Thursday, June 27, 2019

FinTech's scoial disruption in India


Can FinTech be a tool to address social issues like poverty and inclusion?


A resounding YES is the answer to the growing disruption in the market. Financial services and inclusion have the potential to address major social problems and issues in many countries including India. Digital financial services can reduce the cost of receiving payments, put the power in the hands of the person (irrespective of the gender) to manage his/her finances, reduce corruption.

Look at FIndex computed by world bank.

  • 69% of the adult population own an account
  • usage of mobile accounts have been very widespread in the low income countries.
  • Half of the 1.7 billion unbanked adults live in developing countries China, India, Bangladesh etc.
  • 56% of the unbanked adults are women.

One of the NABARD surveys says the following w.r.to our rural sector
  • 88.1 % of the households have a bank account.
  • 33 % households have more than one savings account
  • 26 % of Households have women with institutional (including Self-Help Groups) savings account
  • About 26% of agricultural households and 25% of non-agricultural households reported to have been covered under one or the other type of insurance
  • More than half the agricultural households in India have outstanding debts


Digital FinTech, in India, through manifestation in multiple ways, is disrupting the Indian markets, to increase financial inclusion. That alone is not enough. We need to have a proper eco-system of payments, regulations, infrastructure and consumer protection mechanisms. More important, these digital pushes should result in tailored services for the marginalized.

FinTech brings in more efficiency and enables roll out of customized products and services. It also can act as a platform for the new players and bring in more competition. The cost of remitting through mobile phone is more than 50% cheaper than conventional method. But, the challenge lies in understanding and monitoring the risk to the financial system as a result of FinTech disruption. A consistent and predictable legal and regulatory framework is the need of the hour. Many countries like Mexico, Colombia, Indonesia have passed new regulation to support the adoption of FinTech and foster innovation. Some countries like ours are going for “Sandbox” approaches to test and learn. Whatever be the case, a clear framework is required that will not only address current challenges but help bring FinTech to the doorsteps of every citizen.

India has the potential to leap frog in this space. India should take the opportunity to incentivize the players to sustain innovation and help establish interoperability with the rest of the world. Data protection, peer-to-peer lending, mobile money, access to payment infrastructures for non-banks, robo-advisory services, algorithmic/automated trading, and lending activities using artificial intelligence and machine learning offer tremendous opportunities to reducing poverty, increasing women empowerment and promoting shared prosperity with the appropriate regulatory framework in place.

These are interesting times.

Thursday, June 13, 2019

An open letter to the HRD Minister on our education system by a concerned parent


Dear Shri Ramesh Pokhriyal, 

Congratulations on taking office as HRD minister. We, Indian citizens, are expecting a lot from you. We do believe that you can make effective changes to the education system and help prepare our students to experience a robust system for the challenges that are unique to the 21st century. There couldn't be better timing than now to design a new education policy across the country. Of course, "Education" is a centre-state subject and one has to tread carefully. Strong foundation, Consistent application and interpretation with enough freedom for the states should be the hallmark of such a policy. I feel, however, that the "Students" as stakeholders of any such policy and their parents should play an active role too in coming up with useful suggestions.

Whilst there are a lot of aspects that can be covered under the heading "Education system", I, as a parent of 2 boys with the younger one just about to enter university, have chosen to focus on the H.Sc (Higher Secondary) education and the admission system for Undergraduate courses in our country. I don't claim to be an expert. I have made these suggestions as a parent. Some of these changes are bold and might make you unpopular. Believe me, you would become the hero of the entire student community if you can ease and streamline the admission process.

Thank you for taking time to read this

Regards

Swami Nagarajan
A concerned parent
--------------------------------------------------------------------------------

Table of Contents

1        On our Class XI/XII system... 1

         1.1     Perceived issues / problems. 1
         1.2     Possible Solutions. 2

2        On our UG admission system... 3
         2.1     Perceived issues / problems. 3
         2.2     Possible Solutions. 4

3        Conclusion.. 7

 --------------------------------------------------------------------------------


1      On our Class XI/XII system


Ours is a heterogeneous country in terms of landscape, language, customs and habits. This diversity is our strength. Our education system comprising state and central boards are a reflection of this. Moreover education is a centre-state subject and is rightly so.

1.1    Perceived issues / problems

1.1.1   Choice of subjects in grades 11 and 12


Most schools in our country offer only fixed combinations of subjects for grades 11 and 12. Each subject combination has been set up with a specific career in mind. In this curriculum, which is common across most schools in India, an aspiring engineering student cannot study economics, language or any other subject of his passion. Students are forced to decide on their careers and specialisations by the end of grade 10. Whilst this is not an attempt to negate the influence of super-specialization, my point of view is that up to bachelor’s level of education, a broader spectrum of subjects can be allowed depending on the student’s interest.  

Every school, affiliated to the CBSE, cannot offer all the subjects under CBSE. Fair enough. But within what is available in the school, why can’t a student take any combination as to what he or she wants. Of course, there could be constraints on the time table and scheduling of classes based on what the students want to study. But subject to the availability of teachers and other infrastructure facilities, this need not be considered a problem. The reluctance of schools is the root cause.

Schools which follow curriculum such as IB, IGCSE allow students to choose subjects of their interest, within a broad range of what is prescribed by their board and available in the school. Students here are benefited immensely. Why shouldn’t students studying in CBSE or the state boards be benefited similarly?

1.1.2   Adequacy of state board syllabus


When I read the comments on the NEET related points in Tamil Nadu, one argument, put forward by the politicians, is that the CBSE students have an unfair advantage over the state board. Also, a look at the rankings / scores shows most of the TN students are not able to cope up. I don’t know the situation in other states. What does this really mean? Is it an open admission that the state board syllabus is not adequate or up to the mark? or do the chances of succeeding NEET depend on factors like coaching?

1.1.3   The standing of one state board vis-à-vis other boards


Does every Indian student of higher secondary course know how his/her board is viewed or where it stands? We have no idea how a TN HSC (higher secondary) student is viewed by other states or other countries. Of course, all the universities in India do not discriminate one board system from another. Whenever a selection is based on the qualifying marks in the HSC, there is an implicit assumption that:
a.       Every state board, awarding HSC, compares equally with others
b.      Every subject, across the boards, has the same quality of coverage as well as depth
c.       Every HSC exam has the same level of difficulty
d.      Every subject, across the boards, attempts to impart the same level of learning outcomes.

We all know the above is not true. I was told that some institutions resort to a normalization procedure to help compare the students, across different boards, in a uniform manner. First of all, such institutes are few. Secondly, the normalization addresses only the difficulty level of the exams and not the learning outcomes.

When I was researching for my son’s UG study abroad, I was surprised by some of the universities stating which Indian state boards are acceptable to enter their bachelor degree programs. Does this imply that these universities have done a formal or informal evaluation (sort of due diligence) of the state boards and found only a few meet their criteria? I don’t know. But this kindled my curiosity to see if there is any formal study done across the state boards offering HSC. None. I don’t know how a HSC student, who has taken Physics, of TN state board compares to his counterpart from Andhra state board. But informally when I talk to some of my friends from other boards, there is some sort of underlying opinion about the difficulty and coverage levels. These are restricted to small groups and may be based on personal experience.

The important point is that in the increasing world of transparency, every Indian student deserves to be informed of the standing of his board in various subjects vis-à-vis other boards.

1.2    Possible Solutions


There could be many solutions to address the above. Below, I suggest what comes to my mind.

An independent body should be set up by the central government or the scope of NCERT can be extended subject to adequate resources and budget. This body, let’s call it QAA (Quality Accreditation Agency) should clearly be tasked with the following:

1.      It should specify the list of subjects that can be offered by various boards (e.g. Tamil Literature, Mathematics, English etc.)
2.      So long as a school offers, say N different subjects for HSC, any student of the school should have the option to choose any combination of 4 subjects within that N. The best way to do is to keep the teachers/subjects fixed to the room and allow the students to move from class to class. Today in TN, we call the students taking Maths, Physics, Chemistry and Biology as Group I. All these distinctions should go. A student takes 4 or 5 subjects. The school and teachers should not pass comments or observations on the interests of students.  Many a time, the students and teachers discourage students from taking the subjects of their choice. Of course, this is subject to constraints on the time table and capacity of teachers.
3.      For each of the subjects, above:
a.       an outcome i.e. if a student passes this subject at HSC level, what is he/she expected to know? In what areas and by how much will they be proficient? What will they be capable of doing? What skills will they have accumulated?
b.      a broad recommendation of the possible syllabus
c.       a reading list of recommended books
4.      For doing this, QAA should look at the equivalent syllabi of developed countries as well as international boards like IB (International Baccalaureate) system. This will help our standards to stay relevant and current.
5.      With this ambit, the body should leave the central and various state boards to actually create syllabus and come out with their own books or give reference to other books. This will also enable to add local flavour by the boards where necessary. For example, consider history. Every student, studying History in any board in India, should know about Indian and world history. In addition, he/she should study the local history i.e. history of the region or state.
6.      Periodically, say, every 3 or 5 years, this body QAA should examine the syllabus examination patterns and they type of mark awarded across the boards and publish ratings. The rating can cover aspects such as breadth of a subject covered, depth of the subject, learning outcomes, difficulty of examination etc. These ratings should be shared with the public along with the required data points. For example, from the ratings, any student can understand how a mathematics student, from TN board, compares with the objectives / learning outcomes specified by AQA. Indirectly, this will also enable the students to see where their state board is as compared to others.
7.      This will also put indirect pressure on the state boards to create adequate and appropriate syllabus and encourage them to aim harder. Other benefits could accrue in the upgrading of facilities, enhancing the quality of teachers, equipping them to handle the subjects etc.
8.      Australia has adopted a system called ATAR (Australian Tertiary Admissions Rank) that applies statistical scaling techniques and converts each state board marks into a national rank indicating a percentile score. Perhaps, something similar can be thought of. For this, data points need to be accumulated after addressing the concerns explained earlier.
 
 

2      On our UG admission system


My second observation is on the admission system in our country followed by different institutes – government as well as private and varying admission criteria followed with lack of clarity.

2.1    Perceived issues / problems


1.      Various nomenclature exists in awarding degrees. Some call it B.S (Bachelor of Science) whilst others call it B.Sc. One institute calls an engineering degree in metallurgy as “Metallurgical engineering”; another “Metallurgy and material science”; still another calls “Material science and Metallurgy.” Why are they different? Do they result in different skills, capabilities or learning outcomes? Some call it B.A in Economics and some others award a Bachelor of Science in Economics. How different they are?
2.      Every institute has its own selection test. In my view, most of the private / deemed universities have converted the entrance exam as a source of revenue. A student has to sit for various exams. On an average, the exam fees is not less than INR 1000. Also consider the fact that most exams will require an outstation travel. Imagine the expenses for the family. A family member has to apply for leave and travel with the student and incurs travel, lodging and other expenses. In order to improve the chances of selection, on an average every student takes up five or more exams.
3.      Most of the engineering programs abroad require the students to have studied Maths and Physics. They are the foundations of engineering. With the exception of chemical engineering, all other specializations do not require chemistry. Here, the system expects the students to have studied all three as the basis for JEE test. But then, why does the economics bachelor program, offered at IIT Kanpur, expect the students to take the JEE?  Just because the program is offered by the IIT? Is this really correct? Many other economics programs expect scores in Economics, Commerce, Accountancy and Business Studies. Why are there so many inconsistencies? One cannot point to the freedom of the institutes here!
4.      Various tests are scheduled during the summer after the HSC exams with most weekends gone towards travelling to various locations. The results, for various courses, are not synchronized. The calendar of admission system varies across the country. This also means every state is witness to students jumping from one institute to another as the clash in calendar system doesn’t enable them to take a decision considering all factors.
5.      As an Indian citizen, every student of HSC should have the right to apply to any university in India on equal terms. This doesn’t infringe on the right of states to accord priority for its own students. Let’s say an institute in TN reserves 50% of the seats to students of TN. The remaining 50% of the seats should not have any pre-requisites. Currently, only the central universities have an open procedure. Every state, by various rules, discourages pan-Indian admission. Why should we deprive a student who is highly qualified to seek admission from an institute outside his/her state?
6.      A student has to type out the same information across institutes. Most of them are standard data concerning personal particulars and the marks obtained in exams.
7.      There is no clear cut guideline for every UG course. For example, if one wants to specialize in History as a major and apply for an undergraduate program, what are the subjects he or she ought to have studied at HSC? For applying to history, should one have studied History and/or Maths and/or English? Or will any combination do?
8.      In programs requiring high practical component like engineering, medicine etc. how much time should a student spend in practice or laboratory or workshop? There is no uniformity nor consistency, I am afraid.

2.2    Possible Solutions


1.      Like I described earlier, a body similar to the QAA (mentioned in this paper above) should maintain a catalogue of programs, ensure consistency of nomenclature (without taking away the privilege of institutes to offer new programs), specify the length of time for the degree, define the learning outcomes and suggest broad syllabus/practical pattern. This doesn’t take away an institute’s freedom to design and offer new programs. But, they must file with QAA the new program and work to ensure the learning outcomes are clearly defined. This catalogue should be made transparent to all the students.
2.      This body must also be the central repository of all institutes in the country along with the list of programs offered by each, number of seats etc. This is the only database a student needs before deciding to apply. I know that we have a number of institutions like UGC, AICTE, and MCI etc. The available information, from these organizations, can be used.
3.      The number of seats, for each program, could be broken into:
a.       Seats under “Local states” quota (this is to be filled up the students of the state in which the institute is located)
b.      Seats under “Outside states” (Pan-India)
c.       Seats for international students (if applicable)
In other words, every student wants to have a clear idea of the seats available before applying.
4.      The body should also specify the mandatory subjects to be studied at HSC level for each of the bachelor’s program. A list can be something like this: (This is an example).

Degree Name
Major or Specialization
Core subjects expected to be studied at HSC
Optional / recommended subjects at HSC
Bachelor of Science in Engineering
Mechanical Engineering
Maths, Physics
Chemistry, Biology, Statistics, Computer Science
Bachelor of Science in Engineering
Chemical Engineering
Maths, Physics, Chemistry
Biology, Statistics, Computer Science
Bachelor of Commerce
-
Economics, Commerce
Maths, Accountancy, Business Studies, English Literature
Bachelor of Arts
Geography
Geography, Any science subject (Physics or Chemistry)
Biology, Economics, Social Science
Bachelor of Arts
Philosophy
None
Any
Bachelor of Arts
English Literature
English Literature
Any
Bachelor of Arts
History
None
Any

5.      Our country has moved forward in terms of setting up NTA (National Testing Agency). This has relieved boards like CBSE the onerous task of administering tests leading to straying
from their core purpose. Its sole aim is to ensure tests are conducted properly and scores made available on time. Two important suggestions to make this stronger:
a.       They can aim to make tests computerized like the way SAT, GRE are being administered. This means a wider reach in many cities and towns across the country and easy administration of the tests. Of course, this also adds a responsibility to ensure adequate protection measures are adhered to.
b.      The calendar can be published one year in advance giving clear visibility to students. Every test can be offered more than once. A student who couldn’t attend one can choose another or a student can choose a convenient date or a student can take both the higher marks can be considered.
c.       There should be consideration on the maximum distance a student has to travel in order to take the exam. At the minimum, every district headquarters should provide ample facilities for NTA to administer exams.
6.      This testing body should prepare a list of all possible tests to be done preferably based on the mandatory subjects for each program. Instead of conducting one test per bachelor’s program, the focus should be subjects or general aptitude. My suggestion is to go for the following:
a.       An overall aptitude test addressing language, math, logic, reasoning etc. This can be used for most bachelor’s programs.
b.      One combined test for each professional course like engineering, law, agriculture, medicine, architecture etc.
c.       A few tests on specific subjects like Maths, Physics, Chemistry, Biology, Geography, English Literature etc. There are only a finite number of subjects and this can be clearly identified.
If executed properly, it will indicate to students how many and what tests should be taken in order to apply for their choices. For example:


UG Specialization
NAT
JEE
NEET
CLAT
MAT
PAT
CAT
HAT
Mathematics
Y



Y



Physics
Y




Y


Chemistry
Y





Y

Statistics
Y



Y



History
Y






Y
Philosophy
Y







Geography
Y







Economics
Y







Commerce
Y







All engineering
Y
(Only Math / Physics Sections)






Chemical Engg / Material Science
Y
Math, Physics, Chemistry sections






Biological engineering
Y
Maths, Physics, Chemistry, Biology sections







Legend: NAT – National Aptitude Test, MAT – Math Aptitude Test, PAT – Physics Aptitude Test, CAT – Chemistry Aptitude Test, BAT – Biology Aptitude Test, HAT – History Aptitude Test

7.      A broad selection criteria for the bachelor’s programs in terms of weightage of HSC exam and other tests should be specified. E.g. the weightage of the HSC results should not be less than 40%; weightage of subject tests, required for the course, cannot be more than 60%. This example means, the HSC results can carry from 40% to  75% weightage.
8.      Every state or private university is free to set the weightages within this criteria. But, it cannot do the following:
a.       Introduce additional test
b.      Introduce separate admission criteria
c.       Ask for the scores of another test on the same subject not covered by the body i.e. if the testing body proposes a Maths test, the institute cannot ask for another Maths test organized by a different national or international body.
9.      A common pan-India admission system for the bachelor’s courses is to be introduced online. This should be under the purview of these bodies as their information is the sole basis. The key features should be:
a.       A common portal for registering student’s particulars
b.      An option for the students to specify a fixed number of choices, say 5 of bachelor’s programs in order of priority
c.       Use Aadhaar number as the basis
d.      The student doesn’t have to key in the marks obtained in any of the state or central boards. The marks should be directly accessible to the body using Aadhaar number.
e.       Similarly, all the test results, administered by the testing body, can be made automatically available to the institutes based on Aadhaar number.
f.        The admissions portal will send the student, his/her HSC marks and the required test scores directly to the institutes chosen by the student. The institutes need not spend any time in validating this data.
g.      All the institutes must make their final results (Admit or Decline) to the students through the admission body latest by a specified date.
10.  A common pan-Indian calendar can look like:

Sl.No.
Event
Closure date
1
All boards must complete HSC examinations
15th Mar
2
All boards must make the HSC results available to the students and Admissions body
15th Apr
3
Administering tests by NTA (every test offered two times)
Between 1st Nov and 30th Mar
4
Test scores made available (2 weeks after the test date)
Between 15th Nov and 15th Apr
5
Online bachelor’s program admissions portal opens on
1st Apr
6
Students complete their admission form
15th Apr
7
Admission body sends the details of students / marks to the concerned institutes by no later than
16th Apr
8
Institutes communicate their decision to the students / admission body by no later than (the online system is updated with the latest cut-off scores by institutes / programs)
15th May
9
Students firm up their choices no later than
31st May
10
Institutes issue formal admission letter to students
10th June
11
Students pay up the first semester fees and complete other formalities like hostel etc.
25th June
12
1st semester program, across India for all bachelor’s degrees, starts on
1st July


11.  The above calendar is just an example. This can be modified to take care of other situations. Consider a student who has not got any of his/her five choices. An institute, which rejected the students, may not have fulfilled its capacity and may be willing to relook at the candidate again. Or the candidate might want to try in another institute. Suitable changes can be made to accommodate more rounds of admission within the time frame.

3      Conclusion


In summary, I propose that we introduce three bodies:

1.      A governing council that takes care of the quality HSC and coverage of Bachelor’s programs. This is responsible for introducing all subjects at HSC, new programs at bachelor’s level. This is the only body that has the repository and maintains the definition up to date. This is also responsible for rating every HSC board in the country with respect to learning outcomes. Regarding bachelors, such rating will be a humongous task and need not be considered so long as the learning outcomes are defined.
2.      Expand the scope of NTA as the only testing body for all admission in India for any of the bachelor’s program in the country.
3.      A well-co-ordinated UG admission body across the country

Benefits:

For
Benefits
Country
·        A clear system of education comprising a catalogue of institutes and programs, clear definition of learning outcomes, consistent nomenclature.
·        Self-comparison against other countries to address areas of improvement and make Indian HSC/bachelor’s world class
·        Commitment to the students (the most important stakeholders) on the availability, transparency and validity of the data / admission process

Institutes
·        Consistent admission criteria
·        Synchronized calendar and timelines when exam results would be made available
·        Unified admission system giving institutes a clear idea on the number of students joining their programs. This will help them to plan their courses in advance
·        As the institutes’ data will be made online, this will put pressure on the institutes to elevate their capability
·        No time wasted in verifying the marks / credentials of the students as they are received directly from the government bodies
Student
·        Clear guideline to the students regarding what subjects to study at HSC level and what tests are required for admission to an institute
·        Has the option to take the subject tests more than once and choose the higher marks. The scheduling can be done conveniently.
·        Reduced expenses as tests are fewer
·        Reduced stress levels
·        Validated data of the institutes
·        One stop admission centre. Doesn’t have to worry about sending applications to many institutes
·        Simplified admission system
·        Automatic availability of HSC Board rests and subject test scores to institutes.