kuriyan of the Indian School of Business, Prof Amihud explains that liquidity risk is often ignored by investors. Risk management models used by professional investors often assume that securities can be traded infinitely. When liquidity dries up, especially in a systemic way during periods of crisis, it becomes very expensive to trade. Firms like Morgan Stanley and Long Term Capital Management have suffered huge losses due to underestimating the cost of liquidity.

So when does liquidity dry up? “It is a chicken and egg story”, says Prof Amihud. When prices fall, traders with leveraged positions need to come up with additional funds. If funding is too costly, traders must liquidate part of their positions and this makes stocks less liquid. When stocks become illiquid, their prices fall further; this exacerbates the problem of illiquidity. In addition, information asymmetry is an important determinant of illiquidity. When there is overall panic and information gaps between traders widen, transaction costs go up and liquidity dries up.

The introduction of high frequency trading (HFT), algorithmic trading and technology improvements in terms of direct market access and co-location has not hurt the markets in terms of overall liquidity. Every generation, there are some people who are more technologically advanced than the others and consequently they have an advantage over the others. In earlier times, people who had telephones had an advantage over those who did not have telephones. Then came computers. Initially, only a few had computers. Now, everyone has it.

It’s not an arms race, which imposes a dead-weight cost with no benefit. For example, when both India and Pakistan did not have nuclear weapons, they were equal. Now both have it, and they are still equal, but after burning billions of dollars. Similarly, people argue that when there was no HFT every one was equal in terms of technology. And now with HFT, everyone might eventually reach there and then again everyone will be equal. So why have it? Well, by improving the speed of transactions, HFT helps improve stock liquidity. Limit orders are tighter (have narrower gap between the buying and selling price), which benefits all traders who can trade at lower cost. This applies particularly, to large and more liquid stocks, in which HFTs are more actively involved. The level of illiquidity and its price have declined over time. This is not an anomaly which will disappear once the market finds out about it. It will stay there and benefit all traders and the economy at large.

On being asked about liquidity in the Indian markets, Prof Amihud says that India is among the least liquid markets in the world. Ironically the corporate world would get upset if the Reserve Bank of India (RBI) would raise bank interest rates. Yet, they are not worried about the illiquidity in the securities markets, which raises their cost of capital. If the Securities Exchange Board of India (SEBI) comes out with a regulatory scheme that would make the market more liquid, it will reduce the corporate cost of capital, akin to the RBI lowering interest rates.

[1] Head- Analytics, Insurance Information Bureau, Hyderabad (
[2] Executive Director, Centre for Investment, Indian School of Business, Hyderabad

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Wind energy auctions in India

By Prof. Gireesh Shrimali, Energy Economics and Business, Monterey Institute of International Studies; and a Fellow at Climate Policy Initiative’s CPI-ISB Energy and Environment Program at ISB

Auctions for wind energy have the potential to bring down the costs of wind energy in India. However, these auctions have not happened due to opposition from wind developers. This commentary explores the reasons behind this opposition and suggests ways to ensure effective and efficient wind deployment in India.

The promise of reverse auctions for wind energy

Reverse auctions for renewable energy, where developers bid on the discount they are willing to offer on a fixed tariff, are gaining popularity around the world, including California, Brazil, and South Africa . Auctions are not only efficient – i.e., in delivering the lowest cost – but also fair – i.e., in allocating capacity to developers without bias.

India has had successful experience with solar energy auctions. In the Jawaharlal Nehru National Solar Mission (JNNSM), the lowest bids have come down by approximately 60% compared to the fixed tariffs published by the Central Electricity Regulatory Commission (CERC) less than three years ago). This success suggests that India should use these auctions for other renewable technologies – in particular, for the dominant and established technology, wind – as well.

India is one of the leaders – in fact, fifth – in the world in terms of installed wind energy capacity, totaling approximately 18GW by the end of 2012. This capacity has come online with the help of state-level fixed tariffs and complementary federal incentives, such as Accelerated Depreciation (AD) as well as Generation Based Incentives (GBI).

However, these fixed tariffs, also known as preferential or feed-in tariffs, are typically determined by the government, which raises the risk of either rent seeking – i.e., creating windfall profits for developers that eventually get the projects – when the tariffs are too high or adverse selection – i.e., only high risk projects participating – when the tariffs are too low. Further, it can be argued that the government does not have the best market information and, therefore, due to this issue of asymmetric information, should not be in the business of setting market prices.

So, appropriately designed auctions, which allow for price discovery, given bidding by developers that have the best market information, appear like a good solution for the wind power industry as well.

The absence of reverse auctions for wind energy 

However, all attempts to hold auctions for wind energy in India have failed so far.

In 2012, Karnataka was the first state to attempt a wind energy auction. This wind energy auction was stalled due to a lawsuit asserting that the auction was in violation of the Electricity Act of 2003 which, though it allows states to announce preferential tariffs based on CERC’s recommendation, does not allow them to hold auctions.

This issue could be fixed only at by the central government which would need to issue appropriate guidelines according to the Electricity Act of 2003. Since the Karnataka lawsuit, the Ministry of New and Renewable Energy (MNRE) has come up with these guidelines; however, they cover all renewable energy sources, except wind energy.

Another state, Rajasthan, has also tried twice to do a wind energy auction, and has been stalled both times. The proposed wind energy auction towards the end of 2012 was cancelled due to pushback during consultations, on grounds similar to Karnataka . Rajasthan got around this obstacle by the Rajasthan Renewable Energy Corporation (RREC), an independent and clearly unbiased entity, getting a trading license. However, the second proposed auction, to be helped by RREC in June 2013, has again been stalled due to a lawsuit, alleging that wind energy auctions would cause a 47% plunge in turbine installations.

What is happening, and why?

The stalling of auctions has primarily been due to opposition from wind energy developers, via the Indian Wind Energy Association (INWEA). Therefore, it is tempting to assert that the main obstacle for holding wind auctions is the INWEA. However, to understand why, it is pertinent to investigate this matter in more detail.

The auctions have been stalled by INWEA under the legal framework; however, the reasons quoted by INWEA are that, in absence of the preferential tariffs, the risks for the developers are too high – in particular, the wind resource risk as well as the transmission interconnection risk. Another common refrain is that auctions don’t work in the long-term, due to the winner’s curse issue, where non-serious players bid aggressively, only to default later.

But, careful examination reveals that these issues with auctions don’t hold to careful scrutiny. Aren’t the risks quoted by INWEA typical risks borne by wind farm developers word-wide? And, doesn’t carefully designed pre-qualification criteria – e.g., resource assessment and transmission interconnection studies, such as in California Reverse Auction Mechanism (RAM)  – combined with bid-bonds – e.g., in JNNSM, which penalize non-performance, take care of the winner’s curse issue? In fact, recent auctions in Brazil, which combine these elements, have created widespread participation, and have brought the price of wind power down to grid party.

What is the real issue?

This requires examining the history of the wind energy development in India. The wind energy sector in India was jump started by the federal incentive, AD, which was complementary to state-level preferential tariffs, and allowed equity investors to claim depreciation tax benefits equaling 80% of the capital expenditure in the first year of a wind farm operation. AD attracted a lot of equity investors that were not even remotely connected to the wind energy business. This also enabled vertical integration in the wind industry, where wind turbine manufacturers, such as Suzlon and Enercon India, also became wind farm developers. A side effect of this market structure is that, except for these vertically integrated players, no one really knows the breakdown of the cost components in the wind energy supply chain. Further, this equity-model appears to have promoted installation of capacity, not generation. These issues were perhaps partially mitigated by an alternative, and mutually exclusive, federal incentive GBI, which provided an INR 0.5 subsidy per unit of generation and was targeted towards a different kind of wind energy developer, the independent power producer (IPP). This “IPP-model”, based on project finance principles, was also considered to be more efficient compared to the equity-model in terms of generation. However, based on our discussions with developers, the IPP producers have not had an easy time in India, given the stronghold of the vertically integrated players on critical resources, such as land with good wind resource.

Therefore, one should expect opposition to auctions, which would move towards discovering the real cost structure in the wind energy industry, in particular, by the proponents of the equity-model, such as Suzlon.

To make matters worse, both AD and GBI expired in the beginning of 2012. This has resulted in the wind power development slowing down considerably in India – from approximately 3 GW of installed capacity in 2011 to nearly half that in 2012, indicating the crucial role of these incentives. Though GBI has been reinstated in the 2013 budget, it is not clear whether it will recover its previous budgetary allocation. This policy uncertainty has further made INWEA extremely opposed to any other policy changes, such as auctions. Further, given their complementary nature, AD and GBI were bringing in different kind of investors. In absence of AD, it is not clear whether GBI, by itself, is capable of achieving the 12th plan target.

What should the government of India (GoI) do?

First, in the light of the 12th plan goal – installation of an additional 15 GW of capacity by 2017,  which is predicated on the installation of 3GW of wind capacity per year, a number based on wind capacity installation in year 2011, a year when both AD and GBI were active – it should ensure that, in order to attract investment, adequate subsidies are provided and that policy uncertainty is alleviated, so that investors are ensured a normal rate of return on their investments.

Complete elimination of federal subsidies would not work. GoI needs to recognize that the federal incentives were working in tandem with state-level incentives and, the expiry of federal subsidies, in absence of corresponding adjustments to state-level subsidies, is bound to have a negative impact on deployment. Therefore, this measure would require updating of state-level subsidies which, in order to compensate for the expired federal incentives, would potentially be higher than current levels. This may be hard to implement, given the poor financial condition of SEBs.

Thus, a more effective solution would be to use one (or both) of GBI and AD with innovative, and cost-effective, ways to provide federal subsidies – e.g., interest-rate subsidies, as suggested in our upcoming paper in Energy Policy, “Renewable deployment in India: Financing costs and implications for policy”.  In any case, it is necessary that this federal policy is not only certain but is also reasonably long-lived, so as to provide confidence to investors; otherwise, India will follow the path of the U.S., where the un-predictability of the Production Tax Credit (PTC) has resulted in boom-and-bust cycles for wind energy deployment .

Second, in addition to the provision of complementary federal subsidies, GoI should ensure that states eventually move to an auction based approach to procuring power. This would not only allow for price discovery for wind energy but, more importantly, allow for SEBs to procure wind energy in a cost-effective manner and, therefore, b e welfare maximizing. This will, of course, require design of auctions with appropriate pre-qualification criteria, such as wind resource assessment and transmission interconnection studies, as well as the use of bid-bonds. Under this case, GoI can even provide necessary assistance by creating nation-wide resource assessment studies, such as ones provided by the National Renewable Energy Laboratory (NREL) in the US – e.g., via the Center for Wind Energy Technology (CWET).

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Who would have thought pencil making has secrets?

The short story in New York Times about Faber Castell makes one think. There are secrets to pencil making! And it takes a week to make one. This company in its 252nd year of existence across eight generations seems to trumpet the victory of manufacturing excellence over competition and changing tastes.

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Hello world!

Welcome to ISB Blogs. This is your first post. Edit or delete it, then start blogging!

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Applying to ISB PGP 2014-15: Final Words

As Round 2 of the ISB PGP 2014-15 application season draws to a close on November 30, 2013, let me leave all our applicants with some final advice.

First of all, congratulations to those applicants from Round 1 who have received an offer of admission to ISB. I welcome you to the school and wish you the very best for the year ahead! From achieving your learning goals through classroom-based studies, interactions with faculty, applied learning and extracurricular activities, to campus life, international exposure, placement opportunities and finally joining the ISB alumni network, you are now boarding what we like to call the 51-week rollercoaster. So get ready, the year ahead is as challenging as it is exciting!

To those of you who did not receive an offer of admission this year, do not be disheartened. While many applicants do make it to ISB in their first attempt, a good number of admitted candidates every year are reapplicants from previous years who learnt from their application mistakes, worked on their weaknesses, showed great perseverance and built a strong case for why they should be part of the programme. So, if you believe that business education and ISB can help you build a stellar career, there’s nothing to stop you from going after what you want. Get back to the basics, figure out your next steps, work towards your goals and ensure that the coming year is going to be a phenomenal one for you. And when you’re ready, we’d like to meet you again.

Those of you who are applying in Round 2 and are just a few days away from the deadline, you know what you need to do. Give it your all, make no compromises and give yourself the best chance possible. If you missed last week’s post, do take a look at it for some useful tips on submitting your application. You are also advised to start preparing for interviews as early as possible.

To our international applicants: People say a year in B-school changes your life. People say a year in India changes your life. So are you ready to spend a year in a B-school in India? These are once-in-a-lifetime opportunities, so don’t be afraid to explore (you can take the first step here). Deadline to change your life through ISB is Jan 15, 2015.

Early Entry Option (EEO) candidates, the value proposition to you is similar – get a head start on building a great career by making use of a very good opportunity available to you right now. You can apply now, impress us with your track record as well as potential, and reserve your seat immediately. Later, when you have gotten sufficient work experience and are most receptive to learning, come join the rest of your class. Your deadline to apply to EEO is January 15, 2014. If you haven’t started your preparation already, now is the time to do so.

Dear readers, this concludes our conversations on this blog about the ISB PGP 2014-15 R1 and R2 application cycles, but you are always welcome to connect with my team and me through our traditional channels, as well as through social media. Whether you are joining the Indian School of Business family immediately, a little later in the future or not at all, I wish you great success in all your endeavours, and I encourage you to always keep learning.

All the best!

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Rolling like a coin: the evolution of money down the ages


Nupur Pavan Bang1

This book review was first published in The Hindu on November 26, 2013

Easy money Easy Money: Vivek Kaul

Sage Publications India Pvt. Ltd.

B 1/I-1, Mohan Cooperative Industrial Area,

Mathura Road, New Delhi-110044

Rs 395


I wish somebody had told me these things when I was a student of Finance and while I was pursuing a PhD in finance. I would have had a much better perspective of how and why things work (or don’t) the way they do! That’s the first thought that came to my mind when I read the first book of the trilogy tracing the evolution of money.

The second thought was that this indigenous writer has written a book which is truly global in every sense. I would take the liberty of placing him in the same league as a Niall Ferguson or a Peter Bernstein, even though this is Vivek Kaul’s first book.

We have heard of many college dropouts who have gone on to become billionaires. Here is an example of a PhD dropout, who it seems, is on the path to becoming a best-seller and an authority on Money, its evolution, regulation and consequences.

‘Easy Money’ published by Sage Publications takes us through the era when anything and everything was treated as money in some or the other part of the world. From salt, to dried cod, cowry shells to cattles and even slaves! Going as long back as the 12th century BC, the book chalks the path for evolution of Gold as money by meticulously laying forth the problems with alternatives and with having too many different money types.

There are many interesting facts throughout the book. It is fascinating to know that it was the Chinese who first started using coins and that they “believed that money is meant to roll around the world, and so it should be round”. That the Chinese thought of this in the 12th century BC is fascinating.

The depreciation of the currency, or debasement, as it was known in the early centuries of the Christian era, and practised by reducing the metal content in the coins, eerily echoes the concept of printing more and more paper money to meet expenses, whereby ‘money’ systematically loses value.

From barter to commodities as money to paper money and then the evolution of the banking system, the journey has lessons, as highlighted by the author in the conclusion, that all regulators would do well to imbibe. Wildcat banking, free banking, bailing out institutions existed centuries ago as well. But we have not learnt from history and hence history repeats itself.

Kaul weaves together stories from Egypt, China, India, Rome, USA and UK effortlessly, as also he does with Marco Polo, Leonardo Fibonacci, Kublai Khan and the kings of the United Kingdom. He explains the evolution of concepts like ‘settlement’ and ‘bill of exchange’ through simple examples which make the book highly readable by even those who do not have a basic degree in Finance, Accounting or Economics. The research is thorough, language simple, stories fascinating. Everyone should read it.
[1] Senior Researcher, Centre for Investment, Indian School of Business, Hyderabad (

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A parliamentary budget office for India

By Kaushiki Sanyal, Senior Analyst, Bharti Institute of Public Policy and Sruti Bandopadhyay, Independent Researcher based in Washington D.C.

This article was first published in the Mint on November 20, 2013

At a time when India is going through an economic slow down, it seems counter-intuitive to enact legislation such as the National Food Security Law or continue to dole out subsidies that end up benefiting rich farmers. One reason for these economically questionable actions is the political dividend that parties hope to reap. However, there may be other reasons at work—the lack of understanding among parliamentarians of far-reaching economic impact of government policies. This has grave consequences for a parliamentary democracy where financial oversight is one of the key functions of a legislator. It may also explain to some extent the relative lack of debate on fiscal matters in Parliament.

Data released by PRS Legislative Research since 2000 shows that Lok Sabha has not spent more than 45% of its time discussing the budget. In 2013, Parliament did not discuss the budgetary proposals of any ministry (demand for grants). All were “guillotined” i.e., put to vote without any discussion. In case of Bills, the debate hardly ever goes into their fiscal implications. Financial memoranda of Bills only provide the estimated expenditure at the Union level. For example, the Right to Education Bill, 2008, which required the government to reimburse unaided schools for expenditure on every child, did not provide any estimate for this purpose. The Food Safety and Standards Bill, 2005, only budgeted for setting up the Food Safety and Standards Authority of India. It did not specify whether the cost of implementing this law would be different from the existing system, nor did it account for the enforcement costs to be borne by state governments.

What is holding back members of Parliament (MP) from questioning the executive on fiscal matters? The problem may be lack of expertise among MPs and lack of access to objective and high-quality research that is independent of the executive. Unfortunately, MPs in India do not have a staff of high quality researchers (unlike in other developed democracies) to help them gain expertise in budgetary matters. The institutional research support within Parliament such as a library and reference service is limited due to resource constraints, nor are their research products available readily in the public domain.

A remedy for this may be the establishment of a parliamentary budget office (PBO) in India—a common feature across many countries ranging from developed democracies such as the US, the UK, Canada, Australia, Korea, to Hungary, Uganda, Kenya, Thailand and Bangladesh. PBOs provide legislators with high-quality analysis that is independent of the executive. They specialize in objective and policy neutral analysis on the full budget cycle, the broad fiscal challenges facing the government, budgetary trade-offs and the financial implications of legislative proposals. Such research can raise the quality of debate and scrutiny in Parliament as well as enhance fiscal discipline. Most importantly, it strengthens the role of Parliament in financial oversight.

The key challenges faced by any country that establishes a PBO are threefold—guaranteeing independence and viability of the office in the long-run; ability to carry out truly independent analysis; and demonstrating impact. Countries have adopted different models to suit their specific needs.

The degree of independence of the PBOs varies across countries—in the US, Korea, Uganda, Kenya, Canada and Australia, PBOs fall within the jurisdiction of the parliament, while in Sweden and the UK, it is under the executive. India will need to ensure the independence and non-partisanship of such a body for it to have credibility with legislators. This may best be done if it is established as a statutory body reporting directly to Parliament. A clear set of deliverables may be desirable.

The functions of the PBOs may differ too. For example, the US Congressional Budget Office (CBO) provides information on economic outlook, cost estimates of specific legislative proposals, long-term budget outlook etc. The Canadian PBO provides independent budget projections, fiscal sustainability report, and financial analysis of Bills. In Uganda and Kenya, PBOs exclusively cater to requests from committees while Canada carries out service requests from individual MPs but ranks them below committee requests in terms of importance. The US services requests from committees as well as individual legislators. The UK also caters to individual MPs. It may be worth it in terms of strengthening the legislature if the Indian Parliament were to invest in a well-funded, professionally-run PBO that would cater to both individual MPs and committees.

Has there been any discernable improvement in fiscal oversight in countries which have established PBOs? This is a difficult question to answer given the complexity of policy-making. However, there are some encouraging results. The Canadian PBO contested the true cost of the war in Afghanistan and most famously, exposed the real cost of the government’s proposed F-35 fighter jet procurement. In the US, the CBO focuses on costing or scoring legislative proposals relative to the baseline. This has helped discourage Congress from making unaffordable proposals. In Australia, the PBO does a costing of different political parties’ electoral manifestos, which can discourage unaffordable election commitments.

India will surely benefit from an institutional mechanism that strengthens the capacity of the legislature to hold the executive responsible in financial matters.

It is important to understand that a PBO can only provide independent research; it certainly cannot prevent executives from taking bad fiscal decisions.

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Applying to ISB PGP: Submitting your Application – Round 2

With just over a week to go for the Round 2 deadline in the ISB PGP 2014-15 application cycle, I’m sure the activity level among our applicants is at a peak. Those who were not ready to submit before the Round 1 application deadline could always opt to apply in Round 2, but those applying now have no such safety net; you need to be disciplined about preparing and submitting your final application within the stipulated time period. To ensure that you are on top of everything, I strongly suggest that you go through the application checklist and pointers shared during the Round 1 application cycle. This is important.

In addition to finalising your application, my suggestion is that you start working on additional tasks that have a shorter buffer this time around, as compared to Round 1:

  1. Documents Although we do not require documents like marks cards, degree certificates, offer letters, etc to be uploaded at the time of submitting the application, you will be required to upload them if you receive an interview call. So if you do not have them with you and need to collect them from different locations like your home, college, previous workplace, etc, please arrange for this to be done now. The full list of required documents is available in the application portal.
  2. Evaluators – If you have not identified who your evaluators are going to be, identify them now. Remember, they too have a busy schedule and need time to fill in the evaluation form. It is not necessary for the evaluation to come in before or on the deadline of the application. All that a candidate needs to do is identify the evaluators in the space provided in the application portal and submit the details. Once that is done, the candidate can complete the application in all other respects and submit it.
  3. Interview preparation – Ensure that your essays and application represent you accurately. We will be going through them in great detail and they are likely to play a central role in your interview, should you be shortlisted for it. It may also be a good idea to get started on your interview preparation at this time. Here are some tips on preparing for the interview.
  4. Transition preparation – In the event that you get an offer of admission to ISB in Round 2, you will have limited time to prepare for the transition. So it would be in your best interest to give some thought to the possible transition to a new life and lifestyle, and perhaps discuss the implications with those who are likely to be affected by such a move.

If you have already prepared a strong application and are confident about your profile, get ready for the next phase in the application cycle. If not, you still have time (albeit, limited) to put in the necessary effort to change the course of your life. The next 10 days are crucial and represent the home stretch. Now is the time to give it your all, leave no stone unturned, and make the most compelling statement you possibly can. And if you need any help along the way, do not hesitate to contact us.

All the best!

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Application Tips for Reapplicants to ISB PGP

In the ISB PGP application pool, we get a large number of re-applicants who have unsuccessfully applied to ISB once or more before. This is a key demographic for us and we value these candidates greatly, simply because they persevere when others in similar situations don’t.

There may be several reasons for not making it through ISB’s admissions process in the first attempt. Many may have applied in the previous year even though they had not spent enough time to build and present their most compelling argument. Or they may not have done sufficient homework to understand what the school looks for in prospective candidates. Perhaps they may not have been ready for business education at that time, and that came through in their application or interview. It is even possible (and is often the case) that they may have done everything right and submitted a great application, but may not have made the cut in a very competitive application pool. Whatever the reason, a candidate’s unsuccessful attempt can sometimes discourages him/her from reapplying to ISB next year, and may even lead to dropping the idea of going to B-school altogether. For those who do reapply, however, not getting an acceptance letter from ISB becomes a source of motivation to improve themselves, find out what needs to be done to make it next year, and then put in the necessary effort to get that letter. These are the candidates we seek.

So if you are keen on making it to ISB and have decided to reapply in spite of being unsuccessful previously, here are some of the things you can do to improve your chances this year:

  1. Identify what was lacking – Ideally, you did this exercise soon after learning that you did not get an offer of admission. While we may not provide point by point feedback, when you request for a feedback on your application, we do give detailed pointers on how to prepare a good application. For those who have been interviewed, it would be a good idea to work on presenting oneself better at interviews. We will try and provide inputs to everyone who seeks them, but sometimes it may not be possible to respond to all requests. Even then, share your application with friends, alumni, colleagues, mentors, admissions experts, etc. and figure out where you need to improve.
  2. Figure out your purpose – If your previous attempt failed to make a convincing argument, it could be because you yourself were not very clear about why you needed to go to B-school. Ask yourself, should you go to B-school? The answer might provide the clarity, direction and conviction you need.
  3. Showcase your strengths – By now, you must have realised that ISB focuses on applicants’ strengths rather than weaknesses. Strengths demonstrate to us that you are capable of becoming very good at things you take up (or at least, some of the things). So understand your strengths and differentiators, highlight them in your essays, and present your case better the next time.
  4. Be honest about your weaknesses – This is related to the previous point. While we focus on strengths, we also acknowledge that all our applicants have some areas where they need to improve. If not, why would they even need to come to B-school? In fact, you will notice from our online application portal that we do not ask about candidates’ weakness anywhere in the application. So do not be unnecessarily nervous about any weakness. Instead, understand it, figure out how ISB can help you address it, and communicate that to us clearly. If there are areas where you have proactively taken steps to overcome a weakness, we’d love to hear about them and also the results of such actions.
  5. Focus on improvement made since your last application – This is something that we do not compromise on. Once you have applied to ISB but not made it, you know that there is work to be done. You need to show us how much effort you have put in over the last year to improve yourself and what results you have achieved. In fact, there is one full essay dedicated only to this, and it is mandatory for reapplicants. You should also highlight any awards and achievements received. We will be looking at all this in the context of your previous application.
  6. Finally, prepare and present a strong case for why you should be part of the next PGP class. I have blogged in detail about several different aspects of the application procedure, so you have a great amount of information available at your fingertips. You can get started here.

In conclusion, my advice to you is this: If you have applied to ISB PGP before and not made it, do not lose heart. It is an opportunity to demonstrate perseverance and a never-say-die attitude. We value those candidates who can show tenacity and stay in the game long enough to succeed. So understand your strengths and weaknesses, put in the necessary effort to make critical changes, and be smart about putting your best foot forward. In fact, this is exactly what will be expected of you when doing business in the real world too.

All the best!

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Applying to ISB PGP in Round 2

Each year, applicants have to take a call between applying in Round 1 Vs Round 2. For a particular individual, any number of reasons could make it better to apply in one round than in the other.

There are some advantages of applying in Round 1. For example, getting an offer of admission early gives applicants more time to get prepared for the changes coming up – planning the resignation from their job and handing over responsibilities, terminating home lease, making travel arrangements, organising finances, looking for a new job for the spouse in the new city, looking for good schools for kids in the new city, etc. It also allows them to take a break before joining the programme. Travel seems to be a popular option with many of the students admitted in Round 1. Even in the case where one doesn’t receive an offer of admission, it still helps to know it early so that they can get a head start on addressing any weaknesses in their profile before reapplying next year.

Applying in Round 2 has its own unique set of advantages:

  1. More time is available to evaluate options and figure out if B-school is the right avenue for improving your careers (Related: Should You Go to B-school?). If the choice to go to B-school has already been made, then you may use the time to decide on which schools and programmes would be right for you (Related: Studying at ISB Vs Studying Abroad).
  2. If you are ready to apply, the additional time gained by applying in Round 2 can help you prepare and submit a stronger application:
    1. You may be completing an important assignment shortly, which would go towards improving your overall profile and ability to add value to class discussions.
    2. A significant increase in responsibility through a promotion or profile change could be on the horizon and you can showcase that in your application.
    3. If you are not happy with your GMAT score, you can try and improve your score. Note that for those who have taken GMAT more than once, we consider only the best score while evaluating applications.
    4. You can use the additional time to complete any certifications or courses that you had taken up.
    5. Most importantly, submitting in Round 2 allows you to iterate a little more on your application and articulate your story better through essays, CV, etc. Get friends and colleagues to review them, incorporate helpful feedback and try to present a stronger application.
  3. Applying in Round 2 allows you more insights into the application process. You can benefit from the greater collective intelligence of the community, which has had a few extra months to analyze the procedure, essay questions, etc for the year. Input from Round 1 applicants about their experience is also something that you may find very useful.
  4. And finally, if you had other engagements or business travel during Round 1 and couldn’t really concentrate on your application effort, Round 2 gives you another opportunity to apply to B-school and take the next step towards improving your career. Make the most of it and put your best foot forward.

At this point let me make it clear that submitting your application in Round 2 has, by itself,  no effect on your likelihood of acceptance. For e.g., one myth is that most seats are filled up in Round 1, leaving very little for Round 2 applicants. Another common myth is that the number of applications is lesser in Round 2 and hence admissions are less competitive than in Round 1. I assure you that both of these are incorrect. We see a similar mix of students applying in both the rounds, and the number of offers made in each round is kept proportional to the number of applications received, guided by historical data and prevailing trends. So applying in a particular round, by itself, will neither improve nor hurt your chances of admission.

To those of you who were considering applying in Round 1 but decided to submit your applications in Round 2 instead, congratulations! You have rightly followed the first rule of submitting a winning application – “Apply when you are ready.”

All the best!

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Let the public participate

Given the failure of many government legislations in achieving the objectives for which they were formulated, a case for institutionalising deeper public consultations in the legislative process has been made in the recent past. Currently, there are four entry points where citizens can participate in the legislative process: first, the identifying stage; second, the drafting stage; third, the legislative stage; and fourth, the post-legislative stage.

Civil society organisations can alert the government to the need for a particular legislation or changes in an existing law. The Mazdoor Kisan Shakti Sangathan, a farmers and workers group, ran a successful campaign for a Right to Information law, which was finally enacted in 2005. The recent anti-corruption agitation led to the introduction of a Lokpal Bill currently pending in the Rajya Sabha. The long-running Right to Food campaign by a network of NGOs has been instrumental in raising awareness about chronic hunger and the eventual introduction of the National Food Security Bill in 2011.

The government can also suo moto decide that a law is required in a particular sector. It may get inputs from specialised bodies such as the National Human Rights Commission and the Law Commission or appoint a group to study a sector and draft a law. These groups or bodies may hold consultations with independent experts and stakeholders. Furthermore, an individual Member of Parliament (MP) can also introduce a Bill in either House. This is known as a Private Member’s Bill (for example, Lok Sabha MP, Kalikesh Singh Deo introduced the Disclosure of Lobbying Activities Bill in 2013 to regulate lobbying activities). Although these are generally never passed, they act as signalling devices to the government, which may introduce its own legislation on the subject. It is possible for the public to approach their constituency representatives to advocate for a particular law.

Government Bills are drafted by the concerned ministry, which is then vetted by other ministries. There are also times when the government approaches an independent expert to draft a law. Recently, it appointed the Financial Sector Legislative Reforms Commission, under the chairmanship of Justice BN Srikrishna to reform the financial sector laws.

The government may publish the draft legislation in the public domain for feedback. Drafts of the Electronic Service Delivery Bill, the National Sports Bill and the Land Acquisition and Resettlement Bill were published for a specified time period (generally 20-30 days). It may also circulate the draft among a select set of stakeholders for comments.  An individual MP may solicit public feedback on his Private Member Legislation. For example, Biju Janata Dal, MP Baijayant Panda uses his personal website and social media tools such as Facebook to publicise the draft of his private member bills.

There are few avenues of public engagement once the Bill is introduced in the Parliament. Since 1993, 24 Department-related Standing Committees (DRSCs) were formed to scrutinise Bills and other policies of the Government (before 1993 Bills were sometimes referred to ad-hoc committees for scrutiny). Generally most Bills are referred to these DRSCs, however, the presiding officer of the House has the discretion not to do so. For instance, key Bills such as the Special Economic Zones Bill, 2005 and the National Investigation Agency Bill, 2008 were not referred to a DRSC. In contrast, the Lokpal Bill passed by the Lok Sabha was sent to a Select Committee by the Rajya Sabha although it had been examined by the DRSC.

These DRSCs may solicit feedback from the public by issuing notices in key newspapers and the Gazette of India. The public comments are also tabled in the form of a report. However, the level of public engagement varies with different Bills. For instance, the DRSC scrutinising the Companies Bill, 2009 received 101 comments while only 10 submissions were received for the Armed Forces Tribunal (Amendment) Bill, 2012.

The government is not bound to accept the recommendations of the DRSC but individual MPs may introduce amendments to the Bill when it is being considered by the House. The MP may suggest amendments based on the DRSC’s suggestions or any public feedback.

Once Bills are enacted, ministries draft and notify Rules (also known as subordinate legislation) to enable their implementation. These Rules may be scrutinised by the Subordinate Legislation Committee, which is empowered to seek public feedback.

Post legislative scrutiny of laws is not mandatory in India. It may however be undertaken by bodies such as the Law Commission of India, the DRSCs or a specific commission appointed for the purpose who may hold public consultations. Recently, rape laws were reviewed by the Justice Verma Committee before an Ordinance was promulgated on the matter.

Many other democracies have devised meaningful ways to encourage public participation in the legislative process. In countries such as the UK, Australia and South Africa, it is mandatory to hold public consultations or publish draft Bills for comments. In fact, in South Africa it is a constitutionally mandated provision. In the UK, the Government publishes Green Paper and White Paper, which sets out its central ideas on the Bill. After introduction, it is compulsory to refer a Bill to a committee in the UK and the US. However, there is no such requirement in Australia, Canada and South Africa. Unlike in India and South Africa, it is mandatory for the Government in countries such as the UK, Australia and Canada to respond to the recommendations of the committee. While post legislative scrutiny in India is largely a matter of discretion of the Government, in the UK it is compulsory to do so within three to five years. In the US, legislative oversight committees review laws on a continuous basis. In Australia, most laws have to be reviewed within three years.  Public comments are also solicited during the post-legislative scrutiny.

India can learn from the experience of these countries and tailor them to suit our requirements. There are many ways in which the government can deepen public engagement in the legislative process.

First, ministries can be mandatorily required to publish the draft Bill for a reasonable time and publicise it through different media. Along with the draft Bill, the ministry may be required to include available background information on the subject and facilitate access to legal and legislative record on the matter.

Second, it should be compulsory to refer a Bill to a DRSC or select committee for scrutiny. This could be at both the pre-legislative stage and the legislative stage.  These committees should be required to hold wide consultations with a variety of stakeholders (NGOs, state and local governments, special interest groups, academics and legal experts). Public participation may be facilitated by increasing access to constituency offices, using a variety of media outlets to publicise the Bill and creating public participation offices that can interface with the public.

Third, in order to increase transparency in the feedback process, the government could be required to publish a report demonstrating how the inputs from stakeholders have been considered while formulating the law.

Fourth, most Acts should be subject to a post legislative scrutiny through public engagement every three to five years.  This could be carried out if each Bill includes an Explanatory Note giving the criteria or outcomes by which the Bill could be judged for effectiveness.  This responsibility could be given to a specialised committee.

Such measures will result in robust legislations, which shall need lesser amendments and will be successful in achieving the objective with which that legislation was enacted.

This article was first published in Pragati on May 3, 2013.

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The Value of the ISB Alumni Network

This past weekend, we hosted our alumni at Equinox, the annual alumni learning and networking event at our Mohali campus. I thought this may be a good time to share some thoughts on what you can look forward to if you become part of our rapidly growing alumni network.

Long after our students graduate from ISB, the network that they became a part of continues to play an important role in their lives. Whether one is looking for valuable business leads or exclusive job opportunities, is settling into a new city and building a circle of friends, or for just about anything else, the alumni network is almost always the first port of call.

With over 5200 alumni spread across 32 countries, the ISB alumni network is vibrant, engaged and growing rapidly. They are an active lot and passionate about helping one another. Many of the alumni report that their career growth post graduation has come directly through alumni referrals and job postings on the network. If you thought job opportunities are available only during placement season, think again – the alumni email group sees high-level jobs and opportunities being posted almost on a daily basis! A lot of alumni also reach out to the network for information, guidance or ideas on solving challenges that they grapple with at work. The collective input from them leads to faster and more effective solutions – something that organisations have come to deeply appreciate in their employees. It is no surprise that many organisations encourage the ISB alumni in their employment to recruit more ISB graduates, from the alumni network as well as from the school directly through placements.

Apart from helping corporate careers, the alumni network is also proving to be a great resource for the growing pool of entrepreneurs in the ISB community. Whether they are trying to recruit good talent, looking for top professional services like designers, developers, subject matter experts, lawyers, etc, trying to get publicity for their ventures and build a client base, or even generating investor interest, the collective network often has great references and advice to share, based on personal experiences with these. An encouraging trend at ISB is the ever-increasing number of alumni coming together to co-found businesses.

Of course, the network is not only about work and business. The community is socially active and meet often, in small groups as well as large ones. Movies, get-togethers, and weekend getaways provide a welcome break from work and are especially enjoyable in the company of individuals one shares a pleasant history with. If an alumnus is visiting a city on work and finds that he/she has some free time at the end of the day, fellow alumni are a phone call away – definitely a better option than killing time in the airport lounge. Alumni relocating to a new city also find that the network is there for them – anything from finding a house and suggesting good schools for the children to showing them around town and helping them build a social circle. With such a support system in place, transitions become a lot more comfortable.

Apart from the informal interactions and events, the school and the various chapters of the ISB Alumni Association (ISBAA) also organise official alumni events in different cities. Every year, we celebrate our two alumni reunions, Solstice and Equinox, at our two campuses. These help alumni reconnect with the school, meet old friends and make new ones. They also get to relive their student days by returning to the classroom for learning sessions at these events. In fact, such “Lifelong Learning” sessions are conducted throughout the year at different cities, organised by the elected ISBAA representatives of the different chapters.

All this sharing of resources and opportunities, social interactions and a strong support system are not only rewards in themselves, but also serve a higher purpose. They build a strong sense of belonging and promote a mindset of helping the fraternity. Today, this habit helps make life a little more comfortable. Tomorrow, with a critical mass of alumni in leadership and decision-making positions, this translates to opening up of exclusive opportunities and social circles comprising of CXOs and influential individuals. It doesn’t take a rocket scientist to figure out the immense value that such a network has to offer.

However, to reach that critical mass of ISB alumni in key positions is not easy. We do have an advantage because our graduates start higher up on the corporate ladder, as indicated in my earlier blog post on Career Advancement Services at ISB. And as they have shown, they will scale heights quickly from there. We are a young school, but while most other schools with several years of heritage are adding between 200-400 alumni to their fold every year, we are adding about 800, while maintaining the most stringent admission criteria. At this rate, the day is not far when a critical mass of our alumni will be leading global companies and be the foremost decision makers influencing business, economy and society. Consequently, the reach and influence of each alumnus in the network will also increase manifold.

I will point out a simple, present-day indicator of how the ISB alumni network increases reach. In fact, some of you may already have noticed this: An ISB alumnus’ Facebook or LinkedIn account generally has a significantly higher number of connections/followers than those of the average social media user. They also happen to be connected with fairly influential individuals in their areas of interest. Safe to say this effect is going to grow faster and faster from here on.

Let me leave you with a little anecdote about how the alumni network tends to go above and beyond when help is needed, even in the simplest of things. This is from the personal experience of our alumnus Subramani Ramachandrappa (PGP ’04), CMD of Richcore Lifesciences:

We were putting up a manufacturing plant and my engineering consultant said we needed X units of steam and therefore needed Y kilowatts of backup power, etc. On the look of it, I felt it was too much, but I was not the expert here. So I sent a mail to the alumni network with my concerns and I got six replies almost immediately from alumni who were experts in the energy space, having spent years in the best consulting firms and industry. They each offered to take look at this, and I did not even know any of them! It was just because of the email id that we all had in common. In two days, somebody actually flew down pro bono, sat with me and ran through the program, suggesting changes and helping me understand the system. I could trust him because he was an expert, a fellow alumnus and was not going to steer me wrong. We went with the new recommendations, and even today, my plant has been running great with what we implemented. In fact, the engineer who suggested the original specifications to me also wanted to collaborate with my friend on future projects!

That is the kind of support you can get from the alumni network. Any request for help never goes unanswered, anything from a simple request for information all the way up to support during medical emergencies. We are not looking at it as a transaction, but saying that we all belong to the same family.

All the best!

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Mohnish Pabrai on Cloning as a Strategy


Nupur Pavan Bang1 and Vikram Kuriyan2


This interview was first published by the Global Association of Risk Professionals on October 29, 2013.

Mohnish Pabrai Photo

As a hedge fund manager, Mohnish Pabrai does not have to be fully transparent with his results- except to the investors who receive his reports. But he makes no secret about his targets and successful results in terms of compound returns, nor about the fact that they are grounded in value investing principles, particularly those espoused by Warren Buffett.

Anyone can gain insight into Pabrai’s way of thinking in books he has written: “The Dhandho Investor: The Low – Risk Value Method to High Returns” and “Mosaic: Perspectives on Investing”.

Pabrai talks up a principle of his own, which he describes as cloning. Successful formulas are visible for all to see, but, as Pabrai observed in a recent interview, there is something in human nature that devalues cloned ideas and strategies. “Be a cloner… but clone the best”, advises the managing partner of Pabrai Investment Funds.

The Irvine, Calif. firm is billed as a family of hedge funds inspired by the Buffett Partnerships, with more than $500 million of assets.

A Mumbai native and former IT consultant- founder of TransTech in 1990, which was sold 10 years later to Kurt Salmon Associates- Pabrai won the 1999 Illinois High Tech Entrepreneur Award given by KPMG, the State of Illinois and the City of Chicago. In 2005 he and his wife, Harina Kapoor, started the Dakshana Foundation, with the goal of recycling most of their wealth. The foundation is focused on alleviating poverty in India through education and scholarship grants.

The interview with Pabrai was conducted by Dr. Nupur Pavan Bang (, senior researcher, and Dr. Vikram Kuriyan, director of the Centre for Investment, Indian School of Business, Hyderabad.


Tell us about your belief in the concept of compounding.

Einstein called compounding the 8th wonder of the world. Let me tell you a story.

One day an inventor of games brought a game to the king- the game of chess. Since it was about battle between two armies, the king was amused and spent a lot of time playing the game. So impressed was he that he offered the inventor to ask for any reward. The inventor asked that he be given an amount of rice that would be equal to what the board could hold if we were to start doubling one grain of rice from the first square of the board up to the 64th square.

The king thought that this was a petty and stupid request and ordered for the reward to be given. The minister who was in charge of arranging this did not return for a few days. Upon inquiring about the delay the minister said that the whole kingdom did not have the 18,446,744,073,709,551,615 grains of rice required, or close to $300 trillion worth. Much greater than the combined wealth of the earth.

Such is the power of compounding. This is a concept that many great investors have time and again used for wealth creation. The celebrated Warren Buffett is a great example.


Warren Buffett and Charlie Munger have had a lot of influence in your life. How did you first learn about them and what got you interested in them?

In 1994, I was 30 years old and heard of Buffett for the first time. I did not have any knowledge about investments or capital allocation. Around that time, a couple of his biographies were published. I read them and looked at his track record from 1950 to 1993. Over 44 years he had compounded money at 31% a year. If you compound money at 26% a year, it will double every three years; at 31% you will double in less than three years. I thought about the story of the chess board again and realized that if Warren continued doing what he was doing, he would become the wealthiest person on the planet. He did became the wealthiest person on the planet.

I have never been to a business school and thought of investment, but few things stood out to me. In the investing world, hardly anyone followed Warren Buffett and hardly anyone generated returns the way he did. However, I thought that his approach to compounding was right, and these things were related. Buffett’s approach looked replicable, but no one was doing that. I liked compounding and thought of giving it a try.


How did you start? Where did you get your initial capital from?

I had sold some assets in the business I was running at that time [1994] and ended up with $1 million in the bank. I had no immediate use for that money. When I read Buffett’s biography,  I decided to play his game for 30 years. If I compounded at 26% a year, and my money would double every 3 years, a million would become a billion in 30 years. I thought that even if I fail by 95%, or 97%, I would be okay.

Swami Vivekananda used to say, “Take one idea, make that one idea your life. Think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body be full of that idea, and just leave every other idea alone. This is the way to success”. That is exactly what I did.


Could you tell us a little bit more about your journey from then on?

In 1995 I started putting the million dollars to work. By 1999, $1 million had become $5.1 million, growing at 43.4% per annum, way above my target of 26%. So I said, I think this could be done.


When did you start Pabrai Funds?

I used to give investment tips to friends and family. They would ask me to manage their money. So, in July 1999, I set up Pabrai Funds with $1 million in assets from nine investors. From 1999 to 2007, we compounded at 37.2% per annum before fees, 29.4% after fees.


Did the financial crisis hit you?

Oh yes, it hit everyone! From the mid 2007, for the next 21 months, we compounded at a negative 47.1%. That came to an end in 2009. Eighteen and a half years after I first started [1995 to mid 2013], I have compounded at 25.8% per annum. Short by 0.2. The good news is that I still have 11.5 years left, and in investments, the more you play, the better you get at the game (unlike tennis). I am excited to see how next 11.5 years unfold.


So how do you compound at 26%- especially since you were not formally educated in finance or investments? [Editor's note: Pabrai left his master's degree program at Illinois Institute of Technology to start his consulting and systems integration company, TransTech.]

When I set up Pabrai funds, I looked at the Buffett Partnership. It was closed in 1969; I opened in 1999. In that 30-year period, I did not find a single fund that replicated the Buffett model. I got all the information that I could about the model from published sources, took it to my lawyer and told him to simply replicate it. I adopted cloning in a very serious manner. I then started investing in stocks in which Buffett and his Berkshire Hathaway invested.


Why is it that we don’t see many others succeed like you have? If it’s only about cloning, anyone can do it.

That’s right. Anyone can do it. But nobody does. There is something strange in the human genome which makes people think that cloning is beneath them. Everyone wants to do something unique.

There are other examples of cloning that have succeeded. If you look at Microsoft, Excel was cloned from Lotus; Windows, Word, and a lot of its other products are cloned. It’s not even a great cloner, as most of its products take a number of versions to remove bugs. Even though Microsoft is not a great cloner, it is one the most successful companies in the world.

McDonald’s spends a lot of time to figure out locations for their franchisees. They do a lot of analysis. While Burger Kings that compete with McDonald’s, just look at where McDonald’s is opening up.

There is a lot of debate going on about letting retailers like Wal-Mart into India. What perplexes me is that there is nothing in Wal-Mart’s business model that anyone cannot figure out by walking into their stores. There is nothing in their model that cannot be replicated. India does not need Wal-Marts. It just needs an entrepreneur to look at their model and replicate it.


Do you blindly follow Warren Buffett and invest in any company he is investing in?

There were some professors in the U.S. who looked at every stock Warren Buffett bought from 1975 to 2005, and they did an analysis. If you bought what Buffett bought after it became publicly known, on the last day of the month at a higher price and held it until Buffett started selling and sold it after it was known publicly that Buffett had sold, and got the price which was the lowest price on the last day of the month, and you did this for every stock he bought and sold for 30 years, you would beat the index by 11.5% a year.

Bottom line, cloning is a very powerful notion. No good books have been written on cloning yet. If you take what Buffett did, then you are already beating the S&P by 11.5% per year. Mostly what Pabrai Funds did was to copy the other investors. I just give a slight tweak to it. I don’t buy what others are buying. I look at what they are buying. Then I buy what I can understand and limit myself  to two-three decisions a year.


How has your strategy evolved over the years?

We don’t learn from success. When we stumble we learn a lot. I am grateful that every time I stumbled, it has lead to growth. The period 2007-’09 was wonderful from a growth and learning perspective. Over the entire 1999-’07 period there were no negative returns. Not only did we make 37.7% per annum on a compounded basis, but there were no negative returns. We thought nothing went wrong, and I never saw the housing bubble.

In 2008-’09, financial system was out of oxygen. I had companies which depended on access to capital markets and financing. They just went into a tailspin. In one case, our investment went to zero. We had permanent losses. We had things which were knocked down on price and we had no ability to be offensive. We had no cash. I learned the rule that cash is king. Most of last year I was sitting with 20% cash. That was a big change.

Another change in my approach was the development of a pre-investment checklist, which is very powerful. It looks at mistakes made by other investors. This checklist helps me in catching those mistakes. One of the Warren Buffett biographies reveals that as a kid he used to walk in a strange way. It was to absolutely take out the probability of falling. He picks stocks similarly. He looks at the downside- how can he lose money. So  I did the same…questioning and re-questioning many times about how can I lose money on an investment. The checklist helps me there.

Also, I started having conversations with another investment manager. I got this advice from Charlie Munger, who said he always has someone to talk to about his investments. Until 2008 I never talked to anyone about investments. We mostly never agree, but conversations are helpful.


What about your fee structure?

My investors love my fees structure- which is copied straight from Buffett. Zero management fees for assets under management.  First 6% of returns go to the investor. Above that 6%, I get one-fourth and they get three-fourths. So if the portfolio is up 10%,  I get one-fourth of 4 percent (that is, 1%). If it is up 5%, we get nothing.


Warren Buffett is a Value investor. Isn’t it very restricting to just copy him? There may be many more opportunities out there that may not strictly fall under the Graham and Dodd definition of a value investment, and yet be a great opportunity.

Well, Buffett is a multi dimensional investor. Dozens of investments that he has made are not moat based or may not be value investments. For example he has done a lot of restructuring and arbitrage deals. It is not so much about moat or value investing. It is about what you pay for a business. If you pick four or five investors and decide to pick the best of their ideas with some of your own criteria put in, you will be fine. You can skip the businesses which you don’t understand or which are in conflict with your own criteria, and you will still have enough options to invest. Keeping it simple and buying at a great price are important. It is also important that if you are cloning, you clone the best.

[1] Senior Researcher, Centre for Investment, Indian School of Business, Hyderabad (
[2] Executive Director, Centre for Investment, Indian School of Business, Hyderabad.

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