Current Affairs - 4 July 2016

General Affairs 

Don't Change Excise On Transport Fuels, Suggests Arvind Subramanian

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  NEW DELHI:  Following this week's cut in transport fuel prices, the Centre is likely to favour Chief Economic Advisor Arvind Subramanian's view that excise duty on petrol and diesel should not be cut in the future, said a senior official in Delhi.
  
  In a paper submitted last month, Mr Subramanian suggested a status quo on excise duties till international oil prices rise to $65 a barrel from their current levels of under $50, said the official of the finance ministry.
  
  

  The paper argues that any price-rise above $65 a barrel should be borne equally by consumers, who will have to pay higher rates, and the government which will need to cut excise duty on transport fuels.
  
  Amid the recent fluctuation in global crude oil prices, the Indian basket of crude closed trade on Thursday at $47.24 for a barrel of 159 litres, up from its previous day close at $46.80, according to the available data.
  
  State-run Indian Oil Corporation (IOC) cut the price of petrol by 89 paise a litre and of diesel by 49 paise effective from Friday in Delhi, with corresponding decrease in other states.
  
  Petrol per litre now costs Rs. 64.76 in Delhi, Rs. 67.79 in Kolkata, Rs. 69.32 in Mumbai, and Rs. 64.24 in Chennai.
  
  Diesel costs Rs. 54.70 in Delhi, Rs. 56.89 in Kolkata, Rs. 60 in Mumbai, and Rs. 56.25 in Chennai.
  
  Making its previous fortnightly revision in fuel prices on June 16, IOC had hiked price of petrol marginally by five paise a litre and of diesel by Rs. 1.26, both at Delhi, with corresponding increase in other states.
  
  With oil prices in free fall over the entire last year, falling from well over $100 a barrel levels to around $27, the government had hiked excise duty on petrol and diesel nine-fold to garner additional revenues. In all, it raised excise duty on petrol by Rs. 11.77 a litre and that on diesel by Rs. 13.47.
  
  Oil prices have surged more than 80 per cent on a weaker US dollar from a 12-year low in January.
  
  Mr Subramanian is of the view that taking into account the government's tighter fiscal position this year after approving implementation of the 7th Central Pay Commission (7CPC) recommendations, it would be unwise to cut excise duty till crude prices climb back to his suggested trigger level.
  
  Finance Minister Arun Jaitley has estimated the "recurring burden" on central government finances this year on account of the 7CPC, including for arrears payment, at Rs. 84,933 crore.

PM Modi Speaks At A Book Launch Event In Delhi: Highlights

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  Prime Minister Narendra Modi is speaking at a book launch event in Delhi. He pays tribute to the Sikh warrior Banda Singh Bahadur on his martyrdom anniversary today.
  
  Here are the highlights:
  

  • PM releases book on Baba Banda Singh Bahadur at a commemorative event to mark his 300th martyrdom anniversary.
  • Baba Banda Singh Bahadur ji was not just a great warrior but was also very sensitive towards common people.
  • Sometimes a single moment in life gives direction to a person, similar thing happened with Banda Bahadur ji.
  • After getting inspiration from Guru Gobind Singh ji, he imbibed values of a warrior and embarked on a new journey for social development.

Ahead Of US Independence Day, President Pranab Mukherjee Wishes Americans

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  NEW DELHI:  President Pranab Mukherjee has extended his greetings and felicitations to the government and people of the United States on the Independence Day of the country on July 4.
  
  "On behalf of the government and the people of India, and on my own behalf, it is with great pleasure that I extend warm greetings and felicitations to you and to the people of the United States of America on the occasion of your Independence Day," Mr Mukherjee said in a message to his US counterpart Barack Obama.
  

  Mr Mukherjee also expressed satisfaction over the relations between the two countries.
  
  "It is a matter of satisfaction that the close relations between India and the US are based on the shared values of democracy, pluralism and rule of law -- and strengthened by our increasing convergence on bilateral, regional and global issues.
  
  "Over the years, we have built on our numerous synergies to achieve the common goals identified by us -- for the good of our two peoples, peace, progress and prosperity in the world," he said.
  
  The President said that the recent high-level interactions between Mr Obama and Prime Minister Narendra Modi had helped enhance mutual understanding and brought the two countries closer.
  
  "I am confident that the positive outcomes of Prime Minister Narendra Modi's recent visit to the US will contribute to the further strengthening of our strategic partnership," he added.
  
  "I take this opportunity to convey to you my best wishes for your good health and well-being as well as for the continued progress and prosperity of the people of the United States," Mr Mukherjee said.

BJP Seeks Asaduddin Owaisi's Arrest For Offering Legal Aid To Terror Suspects

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  HYDERABAD:  Two days after MIM chief Asaduddin Owaisi offered to provide legal help to 5 terror suspects arrested by the NIA, Telangana BJP lawmaker T Raja Singh today demanded Mr Owaisi's immediate arrest.
  
  Alleging that the ruling TRS government in Telangana supports Majlis-e-Ittehadul Muslimeen (MIM), which in turn supports terrorists, the lawmaker from Goshamahal seat also demanded the Centre to derecognise the MIM party.
  

  "On one hand Prime Minister Narendra Modi is touring the world to gather support to combat terror, which is a good initiative, but on the other hand, TRS government in Telangana is friends with MIM, which in turn, has friendship with terrorists," he claimed at a press conference.
  
  Mr Singh, known for his controversial statements who had also earlier been booked for alleged hate speeches, further claimed that the Telangana Police is "sleeping", and asserted that the 'cordon and search' operation conducted by Hyderabad police is done only in the areas as directed by the MIM.
  
  The NIA averted major "attack" not only in Telangana but in the country by arresting the five persons which the agency did only after thorough investigation, he said, adding: "I congratulate the NIA officers."
  
  "The revelations of the arrested accused to carry out terror attacks on religious places among others is shocking. The conspiracy has been foiled. But, Asaduddin Owaisi talks of providing legal aid to five ISIS suspects arrested by the NIA," Mr Singh said and asked Telangana Chief Minister K Chandrasekhar Rao will it be good to support MIM under such circumstances.
  
  Mr Owaisi on Friday said his party would provide legal help to the five youths arrested by the NIA on charges of involvement in an alleged ISIS terror module, but asserted his party does not support terrorism.
  
  Noting that the family members of the arrested youths met him and claimed they are innocent, the Hyderabad Lok Sabha MP had said he directed a senior advocate to provide legal help to them.
  
  Meanwhile, Mr Singh claimed "earlier also, maximum number of terror suspects were arrested from Old City and they all have been helped financially and in other ways by MIM.
  
  He sought to know why the TRS government was not initiating any action against them and claimed that the TRS indulged in 'vote bank politics' and, hence, was not taking any action against them.
  
  "Think over it... I request the chief minister to ban MIM party and book sedition case against (Owaisi) Asaduddin and arrest him immediately. This is the time to initiate action," he said.
  
  The BJP lawmaker said he will next week meet Union Home Minister Rajnath Singh and give him in writing all information he has on the "terrorist activities going on in Telangana".

Will Find Out Who Supplied Weapons To Terrorists, Says Sheikh Hasina

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  DHAKA:  Bangladesh Prime Minister Sheikh Hasina today vowed to trace the "roots" of the culprits who supplied weapons and explosives to the terrorists who killed 20 people, mostly foreigners, in a barbaric attack on a cafe.
  
  Her remarks came during a meeting with Japan's State Minister of Foreign Affairs Seiji Kihara at her official residence Ganabhaban.
  

  "Describing the terror attack at Gulshan cafe as unfortunate, the Prime Minister said we must find out the roots of the culprits who supplied weapons and explosives to the terrorists for the barbaric attack," Ihsanul Karim, press secretary to the Prime Minister, told the media after the meeting.
  
  Holey Artisan Bakery in Dhaka's upscale diplomatic zone came under attack on Friday evening by gunmen. Seven Japanese nationals were among 20 killed during the attack.
  
  Six of the seven Japanese killed in the terror strike were surveyors for Dhaka's Metrorail project. The Japanese government has sent the minister to Dhaka after the attack.
  
  The attackers killed two police officers, who tried to enter the cafe, to break the siege.
  
  Army commandos stormed the eatery yesterday and rescued 13 hostages, killing six attackers while capturing one alive. The army said 20 people were found dead on the premises during the raid, all possibly slaughtered late on Friday, hours before the commandos raided the cafe.
  
  It has been confirmed that the hostages killed included nine Italians, seven Japanese and an Indian. Three Bangladeshis were also among the dead and one of them was a US citizen.

Business Affairs 

Realty prices down 40% in NCR say experts

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  Curb on the flow of black money and investors maintaining distance from the realty sector have led to a drastic cut in the prices of properties in NCR.

  While prices have come down by upto 40 per cent over the last few years, it has hardly helped in lifting the spirit of the realty market. Fewer demands from investors have resulted in the piling up of a large number of unsold inventories in NCR.

  Critics might differ on the Narendra Modi government's efforts to curb the flow of black money into the economy, but, its impact is clearly visible in the real state sector. A reality check by MAIL TODAY revealed that parking untaxed wealth into the realty sector has become almost impossible. Dealers claimed that this has turned investors away from the sector resulting into the drastic decline in prices of properties.

  Reality check

  Posing as a prospective buyer, MAIL TODAY reporter spoke to some property dealers in the NCR and most of them said that it is almost impossible to use large amounts of unaccounted money for buying properties. "You can at the most invest Rs 3-4 lakh in purchasing a flat. Rest of the money will be paid through cheques or through net banking," said Manoj Tyagi, a property dealer in Greater Noida.

  He explained, "There is a lot of scrutiny by IT department and other authorities. You need to use a PAN number for every big transaction. Whenever you transfer Rs 3-4 lakhs or more from one account to another, bank officials will ask for details of the money's source," added Tyagi.

  Situation is not better in the secondary market either when you want to buy a flat from an investor. "Most people these days want money in the form of cheques. They know that too much of black money can't be utilised as you need to mention the PAN number for every big transaction," said a dealer from Noida.

  The dealers also feel that as an end user this is the right time to purchase a flat. "You are paying less than what you were paying about three-four years ago. A two-bedroom flat is available within Rs 35 lakhs that too with many schemes. Under subvention schemes, you need to pay only five per cent at the time of booking and the rest during possession," said Dharmendra, a realty broker in Noida. Surveys by various agencies only verify the trend. According to the latest report by real estate consultant Jones Lang Lasalle, the NCR has witnessed the country's highest unsold inventory figures at almost 1,70,000 units. The unsold inventory is highest in Noida, with over one lakh units while the remaining unsold inventory is in Delhi, Ghaziabad and Faridabad.

  Santhosh Kumar, CEO Operations, Jones Lang LaSalle India, said that piling up of inventories in last few years has resulted into drastic reduction of prices. "On an average, the realty market in NCR areas has seen a price fall by 40 per cent. Developers have come out with many schemes to attract customers but that has failed to lift the spirit of the market," Kumar said.

  Kumar said that the main reason for a large number of unsold flats is the trust factor. "Due to many reasons, trust factor has somewhat vanished from the sector. Developer should concentrate more on construction and complete the projects on time. Only then, trust will build up," added Kumar.

  What went wrong

  Similarly, a recent study by ASSOCHAM says that the NCR residential market has an estimated 2,50,000 units of unsold inventory which is approximately 35 per cent of the units under construction due to delay in regulatory clearances and litigations. The report further said that the ticket prices (of) three-bedroom, two-BHKs and single room flats have seen correction by 35 per cent in Noida, 30 per cent in Gurgaon and 25 per cent in some key areas of Delhi but still, the demand stays subdued.

  Geetamber Anand, chairman and managing director of ATS Infrastructure and president of the Confederation of Real Estate Developers' Associations of India (Credai) does not agree with the number of unsold inventories projected by various surveys. "It is not right to say that lakhs of flats are unsold in NCR areas. We will soon come out with our own data on this," said Anand, adding that there are too many options of ready to move-in flats and people are more interested in them.

Wrong to say central banks always have a bazooka, says Raghuram Rajan

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  Cautioning against expecting too much from central banks, the Reserve Bank of India (RBI) Governor Raghuram Rajan has said it is wrong on their part also to always claim a 'bazooka' left up their sleeves, even as he asserted that life is "very difficult" in emerging markets.

  In a panel discussion here on lessons learnt by the central bankers from the global financial crisis, he also took on the industrial nations for expecting the emerging markets to be "orthodox" in their monetary and economic policies at a time when they themselves have "thrown out the orthodoxy out of the window".

  He was speaking at a panel discussion after the Per Jacobsson Foundation Lecture, delivered by JPMorgan Chase International Chairman Jacob Frenkel, on the occasion of the Bank for International Settlements (BIS) Annual General Meeting here.

  The lecture took place on June 26, but its content has been made public now only. Those participating in the panel discussion included Bank of Mexico Governor Agustun Carstens and Bank of France Governor Francois Villeroy de Galhau.

  The lecture took place within days of Rajan making public his decision that he would not opt for a second term as RBI Governor when his current three-year tenure ends on September 4.

  Rajan, a former Chief Economist at IMF who is credited for predicting the global financial crisis, was here to attend the BIS Annual Meeting, as also a bi-monthly meeting of select central bankers from across the world here at BIS Tower.

  Referring to Frenkel's lecture that talked about unconventional monetary policies and the central bankers not being the only game in the town, Rajan said the question at the heart of his talk appeared 'why is the populism popular'.

  "In a way, he was making a desperate plea for orthodoxy and saying let's not abandon orthodox principles and I guess the converse of that is that populism has become popular.

  "I think if you want to talk about the institutional and environmental situation which supported the orthodoxy, the 80s and 90s, one would guess that it was a society where the elites were respected, where there was a feeling that they could understand and interpret the policies for the masses.

  "There was broadly a positive sum game... And actions were not interpreted as favouring one constituency versus another.

  There was a sense of coherence in the society, little more than today," he said.

  Rajan further said that when there is trust in the elite and there is no common economic paradigm, a lot of competing paradigms come up, some of which contradict the laws of economics and very little trust is left in the institutions.

  "Well, that's what we call an emerging market," he said.

  "It's the kind of environment we have worked in the past and we have tried to change that to try and say that there are some broad principles, there are institutions that we should build and yes that some people can be trusted, the experts can be trusted. It takes time to do that.

  "But my sense is that what the crisis has done is that in the industrial countries, created the kind of conditions that bring you back to the conditions we experienced in the emerging markets," he added.

  Explaining further, Rajan sought to compare the current scenario in industrial countries as a new situation, where policies do not seem to work as advertised, where one could argue that normal laws of economics do not apply and where elites were pushing these policies before they lost the reputation.

  "There is a sense that they don't know so they could not be trusted. There is a zero sum game that if an immigrant comes he takes my pension away and if I give to this set, which is top 1 per cent or so, then I am going to lose out in the longer run.

  "Therefore things have become much more complicated. The ability to get a coherent economic policy in this environment is much more limited that what we have been experiencing for so many years in the past.

  "So, in that sense it creates an entirely new environment for the central banks. I think we have been seeing a little bit of this. There is always this notion that many of us have expressed that it can only be a part of the solution and the others would have to step up to the plate.

  "What if others are paralysed and they cannot step up because the environment has changed tremendously. How much do you do? I think this is where Jacob's angst comes through. "If I interpret what you say, you should have gone to a point, take a little bit of detour but should have come back.

  But these detours which seen longer term and long lasting, may be problematic in the longer run. I think that is what I hear you as saying.

  "I think there are two issues here -- one, the whole belief in central banks that somebody else will step up to the plate is not being fulfilled. Second, something we are ourselves responsible for in the central banking community, the statement that we can do it.

  "Just wait, we have one more tool up our sleeves. We aren't exhausted yet. There is always a bazooka left that we have not used. If we say that and at the same time, nothing else is coming up to the plate, then effectively we become the only game in town. How to move away from that is really quite difficult," he said.

  On what policies one should follow in such an environment, Rajan said, "There is a tremendous political suspicion of the elites or the elite institutions and a sense that you really don't care for the masses and you are brought in and paid for the Wall Street or its equivalent in every country.

  "One thing is to damn the torpedoes, if you are crudely orthodox you will say damn the torpedoes, I do so much and no more and then let the pieces fall where they will and this is how much I can do.

  He further said, "My sense is that would be nice as per the orthodox principle but it won't be feasible in the kind of environment we are in. So, next is to say, let me try innovating and you come up with new solutions and some of them will work a little bit but not enough.

  "Then the question is what more do yo do. At some point, you call stop, or you keep holding up the promise of something more and once you go down the list of instruments you pull out, the ratio of economics to politics keeps falling.

  "Ultimately, you are doing it because the system won't let you stop. So, my sense is this is the reason why we are in this dilemma. The environment has changed a lot, but not the economic environment.

  "The laws of environment applies broadly. ... it is also that the political environment has changed and the respect for elites who focus on the economics and not on the broader section of population, at least that is the popular view, becomes very hard," he said.

  Talking about emerging markets in this kind of situation, the RBI Governor said spillovers become much more difficult in this kind of environment because the whole focus is on the domestic economy.

  "What is the exit out of this kind of environment and the exit becomes much more harder when you focus domestically especially when one effective channel of transmission is the exchange rate because the first one to exit gets the full brunt. Exchange rate appreciation becomes much more difficult to go out.

  "You need some sort of coordination or cooperation for everybody to slowly move out but I am not sure we have the kinds of frameworks to do that right now.

  "The second spillover is more of a idea spillover, which just the emerging markets have started adopting, the orthodoxy, which helped us survive some of the more dramatic effects of the crisis, the industrial countries have stated debating all the orthodoxy.

  "So there used to be, for example IMF was all about fiscal consolidation and the fiscal rectitude, even that last bastion has given way. For us in emerging markets even to talk about fiscal rectitude becomes very hard because immediately they point to IMF that even the IMF doesn't talk about fiscal rectitude.

  "If you are an emerging market, a small boat in a turbulent ocean of policy and environment emerging from elsewhere, what do you do? You want us to be more orthodox, but you want us to be more orthodox in an environment where orthodoxy is being thrown out of the window.

  "So it does become much more difficult to talk about labour market flexibility, low fiscal deficit, low inflation, all those good things in such an environment," he said.

  He further said the industrial countries had the benefit of being where they were of showing the way to prosperity and growth. On the other hand, all emerging markets had the debate on how they were unique and the laws of economics do not apply to them, but they were also looking to "pick up the same path and bring down inflation, bring down other things and get to the glorious days when they themselves become rich".

  "But now we have two strikes against that path. One is there was a big crisis and how much that path was responsible for the crisis. Was inflation targeting the reason, why we had that massive crisis, that debate is going on.

  "And second, that the industrial countries are themselves debating the orthodoxy, which then means even they don't believe in that. So therefore what do we do? For somebody who believes entirely in what Jacob has been talking about, life is very difficult in an emerging market," he said.

Government may not cut excise duty on petrol, diesel for now

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  Government may not cut excise duty on petrol and diesel in the near-term if it accepts the suggestions made in the approach paper submitted by Chief Economic Adviser for maintaining status quo when oil prices can climb by another $15 a barrel.

  CEA Arvind Subramanian last month submitted an approach paper to the Finance Ministry on scenarios to deal with a rise in crude oil prices.

  Sources said the CEA suggested status quo on excise duties till oil prices climb to $65 per barrel, from the present $49 levels.

  Any rise in prices above $65 a barrel should be equally borne by the consumers and the government -- consumers by way of paying higher retail rates and the government by cutting excise duty on the two auto fuels.

  If crude oil price were to average $65 a barrel from July to end of the year, half of the burden on the fiscal would be Rs 46,000 crore, or 0.3 per cent of GDP, CEA said in the approach paper.

  Every incremental $5 per barrel increase in global oil prices would translate into a Rs 2-2.1 per litre increase in retail prices if the 50:50 burden sharing mechanism is followed. Every Re 1 cut in excise duty would cost the exchequer Rs 3,500 crore on petrol and Rs 9,000 crore on diesel for the full year.

  Sources said CEA was of the view that this approach had its political pitfalls by way of perception among the people that the government raised excise duty when prices were falling but is not doing the opposite when rates are rising.

  Taking into account the tight fiscal position this year in view of the implementation of the 7th Pay Commission recommendation for a hike in wages and pensions of 1 crore central government employees, it would be prudent to not tinker with duty till crude breaches $70.

  India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore ($1.36 billion) more every year for one dollar per barrel increase in crude oil. Besides, the rising crude oil trajectory impacts inflation and growth.

  India spent $63.96 billion on crude oil import in 2015-16, about half of $112.7 billion outgo in the previous fiscal and $143 billion in 2013-14. For the current fiscal, the import bill has been pegged at $66 billion at an average import price of $48 per barrel.

  When oil prices slumped in the second half of 2014 and 2015, the government hiked excise duty on petrol and diesel nine times to mop up additional revenues that helped it meet its revenue and fiscal deficit targets. In all, it raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47.

  Every rupee per litre increase in petrol price leads to 0.02 per cent rise in WPI inflation and 0.07 per cent for the same amount of increase in diesel rates.

A reward approach for motivating employees needs to be analysed and reviewed to retain its efficacy.

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  American psychologist, behaviourist and social philosopher B. F. Skinner devised one of the oldest theories of motivation, the reinforcement theory. It explained why we do what we do. The theory also known as Behaviourism or Operant Conditioning - possibly still taught in psychology today - states that an individual's behaviour is a function of its consequences, also known as the Law of Effect. His concept posits that by applying motivation through various stimuli - negative or positive - business, government, education and rehabilitation centres, etc. can gain broader understanding of human behaviour. His idea laid less emphasis on personal intentions or goals, and environment played the most important factor. This was in contrast to Ivan Pavlov's theory of classical conditioning that focuses on how the thinking process is influenced. Most recently, psychology is often associated more with the evolution of cognitive or intellect awareness.
  

  While reinforcement theory is still in use at corporate offices where either reward or punishment (or not rewarding) is considered a powerful and a very positive (or a negative) stimulus, to arrive at the best possible approach to using its subsets remains a delicate aspect.

  Corporates globally have employed 'Pay for Performance' (PFP) method of evaluation and compensation, but recently questions and doubts have been raised about this approach. Many wonder whether such a process is gravely flawed or misused, especially in the case of top executive salaries getting linked to a company's stock prices. PFP in many cases is the result of very detailed work of describing the job requirements, identifying and quantifying KPIs (key performance indicators) parameters. Even though a lot of effort has been made for quantification of KPIs, it is almost impossible to compute all of them for ascertaining performance. Corporates have often lost some of their best talent with huge potential due to external factors beyond their control. Trends related to incentives or disincentive(s) are emerging and quantification of KPIs is under strict scrutiny to arrive at best plausible mix of behaviours that can catapult growth of companies without the need of compromising on quality of talent. This is certainly a gargantuan task.

  Reward systems have often been used as HR management tools for motivating employees to perform better. Performance is regarded as behaviour - the way work gets done by teams. And like all other mature HR systems and strategies, a reward approach also needs to be analysed and reviewed to retain its efficacy without overtly emphasising its role.

  Many theories related to rewards have come forth. Alderfer's ERG theory, partly also based on some of Maslow's thinking, assumes people have three types of needs - existence, relatedness and growth. Unlike Maslow's ideas, ERG theory demonstrates that a higher-level need can be a motivator even if a lower-level need is not fully satisfied. Focused on the ways in which workers decide specific behaviours and how much effort to exert, Expectancy Theory predicts one's level of motivation depending on the attractiveness of the rewards sought and the probability of obtaining them. If employees perceive that they may get valued rewards from the organisation, they tend to put greater effort into work. Adams' Equity Theory concentrates on the concept of fairness in the workplace. Employees are likely to compare the inputs they devote to work with the outputs they receive from the organisation. Once they feel they get fewer outputs than inputs, which means there isn't a balance, employees tend to be unsatisfied and not motivated.

  Rewards have different outputs. This also later connects deeply with how the cultural fabric of an organisation is formed and what it is reflective of. The findings of organisational psychologist Edwin Locke revealed that when people are paid on per piece model, while they do get motivated, they tend to pick easier tasks, minimising challenges or risks and deviate less from set paths. When rewards run out, people tend to revert to their old behaviours. Rewards succeed in securing compliance but do not create an enduring commitment to any value or action. Innovation and creativity at workplace apparently seem like the natural victims as exploration is compromised. A former professor at Cornell University, John Condry, was more laconic when he said, "The rewards are the enemies of exploration." According to numerous studies in labs, workplaces, classrooms and other settings, rewards typically undermine the very long process they intended to enhance. Incentive may not necessarily result in altering the attitudes that underline behaviours while they may still contribute in reaching some of the milestones.

  In 1911, another American psychologist Edward Lee Thorndike published the Law of Effect, the principle of learning that states "responses that produce a satisfying effect in a particular situation become more likely to occur again in that situation, and responses that produce a discomforting effect become less likely to occur again in that situation." Many years later, in 1970, R. J. Herrnstein, a student of Skinner, published a paper in which he described the 'quantitative aspect' of this law according to which the rate of a particular behaviour depends both on its own reinforcement rate and on the reinforcement rate of other behaviours - the operants (target behaviours) can be weakened by increasing the reinforcement earned for alternative (desired) behaviours.

  It is also felt that punishment and rewards are actually two sides of the same coin. Both have a punitive and temporary effect as they are manipulative.

  In a research conducted by Washington University while trying to understand 'effective incentives' deeper, students were asked to play a not very exciting computer game and monetary incentive was offered for correct responses and monetary punishment for wrong answers. In this case, punishment seemed an effective strategy as fear or pain, associated with something being taken away, works more than the idea of achieving something that is yet to come. As per evolutionary form of psychology or 'operant conditioning', people's tendency is to avoid punishments or dangerous situations or conflicts more than experiencing the joy of receiving rewards - the latter is less life-threatening and therefore not urgent enough to be incorporated into the behavioural systems and response.

  While punishment as a behavioural control technique can be effective in stopping undesirable employee behaviours such as lethargy, absenteeism or substandard work performance, it may not necessarily lead to employees demonstrating desirable behaviour. In the longer run, it may only promote more recourse to punishment, but overuse can only make employees more immune and resistant to it if used as a behaviour modification practice alone. Punishment only stops a bad behaviour temporarily in most of the cases and may not necessarily bring about good work behaviour. Corporates overall use less of punishment techniques not because they are more contemporary but they have realised with time that it only creates 'malicious obedience' and short-circuited desire to mend one's behaviour.

  Picture a fitness app that either pays or deducts real money from your bank account as per success or failure of the person completing the scheduled workouts. It may boost adherence rate to the exercise programme as people tend to be motivated about losing weight and losing money may further reinforce the behaviour. Similarly, over-rewarding oneself with a 1,200 calorie dessert after burning only 200 calories may not help achieve weight loss goals but forbidding people from their favourite meal as a punishment may work. So, to maximise workout motivation, one may start with an exercise one would be loath to miss - if it also means losing money, it should ideally correct or modify the behaviour. If it doesn't, the mind has grown immune to both rewards and punishments, and one will need different motivational techniques.

  Most of these researches reveal that reward is compared with success and brings with it a lot of inner satisfaction. Punishments on the other hand are considered a consequence of failure and do just the opposite. Thus, the desire to repeat success or avoid failure will largely depend upon the quality of the experiences. Everyone wants rewards for individual gain. If individual success can also be linked to collective gains, it will weed out huge inefficiencies in the system.

  Alfie Kohn, an American author and lecturer in the areas of education, parenting, and human behaviour, in his book Punished by Rewards says both rewards and punishment are ways of manipulating behaviour that destroy the potential for real learning. Instead, he advocates providing an engaging curriculum and a caring atmosphere "so kids can act on their natural desire to find out". It appears to be a handy tip for grown-ups too.

ADB, IFC in talks with IDBI Bank for Rs 3,771-crore QIP

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  Global lenders, Asian Development Bank and International Finance Corporation, as well as other investors are in talks for state-owned IDBI Bank's Rs 3,771- crore stake sale via qualified institutional placement route.

  Some of the global lenders including ADB and IFC have concluded due diligence ahead of the proposed QIP by IDBI Bank, a senior Finance Ministry official said.

  As per the norms, for QIP there is requirement of minimum five investors.

  "QIP should go through if the market condition improves. Hopefully it should happen in the second halve of this fiscal," the official added.

  Last month, IDBI Bank Managing Director Kishor Kharat had said he had met 56 foreign players and 22 domestic investors for QIP and the process should complete by the end of the current fiscal. "There are many players. I have met almost 56 foreign players during QIP, 22 domestic players. There are no time lines drawn, but if you look at the record of the government, whatever they say in previous Budget, before going to next fiscal, they complete. So, from that you can draw some timeline," he had said.

  The government in December gave approval to IDBI Bank for raising Rs 3,771 crore during the year, by way of Qualified Institutional Placement (QIP), a move which will dilute its holding by about 26 per cent in the lender. The government's holding in the bank stands at 73.98 per cent.

  As per existing norms, the government equity in a public sector bank cannot go below 52 per cent to maintain the character of state-owned banks. Finance Minister Arun Jaitley had last year indicated a change in the characteristics of IDBI Bank wherein government would have a majority stake, but at the same time maintain an arm's-length distance.

  Citing the example of Axis Bank, he had wondered if IDBI Bank can follow that model. The government indirectly controls 29.19 per cent in Axis Bank through the administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), the Life Insurance Corp and four other public sector general insurance companies.

  IDBI Bank came into existence with Parliament passing the IDBI Repeal Act in 2003. In terms of provisions of the Act, IDBI has been functioning as a bank in addition to its earlier role of a financial institution.

General Awareness

International Solar Alliance Cell and World Bank Signed Declaration for Promoting Solar Energy

• • Under the Ministry of New and Renewable Energy,International Solar Alliance signed agreement with United States based World Bank for promoting solar energy globally

    
    

    World Bank President Jim Yong Kim is being invited to attend the meeting to sign declaration to boost solar energy globally

    Purpose:  To boost solar energy worldwide

    

    Promoted by: The Interim Administrative Cell of the International Solar Alliance (ISA Cell) & the World Bank

    Agreements signed by:              

    • Jim Yung Kim, President, World Bank
    • Upendra Tripathy, Secretary, Ministry of New and Renewable Energy Chairperson, ISA cell
    • Onno Ruhl, India Country Director
    • Arun Jaitley, Union Finance Minister
    • Piyush Goyal, Minister of State (IC) for Power, Coal and New & Renewable Energy

    Benefits of the Joint Declaration:

    Activating mobilization of finance for solar energy

    Major role in mobilizing more than US $ 1000 billion in investments by 2030

    To achieve International Solar Alliance aims for the deployment of solar energy at affordable rate

     Features of a programme:

    • Providing a platform to activate financing
    • Developing financing instruments including credit enhancement, reduce hedging costs/ currency risk, bond raising in locally denominated currencies
    • Providing support alliance goals for solar energy vide technical assistance and knowledge sharing
    • Working on activation of concessional financing through existing and future trust funds
    • Supporting RE-INVEST events and decided in work in other areas

    Features of International Solar Alliance

    1. Two programmes have been launched
    2. Affordable finance at scale
    3. Scaling solar applications for agricultural use
    4. USA, UK and EU have revealed interest in developing programmes
    5. Interim Administrative Cell of International Solar Alliance (ISA Cell) and the UNDP have joined hands for promoting ISA objectives in 121 prospective ISA member countries

    D. Establishment of 24×7 knowledge centre is under way with the help of UNDP and NIC, Government of India