It is customary to look at the subsidy for fuel, fertilizers, etc. and crib about the money being doled out. However the subsidy for higher education is so so misplaced!

Why should an IIT and an IIM charge fees way below the market costs? All these institutions are sitting on Government gifted land, and grants. Do they really need this subsidy? Why is it that these institutes cannot be asked to charge market related fees -and be self sufficient. Wait a minute. Are they not charging market related fees?

Well, if ISB and IIM are charging more or less the same fees, there seems to be no need for a subsidy for IIM. Now if that is the situation, why did Jaitely provide for Rs. 500 crores for setting up new IITs and IIMs? Just an election promise of setting up one IIT and one IIM in every state.

It really cannot get worse. There is a HUGE shortage of good teachers – and the reasons are not known why. Maybe the institutions do not want to pay well or maybe the job is very difficult to do and hence we are unable to get good teachers. It is time that our colleges used a lot of technology and made sure that good teachers are available all over the country – by using technology.

If private colleges like ISB, Nirma, ITM can run profitable colleges all over the country, there is no reason why the government should subsidize ‘higher education’. Makes no economic sense at all.

In cities like Mumbai the infra is cracking – and government chickened out of increasing the train fare. Like Swaminathan Iyer had suggested – the monthly pass price can be increased at a slow pace – from 15 trips for a monthly pass to 25 trips over a 2 year period. Of course commercially using the space that they Railways have in Mumbai would also dramatically increase its income – imagine creating a big office space over all the railway stations -and renting it out!

The money saved in the subsidy to IIT and IIM should be spent on rural schooling. The rural schooling projects run by organisations like Isha and Eureka seem to suggest that a lot of work in the quality of education has to be done. Setting up schools is not the end game – ensuring that good quality students emerge from them is far, far more important. The Government does not seem to be capable of ensuring quality of education imparted. The Gov should consider partnering with good NGOs to improve the quality of education at the bottom of the pyramid.

LPG subsidy in urban India can be easily removed by creating a parallel private sector delivery mechanism. If the people are not at the mercy of the Gov shops, surely people will be willing to pay a premium for that delivery. The conversion of all the houses in Mumbai’s suburbs – to piped gas – is a clear indicator that when the subsidy amount is say Rs. 4k per annum, the middle class is not really bothered too much about it – and is willing to exchange that for the convenience….

I hope Jaitely and gang start thinking on these lines…

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  1. Completely spot on! We need more investments in primary schools as compared to iit/iim. With respect to the idea of using railway land to build offices, its an idea that has worked elsewhere. For example in Hong Kong, one of their most prominient mtr stations has a mall, office space and a ritz carlton built right on top of the station!

  2. I am in Hyderabad and learnt that new govts in both states promised waiver of agri loans for farmers inspite of terrible debt trap the state governments are in. Farmers are also asking to waive off gold loans apparently alleged to have taken for agri purposes.

    And then everyone is demanding KG to PG free education including full fee reimbursement of engineering education to everyone which is already being implemented in last 5 yrs. The quality of engg education gone down so badly.

    Then you have Rural employment guarantee scheme which govt/planning commission agrees that it is not productive. The power supply is dismal all over India. Govt is not prepared for drought and associated inflation.

    Central govt should not encourage state govts to be debt ridden and also should let political parties to announce all popular scheme to drain the exchequer.

    I always wonder with somuch emphasis on rural & urban education, if no one wants to become plumber, carpetenter, driver, fitter and so on and everyone wants pension type of jobs in state govt, how would the country would cope up.

  3. Hi Subra,
    Gas pipelines are working fine, but unfortunately private gas companies are not at all efficient.
    In cities like Bangalore, it is very very difficult to get govt. gas connection as they ask for local ration card etc. which is not available to migratory people like me. Private companies like Agni Gas to rescue — or so I thought. Getting gas connection is not very difficult, almost no documentation etc. – only pay money. I was fine with the money as I was getting (supposedly) quality service. But then they started showing their true colors, everything is with a charge. No double gas cylinder, they won’t deliver to building security and will only deliver on day time (when I am in office). If they come and we are not here, then charges for booking gas again.
    It was too much for me. I got a govt. gas connection in my home town and got it transferred to Bangalore and now have no such problem. They deliver to whoever has gas book, cylinder and money and usually good service and with double gas cylinder, I don’t really care if they take even a month to deliver gas.
    All in all, very disappointed with private gas companies which take more money and still don’t deliver hassle free experience.

  4. One unrelated question, but please suggest some ways by which I can open some SIPs using direct way of buying mutual funds. Currently, I am using ICICI Direct to schedule SIPs which is very convenient but doesn’t offer mutual funds direct plan. As these are long term investments (20+ years), even 1% difference (which is case in direct and non-direct plans) could make a big dent in my final corpus.

    Is there any website which allows me to buy direct plans without too much hassle? By that I mean, deduct money directly from my savings account through ecs (no cheques etc), I should not have to visit their office again and again and can see my investment online.
    As far as I know, for direct route, I have to go to Mutual Funds office, fill a SIP plan, get KYC done, deposit cheques and then make regular payments. And same thing again for each Mutual Fund and in case I want to renew/modify.

  5. I concur with your views. Subsidies must be removed. But sadly,the NDA Goverment is dithering in taking this step.

  6. Hi Abhi,
    DIrect route is good option for long term investors like you. You can also do investing in direct mode through each AMC website. Each fund house like hdfc,icici all have their own website which allows to invest in direct mode.

    If you already have folio in their fund house, I think you even no need to fill the KYC but even if it is required it will be a one time effort and it is worth it.

    You can use websites like valueresearchonline to track the portfolio in single place.

  7. Hi Shankarraju,
    Thanks for the response. I will definitely checkout these AMC’s websites.

    Subra, short answer to your question is – because the competition (in this case govt. gas agencies) is delivering again for free.
    With the same logic, no grocery shop should ever provide free home delivery, but they do.
    Long answer – If a company doesn’t tell me when would they deliver gas cylinder, still insist on me being home for delivery, refuse to deliver it to anyone else AND THEN charge me for re-delivery of gas (AGAIN not telling me when would they deliver) — then this is cheating in my books and I will complain, switch companies if I can.
    As I said earlier, if I get better service at premium price – I will go for it. But if I have to pay premium but still get service worse than cheaper option, then would choose cheaper option.

  8. Hi Abhi,
    You need not go to each AMC for direct investments. Make sure you have PAN card and address proof in which name matches with PAN card, and go to nearest CAMS/KARVY or CVL center. They will do your KYC. If it is CAMS, they will also ask you to invest in at least one MF plan, so that they know you are not wasting their time. You can temporarily select one MF direct plan and put the minimum lumpsum amount and submit the application. Be sure to enter same name in all the places, as in PAN card and address proof, even if it is longish, because it is better to spend more time once rather than wasting time in resolving conflicts.
    After about less than 15 days, your KYC would be done, if the documents are all fine. You can use this time to do thorough research. If your KYC is done through CVL, many MFs allow you to do investments online. Many others will require you to visit CAMS or their offices.
    Document checklist:
    For KYC
    Originals with self attested copies
    a)PAN
    b)Address proof
    and A PP size color photo
    For MF investments through CAMS
    A check leaf with your name printed on it
    If check doesnt have name printed, bank passbook or account statement attested by banker and self attested by you, preferably the name in bank to be matched with PAN.

    Be sure to read the MF brochures (available online) thoroughly, also mark all the options related to online access.
    Be sure to suffix plan names with direct, or else the default regular options will be chosen.

    If you are on facebook, join Asan ideas for wealth group. It is a closed group, any queries will be answered quickly. I got benefited from that.
    I cant remember any other points as of now. Hope this helps.
    Yeah, there is one AMC, Quantum, which is fully online and takes only direct investments. It is the most hassle free one and once your KYC is done, you can invest online. Any issues, you can call the call centers of respective AMCs.
    Regards
    Aparna

  9. Hi,
    Why don’t we do this with Demat acc? In Demat route, direct mutual fund options are listed. All investments regardless of fundhouse will be available in one place. Could be done online. No extra documentation required if you have Demat acc. Any counter views to this approach?

  10. Hi Anshuk,
    Pros when compared with AMC:
    1. All details across AMCs in one place
    2. Dematerialised form. No need for paper based info

    Cons when compared with AMC:
    1. One time additional cost as brokerage and STT etc.

    Pros when compared with Banks & alike
    1. No trail commission every year
    2. Dematerialised form.

    Cons: Demat a/c is required.

    Please let me know, if I have missed any

  11. Which demat provider offers direct plans? At least ICICIdirect.com account doesnt list any direct plans.
    STT is there irrespective of to or through whom you sell.

  12. @Abhi
    Since you are already doing SIP/MF investments using ICICIDirect, that means you will have your KYC done. You can check it at https://www.cvlkra.com/.

    If you have KYC and any MF in Franklin Templeton, then you can open online investment account with Frankling Templeton without any personal visit to Franklin Office. You may need to courier some documents, if required. I was already having an Offline Franklin Templeton Account. So i was able to easily open the online account.

  13. @Aparna: HDFC Securities lists direct plans. Though, when I wanted to do buy some one day, most plans were not listed.

    In my understanding, these are traded in NSE / BSE. If so, it must be available irrespective of broker. Not sure why it doesn’t get listed sometimes.

    It would be great if Subra could throw some light on this.

  14. @ Aparan
    ICICIdirect.com is a broker & ICICI Bank is where demat accounts are (two separate entities). So being a broker ICICIdirect.com will never have direct plans.
    Correct me if i am wrong.

  15. Hi Mayur,
    Yes, both are different entities. In this case, the plans are listed in exchange (BSE /NSE). As a broker, ICICIdirect shows all the options listed in the exchange. If not shown, we might have to reach customer care for the reason.

  16. If you have already invested in MF’s and had Folio no, then almost all fund houses allows to register on their website using that folio no & buy funds through Direct plans

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