PM’s address at the Ease of Doing Business event 4th November, 2017

Text of PM’s address at the Ease of Doing Business event 4th November, 2017

Miss Kristalina Georgieva, CEO, World Bank; My Colleagues in the Council of Ministers; Senior Officials, Business Leaders; Ladies and Gentlemen!

आज गुरु परब का पवित्र अवसर है | गुरु नानक देव जी का पुण्य स्मरण देश की एकता, सत्यनिष्ठता और सत्य से भरे जीवन के लिए प्रेरणा देता है| दो वर्ष के बाद गुरू नानक देव जी के 550वां प्रकाश पर्व मनाने का पूरी मानव जाति को अवसर मिलने वाला है| ऐसे जगद्गुरु को प्रणाम करते हुये मैं आप सब को भी शुभकामनाएं देता हूँ |

I am very happy to be here today. I sense a well-deserved mood of celebration here. The World Bank has recognized the stupendous work done by us towards improving Ease of Doing Business. We are now among the top hundred countries in the Doing Business rankings. In a short time of three years we have improved forty-two ranks.

I thank Ms. Kristalina Georgieva for being with us on this joyous occasion. It shows World Bank’s commitment to encourage nations to undertake reforms which benefit society and economy. Her presence today will motivate our team to do even better in the coming days and months.

Over the last three years, I have been constantly telling the domestic and foreign investor community that we in India are making sincere efforts to improve ‘ease of doing business’.

And Friends! India has Walked the Talk.

This year, India’s jump in ranking is the highest. India has been identified as one of the top reformers. Congratulations to all who have worked for this. You have done the nation proud.

This improvement is important:

• Because it is an indicator of Good Governance in the Country;

• Because it is a measure of the quality of our public policies;

• Because it is a benchmark of transparency of processes;

• Because, ease of doing business, also leads to ease of life;

• And, ultimately, it reflects the way people live, work and transact in a society.

Friends!

But all this is for the benefit of concerned stakeholders. For me, the World Bank report shows that quantum change is possible through commitment and hard work. Continued efforts can help us improve even further.

और वैसे भी आप जानते हैं मेरे पास तो और कोई काम है नहीं | इसलिए मुझे इसमें भी आगे काम ही दिखाई दे रहा है | मेरा देश , मेरे देश के सौ करोड़ लोग , उनके जीवन में कुछ बदलाव लाना और इसलिए जो अपेक्षाएं दुनिया हमसे रख रही है उन्हें पूरा करने में हम कोई कमी नहीं रखेंगे यह मैं आपको विश्वास दिलाता हूँ|

I say this because, India has reached a position from where, now it is easier to improve further. Our efforts have gathered momentum. In management terms, we have achieved critical mass for a swift takeoff.

For example, this report has not taken into account the implementation of the Goods and Services Tax or GST. As you all know, GST is the biggest tax reform in the Indian economy. And it impacts many aspects of doing business. With GST, we are moving towards a modern tax regime, which is transparent, stable and predictable.

और इसलिए जब जीएसटी की चर्चा हुयी है तो मैं कहना चाहूँगा , यहाँ पर व्यापार जगत के बहुत लोग हैं और इस फोरम के माध्यम से देश भर के व्यापारियों से कहना चाहता हूँ| जिस समय हमने जीएसटी लाने का संकल्प किया तब लोगों को लगता था कि पता नहीं आएगा कि नहीं आएगा, एक जुलाई को लागू होगा कि नहीं होगा| हुआ .. फिर होने के बाद लगा, कि अब मर गए ...यह मोदी है कोई सुधार नहीं करेगा और हमने तब कहा था कि तीन महीना हमें इसे बारीकी से देखने दीजिये क्योंकि हिंदुस्तान इतना बड़ा है और दिल्ली में ही बुद्धि भरी हुयी है ऐसा नहीं है जी|

देश के सामान्य मानवी के पास भी समझ है| हम उससे समझेंगे, सीखेंगे, कठिनाइयों का अंदाज करेंगे, रास्ते खोजेंगे और तीन महीने के बाद जब जीएसटी कौंसिल की मीटिंग हुयी जितनी चीजें सामने आई उसका समाधान किया| कुछ चीजों के लिए काउन्सिल में कुछ राज्य सहमत नहीं थे तो हमने राज्यों के मंत्रियों और अधिकारियों की समितियां बनाईं और मुझे आज यह कहते हुए खुशी हो रही है कि verbatim रिपोर्ट अभी मेरे पास पहुँचा नहीं है लेकिन मंत्रियों की कमिटी , जीएसटी काउंसिल जो बनाई थी उन्होंने मिल करके ही बनाई थी और उस मीटिंग में जो हुआ है और जिसकी छोटी मोटी जानकारी मेरे पास है पूरा रिपोर्ट तो नहीं है मेरे पास लेकिन मैं कह सकता हूँ कि जितने इशूज सामान्य व्यापारियों ने उठाये थे कारोबारियों की तरफ से जो सुझाव आये थे करीब करीब सारे विषयों को positively स्वीकार किया जा रहा है| और नौ और दस तारीख की जीएसटी काउंसिल की मीटिंग में अगर कोई राज्य कठिनाई पैदा नहीं करेगा तो मुझे विश्वास है कि भारत के व्यापार जगत को और भारत की आर्थिक व्यवस्था को नई ताकत देने में जो भी आवश्यक सुधार होंगे वह किये जायेंगे| उसके बावजूद भी आगे भी ऐसी कोई बातें आयेंगी क्योंकि आखिर एक नई व्यवस्था को स्वीकार करना होता है , सालों की पुरानी व्यवस्था से बाहर निकलना होता है तो सरकार का ही दिमाग काम करे यह जरूरी नहीं है सभी stakeholders का दिमाग काम में आता है तब उत्तम से उत्तम परिणाम आता है और जीएसटी उसके लिए भी एक उत्तम उदाहरण बनने वाला है कि सबकी भावनाओं का आदर करते हुए व्यवस्थाओं को foolproof कैसे बनाया जा सकता है यह जीएसटी की प्रोसेस से नजर आता है|

वर्ल्ड बैंक की इस रिपोर्ट में मई 2017 तक के ही रिफॉर्म्स काउंट हुए हैं जबकि GST उसके बाद जुलाई 2017 से लागू हुआ है | इसलिए आप अंदाज कर सकते हैं कि जब 2018 में चर्चा होगी तो हमारे जो initiative हैं वह count होने वाले हैं|

There are many other reforms which have already happened, but need gestation and stabilization time, before they are taken into account by the World Bank. There are a few other reforms where our team and the World Bank team need to find common ground. All this, combined with our conviction to do even better, gives me the confidence that India will occupy a place of pride in the World Bank report next year and in the years thereafter.

I compliment the World Bank for engaging with countries to improve ease of doing business across the world. I also compliment them for the theme of this year’s report - ‘Reforming to create jobs’. There can be no denying that business is a major force in our lives. It is an engine for growth, employment generation, wealth creation and delivery of goods and services that make our lives comfortable.

We are a young country and job creation is an opportunity as well as a challenge. Therefore, to leverage the energy of our youth, we are positioning India as a Start-up Nation and a global manufacturing hub. For this purpose, we have launched various initiatives, such as Make in India and Start-up India.

Through these initiatives, combined with the new eco-system of a formal economy and a unified tax regime, we are trying to create a NEW INDIA. An India where opportunities are created and harnessed to the advantage of the needy. We are particularly keen to develop India into a knowledge based, skill supported and technology driven society. A good beginning has been made through the Digital India and Skill India initiatives.

Friends!

India is swiftly changing for the better. I wish to list some more global recognitions which indicate this:

o We have moved up thirty two places in the last two years in the Global Competitiveness Index of the World Economic Forum. This is highest for any country;

o We have also moved up twenty one places on the Global Innovation Index of WIPO in two years.

o We have moved nineteen places on the Logistics Performance Index of 2016 of World Bank;

o We are among the top FDI destinations listed by UNCTAD.

कुछ लोगों को भारत की रैकिंग 142 से 100 होने की बात समझ नहीं आती। उन्हें कोई फर्क नहीं पड़ता। इनमें से कुछ लोग तो पहले वर्ल्ड बैंक में भी रह चुके हैं। वो आज भी भारत की रैंकिंग पर सवाल उठा रहे हैं। यदि इन्सॉल्वेंसी कोड, बैंकरप्सी कोड, कमर्शियल कोर्ट जैसे कानूनी सुधार आपके टाइम में ही हो जाते तो हमारी रैकिंग पहले ही सुधर जाती। यह रैंकिंग आपके सौभाग्य में आती| देश की स्थिति नहीं सुधरती नहीं क्या | किया कुछ नहीं, और जो कर रहा है उस पर सवाल कर रहे हैं|

वैसे ये भी संयोग की बात है कि वर्ल्ड बैंक ने Ease of Doing Business की प्रक्रिया साल 2004 में शुरू की थी। बड़ा महत्वपूर्ण साल है| इसके बाद 2014 तक देश में किसकी सरकार रही ये भी आप सभी को पता है।

मैं ऐसा प्रधानमंत्री हूँ जिसने वर्ल्ड बैंक का बिल्डिंग भी नहीं देखा है जबकि पहले वर्ल्ड बैंक को चलाने वाले लोग यहाँ बैठा करते थे|

मैं तो कहता हूं कि आप वर्ल्ड बैंक की इस रैकिंग पर सवाल उठाने के बजाय हमारा सहयोग करिए ताकि हम देश को और ऊंचे पायदान पर ले जा सकें। न्यू इंडिया बनाने के लिए साथ आगे बढाने का संकल्प करें|

Our mantra is reform, perform and transform. We want to do better and better. I am happy to note that for the first time, the World Bank is helping us in this exercise at the sub-National level too. In a federal democracy like India, it is often not easy to take on board every stakeholder while undertaking reforms. However, over the last three years, there has been a sea change in the response of Governments, both at Central and State level. State Governments are finding innovative ways to create a business friendly environment. While often competing with each other in implementing business reforms, they are also helping each other in implementing them. This is an exciting universe in which competitiveness and cooperation co-exist.

Friends,

The agenda for boosting growth and employment, required many structural changes, many tough decisions and many new regulations. Besides this, the mind-set of the bureaucracy required change to enable them to work fearlessly and honestly. Over the last three years, the Union Government has done a lot on these fronts. We have resolved a number of regulatory and policy issues facing businesses and companies.

Alongwith manufacturing, we are also pushing for faster progress in infrastructure sectors. Therefore, we are continuously working to improve our investment climate. In the last three and a half years we have undertaken bold Foreign Direct Investment reforms in twenty one sectors, covering eighty seven areas of policy. मैं दो साल तक सुनता रहता था बिग बैंग..बिग बैंग ..रिफॉर्म्स ..अब बंद कर दिया , क्योंकि लोगों की मालूम चल गया कि रेफौर्म्स की स्पीड और लेवल और साइज इतनी है कि आलोचना करने वाले मैच ही नहीं कर पा रहे |

These reforms have touched significant sectors like Defence, Railways, Construction Development, Insurance, Pension, Civil Aviation and Pharmaceuticals. More than ninety percent of the FDI approvals have been put on the automatic route. यह बहुत बड़ी बात है| We are now among the most open economies for FDI.

This has resulted in increased FDI inflow, which year after year is making new records. The FDI inflows of 55.6 billion US dollars for the year ending March, 2016 were an all-time high. The following year, India registered an FDI inflow of 60.08 billion US dollars, thereby scaling an even higher peak. As a result, the total FDI received in the country has gone up by 67% in a short span of three years.

During the current financial year till August, total FDI of 30.38 billion US dollars has been received, which represents an increase of 30% as compared to the corresponding period last year. In August, 2017, India received a total FDI of 9.64 billion US dollars, which is the highest ever FDI received in any month.

Friends!

Over the last three years, we have systemically and critically evaluated business regulations. We have tried to understand the pain points of businesses with regard to interface with government. We engaged with businesses on a regular basis, understood their concerns and sought to modify regulation to address their concerns.

I have often emphasized that technology must be used to transform governance. Use of technology should minimize physical interface and assist time bound decision-making. I am glad to see that a number of Government Departments and State Governments are deploying technology to improve governance and deliver services.

Alongwith the tools of technology we also need a complete change of mind-set while dealing with business. Total re-engineering is required both at the level of Mind and Machine. The past mindset of excessive control has to be replaced by the concept of minimum government, maximum governance. This is our goal and my Government is determined to achieve this objective.

With this objective, an extensive exercise was undertaken to redesign laws and re-engineer government processes to make business environment simpler and more conducive. An attempt has been made to align the Indian regulatory environment to international best practices. Though, we were putting in efforts to improve India’s rank in the Doing Business Report, reforms undertaken by the Government are far more extensive. To give you one example; we have abolished more than 1200 archaic laws and Acts which were only complicating Governance. They have been deleted from the statute book. Similarly, thousands of important reforms have been carried out by the states as well. These additional efforts are not part of the World Bank’s requirement.

All Ministries of the Central Government, Public Sector Undertakings, State Governments as well as regulators should identify international best practices, consult their stakeholders and align their regulations and processes with international best practices. I have no doubt that people working in these agencies are second to none in the world in respect of their capability and commitment to public service.

Friends, इस रैंकिंग को भले Ease of doing Business कहते हैं लेकिन मैं मानता हूं कि ये Ease of doing Business के साथ ही Ease of Living Life की भी रैंकिंग है। ये रैंकिंग सुधरने का मतलब है कि देश में आम नागरिक, देश के मध्यम वर्ग की जिंदगी और आसान हुई है।

मैं ऐसा इसलिए कह रहा हूं कि इस रैंकिंग के लिए जो पैरामीटर्स चुने जाते हैं, उनमें से अधिकांश आम नागरिक, देश के नौजवानों की जिंदगी से जुड़े हुए हैं।

भारत की रैंकिंग में इतना सुधार इसलिए आया है क्योंकि पिछले तीन वर्षों में सरकार ने देश के आम नागरिक की जिंदगी में होने वाली मुश्किलों को कम करने के लिए Reform का रास्ता अपनाया है। तीन वर्षों में देश में टैक्स भरने की प्रक्रिया में बहुत सुधार आया है। इनकम टैक्स रिटर्न के लिए अब महीनों इंतजार नहीं करना पड़ा। PF रजिस्ट्रेशन और PF का पैसा निकालने के लिए पहले आपको दफ्तरों के चक्कर लगाने पड़ते थे। अब सब कुछ ऑनलाइन हो गया है।

मेरे नौजवान साथी अब सिर्फ एक दिन में अपनी नई कंपनी रजिस्टर करा सकते हैं। कारोबारी मुकदमों की सुनवाई भी आसान हुई है। तीन वर्षों में भारत में कंस्ट्रक्शन परमिट लेना आसान हुआ है। बिजली कनेक्शन लेना आसान हुआ है। रेलवे रिजर्वेशन कराना आसान हुआ है। जो पासपोर्ट पहले महीनों में मिलता था, अब एक हफ्ते के भीतर मिल जाता है। ये Ease of Living Life नहीं है तो क्या है?

I must make a special mention of the fact that while Ease of Doing Business is important for all businesses, it is critical for small businesses including small manufacturers. This sector provides the bulk of employment in the country and to make them more competitive, we have to reduce the cost of doing business. The work on Ease of Doing Business must address the issues of these small businesses and manufacturers.

Once again, let me congratulate the team working on various aspects of ease of doing business for their commitment and dedication. I am sure that together we will write a new chapter in India’s history and transform India so that the dreams and aspirations of our people take wing.

I would like to thank the World Bank again for their guidance in our efforts to improve ease of Doing Business. I am told that the experience of bringing about decisive changes in a large country like India without affecting the growth process may become an example for many other nations. There is always scope to learn from others. If required, we will be happy to share our experience with other countries.

Accountability in Financing of Education’ during the Meeting on ‘SDG4-Education 2030: Strengthening Accountability in the Implementation of SDG4’ in the 39th General Conference of UNESCO in Paris (On November 2, 2017).

Statement by Shri Prakash Javadekar, Union Minister of Human Resource Development on ‘Accountability in Financing of Education’ during the Meeting on ‘SDG4-Education 2030: Strengthening Accountability in the Implementation of SDG4’ in the 39th General Conference of UNESCO in Paris (On November 2, 2017).

India recognises that accountability in financing of education is critical to achieve SDG4 and associated targets. It involves accountability in financing of education on the part of both the development partners and individual countries. Accountability on the part of development partners relates to the commitment to enhance funding that is needed to implement SDG4-Education 2030 agenda. The latest Global Education Monitoring Report released recently points out that“at the global level, international commitments to finance the education sector, remains weak”. The Report indicates that “only 6 of 28 OECD-DAC countries met their commitment to allocate 0.7% of national income to aid.” Therefore, OECD developed countries must fulfil their commitment. Ultimately, investing in education is investing in peace and sustainable future.

Accountability on the part of individual countries relate to the commitment to set nationally appropriate spending targets for education, mobilising financial resources and achieving in a progressive manner the international benchmarks of allocating at least 4% to 6% of gross domestic product (GDP) to education; and/or allocating at least 15% to 20% of public expenditure to education. Accountability on the part of individual countries also relates to efforts aimed at ensuring that the available funds are used efficiently and effectively.

The Government of India recognises that achieving the education development goals and targets set in the context of SDG4-Education 2030 agenda requires increased and well-targeted financing and effective and efficient utilisation of allocated funds. Government of India is investing nearly 4.5 % of GDP on education, despite competing demands on resources. The Central and State/ UT governments have been making efforts to provide adequate and equitable financing to educational priorities. There has been a broad consensus that investment on education be gradually increased to reach a level of six per cent of the Gross Domestic Product (GDP). Efforts are being made to step up the outlay on education by facilitating substantial increase in both public and private sector investment in education. Furthermore, improved coordination, monitoring and evaluation processes have been attempted to ensure that the available funds are used efficiently and effectively, and with measurable education outcomes and impacts for children and youth, especially in terms of attainment of expected learning outcomes.

PM to inaugurate World Food India 2017

PM to inaugurate World Food India 2017

India gears up to welcome Global Food Titans

The Prime Minister, Shri Narendra Modi, will inaugurate World Food India 2017 on 3rd November 2017 from Vigyan Bhavan New Delhi. WFI is the most anticipated international mega food event, as India welcomes to host biggest ever congregation of global investors and business leaders of major food companies from 3-5 November in New Delhi. Organized by Ministry of Food Processing Industries under leadership of Union Minister Smt Harsimrat Kaur Badal, World Food India aims to transform Food Economy and realize the vision of doubling of famers’ income by establishing India as a preferred investment destination and sourcing hub for the global food processing industry. This is the first time that India is hosting such an event for the Food processing sector.World Food India platform will strengthen India’s position as a Global Food Factory and is a positive step towards making the Country Food Secure.

India is expected to attract an investment of US$ 10 billion in food processing sector and generate 1 million jobs in the next 3 years. World Food India 2017 gears up to host over 2,000 participants, over 200 companies from 30 countries, 18 ministerial and business delegations, nearly 50 global CEOs along with CEOs of all leading domestic food processing companies, and representatives of 28 States in India. Germany, Japan and Denmark are Partner Countries to World Food India. Italy & Netherlands are the Focus Countries. Specially curated experiential platform ‘Food Street’ specially curated by Chef Sanjeev Kapoor, is a lively vibrant zone, that will showcase Indian and foreign cuisines using Indian ingredients, flavours and fragrances to celebrate India's rich cultural heritage, the diverse uniqueness of its produce to create contemporary renditions and fusion food. After the inauguration from Vigyan Bhavan, the Prime Minister will visit the Food Street at India Gate Lawns opposite National stadium.

Dadabhai Naoroji: The ‘black man’ in Westminster

Dadabhai Naoroji: The ‘black man’ in Westminster
Dadabhai Naoroji, the first Indian elected to the House of Commons, lent his energies to causes as diverse as the women’s suffrage movement and Indian self-rule
Some days ago, members of parliament at Westminster in London organized a special meeting to honour the memory of the first Indian to have been elected to the House of Commons. It was not an open event, yet the queue outside wound around the building long enough for a café owner to step out and enquire what it was that had attracted so much enthusiasm. When I explained, he looked terribly interested himself in the proceedings and asked, “Oh, is the MP upstairs?” Alas, I had to tell him, the man we were celebrating had died 100 years before, which meant he fell in a very different category of “upstairs”. And he had died not in London, where he once represented his voters, but far away in Mumbai, in one of the seven houses that lend the suburb of Saat Bangla in Versova its picturesque name. The café manager looked vaguely sheepish while the rest of us made our way into the building, walking past V.R. Rao’s portrait of the man we were there to commemorate: Dadabhai Naoroji.

Naoroji was one of the founders of the Indian National Congress but he was also convinced that it was “in Parliament (in Britain) that our chief battle has to be fought”. And so, in 1886, he presented himself as a candidate in the general election. Despite endorsements from the likes of Florence Nightingale, he was demolished. Lord Salisbury, the Conservative prime minister, declared that the English were not prepared to have a “black man” as their representative, only to regret those words. For the consequence was that his statement was published in newspapers around the country and Naoroji became an object of massive interest overnight—including in discussions around precisely how “black” this pale-skinned man exactly was. By 1892, he had a real shot at winning, and the people of Finsbury Central did not disappoint—he carried the day with a dazzling majority of three. When his un-black rival demanded a recount, the tally went up; Naoroji had actually won not by three but by a margin of five votes. Delighted either way, he served not only as the voice of Finsbury Central in parliament but also as president of the local football club. And both in the House of Commons and outside, he lent his energies to causes as diverse as the women’s suffrage movement and, of course, Indian self-rule.

A number of people frowned. Some called him Dadabhai Narrow-Majority, which was only marginally better than “Mr Nowraggie”. But the old man didn’t mind. On the contrary, his shattering of the glass ceiling was conclusive enough for two more Indians to also enter the House of Commons in the coming years. He himself lost the next election in 1895, but made up for it by conveying his message in his seminal Poverty And UnBritish Rule In India, lambasting the Raj for its unashamed leeching of Indian wealth for British aggrandizement. The book was a milestone, and remains his most memorable intellectual contribution to the freedom struggle. And it did not surprise too many people that he had earned himself this distinction: When still in his teens at Elphinstone College (then, Institution) in Mumbai, Naoroji was labelled by a professor, a little sentimentally, “The Promise of India”. Personally, though, he didn’t let such things go to his head. “Prosperity has not elated me and I hope adversity will not (depress) me,” he wrote to a friend, “so long as I can feel I am living a life of duty.”

Naoroji was born in British Bombay in 1825 in modest circumstances. He was a bright student, and an 1845 effort to go to university in England was only thwarted because one of his sponsors feared this prodigy might be tempted to become a Christian. So Naoroji began to teach mathematics and natural philosophy at Elphinstone College, till in 1855 he became the first Indian to be appointed a professor at that institution. It was a short-lived career, for by now he had decided to go into commerce—he moved to England and eventually set up a cotton import business. Just to cement one foot firmly in the intellectual space in any case, he also accepted a professorship at University College London. His subject: Gujarati. In the course of time he would set up the still-thriving Zoroastrian Trust Funds of Europe, as well as the East India Association (which later merged with the Congress party), and emerge as one of the most distinguished ambassadors for India in the seat of empire.

Naoroji was also a most sympathetic interlocutor for Indians lost in this alien country. Many were the students who wrote to him for advice, and many too were the parents who frantically sought his assistance in preventing their beloved male offspring from getting ensnared by the fearsome, emancipated women of the West. In 1888, one young man wrote to him asking for guidance on life in England, “which shall be received as from a father to his child”. His name was Mohandas Gandhi, and many years later he would remember Naoroji as “the G.O.M.” (Grand Old Man) who made life easier for so many Indians with his sheer warmth and friendship. Indeed, Naoroji deserves much credit for going out of his way for others: Among the 30,000 documents that comprise his private papers, between notes sent by his plumber and an 1894 eye-glass prescription, are numerous letters in Gujarati, Marathi, even Persian and French, to strangers seeking his esteemed attention. That is, assuming everyone understood what he was saying, for, as a friend wrote with a hint of annoyance, “your handwriting is rather hard to read”.

By the time Naoroji died, aged 93, he had enjoyed a most fascinating career. This included a stint as chief minister to a maharaja of Baroda who was accused of trying to murder the British resident at court with arsenic and crushed diamonds; luckily, Naoroji had already resigned by the time of the scandal. He had run newspapers, participated in great public debates on India’s future, and, significantly, set on its eventful course the Congress party that would serve as the vehicle of Indian nationalism in the years to come. And so it was that when he died, among the richly deserved tributes paid was one reminding everybody that while the man himself had departed, the idea he stood for would be enshrined forever in the destiny of the country he loved.

The year of Kidambi Srikanth

The year of Kidambi Srikanth
With four Super Series titles in the bag, 2017 truly looks like the year of Kidambi Srikanth

Kidambi Srikanth has had a fantastic run of form this year.

Since his loss in August to then World No.1 Son Wan Ho of South Korea, in the quarter-finals of the World Championships in Glasgow, the Indian badminton player has lost just one of the 13 matches he has played. His wins include the back-to-back Super Series titles in Denmark (22 October) and France (29 October), taking the number of his Super Series titles this year to four, and career tally to six. His victories this year have come against players such as Olympic champion Chen Long (Australian Open), world champion Viktor Axelsen (Denmark Open), and Son Wan Ho (Indonesia Open).

Along the way, Srikanth became the only Indian, and the fourth player ever, to win four Super Series titles in a calendar year. The other three are Lin Dan (China), Lee Chong Wei (Malaysia) and Chen Long (China).

He is slowly becoming the man to beat in world badminton.

Srikanth is naturally agile. It helps him move to the net faster and finish with a tap kill. And his speed has been the key to his success and dominance on fast courts such as those in Denmark and France, says coach Pullela Gopi Chand. “In the kind of fast conditions that he’s won in, Srikanth is clearly the world’s best player,” says Gopi Chand.

Srikanth also has a lethal smash.

But, and perhaps more importantly, he has also become stronger mentally, which has helped his game on court. “He has developed the ability to stay cool under pressure,” says former India player Arvind Bhat, who is one of the Indian team’s travelling coaches. “In the quarter-final versus Shi Yuqi (in France), for instance, Srikanth lost the opening game 21-8. An earlier Srikanth, and most players in fact, would have panicked. But he managed to turn things around.”

In fact, in the last two weeks, he has scored three comeback wins—against Axelsen in Denmark, Shi Yuqi in France, and compatriot H.S. Prannoy, again in France.

The other big change has been in Srikanth’s physical fitness. Just hours after his Denmark win, Srikanth landed in Paris and had to get down to business. Sure, both finals (in Denmark and France) may have been horribly one-sided affairs that took a little over 30 minutes to finish, but that alone isn’t reflective of the toll this exertion takes on an athlete’s body. Unlike, say, tennis players during Grand Slams, badminton players have to play six days at a stretch during a Super Series.

“I’m actually a little bit surprised myself,” says Srikanth. “The way we have been training for the last eight-nine months, I guess it’s working for me. I just need to continue this way and keep working hard.” Under Indonesian coach Mulyo Handoyo, who joined the Indian team in March, training sessions at the academy in Hyderabad have changed dramatically. Two-hour training sessions interspersed with long gaps have turned into 4 gruelling hours on court and plenty of running exercises with water breaks. The idea is to develop endurance.

Gopi Chand, however, thinks he needs to develop more patience. “Specially on slower courts. Hanging in there during sticky situations—that’s going to be a real test of his fitness and maturity,” says the national coach.

Comparisons with Gopi Chand and Prakash Padukone may be unfair, but in his career as a professional badminton player so far, Srikanth’s achievements have been tremendous. Padukone’s All England title (1980) came at a time when badminton as a career was unheard of. Gopi Chand’s title came 21 years later. And for both players, the crown in Birmingham remains their biggest claim to fame, when they were aged 25 and 28, respectively. At 24, Srikanth seems to be on a roll.

Further reforms are needed for the GST to succeed

Further reforms are needed for the GST to succeed
The systematic bias against small-scale dealers embedded in its present design is harming supply chain structures and must be remedied
The Rs9 trillion booster shot announced at the end of October will not achieve its purpose unless the tangles in the goods and services tax (GST) structure are sorted out, and the systemic bias against small-scale dealers embedded in its present design eliminated. Big business in India relies critically on inputs from small business. Organized sector manufacturers will hesitate to expand if these traditional input channels dry up. If they respond by producing their inputs in-house, we will be going right back to what we were trying to get away from with value-added taxation.

The GST carries design features that have harmed supply chain structures, as I wrote in my Mint column on 6 October. Some of them were partially reversed at the meeting of the GST Council held that day, but further changes need to be considered at the next meeting on 9 November in Guwahati.

The alterations made on 6 October included enhancing the turnover limit to Rs1 crore for the voucher-free composition scheme which has quarterly reporting, and making quarterly reporting permissible beyond that up to a limit of Rs1.5 crore. These were certainly moves in the right direction, but both changes benefited only retailers selling business to consumer (B2C).

They did not benefit small business to business (B2B) suppliers to large turnover buyers doing monthly reporting. These cases are very common—some of the biggest manufacturers rely on small suppliers of intermediate inputs like nuts and bolts. The large buyer will have to wait for his input credits to be honoured through voucher matching until the small seller does his quarterly uploading. He will clearly prefer to buy from a supplier who does monthly reporting, which then introduces a clear bias in favour of large suppliers, and an inefficient transfer of production away from low-cost small-scale producers. The small seller can of course opt to stay with monthly reporting, which means the quarterly relaxation is in effect not useful to him. As for B2B composition scheme suppliers who do not issue vouchers, they start with the basic disadvantage of the buyer not being able to claim input tax credits under the voucher matching scheme.

A ministerial panel appointed in October made several proposals to make the composition scheme more attractive, such as reducing the rate of levy on turnover and further raising the turnover qualifying limit. These will again benefit only B2C retailers. No small B2B supplier will opt for the composition scheme as long as there is universal voucher matching.

The whole purpose of value-added taxation was to improve the spatial spread of economic activity both regionally and across the scale dimension. The bias against small industry in the present GST design can only be eliminated by getting rid of voucher matching for all but integrated GST (IGST) transactions. On quarterly reporting, the ministerial panel does seem to have proposed that it be extended to all, but with summary documentation and payments every month. A monthly payment system will release business from the present reporting straitjacket only if it is treated as a monthly advance tax, with documentation needed only once every quarter (like advance payments of income tax).

I still maintain that the principal reason why GST reduced economic activity had to do with the reporting modalities, not the brambly rate structure. But the rate structure was and continues to be a problem. It has undermined the very principles on which the tax reform process was built seamlessly across successive governments at the Centre, the most fundamental of which was simplification.

The fact of a multiple rate structure is quite distinct from the pattern of assignment of products to those rates. Instead of a coherent block-wise mapping of products by type on to rates, products of the same type were assigned to different rates, with no visible rationale. This was then followed by several changes in rate assignment, clearly displaying the lack of any principle underlying the first round of rates assigned.

For example, at the 21st meeting of the GST Council held on 9 September, rate reductions were announced for 40 products. Walnuts, whether whole or shelled, were reduced from 12% to 5%. Were other edible nuts already at 5%? If so, why were walnuts at a higher rate earlier? Or were all nuts earlier at 12%, with walnuts now singled out for a lower rate? Dried tamarind and roasted gram were reduced from 12% to 5%, but idli/dosa batter (a similar traditional processed foodstuff) remained at 12% even after reduction.

It gets worse. Cotton quilts came down from 18% to 5% for pieces costing under Rs1,000, but 12% for pieces costing more than that. But, to be fair, there were also some offsetting instances of rate rationalization. Oil cakes, which previously carried different rates by end use, got unified. Brooms got unified too, but could they have not been further unified into a single product category of household goods? With the simplification announced in late October, whereby retailers can issue vouchers to consumers consolidated by rate, it becomes particularly important to group products by type into a single rate.

Rates are technocratic issues. What can be put up to the GST Council is rate policy with respect to a product group, not issues of principle such as rate differentiation by end use or price boundaries. These run contrary to the core attributes of GST as a tax, and should never have been among the options presented to the council in the first place.

Why has it taken so long for the design flaws of the GST to be recognized? I suspect it was because when the GST Council was formed with all state finance ministers as members, it seemed a faultless structure with all interests adequately represented. The incentive error made there was that the compensation formula gave all states a guaranteed 14% growth rate in revenue, instead of a guarantee calibrated in terms of revenue buoyancy to underlying (nominal) GDP growth. That dulled the gaze of all state governments at the growth impact of the structuring of the GST. A pity, because some states have excellent commercial tax departments, with more than 10 years’ experience in operating the state-level value-added tax.

Was Parliament watching? Indeed, a number of questions on the GST were tabled in the Lok Sabha’s monsoon session which began on 17 July, a few weeks after the 1 July launch of GST.

They were bunched and responded to on three dates during the monsoon session. On 21 July, question number 1,069 on GST, was taken up. The first of its four parts was: “Whether due to implementation of GST the micro, small- and medium-scale traders will suffer huge losses as feared by some economists”. The minister responded in a single word: “No”. The last part was: “Whether the GST might adversely affect economic growth in the initial part of 2017-18 and if so, the details thereof?” The minister responded with: “The implementation of GST is expected to have a positive impact on the economy.” And that was that. As an unstarred question, no further follow-up question was permissible, on whether reality was departing from expectations.

Another question, number 1,101, asked whether the government was tracking the response of the general public to the roll-out of GST. The response was: “The implementation of GST has been smooth with no instances of any major inconveniences faced by the public in general... Further, the government is taking all possible steps to ensure correct information is disseminated to the general public by way of topic-wise, GST-focused advertisements in the electronic media. All this is coupled with regular meetings of the secretaries of all the departments of the government to sort out any issues that may arise.”

I don’t know where those who drafted this response were living if they saw no major inconveniences. I was alerted to the design defects in the GST not in professional circles, but from conversations between shopkeepers whenever I ventured out to buy anything. The full-page advertisements in the major newspapers alluded to by the minister did not reveal why traders were shrinking the scale of their activities (the issue addressed in my piece in Mint on 6 October).

Question number 3,273, answered on 11 August, the last day of the monsoon session, was on whether there was confusion among traders over GST. To which the good minister responded: “No Sir. There is no major confusion with reference to registrations and exemptions under GST.” In response to question 2,206 answered on 28 July, on whether the GST carried features that were possibly problematic, the minister said: “No sir. It is intended to bring transparency and accountability in business transactions along with the ease of doing business and rationalization in tax rates.” Because it was an unstarred question, the member of parliament could not respond to say that doing business had actually become more difficult.

Moving to the Rajya Sabha, question number 1,065 asked whether rolling out GST in a state of unpreparedness had spawned a large workforce of tax consultants and chartered accountants whose heavy bills would burden small traders, the response once again was a short “No sir”. Question number 2,498 asked whether the common man faced problems after demonetization and GST. The response on 8 August was that the roll-out had been smooth with no blockages or interruptions.

Good questions, but not enough to have shaken the apparent conviction of the government that the GST design was perfect. Any tax reform has to facilitate business in order to secure revenue and willing compliance. Such a configuration for the GST is still possible if the reporting frequency is shifted to quarterly for all, and voucher matching is restricted to IGST transactions.

What bank recapitalisation means

What bank recapitalisation means
Recapitalisation matches the capital requirements of public sector banks for both NPA provisioning and some growth
The past couple of days have brought cheer to public sector banks. The promised recapitalisation of Rs2.1 trillion takes care of not only the provisioning requirements of public sector banks, but also provides them with growth capital. All requirements of public sector banks have been addressed at one stroke.

Bank recapitalisation via special recapitalisation bonds is an approach the government used in the 1980-1990s. Between financial years (FY) 1985-1999, the government infused Rs204 billion into public sector banks via recapitalisation bonds. The operational details of the bonds will likely be similar to the bonds of the 1990s.

Assuming that the Rs1.35 trillion infusion is equity capital, it could be highly dilutive but positive for the FY19 adjusted books. The Rs1.5–1.6 trillion infusion will lead to 0-200% dilution of public sector banks. At first glance, the quantum of this dilution will look high for minority investors, but in most public sector banks the current stock price is higher than the adjusted book value of FY17, so raising at current prices or higher will have a positive impact on the FY19 adjusted book value.

The Common Equity Tier 1 (CET 1) requirement determines if a bank can stand the test of crisis. Our estimates suggest that the CET1 requirement of all public sector banks is Rs1.5-1.6 trillion. The balance recapitalisation fund can be directed towards growing their business-growth capital. Recapitalisation, therefore, takes care of dry powder requirements for stressed assets and future capital for growth, assuming CET 1 of 9.5%, 60% provisioning on all stress and 7% compound annual growth rate (CAGR) in risk weighted assets (RWAs) over FY18–19.

We expect bank recapitalisation to benefit the economy through five main channels. First, assuming Rs700-750 billion is available to banks as growth capital and a leverage ratio (loan-to-equity) for banks of eight-nine times, the available growth capital should enable banks to extend additional loans worth Rs5.8-6.5 trillion (7.3-8.3% of outstanding credit).

Second, the capex cycle recovery has been stuck because of the excess leverage sitting in many companies. While banks have recognized the bulk of these assets as non-performing assets (NPAs), resolution of these assets has been long-pending. Resolution in most of these cases requires a right-sizing of the debt of these leveraged companies, which was only possible with capital in the public sector banks. Now, with adequate capital, this resolution process will move forward more quickly, which should set the stage for a capex cycle recovery in the medium term.

Third, capital shortage in the face of rising NPAs had resulted in a wider gap between the public sector banks’ weighted average lending and deposit rates; so recapitalisation should enable more effective transmission. Fourth, recapitalisation should improve risk appetite, easing credit conditions at the margin for needy borrowers; and finally, higher share prices should enable public sector banks to directly raise more capital from markets.

Overall, the bank recap is a growth positive. Given that capex weakness is due to excess leverage (which the recapitalisation addresses), private investment should pick up over time as capacity utilization improves. In any case, a cyclical recovery is already under way and we expect gross domestic product (GDP) growth to rise from an average of 5.9% in H1 2017 to 6.7% in H2 and to 7.5% in 2018.

The recapitalisation commitment to banks does have fiscal implications. For now, the fiscal impact of the recapitalisation bonds is likely to be limited to the additional interest payments, which are estimated at Rs80-90 billion per year (0.05% of GDP). At the same time, the government should also benefit from a rise in PSB market caps due to increased dividends and a sell-down of equity.

However, the recapitalisation bonds will increase the government’s debt liability by 0.8% of GDP (47.5% in FY17) either directly (if the bonds are issued by the government) or indirectly via higher contingent liabilities (if the bonds are issued by a government agency). Despite the adverse impact on debt, this should not have any adverse impact on India’s sovereign credit rating because recapitalisation will also improve India’s medium-term growth prospects.

With no extra government borrowing, the likelihood of inflationary impact from recapitalisation is less. Recapitalisation should also be neutral for monetary policy as it improves growth prospects and monetary transmission, which is often cited by the Reserve Bank of India (RBI) as one reason why the positive growth effects from monetary policy have been limited.

The quantum of recapitalisation is a positive surprise and matches estimates of capital requirements for public sector banks for both NPA provisioning and some growth. With a very clear solution in place for the NPA problem, growth recovery will be less susceptible to periodic slowdowns and will be more structural than cyclical. While the current measures will take time to show effect, the medium and long term will be a showcase of the positive impact of these announcements. The government now needs to follow through with reforms aimed at public sector banks. Since 2014, the policy choices made by both the government and the RBI have resulted in a stability not afforded to many emerging markets. The big bank recap is another step in that direction.