UPSC Interview Transcript By Manish Chaudhary Board Img Khan

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(A cordial interview. I was able to maintain smile, engage members most of the time. Took pauses, thought of the theme before answering… spoke while looking for right words. Was trying not to appear informal or casual in the interview… obviously I was a bit nervous when I entered… )

CP: You are from IIM Lucknow. (Me: yes sir) What is this rank 1 here?
Me: Sir, it is rank 1 in the college.

CP: You were having this salary. I am sure even in Hong Kong terms it would have been very good. Was it? (Me: Yes sir, comfortable.) How much was it in HK dollars terms?
Me: (I always remembered my salary in US$ terms, had no straight figure in mind in HK$ terms) Sir 1 HK$ is about 7 rupees. So…

CP: So it was very good. Why did you leave your job then?
Me: Sir, I left it to prepare for the civil services exam. I am coming for civil services because I
really see this as the next step. In this job…
CP: I haven’t asked you that yet (smiling)…
Me: Oh I am sorry sir.

(All my nervousness ends here as this was the question I had most trouble with in convincing
people so far)

CP: You were working as a credit derivatives trader. Is that the one which caused the
financial crisis?
Me: Yes sir, credit derivatives were at the core of the crisis…

CP: I hope you weren’t (thrown) out because of that… (Smiles)
Me: No sir (I wanted to say I joined after that and got my opportunities so fast because of the
crisis… but never got a chance)

CP: Ok Gaurav, explain to a layman what derivatives are?
Me: We have simple financial products like equity, loans, bonds… Any contract built on top
of it which derives its value from it is a financial derivative…

CP: So you mean like buying and selling loans…
Me: Yes sir, that…

CP: What caused the financial crisis?
Me: I would say it was because of 2 reasons: availability of cheap credit and lack of adequate regulations. Sir, banks are the first place where the credit worthiness of a borrower is determined. When a bank extends a loan it is supposed to do due diligence about the
borrower as it would be keeping it on its own balance sheet. But banks in US began to sell these loans to others thereby taking them off their balance sheets. Once that happened they had no incentive to do the due diligence any more. They began to package it into securities, some of it the CDOs. Then the ratings agencies came in and here again they had a conflict of interest. Because ratings agencies were paid by the banks who asked them to rate these (all
members nodding)… So…

CP: Have they done anything to contain this lack of regulations?
Me: Yes sir, they have passed the Dodd Frank Act (maybe I said Bill, don’t remember).

(M1 takes over and the tough time begins)

M1: Gaurav, in the days of Britishers, we had good things like writing reports on paper, publishing gazetteers by the collectors. Why has it disappeared now?
Me: (holy mother of God, why is writing reports on PAPER is a good thing and wtf is a gazetteer and wtf is this whole question) Sir I think its because of technology… (I wanted to say that now we have many MISs or management information systems due to which writing
reports has become redundant in many cases as the IT system itself generates the information in the desired format)

CP: (Interrupting) leave it, probably he doesn’t even know about this…
M1: You have history and economics as optionals. Don’t you think that in history writing there is an excessive focus on history writing about the elites and not so much on the economic history?
Me: Sir, this was definitely the case, but in the course of my preparation, I feel that the focus is shifting towards writing the social, economic history… the history of commons. for instance, we have various authors writing about the Indo-Rome trade, about the Indo-Asean trade, trade and economic history within the sub-continent… Pliny…

M1: (not convinced and says 2-3 things here)
Me: (I maintain with a sorry here and there that focus is shifting from history of the elites to history of the commons)

(tough time with M1 over)

M1: (blah blah blah.. gold deposits… blah blah) Do you think we can do anything about gold imports?
Me: Yes sir, in the medium term we can do that. Gold is increasingly bought as an inflation hedge. Most of our financial instruments don’t even give returns to compensate for inflation.
If we take measures to check inflation, that would curtail gold imports. Then if we introduce inflation indexed bonds, as the minister as announced, it would curtail gold imports. Then we should encourage a banking system based on gold, just like we have a system based on money, to …

M1: (blah blah)… Indians have jewelry which contains copper, stones etc. as well. we should account for that as well.
Me: (nodding) yes sir

M1: So we should encourage gold deposits.
Me: (nodding) yes sir

M1: Black money.. we keep on hearing estimates… what are your estimates about it? What can we do to check it? Answer with estimates first…
Me: Sorry sir, for the estimates, I don’t have any expertise on it. Widely different figures have been quoted from time to time (he nodding)… But for how we can check it… the two biggest places for black money are land and gold. In land, we have so many government restrictions on land use, so high taxes… that the land transactions are never reported to the full value. To check this, I think we should free up the policies, substantially reduce taxes like in Hong Kong. Then for gold, as I have previously said, inflation indexed bonds… (he nods). Then sir in the external front, there are all these tax havens. To check these we should make a concerted effort via international forums like G-20. So in all, we need a holistic approach, both domestic and international. (I should have added Mauritius tax treaty here as well, but didn’t anyways)

M1: Do you think black money is a problem of developing countries only? Developed countries don’t face it?
Me: I am sorry sir, but I think developed countries too face it. (here I wanted to somehow give the example of the Facebook co-founder and it came twice to my mind but I decided that its not a case of black money.) We have all these island states across the world which
companies use to evade taxes even from developed countries. For example, we have Cyprus for Russia, we have British Virgin Islands…

(M2 takes over and tough time starts again)
M2: You are a student of history… (blah blah blah) Name some of the Marxists historians?
Me: (I had decided if they ask any thing about Marx, I would apologise and say my reading on Marx is too shallow to really comment.) (I remember having received an advice
by a friend of friend to read on Marxist history but slacked here) (but I now realized that the question is only asking me to name the Marxist historians, so I decide to give a try)… Sir, I
have read.. I have heard about Sumit Sarkar, he is a Marxist historian (now inclined to take Romilla Thapar’s name but remembered a history coaching guy saying she is not a Marxist historian, so don’t take her name) Sir, I am sorry, these are the only names I can tell about the Marxist historians

M2: Ok, you know we had this hundi system (it was the medieval version of hawala where say you can deposit money in a city and take out money in another). What’s the difference between it and modern day hawala?
Me: (Man I always thought hundi was like hawala… wot a harami question this was…) True
sir, hundi system was like hawala. But I know the britishers came and they enacted the Indian Negotiable Instruments Act and brought hundis into the formal sector. Today in the hawal system, it is mainly the misuse… The money involved there is the black money from tax evasions, terrorist funding… we have better regulations today… so hawala is illegal. In those times regulations were not that strong so that (hundis) was a fully functioning system.

M2: (asked another question I think, not sure though)
(Let me clarify… during the ‘tough’ period I was taking pauses and answering slowly and obviously as one can make out was not entirely confident)

(M3 (a madam) takes over)
M3: The world is under a recession. What do you think?
Me: Yes. I would say the global economy has not recovered fully from the crisis. We have had many fiscal and monetary stimulus but still the recovery has not been full.

M3: What is the cause of the global recession?
Me: It started in US due to easy credit and lack of regulations. Then it spread over to Europe.
There also similar factors were operating. If we look at Spain, Cyprus, Ireland, Iceland, all their problems started when the housing sector (fueled by easy credit) collapsed and the government had to assume the banking sector liabilities. (I wish I had added the trade issues for Greece and Italy and asserted that the so called ‘sovereign’ crisis in Europe is actually a balance of payment and a credit crisis and NOT a sovereign crisis, but huh…) Then China,
India, ASEAN began to suffer because of the global trade linkages. Sir, still the final consumers are in US and Europe, so if they slow down, the trade in Asia slows down and the crisis thus spread…

M3: Was India also affected by the crisis?
Me: Yes mam, though not as much as US and Europe, but definitely we were affected.

M3: Why was India not affected so badly?
Me: I think one of the big reasons was that our linkages with global economy were not as strong. We still don’t have full capital account convertibility. Even in trade, though we are growing, but when we compare with some Asian countries like China and ASEAN countries, our trade to GDP is less. Their trade is over 100% of the GDP. Then another big reason was that our banking sector was more stable.

M3: What were the reasons for this stability?
Me: One is that it did not have large exposure to the US and Europe housing markets. Then I also think that another big stabilizing factor was that most of the banks are government owned. This gave confidence to public. Mam, I still remember, that ICICI which was a
private bank was facing so much trouble… It had to freeze its electronic funds transfer facility for 6 months… I had an account with ICICI then and I could not withdraw that money. So the first thing I did after the crisis was to shift that money to SBI. (all smiling)

M3: RBI regulations also helped?
Me: Yes mam, you are right. For example, RBI still doesn’t allow banks to speculate freely in the derivatives. (I wanted to give the Harvard swap example, but leave it for another day)

(M4 takes over now)

M4: Naxalism… how would you tackle it? Tell me first where is it widespread?
Me: Sir it is widespread in the tribal and forested regions of Andhra Pradesh, Maharashtra, Chattisgarh, Odisha, Jharkhand, West Bengal. For tackling it… I think we need a pragmatic approach. Simply law and order solutions cannot work alone because I am sorry sir, I believe it is a political problem as well. At the core of it, the grievances of the people are genuine. If we take away the land of the tribals and don’t pay them or rehabilitate them, then problems
will occur. So we need a political approach. Like any organization, I am sure they would have a moderate as well as an extremist faction. We should bring in the moderate section for talks.
But at the same time we should not loosen up the police, CRPF pressure on the extremists. Then now the naxalites are getting support from across the borders. So we should use intelligence inputs to cut this support.

M4: Gaurav, India and China… (blah blah) what do you think of them?
Me: (My initial thought was that whatever anybody may say, India can never even hope to compete with China) Sir I think that 30-40 years from now, China and India will clearly be no 1. and no 2. respectively in terms of economy, global power. Some people think of this as confrontational. But I am sorry sir, I don’t think so. I think that this is a great opportunity for both the countries to deepen economic ties. India can benefit so much from China’s growth.
We have the example of ASEAN and China in front of us. These countries are so economically close to China and this is one important reason I believe that the military issues over the islands – like India has border issues with China – are kept under check. Sir, in contrast to the trans pacific partnership proposed by the US, there is a new economic partnership under talks – the common economic space which will have China, Japan, Korea, Asean states, Australia. India has also decided to join the talks. I believe that is the way forward instead of confrontation.

M4: So you have acted in and edited this movie ‘towards zero’ in college… what was it?
Me: It was a small movie about 5 students who were caught cheating in the exam and then expelled by the dean. They decide to take revenge and rob the ‘professors’ bank’ in the college. But they get caught and end up being canteen boys.

M4: The name ‘towards zero’?
Me: So this way despite having a good educational background, they end up as nothing…gravitate towards zero. (hahaha all around)

M4: Have you watched that amir khan movie…. 3 idiots…. do you think it’s realistic?
Me: (God where have I seen a girl like Kareena Kapoor in my college and the movie was clearly an exaggeration in terms of the activities they do) I am sorry sir, I didn’t find it realistic… in fact some people say it was based on Chetan Bhagat’s book (another one I found fake) and I didn’t find that too realistic…

(CP interrupting)

CP: So you think that our higher education system gives practical knowledge????
Me: (realize my mistake now) Oh I am sorry sir; I was earlier comparing it with my education institute. If we consider the whole higher education system, then clearly… even recently… many CEOs have complained that the graduates don’t have the required skills… So we need here to improve the quality of education.

CP: what do you think are the biggest challenges for India’s development in coming decades?
The two biggest challenges…
Me: Sir I think one is ensuring good governance… we all know how bad governance leads to corruption and misallocation of resources. But it also erodes the credibility of the government and thus makes it difficult for the government to bring in reforms… without
which we cannot sustain our growth. The next is to ensure that the growth which happens is inclusive. Without inclusive growth I don’t see how we can sustain this growth in next 30-40
years.

CP: Right… inclusiveness… with so many people under poverty… how much you think is the poverty in India? Different people have given different estimates… The planning commission estimates nobody believes… how much is the poverty?
Me: Sir, I am sorry but it really depends upon where one defines the poverty line…

CP: That’s right… but what do economists say?
Me: Sir depending upon the ideology economists gives different estimates (all nodding and
laughing)

CP: Yeah… still where would you estimate? What are the planning commission estimates?
Me: Planning Commission estimates it to be around 30%.
CP: And you?
Me: (no escape now) Sir, I have seen figures between 30 – 50% range…

CP: Wide range…
Me: Sorry sir… around 40%…

CP: Don’t you think there is a disconnect between India projecting itself as a superpower and
so many poor living here?
Me: Sir developing as a superpower and poverty elimination is a continuous process.

CP: Yes, but isn’t there a contradiction?
Me: Yes sir, true. I think poverty elimination is a precondition to become a superpower. (he
nodding)

CP: Have you seen the economist’s latest edition?
Me: Sorry sir…

CP: Never mind… on its cover page, there is a picture of a cat looking at its reflection in a
mirror. The reflection is that of a tiger and it is in India’s context. What do you think?
Me: (smiling) sir, sorry, but if you would permit me the use of informal words here… an informal comparison… I think India is not a cat… its a cub of a tiger… becoming the tiger is the destiny… (hahaha… all laughing… nodding)… If we continue on the same course and institute necessary reforms, we have to become a global superpower.

CP: Why do we want to become a superpower… (I frame some answer in my mind)… its to further our economic development… Ok your interview is over… blah blah blah..
Me: Thank you … blah blah blah.