Friday, January 20, 2006

Chronology of Bofors case


New Delhi, May 31: Following is the chronology of events in the Rs 1437 crore Bofors gun deal case in which Delhi High Court today quashed all charges against Hinduja Brothers and Bofors Company:

March 24, 1986: The Rs 1437 crore deal between Indian government and Swedish arms manufacturer A B Bofors for supply of 400 Howitzer field guns of 155mm to Indian Army.

April 16, 1987: Swedish Radio claims Bofors paid kickbacks to top Indian politicians and key defence officials to secure the deal.

April 20, 1987: Prime Minister Rajiv Gandhi assures Lok Sabha that neither any middleman was involved in the deal nor any kickback was paid.

August 06, 1987: Joint Parliamentary Committee set up under B Shankaranand to probe into allegations of kickbacks.

February 1988: Indian investigators visit Sweden.

April 25, 1988: JPC submits its report.

July 18, 1989: JPC report presented in Parliament.

December 26, 1989: V P Singh government debars Bofors Company from entering into any defence contract with India.

January 22, 1990: CBI registers FIR in the case.

January 26, 1990: Swiss authorities freeze bank accounts of Swenska and AE Services.

February 17, 1992: B O Anderson`s sensational report on the Bofors pay-offs case published.

December 1992: Supreme Court reverses a Delhi High Court order quashing the FIR in the case.

February 09, 1993: Supreme Court rejects Win Chadha`s plea for quashing of letters Rogatory sent by the trial court to its counterpart in Sweden seeking assistance for CBI in the case.

July 12, 1993: Swiss Federal Court rules that India was entitled to Swiss Bank documents pertaining to the kickbacks.

January 21, 1997: After four years of legal wrangles, secret documents running into over 500 pages given to Indian authorities at a public ceremony in Berne.

January 30, 1997: CBI constitutes special investigation team for the case.

February 10, 1997: CBI questions ex-Army Chief Gen K Sunderji.

February 12, 1997: Letters rogatory issued to Malaysia and UAE seeking arrest and extradition of Italian businessman Ottavio Quattrocchi and former Bofors agent Win Chadha.

May 1998: Delhi High Court rejects Quattrocchi`s plea for quashing of red corner notice issued by Interpol at the behest of CBI.

October 22, 1999: CBI files first chargesheet naming Win Chaddha, Quattrocchi, former Defence Secretary S K Bhatnagar, former Bofors chief Martin Ardbo and the company AB Bofors. Former Prime Minister Rajiv Gandhi`s name figured as "an accused not sent up for trial" as he had already died in 1991.

November 07, 1999: Trial court issues warrant against Quattrocchi while summoning other four accused.

December 13, 1999: CBI team goes to Malaysia to seek extradition of Quattrocchi but fails in its efforts.

Early, 2000: Quattrocchi approaches Supreme Court for quashing of arrest warrant against him. Court asks him to appear before CBI for interrogation while protecting him from arrest. Quattrocchi refuses to accept the order saying his counsel misled the court.

March 18, 2000: Chadha comes from UAE to face trial.

July 29, 2000: Special CBI court issues "open non-bailable arrest warrants" against Ardbo.

September 04, 2000: Chadha moves SC for permission to go to Dubai for treatment. The court rejects the plea a week later.

September 29, 2000: Hindujas issue statement in London saying the funds received by them from AB Bofors had no connection with the Howitzer gun deal.

October 09, 2000: CBI files a supplementary chargesheet naming Hinduja brothers - Srichand, Gopichand and Prakash - as accused in the Bofors gun deal.

December 12, 2000: Special CBI court takes cognizance of the supplementary chargesheet.

January 19, 2001: Three Hinduja brothers appear before special CBI court, granted bail but asked not to leave India.

May 12, 2001: Supreme Court lets Srichand and Gopichand go abroad but asks Prakashchand to stay in India.

October 24, 2001: Win Chadha dies of cancer. Another accused S K Bhatnagar passes away in the same year.

April 19, 2002: Special court dismisses Hindujas` plea to quash the chargesheet.

January 2002: Delhi High Court quashes CBI chargesheets in the case on the ground of inordinate delay in probe and trial.

2002: SC allows special CBI court to go ahead with trial.

September 02, 2002: Arguments begin on charge.

November 14, 2002: Special Judge Prem Kumar frames charges against Hinduja brothers and Bofors Company.

July 07, 2003: Supreme Court sets aside HC verdict on quashing of chargeshet and orders resumption of trial.

February 04, 2004: Justice J D Kapoor drops corruption charges against all accused. Orders reaming of cheating charges against Hindujas and forgery charges against Bofors.

2004: Hindujas seek recall of Justice Kapoor`s order.

May 31. 2005: Justice R S Sodhi quashes all charges against Hindujas and Bofors.

Tuesday, January 17, 2006

Sth abt GDP

Gross domestic product

From Wikipedia, the free encyclopedia.

Gross Domestic Product (GDP), a calculation method in national accounting (see Measures of national income and output) is defined as the total value of final goods and services produced within a country's borders in a year, regardless of ownership. It may be used as one of many indicators of the standard of living in a country, but there are limitations with this view. GDP is often abbreviated as Y.


Definition

GDP is defined as the total value of goods and services produced within a territory during a specified period (or, if not specified, annually, so that "the UK GDP" is the UK's annual product), regardless of ownership. GDP differs from gross national product (GNP) in excluding inter-country income transfers, in effect attributing to a territory the product generated within it rather than the incomes received in it.

Whereas nominal GDP refers to the total amount of money spent on GDP, real GDP adjusts this value for the effects of inflation in order to estimate the actual quantity of goods and services making up GDP. The former is sometimes called "money GDP," while the latter is termed "constant-price" or "inflation-corrected" GDP -- or "GDP in base-year prices" (where the base year is the reference year of the index used). See real vs. nominal in economics.

GDP measures only final goods and services, that is those goods and services that are consumed by their final user, and not used as an input into other goods. Measuring intermediate goods and services would lead to double counting of economic activity within a country. This distinction also removes transfers between individuals and companies from GDP. For instance, buying a Renoir doesn't boost GDP by $20m. (If it did, buying and selling the same painting repeatedly to a gallery would imply great wealth rather than penury.) Note that the Renoir purchase would affect the GDP figure, but not as a $20m receipt, the auctioneer's fees would appear in GDP as consumption expenditure, because this is a final service.

The most common approach to measuring and understanding GDP is the expenditure method:

GDP = consumption + investment + exportsimports

Consumption and investment in this equation are the expenditure on final goods and services. The exports minus imports part of the equation (often called net exports) then adjusts this by subtracting the part of this expenditure not produced domestically (the imports), and adding back in domestic production not consumed at home (the exports).

Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:

  • Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.
  • If separated from endogenous private consumption, Government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework.

Therefore GDP can be expressed as:

GDP = private consumption + government + investment + net exports
(or simply GDP = C + G + I + NX)

The components of GDP

Each of the variables C, I, G, and NX :

  • C is private consumption (or Consumer expenditures) in the economy. This includes most expenditures of households such as food, rent, medical expenses and so on.
  • I is defined as business investments in capital. Examples of investment by a business include construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. 'Investment' in GDP is meant very specifically as non-financial product purchases. Buying financial products is classed as saving in macroeconomics, as opposed to investment (which, in the GDP formula is a form of spending). The distinction is (in theory) clear: if money is converted into goods or services, without a repayment liability it is investment. For example, if you buy a bond or share the ownership of the money has only nominally changed hands, and this transfer payment is excluded from the GDP sum. Although such purchases would be called investments in normal speech, from the total-economy point of view, this is simply swapping of deeds, and not part of the real economy or the GDP formula.
  • G is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the millitary, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits. The relative size of government expenditure compared to GDP as a whole is critical in the theory of crowding out, and the Keynesian cross.
  • NX are "net exports" in the economy (gross exports - gross imports). GDP captures the amount a country produces, including goods and services produced for overseas consumption, therefore exports are added. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic.

It is important to understand the meaning of each variable precisely in order to:

Examples of GDP component variables

Examples of C, I, G, & NX: If you spend money to renovate your hotel so that occupancy rates increase, that is private investment, but if you buy shares in a consortium to do the same thing it is saving. The former is included when measuring GDP (in I), the latter is not. However, when the consortium conducted its own expenditure on renovation, that expenditure would be included in GDP.

If the hotel is your private home your renovation spending would be measured as Consumption, but if a government agency is converting the hotel into an office for civil servants the renovation spending would be measured as part of public sector spending (G).

If the renovation involves the purchase of a chandelier from abroad, that spending would also be counted as an increase in imports, so that NX would fall and the total GDP is unaffected by the purchase. (This highlights the fact that GDP is intended to measure domestic production rather than total consumption or spending. Spending is really a convenient means of estimating production.)

If you are paid to manufacture the chandelier to hang in a foreign hotel the situation would be reversed, and the payment you receive would be counted in NX (positively, as an export). Again, we see that GDP is attempting to measure production through the means of expenditure; if the chandelier you produced had been bought domestically it would have been included in the GDP figures (in C or I) when purchased by a consumer or a business, but because it was exported it is necessary to 'correct' the amount consumed domestically to give the amount produced domestically. (As in Gross Domestic Product.).

Difference from Aggregate expenditure

An alternative measure of the economy to GDP is the Aggregate expenditure measure, which is identical to GDP except that it excludes items produced but not purchased (net inventory/stock level growth). If the economy produces more goods than are sold, the increase in inventory would generally be included in the GDP figure (as "Investment"). GDP counts these changes in inventory levels as investment.

The GDP Income account

Another way of measuring GDP is to measure the total income payable in the GDP income accounts. This should provide the same figure as the expenditure method described above.

The formula for GDP measured using the income approach, called GDP(I), is:

GDP = Compensation of employees + Gross operating surplus + Gross mixed income + Taxes less subsidies on production and imports
  • Compensation of employees (COE) measures the total remuneration to employees for work done. It includes wages and salaries, as well as employer contributions to social security and other such programs.
  • Gross operating surplus (GOS) is the surplus due to owners of incorporated businesses. Often called profits, although only a subset of total costs are subtracted from gross output to calculate GOS.
  • Gross mixed income (GMI) is the same measure as GOS, but for unincorporated businesses. This often includes most small businesses.

The sum of COE, GOS and GMI is called total factor income, and measures the value of GDP at factor (basic) prices.The difference between basic prices and final prices (those used in the expenditure calculation) is the total taxes and subsidies that the Government has levied or paid on that production. So adding taxes less subsidies on production and imports converts GDP at factor cost to GDP(I).

Measurement

International Standards

The international standard for measuring GDP is contained in the book System of National Accounts (1993), which was prepared by representatives of the International Monetary Fund, European Union, Organisation for Economic Co-operation and Development, United Nations and World Bank. The publication is normally referred to as SNA93, to distinguish it from the previous edition published in 1968 (called SNA68).

SNA93 sets out a set of rules and procedures for the measurement of national accounts. The standards are designed to be flexible, to allow for differences in local statistical needs and conditions.

National Measurement

Within each country GDP is normally measured by a national government statistical agency, as private sector organisations normally do not have access to the information required (especially information on expenditure and production by governments).

GDP can measure spending on all goods and services. GDP can also measure all income earned.

Interest rates

Net interest expense is a transfer payment in all sectors except the financial sector. Net interest expenses in the financial sector is seen as production and value added and is added to GDP..

Cross-border comparison

The level of GDP in different countries may be compared by converting their value in national currency according to either

The relative ranking of countries may differ dramatically between the two approaches.

  • The current exchange rate method converts the value of goods and services using global currency exchange rates. This can offer better indications of a country's international purchasing power and relative economic strength. For instance, if 10% of GDP is being spent on buying hi-tech foreign arms, the number of weapons purchased is entirely governed by current exchange rates, since arms are a traded product bought on the international market (there is no meaningful 'local' price distinct from the international price for high technology goods).
  • The purchasing power parity method accounts for the relative effective domestic purchasing power of the average producer or consumer within an economy. This can be a better indicator of the living standards of less-developed countries because it compensates for the weakness of local currencies in world markets. The PPP method of GDP conversion is most relevant to non-traded goods and services.

There is a clear pattern of the purchasing power parity method decreasing the disparity in GDP between high and low income (GDP) countries, as compared to the current exchange rate method. This finding is called the Penn effect.

For more information see measures of national income.

GDP and standard of living

GDP per capita is often used as an indicator of standard of living in an economy. While this approach has advantages, many criticisms of GDP focus on its use as an indicator of standard of living.

The major advantages to using GDP per capita as an indicator of standard of living are that it is measured frequently, widely and consistently. Frequently in that most countries provide information on GDP on a quarterly basis, which allows a user to spot trends more quickly. Widely in that some measure of GDP is available for practically every country in the world, which allow crude comparisons between the standard of living in different countries. And consistently in that the technical definitions used within GDP are relatively consistent between countries, and so there can be confidence that the same thing is being measured in each country.

The major disadvantage of using GDP as an indicator of standard of living is that it is not, strictly speaking, a measure of standard of living. GDP is intended to be a measure of particular types of economic activity within a country. Nothing about the definition of GDP suggests that it is necessarily a measure of standard of living. For instance, in an extreme example, a country which exported 100 per cent of its production would still have a high GDP, but a very poor standard of living.

The argument in favour of using GDP is not that it is a good indicator of standard of living, but rather that (all other things being equal) standard of living tends to increase when GDP per capita increases. This makes GDP a proxy for standard of living, rather than a direct measure of it.

There are a number of controversies about this use of GDP.

Controversies

Although GDP is widely used by economists, its value as an indicator has also been the subject of controversy. Criticisms of GDP include:

  • GDP doesn't take into account the black economy, where the money spent isn't registered, and the non-monetary economy, where no money comes into play at all, resulting in inaccurate or abnormally low GDP figures. For example, in countries with major business transactions occurring informally, portions of local economy are not easily registered. Bartering may be more prominent than the use of money, even extending to services (I helped you build your house ten years ago, so now you help me).
  • Very often different calculations of GDP are confused among each other. For cross-border comparisons one should especially regard whether it is calculated by purchasing power parity (PPP) method or current exchange rate method.
  • Quality of life is determined by many other things than physical goods (economic or not).
  • In 'poor' countries, it may just be that everything is cheap, except for a few western goods. So one may have little money, but if everything is cheap that evens out nicely. Thus, the standard of living may be quite reasonable, it's just that there are, say, fewer TV-sets, meaning people have to share them (which may actually increase the quality of life in a economic sense and choice, but decrease in a social sense for societies that value doing things together).
  • If many products are of low quality in terms of durability then people will have to (unnecessarily) buy them again and again, thus boosting GDP without increasing their satisfaction. (On the other hand, if products were very durable then that would hamper innovation because people would be less inclined to buy new products, giving producers less of an incentive to develop them.) Similarly, if many products are of low quality in terms of usability and people don't know beforehand which products are the best choice for them, then they will either have to make do with an inferior product or buy again and again until they find something more satisfying. Furthermore, if products have a short lifespan in the market (eg because of fast innovation or fashion) then this process starts all over again when people need a replacement. Note that in a capitalist society these factors working together can easily cause a very high GDP combined with low customer satisfaction.
  • If a nation doesn't spend but saves and invests overseas, such as Japan, its GDP will be diminished in comparison to one that spends borrowed money, like the US, thus accumulated savings and debt are not taken into account so long as adequate financing continues to happen.
  • GDP doesn't measure the sustainability of growth. A country may achieve a temporary high GDP by over-exploiting natural resources or by misallocating investment. Oil rich states can sustain high GDPs without industrializing, but this high level will not be sustainable past the point that the oil runs out. Economies experiencing an asset bubble, such as a housing bubble or stock bubble, or a low private saving rate tend appear to grow faster due to higher consumption, mortgaging their futures for present growth. Environmental degradation at the expense of economic growth can end up costing dearly to clean up, GDP doesn't account for this in places such as China.
  • GDP counts work that produces no net change. For instance, a hurricane destroying thousands of homes would not be counted by GDP, but the rebuilding of those homes would be. A good recent example would be the aftermath of 2005 Katrina hurricane, which is poised to become the most expensive hurricane in history. GDP would capture the rebuilding activity and suggest a rising living standard, but we're only working toward restoring what was lost for the most part. Therefore, GDP growth would over-estimate the increase in the standard of living. See Negative externalities.
  • As a measure of actual sale prices, GDP does not capture the economic surplus between the price paid and subjective value received.
  • the annual growth of real GDP is adjusted by using the "GDP deflator", which tends to underestimate the objective differences in the quality of manufactured output over time. (The deflator is explicitly based on subjective experience when measuring such things as the consumer benefit received from computer-power improvements since the early 1980s). Therefore the GDP figure may underestimate the degree to which improving technology and quality-level are increasing the real standard of living.
  • Some economists such as Herman Daly consider GDP to be a poor measure even of material well being, especially in developed countries. They argue that GDP only measures production and consumption, not however the level of utility people gain from producing and consuming. This idea is expressed in the theory of uneconomic growth, which states that GDP growth above a certain "economic limit" actually decreases material well being. An extreme example of this is a major war. Historically, GDP growth was often boosted in war time while material living standards fell considerably.
  • GDP does not take inequality into account.

Some economists have attempted to create a replacement for GDP called the Genuine Progress Indicator (GPI), which attempts to address many of the above criticisms. Many nations calculate a national wealth, a sum of all assets in a nation, but again doesn't account for future obligations such as environmental degredation, asset bubbles, and debt. Other nations such as Bhutan have advocated gross national happiness as a standard of living, claiming itself as the world's happiest nation.

Forex reserves touches $139.352 billion for week ended 6th jan

Forex reserves rise by over $2 b

-Source: Businessline
Saturday, 14 January , 2006, 09:54

Mumbai: Foreign exchange reserves surged over $2 billion during the week-ended January 6, due to currency revaluation and FII inflows.

This is after a sharp decline of over $6 billion due to India Millennium Deposits redemption, in the earlier week.

According to Reserve Bank of India's Weekly Statistical Supplement, for the week-ended January 6, foreign exchange reserves increased by $2.146 billion to touch $139.352 billion, against $137.206 billion in the earlier week.

The redemption of the IMD had caused an outflow of $6.844 billion from the reserves.

In the period under review, the euro gained against the dollar and touched levels of $1.2101. Net FII inflow into the domestic equity market was $500.8 million, according to figures from SEBI.

A dealer with a private bank said the accretion to the forex reserves could be due to the 100-point gain by the euro during that week and strong FII inflows. Some of the IMD outflows may have returned to banks, which may have accrued to the reserves, the dealer said


Sth to know abt forex reserves

For God's sake, harness forex reserves now!

March 15, 2005

Foreign Exchange reserves are basically held to achieve a balance between demand for and supply of foreign currencies.

The reserves also help in maintaining confidence in monetary and exchange rate policies and enhancing the capacity of the central bank to intervene in forex markets.

They help build a capacity to absorb shocks in times of crisis and provide the confidence that the economy is well placed to meet all external obligations. Also, reserves provide the security of backing domestic currency through external assets.

Further, it helps the country maintain the investor confidence required to attract the much-needed FDI in crucial sectors of the economy. The country also benefits by using the excess reserves to repay its liabilities.

India's foreign exchange reserves hit a record high in recent years and are currently placed at $137.55 billion as on the week ending March 4, 2005. Since the inception of economic reforms, forex reserves have risen continuously. However, the forex reserves in the past two years have been rising exponentially.

The swelling of forex reserves has become a macroeconomic issue. Policymakers, independent analysts and politicians have expressed some worry regarding the deluge of dollars into our economy over the past two years.

Nearly 50 per cent of our current forex reserves have been built up in the past 2 years. The question being asked is how have the reserves been built up, and whether they would start dwindling.

Some experts seem to suggest that the quantum of dollar flows is not explained by normal economic activity such as foreign direct investment, portfolio investment in stock markets, money sent by Indian workers abroad and bank deposits made by non-resident Indians.

So where is the forex coming from?

Analysis of components forming the inflows suggest that the upswing is mainly attributable to the resurgence in exports, increase in capital inflows (including foreign investment), stronger rupee and the reduction in the current account deficit.

It is possible that the substantial part of the forex inflows could be funds that have been held abroad over the years by the Indian business class.

Historically, Indian businesses, with some help from public lending institutions, have been known to over-invoice project imports and use it as an instrument to keep some money out of the country. Some of these funds may be coming back into the country, as confidence in the domestic economy, in the medium term has grown stronger.

The persisting weakness in the western economies, primarily the United States, has added to this reverse flow of funds.

Private transfers -- inward remittances by a large number of Indians who live abroad -- to families, into Foreign Currency Non-Resident (FCNR) accounts, and real estate, also represent a large portion of the inflows.

Furthermore, Indian companies today are able to raise debt and equity in foreign markets, and do so far more effectively than they could in the past. This again explains a part of the increasing forex reserves.

All this indicates that a good part of the increased dollar inflows are here to stay. The assessment by some analysts that these dollar inflows are merely in search of the interest rate differential that prevails between the US and India and can exit anytime is not entirely correct.

Although fund managers are parking their money in India due to the advantage they get from the positive interest rate differential, a lot of these funds, just as in other Asian economies, have come seeking a more permanent parking space.

The high reserves have certainly provided the much-required boost to investor confidence and given India a good image abroad.

India's forex reserves have been at a comfortable level for quite some time now, even after the traditional approach of assessing adequacy of foreign exchange reserves in terms of import cover has been broadened to include some important parameters, such as size, composition, risk of capital flows and international uncertainty.

With high reserves, high exports, and increasing foreign direct investment inflows, the economy is all set to ride the trajectory of higher growth. Thus, instead of worrying about the cost of holding such high reserves, the government would be better off capitalising on them to improve the country's image.

Intentions seem to be good. Prime Minister Manmohan Singh and Finance Minister P Chidambaram both send out the right signals about their commitment to development and providing the right environment for development. But, sadly, action seems to be missing.

So, what are the ways in which resources can be utilised in the most effective manner?

For one, there is definitely a case for revisiting and resetting the timetable for capital account convertibility. It is rather unfortunate that the debate has been put on the backburner.

It is time for the Reserve Bank of India to take a stand on whether it wants to follow the example of China and move towards a controlled exchange rate regime or is it ready to let the rupee float and dump its policy of buying the dollars to check the rupee from appreciating.

Being a developing economy with a large and growing manufacturing sector, our import demand is going to be continuously high in the coming years and we will need large forex reserves to meet this demand, especially when export growth may not be able to keep pace with import demand.

Further, if the economy grows at 8 per cent, and there is a revival in investment leading to an increase in import demand, all the excess reserves will stop accumulating.

The high foreign exchange reserves can be used to allow higher import of capital goods and technology to support the growing economy and for development purposes. Another alternative use of the reserves could be to use part of the inflows to replace external commercial borrowings.

Thus, the contradictory situation, where there is more commercial borrowing (large forex inflows) and lack of demand for domestic rupee resources, can be avoided.

A sizeable proportion of resources, taking the stock of forex reserves available, can be used for domestic investment in both the medium and long term.

A great debate on this issue seems to be going on these days and the present government seems to be more than inclined towards this proposal.

The government should also allow Indian residents to open foreign exchange -- say, dollar-denominated -- deposits in domestic banks. At present this is allowed with a lot of restrictions.

Another way to utilise these huge forex reserves would be to follow an aggressive policy in investing overseas, and outward FDI. Recent announcements are definitely steps in the right direction in this regard.

A lot of restrictions on investing in foreign markets have been relaxed. However, further steps need to be taken to further facilitate Indian companies to acquire foreign companies and brands by signing more bilateral investment and double taxation treaties.

While on the one hand so much can be done with the reserves, on the other hand the costs of reserve accumulation are rising, especially when accompanied by sterilisation.

Reserve accumulation means a poor country is lending money very cheaply to the United States and Europe. If the same resources were harnessed for investment, economic growth would accelerate, inflation would diminish, and the welfare gains would increase.

Unfortunately there is not enough happening to create sufficient demand for dollars. This has resulted in an appreciating rupee, which the country does not exactly want.

The reserves may not really be of that much concern if we are aiming for 8 per cent growth. In such a scenario, imports will also increase and we may not be looking at such a big import cover after all.

Therefore, the time has come to think up policy measures that would create greater import demand and widen the current account deficit. The policies must ensure that the piled up reserves are used to attain greater economic growth.

The debate on capital account convertibility should be restarted without any further delay. The government must also initiate aggressive FDI and trade policy reforms, promote exports aggressively and use the India Brand Equity Fund to create the India brand to boost export growth.

All this should be done with various components of the forex reserves in view. Devising an appropriate strategy to make productive use of reserves is as important as providing incentives for larger inflow of forex.

Monday, January 16, 2006

MBA-Interview - Sample Questions & Suggested Answers

Justify your decision to pursue the MBA programme?

Don't tell the panel that you are looking for a "challenging job in a good firm with lots of money, status and glamour". Instead, you must convey to the interview panel that you have made a rational and informed decision about your career choice and your intended course of higher study. There are broadly four areas which your answer could touch upon :
  • Career Objectives: You could talk about your career objectives and how the two year MBA programme will help you achieve them.
  • Value Addition: Value addition will essentially be in two forms knowledge and skills.
  • Background: This is where you connect your past to your future. If you are an engineer, try and say that the MBA course and your engineering degree will help you do your job better in the company that you will join. You should be able to convincingly justify how your engineering qualification will help.
  • Opportunities and Rewards: You could also at this stage mention the opportunities that are opening up in organizations for management graduates. At this stage mentioning superior monetary rewards for management graduates may not be a bad idea.
Why do you think you would enjoy your chosen area of study (Eg: Marketing)?

Marketing is key to the success of any organization and the function has always appealed to me, because it requires a combination of creativity, strategic and analytic ability - all qualities that I feel I possess. Through discussions with some of my seniors, I have a pretty good idea of what it's like to work toward taking up a marketing job, and I know I will enjoy the work.

How do you spend your spare time?

I have a good collection of books of different genre and enjoy reading. In addition, I love driving during late evenings or on rainy weekend afternoons. Also, for the last two years I've been volunteering at the local children's hospital on Saturday mornings.

What are your weaknesses?

I used to be somewhat disorganized, but eventually this got me into trouble when I missed an appointment I hadn't written down. It was clear that I had to learn how to be more organized. So, with the help of my senior colleague we worked out a system that I still use today. Not only do I stay on top of things, but I'm more efficient, too.

The first thing you need to do prior to interviewing is assess yourself. This includes listing your strengths and weaknesses, your accomplishments and achievements, reviewing your strong and your weak subjects, and recording some of the key decisions you have made in your life.

You should then review your interests, the disappointments you've encountered, your work environment likes/dislikes, your business and personal values, your goals, needs, restrictions, and life style preferences. It would help if you're ready to practice answering the following potential questions.

Prepare structured answers for the following potential questions

  1. Why should we admit you into our MBA program?
  2. What are your strongest abilities?
  3. What skills would you be bringing to the classroom?(relevant if you have job experience)
  4. What are you looking for in this program?
  5. Tell me something about yourself?
  6. What are your greatest strengths/weaknesses?
  7. Where do you want to be in 5 years?
  8. Why do you want to study in this institute?
  9. What does "success" mean to you?
  10. What does "failure" mean to you?
  11. What are your three major accomplishments?
  12. What have you disliked in your past jobs? (If you have worked in more than one organization)
  13. What kinds of people do you enjoy working with? (If you possess work experience)
  14. What kinds of people frustrate you?
  15. How long before you can make a contribution (Not monetary) to the institute?
  16. In the past year, what have you been dissatisfied about in your performance?
  17. What according to you is your ideal job and how will this program help you realise the same?
  18. What can you tell me about your past bosses? (If you have work experience)
  19. Which is more important to you: money or the type of job?
  20. What have you learned from your activities in college?
  21. Were your extracurricular activities worth the time you put into them?
  22. What have they taught you?
  23. What qualities should a successful manager possess?
  24. What two attributes are most important in your job?
  25. What major problem have you encountered and how did you deal with it?
  26. What have you done that you consider creative?
  27. Who do you admire? Why?
  28. What do you get passionate about?
  29. What courses are you taking?
Source:Ascent education