India’s first markets: Their role in 21st-century economic progress

India’s first markets have for millennia attracted people: to conquer, to plunder, to settle, to prosper, and to leave behind a living legacy long after they sailed into the sunset as their fortunes ebbed. What attracted them to this land of gold and honey was its abundant wealth; they came to buy in the booming bazaars and to export India’s diverse high quality produce and products.  India’s first civilization, which spread from its type-site Harappa in Punjab (in present-day Pakistan) to Kutch, the Ganga valley, and even further south to coastal Maharashtra and Karnataka, bears ample evidence of the existence of such flourishing markets and port towns in proto-historic India.

India’s first Markets as carriers of economic growth and prosperity

If truth were to be told, the affluence and opulence of ancient Indian civilizations were brought out by India’s first markets which included the twin modes of economic growth, namely, markets and exports. Many centuries before Japan and South Korea resorted to the export-oriented growth theory to promote swift development of their economies, the early Indian rulers, craftsmen, and tradesmen had successfully adopted the same growth ideology to usher in riches and luxury to its populace through India’s first markets. Not surprisingly, it has been estimated that India had the world’s largest economy during the years 1-1000 CE. According to Maddison’s calculations (see Table), China and India together contributed 50.5% of world GDP.


Virtually every facet of human life and venture is a reflection of the development of India’s first markets. Not surprisingly, India is now emerging steadily as an Asian giant, aspiring to become an economic superpower of the world by the mid-21st century.

For good or bad, there is no denying the critical role played by various mercantile and commercial epochs, which owed much to the trade and market expansion through those eras, in the origin of India’s first markets. This has enabled India to occupy a pride of place on the global economic map in the 21st century. Each strand of India’s economic, social, and cultural growth is nothing but a continual process of evolution, experimentation, and improvisation in every sphere of economic activity that has been facilitated primarily by the business and commercial exchanges seen in India’ first markets.

History of nations is essentially a history of their political economies, and is driven in the pursuit of not so much political as commercial conquests. Most facets of human behavior surface out of business exchanges at market places. So also do economic processes and institutions. These have not been day-break discoveries or inventions, but have evolved over centuries through an endless string of tried and tested market processes, experiments, and research. To put it more explicitly, the term “market” means much more than its simple generic implication of buy and sell; markets are of various kinds, marketing functions are many, different genres as it were, and each genre has developed through time to meet the requirements of specific sorts of buy and sell transactions.

But for India’s first markets, man would have well-nigh remained a nomad in search of food. In view of the critical role that markets undoubtedly played in the rise of human civilization, a prod into both the proto-historic and historic growth of markets makes a fascinating research inquiry. Hence, as one views and visits the modern next-generation exchange markets, it would indeed be exciting to peep into the past, and trace the growth of markets, market logistics, and market institutions over the past millennia. And no other country seems more apt for such a probe into times of yore than India, which can boast of a long history, and has subsequently traversed through successive historical eras, thanks to the entry of races and cultures of diverse hues in different periods of time.

Japan’s Contribution to World Research

Since the 1980s, Japan has emerged at the forefront of research in several fields and has made path-breaking contributions in the global arena. This is the outcome of significant investment in R&D activities and the centers of excellence in the form of more than 30 leading universities. In fact, together with the U.S. and Europe, Japan ranks among the topmost countries as a proven leader in the global effort toward research and development.

International recognition of Japan’s contribution to World Research

Expectedly, Thomson Scientific, a leading provider of information solutions, has repeatedly recognized Japan’s ongoing impact on global research through the years. In 2007, 17 leading Japanese scientists were honored with the Thomson Research Front Award. The selection was made on the basis of an analysis of communication among scientists and the fact that the Japanese scientists published research papers that were among the most highly cited papers around the world.

More recently, in December 2012, Japanese organizations dominated the Top 100 Global Innovators list announced by the IP & Science business of Thomson Reuters, the world’s leading featured provider of intelligent information for businesses and professionals. While the U.S. led globally with 47 organizations in the list, there were 25 Japanese organizations out of a total of 32 organizations from Asia. Such recognition shows that Japanese researchers and innovators are at the forefront of global research.

While Japan’s excellence in electronics is a well-established fact, researchers in Japan have a proven track record in the fields of medicine and science, as evident in the long list of Nobel laureates from Japan.

Japan has particularly excelled in medical research in the streams of nuclear medicine, cardiovascular diseases, infectious diseases, and rheumatology. A database analysis of research papers in nuclear medicine published in reputed research journals during the 1990s shows that Japanese researchers contributed more than 11% of the total papers and rank second behind the U.S.

It might be logical to assume that the excellence of medical research in Japan is a direct result of the increasing investment by both public and private sectors in the field of biomedical R&D. Not surprisingly, a study published in the New England Journal of Medicine on January 2, 2014, reveals that such investment from the private sector surged from $20.9 billion in 2007 to $27.6 billion in 2012. At the macro level, Japan’s total spending on medical research increased by $9 billion and accounted for 13.8% of the world’s total research spending. To put things in perspective, the study emphasizes that the U.S. had a reduced spending on medical research over the same period.

Japan’s capacity to innovate, coupled with researchers par excellence, can surely lead the country to scale newer heights in research and to continue its contribution to the global research pool.

Globalization of Academic Research in Japan

Globalization of academic research  is a reality in the contemporary world. National boundaries are getting obliterated because of the Internet and instant electronic communication. In fact, in the last few years, there is an increasing collaboration among researchers in science, humanities, and the arts from around the world to produce results that have a global impact. In statistical terms, a report by the National Science Foundation confirms that 6,477 new international research alliances were formed in the 1990s, and this is only a fraction of the international research alliances in the 2000s.

This shows that the combined forces of globalization of academic research and and internationalization are transforming research worldwide. Research in Japan, which has had an isolated past, is also reinventing itself since the 1990s. Not surprisingly, Japan is the world’s second highest R&D spender behind the U.S. and contributes 13% of the total expenditure on R&D worldwide. This has largely been possible because of the rapid strides of industrialization in Japan.

However, the talent pool that contributes to industrialization comes from Japan’s academic institutions. Therefore, in the last few decades, there has been a conscious effort to facilitate globalization of academic research in Japan.

Globalization of Academic Research in Japan: Problems and Way Forward

Two factors that have hindered globalization of academic research in Japan are the language barrier and the lack of alignment of the academic year in Japan with the international calendar. However, both these impediments are being tackled to make Japan a truly global destination for research. Several universities have already introduced classes in English for undergraduate courses. For instance, The University of Tokyo (Todai) has launched its new all-English undergraduate programs. Further, there are more than 50 graduate schools where students can enroll for lessons conducted in English.

The mismatch in the academic year in Japan with the global academic calendar is also under scrutiny for change, although it might take some time coming because it will entail a complete overhaul of Japan’s education system. However, Todai has recently announced a four-semester plan, which is likely to start in March 2015. This will make it easier for foreign students to study at Todai from the beginning of the second term in September, and for Japanese students to utilize the summer break of June-August to study overseas. With a similar objective of attracting overseas researchers, Waseda University has also introduced four “quarter terms” as an alternative to the semester system.

Japan’s plan for international student exchange, known as the “300,000 International Students Plan,” was launched in 2008 and aims to achieve the targeted number international students by 2020. Another significant initiative toward globalization of research in Japan was the “Global 30” Project, launched by the Ministry of Education, Culture, Sports, Science, and Technology in 2009. The objective of this program was to establish 30 core universities for internationalization. This initiative has successfully broken down the language barrier, and a range of courses in many research fields are being offered in English at the universities.

The university is undoubtedly the cradle for pioneering research in the future. Therefore, it is important to open up Japan’s research institutions to international research talent, and to simultaneously send Japanese researchers for exposure in other countries.  Already, researchers from universities and research institutes in Japan are travelling to China, Vietnam, Russia, Hungary, Germany, France and many other countries, with reciprocal visits from those countries.

The Future of Globalization of Academic Research in Japan

These are the first steps in Japan toward an international mix of researchers, which have gathered momentum after the turn of the millennium and will yield tangible results in the next few decades. Assimilation of international researchers in higher education, backed by favorable government policies and funding for research projects, will go a long way toward globalization of research in Japan, and will hopefully take research in Japan even higher on the global stage.

Food Security Bill vis à vis India’s Financials: Food for Thought?

The 2014 elections are just around the corner, and it’s time for populist moves and one-upmanship by both the incumbent government and the opposition. Not surprisingly, the UPA pushed the National Food Security Bill through the Rajya Sabha on September 2 within a week of the nod from the Lok Sabha, and the administration is now undoubtedly going to brandish it as the potent weapon running up to the elections next year. Conversely, the opposition is already sharpening its fangs for an all-out battle against the provisions of the bill, and even more so against the way it was pushed into Parliament.

Food Security Bill: What does it mean for the beneficiaries?

Ostensibly, the Food Security Bill—touted by the government as a landmark legislation in India’s constitutional history—has a “bite” for almost all sections of the population: 67% of the 1.2 billion population will receive grains with a subsidized price-freeze for three years; mothers-to-be will get free meals till the baby’s first six postnatal months, and children upto 14 years will receive free meals.

The specific stipulations in the bill, down to the nitty gritty of who is going to get how many kgs of grains, only accentuate the ambitious nature of the Food Security Bill. With numerous government schemes announced every other day and a poor follow up rate in their implementation, one cannot help being skeptical of the provisions of the Food Security Bill. Not surprisingly, experts have already called for a systematic selection of the beneficiaries, and a revamped public distribution system (PDS) to ensure that the provisions reach the intended beneficiaries. The PDS in various states is still not subject to a uniform yardstick, and some states are ahead of others in efficient functioning of the system. In the absence of a proficient distribution system, the past has often been a story of rotting grains in godowns while the needy wait for supplies that never arrive.

The problem of inefficient distribution is a worry for the government too. The Centre has announced that it will host a meeting with food secretaries of various states on September 23, where discussions will be held to facilitate smooth implementation of the Food Security Bill.

Food Security Bill to drive national debate till 2014?

On the other hand, protagonists in the opposition camp argue that the Food Security Bill will imply a huge outflow from the exchequer, leading to a severe crunch in India’s financial arithmetic. The cost implications for putting the Food Security Bill into practice is ranging from the government’s own estimate of Rs 25,000 crore to an astronomical Rs 200,000 crore voiced by some quarters in the opposition. Another charge leveled at the Food Security Bill is that its provisions will entail grain procurement of 62 million tonnes a year, leading to additional pressure on the exchequer and a possible inflation of food prices.

The next few days will likely see stepped up rhetoric from both the government and the opposition, and it will be a busy primetime on most news channels. Both sides will go all out to take extreme positions in the debate and harden their stance, and the discerning public will surely get to hear the clang of this debate right up to the general elections, and perhaps even later when the new government assumes office and declares its intent on the bill.

Index Futures

The economy is driven by the markets, which are constantly evolving and generating new instruments of commerce and trade to get around the challenges in the existing market ecosystem. Trade in commodity futures trade, which was born out of necessity several centuries ago, is one such innovation that has stood the test of time in spite of several hiccups on the way. However, this market sector is challenged with questions such as its role in the movement of prices in the real world, but traders have accepted futures trade because, with the least investment, they can narrow their risk and even multiply profits.

However, the beginning of stock index futures in the 1980s and commodity index futures later took futures trade to the next plane, where a trader could take a position on the commodity or stock index, and not on individual stocks or commodities. But once again “Mr Doubt” still drives the debate: Do we need commodity index futures? Do commodity index futures really help the investor? Does this new financial mechanism help the stock/commodity market grow quickly, or does it contribute to a meltdown as inferred in the U.S soon after index futures were introduced? And last, in the Indian context, is the derivative market mature enough to accept commodity index futures?

Although there are several fundamental points of departure between stock exchanges and commodity exchanges, there seems to be close likeness in the growth of instruments of trade in either arena. However, it is for sure that trade in derivatives helps hedgers safeguard themselves against the risks associated with the ebb and flow in the value of the underlying asset or index, and speculators to multiply earnings if the value of the basic asset or index moves in a positive direction.

In course of the self-discovery of formal trade instruments, the stock market seems to have been always ahead of the commodity market. Frequently, introduction of an instrument in the stock market leads to a demand for the same in commodity exchanges. The most significant such example is trade in index futures.

What are Index Futures?

Joseph is a new entrant in the market and finds himself overwhelmed by the range of opportunities available. It is a problem of plenty, where the critical decision needs to be made for holding on to the right stock or commodity. He wants to build a small portfolio, but he is simultaneously beset with the worries of a volatile market. Risks abound.

Let us bring in index futures to aid Joseph in his dilemma. Joseph’s basic quandary is to choose stocks that are likely to yield excellent returns, or commodities that provide the right signals couple of months down the line. Besides these factors, however, his success or failure is also related to the movement of the index; this is because every buy position on a specific stock is a buy position on the stock index. A downward slip in the index will have an impact on his position in the individual stock as well. In short, the outcome can go awry in spite of a correct assessment. But what if Joseph could take a position on the index itself by trading in an index futures contract?

While it is not realistic to hold positions in all stocks that figure in an exchange, trading in stock index futures has already arrived worldwide. A trade in index futures basically means that the trader is taking a posture against the movement of the index. If the market sentiment is that the index will move upward, a buy position is rational, and vice versa.

Moving to trade in commodity index futures, the commodity index shows the price movement of a basket of commodities, and the futures contract is an agreement on the expected value of that index at some specific time in the future.

Index Futures: The Global Scenario

Both stock index futures and commodity index futures are already deep-rooted in many U.S., European, and Asian markets. The Kansas City Board of Trade was the first to introduce stock index futures in February 1982, and within a short time the Chicago Mercantile Exchange initiated index futures based on the S&P 500 index. From then on, stock index futures have been doing reasonably well and have attracted investors as they showcase an opportunity to “buy into the components of the index.”

In the context of commodity index futures, the two leading indices represented in futures contracts are the Commodity Research Bureau (CRB) Futures Price Index and the S&P Goldman Sachs Commodity Index (GSCI).

Index futures in India started at the National Stock Exchange in June 2000. Here, futures contracts are founded on the S&P CNX Nifty index, which is a well-accepted market benchmark with good hedging efficiency and scope for arbitrage.  The next significant step for futures trading in India would be commodity index futures.

While we wait for such an eventuality, it is important to emphasize that the requirement is for an index that can act as a barometer of the price of the commodity basket. If such an index emerges and remains relatively unfettered in regulatory restrictions, it will provide the trader opportunity to mitigate risk. On the downside, irrevocable damage can be caused to the market ecosystem and sentiment if the trading gates are thrown open to an ill-computed index.  It is prudent to be cautious, rather than be in a mad rush to emulate stock index futures without allowing for problems that are exclusive to the commodity market.

English Language in its 21st-Century Avatar

Last week, author and grammar columnist June Casagrande wrote on the use, misuse, or overuse of the semicolon in the English language, the “strange little squiggles” as she calls it (A Word Please, July 17). This follows her earlier blasé dismissal of the rules for periods with initials.

So how much of a stickler can a writer or an editor be for punctuation?  Or, for that matter, for the grammar rules of the purist?

The Panda Who Ate, Shot, and Left

A panda walks into a café. He orders a sandwich, eats it, then draws a gun and proceeds to fire it at the other patrons. “Why?” asks the confused, surviving waiter amidst the carnage, as the panda makes towards the exit. The panda produces a badly punctuated wildlife manual and tosses it over his shoulder.”Well, I’m a panda,” he says. “Look it up.” The waiter turns to the relevant entry in the manual and, sure enough, finds an explanation. “Panda. Large black-and-white bear-like mammal, native to China. Eats, shoots and leaves.”          

From Lynne Truss, Eats, Shoots and Leaves (2003)


When former BBC Radio host Lynne Truss—sometimes nicknamed “the comma queen”—penned her humorous and yet instructive Eats, Shoots and Leaves (2003), it set off a debate in America and the British Isles on the usage of punctuation in English writing. In this war of words, dramatic phrases like “grammar bullies” and “grammar fascists” were thrown at the so-called linguistic purism of Truss’s work. There were even accusations that Eats… is too rigid a prescription for the English language in its 21st century avatar. Truss’s own one-time colleague and language expert David Crystal openly mocked Truss in his book, The Fight for English: How Language Pundits Ate, Shot, and Left.

Few years ago, when I read Truss’s rather diminutive book for the first time, its humor and instructive content were both bang on. But that was when the new millennium was yet to break free from the shackles of the purists of the English language and grammar rules. The language of technology (texting, chat, and ‘big-brother’ email) was just a budding cult, and the world of communication still traversed in straight-jacketed stipulations of English writing.

English Language of the 21st Century: Style vs. Correctness  

But a decade down the technology ride, mobile and web telephony has fashioned an entirely new technology language, which is challenging and thinning the line between informal and formal writing. It’s not unusual to find graphone “sentences” floating between cellular towers and among the tech-savvy GEN Y and Z. This posits the danger of some elements of this casual communication style creeping into formal writing.

That’s where the editor comes in, pruning and mowing the language, style, and grammar “correctness” to make writing fit for its target reader.

But does that imply going back to the grammar books of the last century? Apparently not. The English language has changed from the Shakespearean age and through the centuries, and continues to evolve even now. Strange (or “un-English”) words are creeping into the dictionary through usage, and some words are being pushed into writing even before you can find them in any English dictionary. In fact, for the editor, for many of his or her decisions, it’s no longer a question of RIGHT or WRONG; it’s finally coming down to STYLE. Do I insert the Oxford comma here? Do I insert periods for initials? Is a hyphen really necessary here, or an en dash? Is a semicolon better, or a comma, or just a plain simple period?

Writers, including seasoned writers, often defy grammar rules to confirm to their writing style (the “Don’t mess with my style” attitude) and are averse to an over-enthusiastic editor’s pen. In such tricky scenarios, it’s really up to the editor to emerge unscathed by shedding some of the century-old grammar baggage of the purists and being more modern. In many ways, therefore, the editor can no longer afford to nit-pick for prescribed rules of grammar; being a grammar guru is fine, but keeping an astute eye on how the English language is evolving with changes in society, technology, and means of communication is an equally strong trait of a good editor or writer.

So where does all this leave us with the panda who eats, shoots and leaves? Truss’s work was a bestseller for a good reason; it succeeded in using humor to bring to the fore major fallacies that could be avoided with correct use of the punctuation in written English. However, the problem was in the book’s subtitle: The Zero Tolerance Approach to Punctuation. With the English language now well into its 21st century avatar, “zero tolerance” is no longer valid. Even in formal writing, the world is much more amenable to conversational, as against turgid or terse, writing. Each day, the written word hits readers from various mediums, and choice of attention is made almost instantaneously based on two factors: correct language skills and good writing style. One without the other would be like a boat without the oar; you might not sink, but you’ll not move either!