Competing rating systems put realty developers in a quandary

While multinationals prefer per capita energy consumption-based IGBC, others say Griha more suited to India

Devesh Chandra Srivastava

New Delhi: There are varieties of green—in nature and in the building trade.

Developers are split down the middle as two green rating agencies hardsell the advantages of their respective building certification methods.

India now has two competing systems to rate how green a building really is. There is the energy compliance certificate issued by the Indian Green Building Council (IGBC or Leed India) and the Green Rating for Integrated Habitat Assessment (Griha). The former is benchmarked with global standards while the latter is home-grown.

Leed is the short form for Leadership in Energy and Environmental Design, whose standards are backed by the Confederation of Indian Industry and has been in use in India since 2001.

Griha officials claim that their test is more suited to Indian realities.

“Griha is an easy, yet comprehensive rating system designed for India. The Leed India rating is primarily based on per capita energy consumption in developed nations like the US. Our per capita consumption (of energy) is still very low,” said Siva Kishan, chief executive at the Griha secretariat in New Delhi.

“International codes usually take a hypothetical case. Griha takes an absolute number, which is easily understood,” said Mili Majumdar, associate director for sustainable building sciences at The Energy and Resources Institute, which built the Griha ratings in 2005 with funding from the ministry of new and renewable energy.

The ministry has made it mandatory for government buildings to obtain a Griha rating as a precondition for departments to get subsidies and other financial assistance for green development

Griha’s Kishan also believes its rating parameters are tougher: “We have found buildings to be not so green as per our parameters, but which have been certified by the IGBC.”

Currently, there are more than 50 projects being built across India based on Griha guidelines. First-mover IGBC has 604 buildings registered with it.

However, IGBC chairman, P.C. Jain said, “There is no conflict between the two rating systems. A Griha rated building is a platinum Leed building as per our standards.”

He added, “We constantly upgrade our rating parameters as per Indian conditions. In fact, Griha has no upgrade as it involves the slow-paced government machinery. But eventually, these two systems should become one.”

The two rating systems may also confuse developers over the certification of their projects and buildings.

Kishan of Griha said, “Developers often use IGBC’s certificate for an image makeover. Going ahead, (the ministry) would probably ask state governments to incorporate the best points of Griha and IGBC on a voluntary basis.”

Many developers tilt towards the Leed India ratings.

Said New Delhi-based developer Vidur Bharadwaj, director of 3C Company: “The objective of both the organizations is to encourage environment-friendly buildings. However, IGBC has higher exposure to the West. This makes it much more acceptable to multinationals. IGBC is also simple and easy to understand and follow.” 3C Company has designed several energy-efficient commercial buildings.

A spokesperson of Amby Valley City, a residential township project near Mumbai, said, “Since the two systems are based on different parameters, there is a possibility of the two systems rating the same buildings differently. Griha could be the home-grown challenger to Leed.”

But Griha has its supporters as well.

“We decided to go with Griha because it is more suited to Indian climate. Unlike Leeds, it does not promote usage of certain products like glass and air-conditioning equipment,” said Shashank Jain, chief operating officer of Ansal API, which has tied up with Griha for a project in Gurgaon.

Padmaparna Ghosh contributed to this story. Source: Live Mint

PSBs’ advances to real estate up 15%

PK Dey
Posted: Thursday, Jun 24, 2010 at 2202 hrs IST
Updated: Thursday, Jun 24, 2010 at 0102 hrs IST

Mumbai: As real estate gets back on track, banks are lending more money to this sector. RBI had increased the provisioning requirement for advances to the commercial real estate sector, classified as standard assets, from 0.40% to 1%. A study on growth in advances to real estate of 22 public sector banks (PSBs) and 10 private sector banks in 2008-09 and 2009-10 reveals that advances to real estate from PSBs rose by 15% as against a decline of 0.4% in private banks.

An analyst from a broking firm said, “Real estate sector, residential as well as commercial, has been growing rapidly over the last few years. The rising disposable income and increasing number of nuclear families is driving the demand for residential properties. In the commercial space, the increasing participation of retail giants for setting up malls and related activities centres have resulted in rapid growth in this sector. So banks have been aggressively lending to this segments.” Among the 22 PSBs, four banks including Bank Of Baroda, Syndicate Bank, State Bank of India (SBI) and Punjab & Sind Bank showed more than 30% increase in their advances to real estate during 2009-10.

Between FY09 and FY10, advances to real estate of 22 PSBs rose by 15% to Rs 3.01 lakh crore from Rs 2.62 lakh crore. 32% of PSBs exceeded the average increase of 22 PSBs in advances to real estate sector during 2009-10. The highest and lowest increase in advances to real estate was seen in Bank Of Baroda and Corporation Bank, respectively. In 2008-09, the highest advances to real estate seen in SBI followed by Bank Of Baroda and Bank of India.

The total advances to real estate sector of SBI rose by 35.9% to Rs 87,125 crore in 2009-10 from Rs 64,105 crore in 2008-09. And the ratio of advances to real estate to total advances increased from 11.82% to 13.79%.

Among the private banks, highest increase in the advances to real estate was of Development Credit Bank (DCB),where it increased from Rs 225 crore to Rs 380 crore. The total advances of DCB rose by 5.6% to Rs 3,459 crore during 2009-10 from Rs 3,274 crore during 2008-09. And the ratio of advances to real estate to total advances increased from 6.87% to 11%.

The advances to real estate in Yes Bank rose from Rs 1,024 crore to Rs 1,670 crore. HDFC Bank had advances to real estate of Rs 18,473 crore during 2008-09 which rose to Rs 25,293 crore during 2009-10. However, ICICI Bank showed a decline of 16.8% in its advances to real estate during 2009-10

Mumbai to get world’s tallest residential real estate tower

WEDNESDAY, 09 JUNE 2010

Mumbai gets tallest tower The world’s tallest residential tower is to be built in Mumbai, India, on the site of an old cotton mill, it has been announced. Mumbai based Lodha Group will build the 117 storey skyscraper on a 17 acre site in Lower Parel in the city centre. It will be 442 meters high, beating the current tallest residential building in Australia at 323 meters and will contain 276 luxury apartments.   The building will be an iconic tribute to Mumbai and a symbol of India’s arrival on the global economic and cultural stage, the company said.   It has appointed New York based architects Pei Cobb Freed and Partners, whose work includes the Louvre Pyramid in Paris, Bank of China Tower in Hong Kong and John Hancock Tower in Boston.   About two to three acres will be reserved for open spaces with construction expected to start in the next few months and scheduled to be completed by 2014.   ‘Through the partnership with global architects, designers and engineers, we aim to bring to Mumbai a landmark, which would exemplify the spirit of Mumbai to always soar higher through hard work and passion,’ said Abhisheck Lodha, director of Lodha.   As residential property prices continue to rise in India the upmarket apartments are expected to be popular. The company is negotiating with foreign as well as local financiers to fund the project.   ‘A project of such big magnitude would surely be priced at a premium. We anticipate that there would be some demand for the project from high net worth individuals,’ said Yashwant Dalal, president of the Estate Agents Association of India.   The project also includes luxury villas with private pools, a high end shopping mall and an office building. Some booking have already taken place in the pre-launch period but the main launch is expected at the end of the month.   Pawan Swamy, managing director western India, at Jones Lang Lasalle Meghraj, a global realty consultancy firm, said Lodha Developers have the necessary permission to build a similar project at their recently acquired plot at Wadala.   Anand Gupta, Honorary treasurer of the All India Builders Association of India, said the project is something that all should all be proud of. ‘The structure and the skyline of the city symbolise the development and the progress of Mumbai,’ he added.

Govt to Set up New norms for Realty Valuation

The urban development ministry, along with the Indian Bank Association (IBA), the National Housing Bank (NHB) and the corporate affairs ministry, has drafted a handbook on policy, standards and procedures for real estate valuation by banks and housing finance institutions. The exercise, the first ever, is to put some order in real estate valuation.

In parallel, the company affairs ministry has drafted a Valuation Professionals Bill. It seeks to create a Council of Valuation Professionals of India. It will have experts from professional institutions and regulate the business of valuation. The council will set standards for valuers, train them, set qualifying norms and monitor them.

The norms include educational qualifications, work experience, membership of professional bodies, registration with the government and references. An IBA official told Financial Chronicle that the draft bill was now in the consultation stage.

The Royal Institute of Chartered Surveyors (RICS) India managing director, Sachin Sandhir, who helped in drafting the bill, said, the valuation practice in this country was replete with instances of bad corporate governance, bad debts and fraud. “It is an accepted fact that property valuation methods in India are as varied as the property laws in different states. In the absence of any prescribed standards, guidelines or reporting formats, valuers could manipulate assumptions, calculations and approaches.

“In the past, the Securities & Exchange Board of India (Sebi) has said disclosures made by real estate developers prove there are no standards of valuation. In some cases, inflated valuations are based on assumptions about future property values. Internationally recognised and International Valuation Standards-compliant RICS standards could not have come at a better time,” he said. According to officials, the need for some regulation has arisen because of the fly-by-night operators in the real estate business who take customers as well as the tax authorities for a ride and whose valuation systems are, at best, opaque.

The new policy will also look at other features like term of the empanelment, compliance to standards and procedures, obligations and other aspects. Importantly, an annual performance review by senior officials of banks will be undertaken. According to the draft, if the performance of the valuer is unsatisfactory, he or she can be taken off the panel. Use of unfair practices, professional misconduct, violation of the code of ethics and professional practice, will also invite similar action.

A valuer will be expected to address all conflicts and help arrive at an amicable solution; supportive documents are to be provided before the valuation work begins. According to the draft, banks will raise objections, if any, within 15 days of the submission of rectification and resubmission. Two valuers will be appointed if the property value exceeds Rs 10 crore and the maximum acceptable difference between the two evaluations should not exceed 15 per cent.

RICS, headquartered in London, has also offered support to develop skills and capacity of valuers. Ashish Jindal, northern region director of Knight Frank, said property valuation in India was done by diverse groups of people with varying backgrounds and skills. “Property valuation is considered just a part of the disciplines of engineering and architecture, so a degree in these subjects is sufficient to become a property valuer. But valuation needs knowledge of other disciplines, such as law, economics, accountancy, town planning and environmental science. Moreover, a valuer must keep abreast of changing legislation, emerging economic trends and constantly shifting market forces. This breadth of knowledge and experience is extremely rare, given the lack of relevant educational courses available to meet these needs,’’ he said.

India Career Journal: Who’s Hiring?

JUNE 17, 2010, 1:29 PM IST

By Shefali Anand

Jobs are back, thanks to an uptick in the Indian economy over the last few months.

European Pressphoto Agency

After a tough 2008 and 2009, hotels, resorts and other tourism-related services are hiring again.

But who is hiring, and what are they looking for?

Here, we list five industries that are crying out for new employees. But be warned: hiring this time around is not like the boom times of 2006 and 2007. Back then, companies were hiring indiscriminately, taking on tons of fresh-out-of-school graduates and ready to invest time and money to train them. This time, companies increasingly want more experienced people, preferably ready to hit the ground running as soon as they start their jobs. Also, companies are spreading their recruitment throughout the year instead of concentrating the hiring process at the beginning of the financial year.

Nearly one million new jobs could be created in the organized sector this year, estimates human resource services firm Ma Foi Randstad. A lot of them will be in the following industries:

1. Healthcare

The expansion of hospitals, primary healthcare centers and diagnostic centers in India, has created a hunger for staff in these businesses.

According to Ma Foi Randstad Employment Trends Surve released on Thursday, the healthcare industry will create 160,000 jobs within the three months ended June.

Within this industry, among the most in-demand professionals are nurses, who are in short supply both in India as well as abroad. K. Pandia Rajan, chief executive of Ma Foi (India & Sri Lanka), says that some nurses who get hired outside India earn more than a software engineer from a second-tier engineering school in India.

There’s also a lot of demand for people in “allied health services” such as laboratory technicians, x-ray technicians and staff at physiotherapy units. Neighboring Southeast Asian countries and the Middle East are also seeking this talent as they build their medical tourism capabilities, says Kamal Karanth, managing director of Kelly Services India, a human resource services firm.

2. Banking and Financial Services

Banks and financial companies have always been major creators of jobs and the momentum has once again increased in recent months.

Both public sector and foreign banks are now expanding rapidly across India and are in need of more talent to sell their products and build their brands. They are primarily looking for relationship managers, and front-end managers, to build the services part of their businesses.

Similarly, insurance and money management companies are expanding rapidly, to tap India’s growing wealth. Top sales and marketing people at these companies find it easy to switch to other industries, and they have been, leaving many a job empty.

3. Information Technology and IT-Enabled Services

As the global economy came out of the worst of the recession, India’s information technology companies have seen an increase in demand for their products and services. As a direct result, in recent months they have stepped up their hiring.

At the same time, after the recent lull in the job market, there has been a lot of attrition in this industry lately, as people look for better-paying jobs in rival companies.

Kelly Services’ Mr. Karanth expects that Infosys, Wipro and their ilk could easily absorb 100,000 professionals before the end of this calendar year. He says the most demand is for entry-level programmers as well as for the next level of staff, such as team managers and so on.

The related IT-Enabled Services industry, which basically refers to outsourcing firms, is also hiring, typically freshers and mid-level managers.

4. Hospitality

This was one of the fastest-growing sectors before the recent economic downturn, but was hurt sharply in 2008 and 2009. Now, once again, there is growing momentum in the construction and operation of new hotels, resorts and other tourism-related services.

Market experts expect increased investment in this sector, which should, in turn, further result in new jobs.

While the industry is looking for a wide variety of talent – from chefs to service-keeping staff – the need of the hour is to hire people to run hotels or resorts successfully. In other words, they want people in services or operations management.

5. Real Estate and Construction

Over the last few months, there has been a sharp increase in the construction of homes and housing prices, and big real estate companies have listed major expansion plans.

While this intuitively would give rise to more jobs, human resource consultants are divided on how large this number could be. Also, a large number of people who work in this industry – particularly real estate brokers and salespeople – are not affiliated to companies, and are thus hard to account for.

There is demand for sales and marketing personnel for major real estate projects, but some niche related fields of work are also experiencing a boom. These include architects, designers and technical surveyors, says Mr. Rajan of Ma Foi.

Source: Wall Street Journal Blog

Affordable Housing is possible through law and policy

'Affordable Housing' examines the problems faced by housing sector across all its stratas - upper middle, middle, and lower middle in particular and comes up with practical solutions on how cost can be reduced and actual development carried out.

'AFFORDABLE HOUSING- How law and policy can make it possible', another research work of senior advocate Dr Arun Mohan was launched by Kumari Selja, Minister of Housing & Urban Poverty Alleviation and Tourism. Justice R. V Raveendran, Judge, Supreme Court of India presided over the function.

 

‘Affordable Housing’ examines the problems faced by housing sector across all its stratas – upper middle, middle, and lower middle in particular and comes up with practical solutions on how cost can be reduced and actual development carried out.

 

The work points out how 44 per cent of our population which can afford to repay a home loan is ignored by the finance sector. The cost of ownership can be reduced by over 30 per cent, the interest rates (or home loans) can be reduced and those who are treated as unqualified for finance can also be given the finance.

 

It also informs how a person who is earning a little more than the minimum wage can look forward to purchase his own flat one day.

Keeping in view the economic fundamentals and human behavioural patterns, this work covers the problem of housing in its true spirit and is targeted at the policy maker, those concerned with implementing the policy and written in a pattern that even a layman will find it worth it. The book also highlights information and facts a prospective flat buyer, or one taking a home loan, must know.

The ‘crisis of confidence’ between the builder, the flat buyer and the bank financier is sought to be overcome by the concept of a Certifying-cum-Performance Guaranteeing Company (CPG Co.).

The author took time off from his busy practice and conducted this research and creative writing for public service, as housing is a subject where subsequent light should be thrown.

Written from a multitude of perspectives, ‘Affordable Housing’ is a stimulating work written by the renowned Senior Advocate in his inimitable style and clearly demonstrates his ability to fuse the insight on housing from all its perspectives.

Grab the 'green' real-estate boom

Real-estate moguls know there's good money in environment-friendly buildings. Here's how the little guy can play, too.

By Fast Company

If the workplace is any indication, you could almost believe corporate America really cares about the environment.

Goldman Sachs (GS, news, msgs), Hearst, IBM Corp. (IBM, news, msgs), JPMorgan Chase (JPM,news, msgs) and Toyota Motor (TM, news, msgs) all have made the move into "green" buildings. Bank of America (BAC, news, msgs) plans to build a 52-story eco-skyscraper near New York's Times Square, and Accenture (ACN, news, msgs) has leased green office space throughout the country.

Sustainable construction is one of the fastest-growing segments of the already-red-hot commercial-building industry. An estimated 5% of all new U.S. commercial construction received the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification last year. And by 2010, 10% of all new commercial construction will be sustainable, according to McGraw-Hill's (MHP, news, msgs) 2006 Smart Market report. (The green trend in home construction is still in its infancy, although that's bound to change.)

Existing construction is getting an eco-lift too. Developers such as Hines and the Durst Organization, and some real-estate investment trusts (REITs), are snapping up half-empty office buildings and renovating them according to green standards. That can often bring 3% higher rents and a 7.5% increase in a building's value, according to the McGraw-Hill report.

On average, green buildings save 10% of utility costs each year -- and sometimes much more. Genzyme's(GENZ, news, msgs) corporate headquarters in Cambridge, Mass., spends 42% less on energy and uses 34% less water than a similar traditional building would. Even more important, as sustainable materials and technology improve, green construction will become more cost-effective, says Charles Lockwood, an environmental and real-estate consultant in Southern California and New York.

So how do individual investors get in on this latest real-estate boom? The easiest opportunities may lie in REITs that have made a substantial commitment to new or renovated green buildings. In a sign of just how hot this phenomenon is, however, two of the biggest, greenest REITs, Arden Realty and Equity Office Properties Trust, have been swallowed up by GE Real Estate and Blackstone Group, respectively.

But there are still promising names out there. Liberty Property Trust (LRY, news, msgs) has 21 green buildings in its portfolio of about 700 properties and says that number will rise quickly as the trust renovates more of its existing properties and takes on more new green projects. Liberty has enjoyed the nice run-up that all REITs had in the past year thanks to the strong commercial-building market. But Fauzia Rashid, a co-manager of Fred Alger Management's Spectra Green Fund (SPEGX), expects Liberty's green investment will help it continue to perform well even if commercial building starts to slow down.

For investors who get a bit woozy at the thought of betting solely on the vagaries of the commercial-real-estate market, a mutual fund with green-building holdings might be the safer way to go. The Spectra Green Fund, unlike many of its socially conscious counterparts, has consistently outperformed the Russell 3000 for the past three years.

The fund, which among other things invests in clean-energy stocks, is putting a small percentage of its assets in green REITs. Rashid also likes to invest in the building segment through the back door, focusing on the supply and equipment manufacturers that green builders rely on, such as Johnson Controls (JCI, news, msgs), the maker of devices that measure and monitor energy output. At about $96 a share, Johnson Controls has jumped in the neighborhood of 40% in the past year. And that's a nice neighborhood to be in.

This article was reported and written by Walecia Konrad for Fast Company.

New real estate exposure norms for urban co-op banks

Business Standard: June 10, 2010

Mumbai: Reserve Bank of India has revised the norms for urban cooperative banks for giving loans to the housing and real estate (RE) segment. Working capital loans to small contractors against hypothecation of construction material are exempted from the existing norms that allows UCBs to use 15 per cent of the total deposits for giving loans for housing and commercial real estate, RBI said. In a communication to chief executive officers of UCBs, RBI said it has fine-tuned the rule for aggregate limit for housing finance. Now, urban banks can use up to 15 per cent of deposits to provide housing, real estate and CRE loans. Earlier, the RBI norm permitted them to use up to 15 per cent of deposits for giving advances to housing loans and other block capital loans. The 15 per cent ceiling was reckoned on total deposits at the end of March 31 of the previous financial year. The exposure to compute the ceiling will include fund and non-fund based facilities extended to customers. Many urban banks and federation of cooperative banks had approached the central bank for clarification on norms that restricts exposure to real estate including housing loan and commercial realty to 15 per cent of deposit base.

Rs 1,400-cr green urban transport project launched

The Hindu Business Line: June 10, 2010
 
New Delhi: The Urban Development Ministry has launched a Rs 1,400-crore green urban transport project called the Sustainable Urban Transport Project (SUTP).
The Global Environment Facility, The World Bank and the United Nations Development Programme are providing both technical and financial assistance for its implementation.

Select cities
Under the project, green urban transport will be introduced in select cities to overcome pollution and other hazards of the existing urban transport system, including traffic impediments for pedestrians.
Four such demonstration projects have commenced in Pimpri-Chinchwad in Pune, Indore, Naya Raipur in Chhattisgarh and Mysore.
Launching the project, the Union Minister for Urban Development, Mr Jaipal Reddy, said there was an urgent need to shift from personal to public transport and the project has been initiated with this objective.
The Government has given high priority to improved urban transport since the launch of the JNNURM (Jawaharlal Nehru National Urban Renewal Mission). More than 12,000 buses have been sanctioned for 60 cities under the mission for the improvement of public transport, while capacity building efforts for better public transport were also being made.

Independent transport body
Mr Reddy said an independent transport authority should be set up in each major city for better governance and planning of public transport.
The SUTP aims at arriving at a long-term strategy to empower planners, decision-makers and other professionals by building their capacity in planning and implementation of the Green Urban Transport Project.
Both the World Bank and UNDP provide loans and grants for SUTP, which is also co-funded by the Government, the respective States and the cities.
This is the first time that such multiple international funding agencies have come together for a transport project in India.

India Inc steps up hiring, job index up 7%

By Agencies 

Riding on improving business confidence, Corporate India's online hiring activity rose for the fifth month in a row, leading recruitment services provider Monster India said.

The Monster Employment Index, a monthly gauge based on a comprehensive review of employer job opportunities from a large selection of online job sites, climbed by 7 per cent to 125 in April, from 117 in March.

"The April rise in Monster Employment Index India is a positive sign as employers continue to expand hiring efforts at the beginning of the second quarter," Monster Worldwide managing director (India, Middle East and Southeast Asia) Sanjay Modi said.

With this, the online employment availability in healthcare, bio technology, life science and pharmaceuticals witnessed its largest monthly rise. Overall, job opportunities rose in 18 of the 27 industry sectors tracked in the survey.

Healthcare led the rise with a 29-point gain in April, indicating a relatively high level of online recruiting in support of scientific research and development activity.

The banking, finance and IT sectors also edged higher in April. Consumer-driven sectors, such as production and manufacturing, automotive, home appliances and real estate, witnessed strong growth over a three-month period.

In the IT industry, the online job demand increased by 51 per cent from January levels. Meanwhile, education was the only industry to grow month-over-month, over a six-month period.

"With other indicators, such as business confidence, improving and most industries and occupational categories in the index registering recent positive trends, we hope to see continued improvement in the future," Modi added.

Online job demand rose at all the 13 cities monitored by the index in April, with Kochi, Coimbatore and Ahmedabad registering the largest jumps.

Among major metropolitan areas, brisk hiring activity was witnessed in Mumbai.

Delhi-NCR and Bangalore grew by 5 per cent over March levels, though hiring activity in Bangalore was relatively restrained compared to the previous month, the study said.

During April, online recruitment activity rose in 13 of the 14 occupational groups tracked, with online job demand for healthcare and engineering/production professionals witnessing the greatest monthly increase.

Educated, unemployable

By Garima Pant 

A yawning gap

Why must Infosys (INFOSYS.BO : 2627.5 -27.5), one of the biggest names in the IT industry, which recruits the cr me-de-le-cr me of professionals from the best institutes in the country, spend $184 million on training programmes annually or invest up to 30 weeks of residential programmes on engineers it hires? The answer is simple the need to build employee competency levels. Says Srikantan Moorthy, VP and head, education & research, Infosys Technologies, "We recruit people on the basis of their learning ability. The investment is a non-negotiable. Besides training we conduct residential programmes to enable our engineers to meet client requirements. The need of the hour is not just for individuals to have strong conceptual knowledge, but also strong application capabilities." His information is, perhaps, an indicator of how inadequate India's education system is when it comes to preparing an individual for a job.

While unemployment cannot be brushed under the carpet, youth employability is no less a nightmare. A lot can be blamed on the education system. As many as 90% employment opportunities require vocational skills, but 90% of our college and school outputs are just cram experts, rendering no less than 57% of India's youth suffering with some degree of unemployability, reveals a recent TeamLease Labour report.

So, if you were looking at the bright side of the picture that just 8% of the youth in India are unemployed, there's hardly a reason to cheer, because 53% of the rest suffer from some form of skill deprivation. That sets back the demographic advantage India could hope to enjoy in future.

"India is coming into its dividend as an unusually young country in an unusually ageing market a young, fresh-faced nation in a graying world," Nandan Nilekani observed in his book, Imagining India: Ideas for the New Century. That's not just another observation. By 2025, 25% of the world's workers will be Indians, points out the TeamLease report. Three hundred and fifty universities, 18,000 colleges and 6,000 ITIs will till then continue to churn out five lakh technical graduates, along with around 2.3 million graduates (or maybe more). Unfortunately, just 10-25% of them will be 'employable', according to the Confederation of Indian Industry (CII).

If that to you seems far fetched, consider this: according to a 2008 report of the Boston Study Group, India by 2012 will have 1.3 million surplus of un-trained and under-educated people and the country will fall short (by 5.3 million) of real talent.

An inefficient human resource development regime in the country, absence of an academia-industry interface, lack of focus on skill development of individuals and an almost non-existent quality assurance framework are the root causes of the poor outcomes of the current educational regime. With no returns expected in terms of jobs, there is a significant drop-out rate leading to an under-trained and under-skilled workforce.

"I opted to work right after graduation as I could see how my seniors were struggling to find a job of their choice and had to make peace with jobs that were underpaying and not worth their efforts," rues 23-year-old Jitesh Bhasin, a BPO employee. His fears are not unjustified.

This trend will result in a deluge of 'shall drop, will work' accumulating at the bottom of the education pyramid. The NSS' 61st round employment data hardly sprung up a surprise when it revealed that in urban India, 207 out of every 1,000 men who completed their graduation or went beyond that remained unemployed, against only 10 men out of a 1,000 who are not literate.

Skill deficit

Consensus on the lack of vocational training in the country impeding competitiveness and productivity of the workforce is easy to achieve among experts. How else do you interpret that only 25% of the engineering graduates, 15% of finance and accounting professionals and just 10% of professionals with any kind of degree are suitable to be employed in MNCs. Incidentally, that finding comes from an MNC itself (McKinsey).

India better pull up its socks. Close to 500 million people, says McKinsey, will need to go through skill development by 2020. As Dilip Chenoy, CEO, National Skills Development Council, says, "It's not education that is primarily responsible for lack of skills. It's probably the lack of systematic approach in skill development and building on whatever education one receives."

The 11th Plan document suggests that due to "the near exclusive reliance upon a few training courses with long duration (two to three years) covering around 100 skills, 80% of new entrants into the workforce have no opportunity for training in skills. 12.8 million population (sic) will enter the work force as new entrants per year. As against this, the present (largely government-administered) system of delivery can only provide training to 3.1 million per year".

The manner in which higher education institutes have grown in the past decade facing difficulty in attracting top-notch faculty, retaining them, and enhancing their skills is worrisome. "Quality has suffered a lot with this expansion," says Amit Bansal, CEO and founder of PurpleLeap, an Educomp-Pearson company that is into entry-level talent management. Many of them, therefore, do not have the ability to attract the best students. "It is the increasing number of students coming out of the neo- and non-academic managed colleges that contribute to non-employability or under- employability," says Srinivasan. With the dilution of entrance standards, the overall education quality is being compromised. K Pandia Rajan, MD, Ma Foi Management Consultants, adds how the academic infrastructure in engineering colleges has become very basic. "A quantum leap in engineering colleges due to poor accreditation policies is a big problem," he says.

Another area of focus is lack of soft skills. Shankar Srinivasan, chief people officer, Cognizant, feels that often students coming out of Indian institutes are technically proficient. "But they lack behavioural prerequisites such as communication, presentation, confidence and other soft skills," he says. Whether the reforms initiated by the government in terms of PPP model being adopted for upgrading ITIs and a modular employable skills programme with an objective to provide employable skills to early school leavers, existing workers and even ITI graduates works remains to be seen.

Undeniably, the need of the hour is to implement a skill-based education system in place of the degree-based system to sincerely solve the problem of educated unemployment.

India, China hiring prospects strong - Manpower

 

By Nick Zieminski

NEW YORK (Reuters) - Employers in most economies are more likely to add workers than three months ago, including those in the United States, but big gains are limited to booming emerging economies like Brazil, India and China, according to a quarterly survey by Manpower Inc.

Manpower's survey, considered a leading indicator of labour demand, suggests an employment recovery will continue in much of the world, but employers remain cautious. In the United States, large-scale job creation is unlikely in coming months.

The global employment services company said Tuesday its seasonally adjusted U.S. net employment outlook was plus-6 for the third quarter, up slightly from plus-5 in the previous survey. It was negative a year ago.

Manpower's index, based on interviews with 18,000 U.S. hiring managers, measures the difference between those who say they will add to their workforce and those who plan cuts. About 70 percent reported no change in their outlook, continuing a recent trend that shows many employers remain unconvinced about the sustainability of the current economic rebound.

"We'll go into the third quarter and see more of what we saw in the second -- no doubt improved BLS numbers, but not so improved that we're going to feel like we're out of the woods," Manpower Chief Executive Jeff Joerres said.

BLS refers to the U.S. government's Bureau of Labour Statistics, which reports monthly employment figures and Friday said 431,000 jobs were added outside the farm sector in May. That was far fewer than expected, and growth in private payrolls also fell short of forecasts.

Indian students look at a text message from a mobile phone in Kolkata, August 23, 2005. Employers in most economies are more likely to add workers than three months ago, including those in the United States, according to a quarterly survey by Manpower Inc. REUTERS/Jayanta Shaw/Files

Encouraging economic signals include a production managers' index that indicates a recovering manufacturing sector, Joerres said. But U.S. employers are able to meet added demand with their existing workforce, and will resist adding new workers until they see credible evidence that demand is sustainable.

"To get that evidence, we may have to wait until the first quarter," Joerres said, noting that hiring is seasonally weak in the fourth quarter. He described the pace of a U.S. jobs recovery as "still very tepid."

Manpower's survey dates back to 1962 in the United States but has a shorter history in other countries. The Milwaukee, Wisconsin-based company is active in 82 countries and makes most of its sales and profit outside the United States.

BRAZIL, INDIA, CHINA RANK HIGHEST

Manpower's global survey of hiring intentions, based on 61,000 interviews, found better jobs prospects in 23 of 36 countries and territories when compared with the second quarter, and all but four were higher from a year ago.

The strongest hiring prospects are again in emerging Asian economies like India and China, where companies enjoy both local and export demand. China's hiring outlook is the strongest since Manpower started surveying employers there five years ago, while India's has rebounded to a two-year high.

Prospects improved in Japan for the fourth consecutive quarter but remain the lowest in the region, partly a result of political turmoil.

"There's a lot of trepidation in the air in Japan, and as a result hiring is being depressed," Joerres said.

In Latin America, the majority of employers in Brazil anticipate taking on staff. Mexico can also expect a better hiring environment, especially in manufacturing and mining, but the hiring outlook dipped in Argentina.

In Europe, the weakest third-quarter hiring plans were reported in Italy, Ireland, Spain and Greece, while employers in larger economies like France, Germany and the United Kingdom are more willing to add workers over the next three months.

Manpower's third-quarter survey was conducted before a debt crisis in Greece led to a nearly $1 trillion European rescue plan. But Manpower's internal data suggests the crisis has had limited effect on the confidence of European employers.

"We've been seeing really no change in our business since the Greek credit crisis of a month ago," Joerres said.

More employers than last quarter expect to boost hiring in Central European economies, as well as in Spain, Sweden, Austria and Belgium, Manpower said. Prospects are down in Norway, Switzerland and in South Africa, which Manpower groups with Europe and the Middle East.

(Reporting by Nick Zieminski, editing by Matthew Lewis)