Can rural India reap digital dividends?

The virtual world has increased the possibilities of trade in the real world 

One of the primary agendas of the liberalization which began in 1991 was to improve competitiveness and reduce the transaction costs which largely restricted India’s trade with the rest of the world. But a quarter century after economic reforms were initiated, this Coasean problem of transaction costs remains more relevant than ever. The World Bank’s latest World Development Report, or WDR, points to the potential of Internet and communication technology (ICT) in pruning these.

The Coase theorem (named after British economist Ronald Coase) states that if trade in an externality is possible and there are sufficiently low transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property. Since the digital revolution, the virtual world has increased the possibilities of trade in the real world, minimizing these transaction costs. Transaction costs include search and information costs, bargaining and decision costs, and policing and enforcement costs.

The WDR cites the example of the Taobao villages in China to show the extent to which the Internet can induce development. Taobao, a consumer-to-consumer portal established by Chinese e-commerce giant Alibaba, allows entrepreneurs to open online stores and sell their products to interested consumers. A Taobao village is a cluster of rural e-tailers where at least 10% of village households engage in e-commerce.

It’s worth looking at the potential benefits of such a model in India. Over half of India’s population depends for its livelihood on an agricultural sector that cannot support it adequately. Structural reforms may improve the sector’s viability, but the only long-term solution is enabling the rural population’s access to other forms of economic activity. An e-retail model that aims at incorporating rural households could offer some utility here.

As matters stand, e-commerce in India is almost entirely an urban phenomenon. Clustering rural retailers as the Taobao model does creates the volume necessary for incentivizing at least some portion of the logistical and financial support urban retailers enjoy. And it could have the secondary benefit of providing a boost to artisans who lack access to a wider market, making traditional crafts unsustainable.

E-commerce ventures structured along similar lines such as ITC e-choupal, Craftsvilla and Kerala’s Kudumbashree have had moderate success in the past.

The major obstacle, of course, is the lack of rural Internet access. India has the ironic reputation of having the second largest number of Internet users and the largest offline population in the world. Internet usage is highly skewed in favour of men and urban households compared to women and rural households. Prime Minister Narendra Modi’s Digital India initiative aims at resolving this bottleneck. Its goal of connecting rural areas with high-speed Internet networks is laudable, as is its focus on digital literacy. How such a mammoth undertaking will play out remains to be seen. And to be successful—particularly in the context of the Taobao model—it must form robust linkages with other government initiatives that range from providing a cradle-to-grave digital identity to universal access to banking services.

Other hurdles wait further down the road. Judging by the government’s Start-up India push, the infant industry syndrome is an occupational hazard in the Indian policy environment. Rural e-commerce should not fall into the same trap. If the Internet has to become an effective catalyst for efficiency and innovation, competition is essential. Alibaba’s Taobao advanced so much on the efficiency frontier due to intense competition from eBay.

The last thing the rural economy needs to add to the protectionism the agricultural sector enjoys is a subsidized, protected retail segment.

ICT alone accounted for one-fifth of global growth from 1995 to 2014. In 1990, American economist Paul Michael Romer said, “Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable… History teaches us that economic growth springs from better recipes, not just from more cooking.” Technological change is an endogenous factor in growth and Internet is technology at its best.

Ministry of Shipping initiates Project Green Port

Ministry of Shipping initiates Project Green Port

Weighing in the environmental perspective for sustained growth, the Ministry of Shipping has started ‘Project Green Ports’ which will help in making the Major Ports across India cleaner and greener. ‘Project Green Ports’ will have two verticals - one is ‘Green Ports Initiatives’ related to environmental issues and second is ‘Swachh Bharat Abhiyaan’.

The Green Port Initiatives include twelve initiatives which will be implemented under strict time bound fashion in order to achieve the targets. Some of these initiatives are preparation and monitoring plan , acquiring equipments required for monitoring environmental pollution, acquiring dust suppression system, setting up of sewage/waste water treatment plants/ garbage disposal plant, setting up projects for energy generation from renewable energy sources, completion of shortfalls of Oil Spill Response (OSR) facilities (Tier-1), prohibition of disposal of almost all kind of garbage at sea, improving the quality of harbour wastes etc.

Under Swachh Bharat Abhiyaan, the Ministry has identified 20 activities with certain time-line to promote cleanliness at the port premises. Some of the activities include cleaning the wharf, cleaning and repairing of sheds, cleaning and repairing of port roads, painting road signs, zebra crossing, pavement edges, modernizing and cleanliness of all the toilet complexes in the operational area, placement of dustbins at regular intervals, beautification and cleaning of parks, boards indicating cleanliness messages, cleaning and repairing of all drainages and storm water systems and tree plantation.

In order to achieve these objectives, regular training will be provided to the staff in order to generate awareness and inculcate a positive attitude towards keeping the environment clean and green. All the Major Ports have already initiated action on the above mentioned activities and are making good progress.

Health Ministry releases results from 1st phase of NFHS-4 survey

Health Ministry releases results from 1st phase of NFHS-4 survey

The Ministry of Health and Family Welfare released today the results from the first phase of the National Family Health Survey (NFHS-4), 2015-16. These are available on Ministry’s website, www.mohfw.gov.in. Findings for the 13 States of Andhra Pradesh, Bihar, Goa, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tamil Nadu, Telangana, Tripura, Uttarakhand, West Bengal and two Union Territories of Andaman and Nicobar Islands and Puducherry show promising improvements in maternal and child health and nutrition. Data collection for the second phase States and Union Territories is currently ongoing.

The results from NFHS-4 in 15 States/Union Territories indicate that fewer children are dying in infancy and early childhood. After the last round of National Family Health Survey in 2005-06, infant mortality has declined in all first phase States/Union Territories for which trend data are available. All 15 States/Union Territories have rates below 51 deaths per 1,000 live births, although there is considerable variation among the States/Union Territories. Infant mortality rates range from a low of 10 in Andaman and Nicobar Islands to a high of 51 deaths per 1000 live births in Madhya Pradesh.

Better care for women during pregnancy and childbirth contributes to reduction of maternal deaths and improved child survival. Almost all mothers have received antenatal care for their most recent pregnancy and increasing numbers of women are receiving the recommended four or more visits by the service providers. More and more women now give birth in health care facilities and rates have more than doubled in some States in the last decade. More than nine in ten recent births took place in health care facilities in Andaman and Nicobar Islands, Andhra Pradesh, Goa, Karnataka, Puducherry, Sikkim, Tamil Nadu, and Telangana, providing safer environments for mothers and new-borns.

Overall, women in the First Phase States/Union Territories are having fewer children. The total fertility rates, or the average number of children per woman, range from 1.2 in Sikkim to 3.4 in Bihar. All First Phase States/Union Territories except Bihar, Madhya Pradesh and Meghalaya have either achieved or maintained replacement level of fertility– a major achievement in the past decade.

Full immunization coverage among children age 12-23 months varies widely in the First Phase States/Union Territories. At least 6 out of 10 children have received full immunization in 12 of the 15 States / Union Territories. In Goa, West Bengal, Sikkim, and Puducherry more than four-fifths of the children have been fully immunised. Since the last round of National Family Health Survey, the coverage of full immunization among children has increased substantially in the States of Bihar, Madhya Pradesh, Goa, Sikkim, West Bengal and Meghalaya.

Married women are less likely to be using modern family planning in eight of the First Phase States/Union Territories. There has been any increase in the use of modern family planning methods only in the States of Meghalaya, Haryana, and West Bengal. The decline is highest in Goa followed by Karnataka and Tamil Nadu. Despite the decline, about half or more married women are using modern family planning in eight of the 15 States/Union Territories.

Poor nutrition is less common than reported in the last round of National Family Health Survey. Fewer children under five years of age are now found to be stunted, showing intake of improved nutrition. In nine States/Union Territories, less than one-third of children are found too short for their age. While this reveals a distinct improvement since the previous survey, it is found that in Bihar, Madhya Pradesh and Meghalaya more than 40% of children are stunted. Wasting is still very high by international standards in all of the States/Union Territories. Anaemia has also declined, but still remains widespread. More than half of children are anaemic in ten of the 15 States/Union Territories. Similarly, more than half of women are anaemic in eleven States/Union Territories. Over-nutrition continues to be a health issue for adults. At least 3 in 10 women are overweight or obese in Andaman and Nicobar Islands, Andhra Pradesh, Goa, Puducherry, and Tamil Nadu.

Indian families in the First Phase households are now more inclined to use improved water and sanitation facilities. Over two-thirds of households in every State/Union Territory have access to an improved source of drinking water, and more than 90% of households have access to an improved source of drinking water in nine of the 15 States/Union Territories. More than 50% of households have access to improved sanitation facilities in all First Phase States/Union Territories except Bihar and Madhya Pradesh. Use of clean cooking fuel, which reduces the risk of respiratory illness and pollution, varies widely among the First Phase States/Union Territories, ranging from only about 18% of households in Bihar to more than 70% of households in Tamil Nadu and more than 80% of households in Puducherry and Goa. About NFHS

The 2015-16 National Family Health Survey (NFHS-4) is the fourth in a series of national surveys; earlier National Family Health Surveys were carried out in 1992-93 (NFHS-1), 1998-99 (NFHS-2) and 2005-06 (NFHS-3). NFHS-4 is the first of the NFHS series that collects data in each of India’s 29 States and all 7 Union Territories. Also, NFHS-4, for the first time, will provide estimates of most indicators at the district level for all 640 districts of the country included in the 2011 Census. In NFHS-4, women aged 15-49 years and men aged 15-54 years are interviewed. When the survey is completed throughout the country, approximately 570,000 households would be covered for information.

All National Family Health Surveys have been conducted under the stewardship of the Ministry of Health and Family Welfare, Government of India, with the International Institute for Population Sciences, Mumbai, serving as the nodal agency. ICF International (formerly Macro International), Maryland, USA, provided technical assistance for all four surveys. NFHS-4 funding was provided by the Government of India, the United States Agency for International Development (USAID), the Department for International Development (DFID), the Bill and Melinda Gates Foundation, UNICEF, the United Nations Population Fund (UNFPA), and the MacArthur Foundation. Technical assistance for the HIV component of the survey was provided by the National AIDS Control Organization and the National AIDS Research Institute.

“Youth and Nation-Building”

Address by the President of India to the institutes of higher learning and civil service academies through video-conferencing using the national knowledge network on the topic, “Youth and Nation-Building”

Vice Chancellors of Central Universities;

Directors of IITs, NITs, IISERs and other institutes of higher learning and civil service academies;

Faculty members;

My dear students:

1. I wish you all a very happy and prosperous new year. Let 2016 be a year of achievement and fulfilment for each one of you.

Friends:

2. India is a nation with a significant young population. Over six hundred million people in our country are below the age of 25 years. The National Youth Policy defines youth as those persons who are in the age group of 15 to 29 years. I am however not subscribing to any technical definition here. For me, youth is much more than mere age. I place my faith in those who are curious and keen to learn; who are impatient and adventurous; who have boundless energy and drive; who accept the permanence of change and are ever ready to question the status quo; and who have the potential to create and harness disruptive technologies for rapid growth.

3. Investment in educating the youth, in the sharpening of their mental faculties, technical skills, professional competence, and awareness about their social responsibilities, would be the key to prepare them for nation-building. The way we nurture our youth into confident, capable and committed citizens will determine our country’s future. I have therefore chosen to speak to you today on "Youth and Nation-building”, a subject close to my heart.

Friends:

4. When we talk of nation-building, the first thing we have to think of is what kind of nation we want to build? A blueprint for that cannot be some random sketch but a grand design based on values, hopes and aspirations of the people of the nation. On twenty-sixth January 1950, we laid a strong foundation by giving ourselves the Constitution of India. It was themagna carta of socio-economic transformation for building an inclusive and modern India. We promised ourselves to secure to all the citizens of this sovereign nation justice, liberty, equality and fraternity. The core principles of democracy, secularism, gender equality and socio-economic equity became the beacon for our journey forward.

Friends:

5. Let me pause here to take a look at the changes that surround us. Information and communication technology has made us think, act and react differently. Distances have shrunk; mobility has increased; instant communication has led to greater awareness, and raised expectations. Consumerism is at its peak. Medical sciences have raised the life expectancy and through better healthcare improved the quality of life. Disruptive technologies have become the rule rather than the exception, putting strain on adaptive capacity of individuals and systems.

6. It is in this environment that the youth have to shoulder the responsibility of nation-building. They must be readied for it through the medium of education and training. The education that we impart to our youth must have three clearly-defined goals. First, it must teach them to control their lives, which can be done through character-building, healthcare, and sharpening the ability to learn and use experience for attainment of one’s goals. Second, it must teach them to understand life through a study of history, science, religion and philosophy. And the third, it must teach them to enjoy their lives through friendships and relationships, observance of nature, and study of art and literature. Our education system must gear up to develop our youth on these lines.

Friends:

7. We must provide value-based education to our youth. We must inculcate in them the spirit of democratic behaviour which calls for an appreciation of the rich diversity of our nation, assimilation of ideas, and accommodation for divergent or contrarian views. The idea of secularism is deeply ingrained in the consciousness of our nation. It has to be further strengthened in the minds of the young ones to build a harmonious society.

8. Gender equality is essential for building an inclusive society. Unless women participate on equal terms and in equal numbers in the process of nation-building, all efforts will remain incomplete. The occurrence of some unfortunate incidents of atrocity and violence against women in recent years should strengthen our resolve to wipe out any trace of depravity and evil from the minds of individuals. ‘Respect for women’ is sacrosanct in our society with its roots embedded in our civilizational values, which are reflected in our Constitution. A spirit of reverence towards women must be instilled in our children in our homes and educational institutions. It must guide social conduct of an individual from an early age.

Friends:

9. Without socio-economic equity, the word "inclusion” has no meaning. During the last few years, we have provided citizens the right to information, employment, education and food, backed by legal guarantees. The Government has launched programmes for financial inclusion, creation of model villages and formation of a digitally-empowered society. We have strong legislations and schemes oriented towards inclusion. What we have to do now is to create enough opportunities through their implementation to meet the ambitions of an aspirational India.

Friends:

10. The nation which you have to build as bureaucrats, technocrats, scientists, educators, social innovators, thinkers, and agriculturists has to be an India which will ensure a decent and fulfilling life to all its citizens. It has to be aswachh India, swasth India, a digitally-empowered India, educated and skilled India, and a tolerant, harmonious and peaceful India where the last person feels a part of the narrative of the country.

11. India needs novel ideas and creative solutions to overcome challenges in the fields of education, skill development, sanitation and healthcare, financial inclusion and service provision. A successful innovative idea is one that has scalability. How can we skill one million of our youth every month? How can we gainfully employ trained manpower in the industry? How can we provide healthcare services to each rural household? How can we meet the financing requirements of small farmers and entrepreneurs in villages and small towns? How can we make public utility services more accessible, inclusive and transparent?

12. The answers to these questions lie in creating a strong digital backbone that can lead to efficient service delivery. Putting a mobile phone in the hands of a person living in a remote village and teaching him to use it to access information, knowledge and services is a great act of empowerment. It gives true meaning to the word ‘inclusion’.

13. For building the India of our dreams, we all have to work together to develop an eco-system which will bring together innovators, entrepreneurs and financiers, which will recognize merit and give primacy to science, technology and innovation. A facilitative and supportive environment for free play of all creative forces, be it in government, corporate sector or academia, has to be created.

14. The government has just launched "Start-up India" to promote start-ups and offer incentives for entrepreneurship and job creation. The over 4,500 start-ups make India the third largest start-up eco-system in the world. The higher academic institutions have a clear role to play in refining the entrepreneurial abilities of their students. Teaching of entrepreneurial studies as a course in our institutes will be a good beginning.

15. Educational and civil services institutions have to inculcate in their students and trainees a sense of social responsibility. Some suggestions for enhancing their engagement with the community are:

i. Assign them to teach in nearby government schools for at least one hour per month.

ii. Deploy them to undertake community-based projects to uplift the condition of people in the vicinity.

iii. Assign them to identify problems faced by villages and work on innovative solutions which blend modern technology with local practices.

My young friends:

16. Tomorrow belongs to you. Your commitment to national goals will determine the direction of our future growth. As you get ready to embark on the journey to fulfill your dreams, let me share with you my own little checklist for nation-building.

We work towards nation-building if:

Produce more than we consume;

- We give more than we take;

- We work more than we idle; and

- We think more than we talk.

You may just find this list useful.

Professional litigants of the Supreme Court

The inquiry comes in the light of an increase in the number of PILs filed in the high courts and the Supreme Court 

Courts coming down heavily on litigants is not a new phenomenon, especially in public interest litigation (PIL). Recently, chief justice of India T.S. Thakur asked if the Centre for Public Interest Litigation (CPIL), a non-profit organisation, was a “professional litigant”.
In response, senior advocate Prashant Bhushan said CPIL was not a professional litigant, citing the fact that it received no funds for the cases it pursued.
“Most of the work is pro bono,” he said.
The inquiry comes in the light of an increase in the number of PILs filed in the high courts and the Supreme Court. The courts are generally critical of serial litigants and hold them to higher standards to test their motives. Courts are also wary of personal interests driving such litigation.
To put this in context, PILs have stirred reforms ranging from measures to deal with sexual harassment in the workplace to spectrum allocation and coal block allotments. There have also been frivolous PILs like one seeking the recall of the Indian cricket team after an overseas debacle; such cases are disposed of, with costs imposed on the petitioners.
But the court’s query in the case of CPIL highlights an interesting trend—”professional litigants” are emerging as a distinct class.
Non-profit organisations are adding litigation wings to file cases of public interest. For instance, the People’s Union for Civil Liberties, a human rights organisation that filed the PIL demanding the “right to food”.
NGO Common Cause, which calls itself an advocacy group, has listed on its website at least 18 PILs in the Supreme Court and five in various high courts.
These include cases seeking the court’s intervention on issues such as depiction of violence on television, challenging appointments made to the Central Vigilance Commission and irregularities in coal block allocations. Common Cause’s governing council includes Prashant Bhushan.
The court itself sought the assistance of one such litigant in a suo moto case probing the cause of 2013 floods in Uttarakhand. Rural Litigation Entitlement Kendra (RLEK), an Uttarakhand-based NGO, is involved in environmental litigation in the National Green Tribunal. In the Supreme Court, RLEK filed a PIL against limestone mining in the Doon valley in the 1980s.
The Association for Democratic Reforms (ADR), an NGO focusing on electoral reforms, is associated with at least seven cases in the Supreme Court. Judgments on disqualification of convicted members of Parliament, paid news and foreign funding of political parties were all based on cases filed by the ADR.
Lawyers Collective, an NGO led by senior advocates Indira Jaising and Anand Grover, is leading the court battle against discrimination faced by HIV-positive citizens.
Shamnad Basheer, founder of the intellectual property website SpicyIP and former IP chair at National University of Juridical Sciences, Kolkata, recently started the P-PIL initiative which promotes public interest lawyering.
In the most recent example, Centre for Science and Environment (CSE), a Delhi-based organization of environmental activists, led the campaign against air pollution in the courts. The centre’s findings and inputs were considered in justice Thakur’s 16 December order making it difficult for commercial vehicles to pass through Delhi to curb pollution.
The Supreme Court has comprehensive guidelines on who can file PILs. Organisations are required to disclose their funding and assets before the registrar of the court before filing such cases.
Somewhere in between part-time pro bono work by a few lawyers and high commercial litigation, professional advocacy of public causes is making its presence felt in India. The issues they can take up are almost unlimited. But the question is: how many will pass judicial scrutiny?

Easwar panel suggests friendlier direct tax laws

Committee proposes deferring contentious ICDS provisions; some recommendations may be a part of budget ’16 

 A committee set up by the government to change direct tax laws has suggested several taxpayer-friendly measures to improve the ease of doing business, reduce litigation and accelerate the resolution of tax disputes.

In its first report made public on Monday, the committee, headed by retired high court judge R.V. Easwar, has recommended simplifying provisions related to tax deducted at source (TDS), claims of expenditure for deduction from taxable income and for tax refunds.
It proposed deferring the contentious Income Computation and Disclosure Standards (ICDS) provisions and making the process of refunds faster.
Some of these recommendations that require amendments to the income-tax act are likely to be a part of the Union budget to be presented on 29 February while some other changes in administrative procedure can be implemented through official notifications by the income tax department.
The committee has asked the income-tax department to desist from the practice of adjusting tax demand of a taxpayer whose tax return is under assessment against legitimate refunds due.
It has also proposed deletion of a clause that allows the tax department to delay the refund due to a taxpayer beyond six months and suggested a higher interest levy for all delays in refunds.
The panel also proposed that stock trading gains of up to Rs.5 lakh will be treated as capital gains and not business income, a move that could encourage more retail investments in the stock market.
The committee has recommended that TDS rates for individuals be reduced to 5% from 10%. It has also clarified that dividend income on which dividend distribution tax has been levied should be treated as part of total income. It also sought to provide an exemption to non-residents not having a Permanent Account Number (PAN), but who furnish their Tax Identification Number (TIN), from the applicability of TDS at a higher rate.
The committee also favoured deferring ICDS.
“Taxpayers are already grappling with regulatory changes of the Companies Act, 2013, Ind-AS (Indian accounting standards) and the proposed GST (goods and services tax). Industry should be allowed more time to deal with another change of this nature. The committee understands that the taxpayers feel that many of the provisions of the ICDS are capable of generating a legal debate about which at present there is no clarity,” the report said.
These standards, 10 in all, which will affect the way income is calculated, were expected to come into force from financial year 2015-16.
The committee also recommended that most of the processes of the income-tax department should be conducted electronically to minimize human interface. To this effect, it suggested that processes such as filing of tax returns, rectification of mistakes, appeal, refunds and any communication regarding scrutiny including notices, questions and documents sought should be done electronically.
To make it easy for small businesses, the committee recommended that the eligibility criteria under the presumptive scheme be increased to Rs.2 crore from Rs.1 crore. It also recommended launching a similar scheme for professionals. The presumptive tax is levied on an estimated income and makes life (and work) easier for small businesses.
Under the presumptive income scheme, such professionals or businesses will not need to maintain a book of accounts but just pay tax based on presumptive income calculations. For instance, for professionals it is proposed that 33.3% of their previous year’s receipts will be taken as income on which they will have to pay tax. If their profits are much lower, they will have to maintain a book of accounts clearly categorizing expenditure and pay tax accordingly.
Following up on a promise to provide a predictable and fair tax regime, the government set up the 10-member committee under Easwar to overhaul the income-tax act of 1961 to remove ambiguities in the tax laws that cause unnecessary litigation and update the laws based on various judgements.
An estimated Rs.5 trillion is locked up in litigation across various courts and tribunals.
Rajesh H. Gandhi, partner, Deloitte Haskins and Sells Llp, said the recommendations will go a long way in reducing litigation, but it remains to be seen if the government will accept these recommendations and make changes in the budget.
“The committee has suggested not treating short-term gains up to Rs.5 lakh from sale of shares as business income. This will remove the confusion of treatment of such income as business income or capital gains. Some of the other suggestions like not allowing tax authorities to reopen or revise assessments on the basis of audit objections or no levy of penalty where the taxpayer has taken a position relying on court cases will reduce litigation on some of the common controversies,” he said.
Ketan Dalal, senior tax partner, PricewaterhouseCoopers India, said in a note that though a large number of recommendations are procedural, they are useful and pragmatic.
“These relate to reducing the TDS rates to avoid the need for chasing refunds, streamlining certain compliance aspects and a variety of recommendations on refunds, including creating disincentives for the tax department to hold back refunds,” he said.

Start-up India: Did the government overreach?

Sometimes, the best practice a government can adopt is to stay away 

Dave Thomas, founder of the famous fast-food restaurant chain Wendy’s, once said, “What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.” But in a country as difficult to do business as India, an entrepreneur also needs a fourth attribute: knowledge of a complex maze of laws and regulations. In this context, the government’s Start-up India campaign, initially announced by Prime Minister Narendra Modi during his last Independence Day speech, was eagerly awaited.

The daylong event on Saturday saw the unveiling of an action plan for the campaign. The measures announced by the government fall under three distinct heads: simplification and handholding; funding support; and industry-academia partnership and incubation.

Sometimes, the most salutary practice a government can adopt for a sector to flourish is to stay away. While the start-ups in India have, of late, seen a boom, most of it is despite the government and not because of it. The year 2015 was, by far, the best year for Indian start-ups. On the back of a massive spurt in funding, India is now—according to a report by software lobby group Nasscom—the world’s fastest growing and the third largest start-up ecosystem. With a lively venture capital financing culture, the government would have been better off avoiding the funding support it announced on Saturday.

Though this fund—amounting to Rs.10,000 crore over four years—will be in the nature of Fund of Funds and will be invested in Securities and Exchange Board of India-registered venture funds (many of the big-name investors aren’t), the selection of appropriate venture funds for investment is a privilege the government can do without. Besides the high opportunity cost and potential charges of cronyism, the government fund is neither sufficient to resurrect the start-up ecosystem if it is floundering, nor is it required if the ecosystem is alive and kicking. Likewise, the government should also desist from the temptation of organizing start-up fests and such events, and leave this job to industry associations.

A whole host of simplification measures announced to make business easier for start-ups is indeed welcome, but with a caveat. A lot of these steps need to be taken for improving the business environment across the board and not just for start-ups. For instance, it will help if a mobile app and portal is available to all businesses, and not just to start-ups, for clarification of regulatory requirements. And what about reducing the number of regulations and discarding the archaic laws which would make such an app superfluous? This should be part of the government’s broader effort towards ‘ease of doing business’ and the app should not become the permanent solution.

Most of the exemptions and concessions offered to start-ups were either not needed or not desirable. The tax holiday for the first three years is much ado about nothing. Few start-ups, if any, can be expected to start returning profit in just three years of existence. A number of other exemptions and “handholding” measures are a throwback to the “infant industry argument” which becomes an excuse to protect a certain class of industries from market competition. A number of concessions available to the small and medium enterprises in India, for instance, have done little more than keep them from growing up. Moreover, these exemptions stand in direct contrast to the government’s intention to phase out all exemptions and reduce corporate tax rates from 30% to 25% by 2019.

The government’s focus on industry-academia partnership is perhaps the most appropriate one. Most of India’s top institutes of higher learning are not known for their research outputs. Moreover, a lot needs to be done to make research outputs useful for industry. Conversely, the feedback from industry should be used as inputs for research. Such centres of excellence which combine education, research and industry experience can become hotspots for disruptive technologies and start-up ideas.

Most of the Indian start-ups are engaged in fixing broken markets. While this is commendable in itself, India also needs start-ups throwing up globally path-breaking products. An enabling environment for this will comprise incubation centres which can plug into cutting-edge research happening in the country. If the government pulls this off, the Start-up India campaign would have done some good.

Will the Start-up India campaign end up making India the start-up hub of the world?