FINANCIAL INCLUSION

We have always debated about socialunity, national unityand so on. But we havenever debated aboutfinancial unity

ET Global Business Summit 2015

MUMBAI | 18 PAGES | .̀ 3.00 OR .̀ 7.00 ALONG WITH THE TIMES OF INDIA SATURDAY, 17 JANUARY 2015BENNETT, COLEMAN & CO. LTD.THE ECONOMIC TIMES

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In a rare appearance at a media event, Prime Minister Narendra Modi used the opportunity offered by ET’s GlobalBusiness Summit to present his comprehensive economic & political vision. In a 45-minute electric speech delivered inEnglish, the PM mapped India’s future & presented a new philosophy of business, wowing India Inc & top policymakers

GRAND VISION: PM Narendra Modi addresses more than 700 global & Indian CEOs at the ET Global Business Summit

Our Bureau

New Delhi: Prime Minister Naren-dra Modi dared India to dream big ashe laid out details of his grand eco-nomic and development vision forthe country for the first time. Herald-ing the dawn of a New Age India, hesaid the country was making thetransition from a “winter of subduedachievement” to a “new spring”.

“India is a $2-trillion economy to-day. Can we not dream of an Indiawith a $20-trillion economy?” theprime minister asked at the ETGlobal Business Summit on Fri-day in an address that detailed theNarendra Modi doctrine of develop-ment in a comprehensive manner,each element segueing into the next.

“The government must nurture anecosystem where the economy isprimed for growth; and growth pro-motes all-round development.Where development is employ-ment-generating; and employmentis enabled by skills. Where skills aresynced with production; and pro-duction is benchmarked to quality.Where quality meets global stan-dards; and meeting global stan-dards drives prosperity. Most im-portantly, this prosperity is for the

welfare of all. That is my concept ofeconomic good governance and all-round development.”

Driving the prime minister’s visionis his desire for the uplift of all Indi-ans, especially the poorest. InvokingMahatma Gandhi, he said: “Elimina-tion of poverty is fundamental to me.This is at the core of my understand-ing of cohesive growth.”

He acknowledged that the taskwon’t be easy.

“Quick and easy reforms will notbe enough for creating a fast-grow-

ing economy. That is our challengeand that is what we aim to do,” hesaid. “It will take hard work, sus-tained commitment and strong ad-ministrative action. But we canovercome the mood of despair,” hesaid, referring to growth thatslumped below 5% to decadal lowsin the past two fiscal years.

Modi became prime minister inMay last year after leading BJP to anoverwhelming general election vic-tory. Since then the government haskicked off policy changes — andmore are to follow — as it seeks to re-vive growth, lift investment senti-ment, generate jobs, make India amanufacturing hub, improve gov-ernance and promote financial inclu-sion as part of the reforms agenda.

The PM headlined a star-studdedroster of 700 speakers and guests atthe ET Global Business Summit atthe Durbar Hall of Taj Palace Hotelin New Delhi. Nobel laureate PaulKrugman, free-trade guru JagdishBhagwati and Black Swan authorNassim Nicholas Taleb were amongthose in the audience.

The event that kicked off on Fridaywill feature a full programme onSaturday.

Expecting Ideas for Govt, says PM��3

HIGH-POWERED DISCUSSION: (From left) BCG Chairman Hans-Paul Bürkner, Bharti Chairman Sunil Mittal, Columbia Univ Prof Jagdish Bhagwati, Biocon CMD Kiran Mazumdar-Shaw & Max India Chairman Analjit Singh

PRIME MINISTER’S SPEECH CHARGES CORPORATE INDIA; BUSINESS CZARS OFFER MEASURES TO LIFT GROWTH��PAGES 2,3,4,5

India has to improve the ease ofdoing business for entrepre-neurs and industrialists and re-form the tax system to spur thecreation of jobs, Infosys founderNR Narayana Murthy said atthe ET Global Business Summit.“We have to understand the onlyway we can solve the problem ofpoverty is through the creationof jobs by entrepreneurs and in-dustrialists, both Indian and for-eign,” said Murthy. Along withreducing friction for business,he said the government had tocollect as much tax as possible byintroducing a system that waseasy to understand, easy to com-ply with and that was corrup-tion-free and based on fair rules.He also stressed the need to focuson higher education.��4

Make it Easierto do Biz, MendTax System

Andhra Pradesh Chief MinisterChandrababu Naidu deliveredencomiums to NDA ally Na-rendra Modi and made a salespitch on behalf of his state to as-sembled business leaders at TheEconomic Times Global Busi-ness Summit. Naidu, styled bymany as the ‘CEO of AndhraPradesh’ because of his govern-ing style during his earlier stintruling the undivided state, urgedthe prime minister to draw up a‘Vision 2050’ document thatwould serve as a guiding light forthe country’s reforms. The fu-ture, he said, belongs to India be-cause of the country’s demo-graphic advantages and the NDAgovernment’s initiatives, amongthem the opening up of the coalsector to private investors.��4

PM Modi MustNow Draw upVision 2050

NRN’S ADVICE ON CREATING JOBS NAIDU PITCHES FOR ANDHRA

OTHER NEWS OF THE DAY

Nobel Prize-winning econ-

omist Paul Krugman had

good news to offer at the

Economic Times Global

Business Summit. India is

definitely a country of the

future. While China has

shown ability to grow fas-

ter than most, when it

comes to global turbu-

lence, India has shown

more resilience. ��5

Krugman:India Countryof the Future

‘Nothing to do with MSG’Censor Board chief Leela Samson, who

quit on Thursday, said her resignation

had nothing to do with the movie MSG. A

range of incidents forced her to quit.��6

LEELA SAMSON EX-CENSOR BOARD CHIEF

Q&AEXCLUSIVE

FM Dares CongStates to FollowUPA’s Land ActGovt won’t hesitate to

steamroll obstructions

to its growth plans,

says Arun Jaitley

Our Bureau

New Delhi: Finance MinisterArun Jaitley on Friday indicatedthe government would not hesitateto steamroll obstructions to itsgrowth plans as he dared the Con-gress party, which has opposed thechanges to the Land AcquisitionAct, to continue to follow the old leg-islation in states it rules, therebyimplicitly suggesting that evenCongress chief ministers didn’twant the old Act.

Saying India was in the throes of“competitive federalism” withstates competing for investor mon-ey and on economic growth, Jaitley,speaking at the Economic TimesGlobal Business Summit, said stategovernments today could no longerafford policies that did not favourattracting investments.

Defending the changes to theland acquisition legislation, Jait-ley said despite the changes to theact brought about using the ordi-nance route, state governmentsnevertheless had the choice to fol-low the old one.

Creeping Acquisition of RS Numbers��16

INDIA IN THROES OF COMPETITIVE FEDERALISM

Jayant Sinha added a term—Innovate in India—to the lexicon

of NDA’s catchphrases as the MoS, finance, talked up gov-

ernment’s commitment to new-economy businesses.��4

Now, Innovate in India

ON DECISION-MAKING

...People of this countryare getting restless, peo-ple want quick, correctdecisions… excuses onwhy I could not deliverwill never be an alibi

ON DEVELOPMENT

Development seems tohave become the agen-da only of the govt…That should not be thecase… It should be apeople’s movement

Reliance Industries’

consolidated net

profit fell 4.5% in the

December quarter as margins at

its giant refinery contracted

amid the sharp drop in crude

prices. The weaker refining op-

eration was partly offset by

strong growth in its rapidly

growing retail business and

higher shale profits while petro-

chemical margins rose. Revenue

declined 20.4% yoy to .̀ 96,330

crore, reflecting the steep fall in

benchmark oil prices. Profit

dropped to .̀ 5,256 crore.��9

Low RefiningMargins PullDown RIL Net

Wipro reported tepid

growth of 1.3 % in

revenue, in a quarter

where rivals Infosys and TCS

have also been underperform-

ers, raising concerns about

slowing growth across the in-

dustry. The Bengaluru-based

company on Friday offered a

guidance of 1.1-3.1% for the

fourth quarter, the lowest the

company has projected for a

three-month period this fiscal,

and suggesting that its reve-

nues will barely grow at about

7 % for the entire year.��9

Wipro RevenueUp 1.3% AmidGrowth Fears

The Narendra Modi government has revived global in-

terest in the India growth story and it can help attract

plenty of investment if it improves the ease of doing busi-

ness in the country, top industrialists and global thought leaders said

at the ET Global Business Summit in Delhi on Friday.��PAGE 5

India Inc, Global Gurus Laud Modi

What’s In Store

Reforms In Energy Sector:

COAL, MINING & POWER

Pushing transparency and efficiency in governance, institutional reforms, positive regulatory framework, tax stability & ease of doing business

STEPS TO USHERIN THE NEW SPRING

VISION OFNEW AGE INDIA

COMMITMENTto achieve deficit target

PRICING reforms in petroleum products

FIRMMEASURESTO CONTROL INFLATION

CONSENSUS WITH STATES TO IMPLEMENT GST

INCLUSIONOF POOR IN FINANCIAL SYSTEM

MAKING India attractive for FDIBOOST for infrastructure

The Government Must Nurture An Ecosystem Where:

Economy is primed for growth & growth promotes developmentDevelopment is employment-generating and employment is enabled by skillsSkills are synced with production and production is benchmarkedto qualityQuality meets global standards and meeting global standards drives prosperity

ECONOMIC GOALS AND OBJECTIVES - PROSPERITY FOR THE WELFARE OF ALL

ALL AGOG: THE FRONT ROW

Can’t We Dream of India as a$20-Trillion Economy: Modi

The Economic Times Global

Business Summit had power,

wealth and intellect repre-

sented in equal measure.��5

No Less Than FirstAmong Exclusives

Here is an E-Book that takes you through my speech at the ET Global Business Summit. http://etspeech.narendramodi.in/ @EconomicTimes

Tweet from Narendra Modi

THE PM SPEECHPAGES��2, 3

PM Modi tweeted from hishandle after his rousing speechat the ET Global Business Summit

TK.Arun@timesgroup.com

New Delhi: Nobel-prize winning econo-mist Paul Krugman had good news to offer at the Airtel Economic Times Global Business Summit, both general and par-ticular. India is definitely a country of the future, if not the definitive country of the future. Further, he announced the demise of taper tantrums, the phenomenon of emerging markets being roiled and their currencies plummeting whenever the US Federal Reserve even thought about rais-ing policy rates, to taper off quantitative easing that had seen it create liquidity at an annualised rate of nearly $1 trillion.

Krugman said he could not claim to have specialised knowledge of the Indian econ-

omy, and confessed to having been de-terred from specialising in development economics when he was a graduate stu-dent, as “development economics actually meant no development in reality”.

The first global economy, towards the end of the 19th century, with its steam en-gines, telegraph and hectic commerce and colonies, saw the rich countries grow faster than poor ones. A snapshot of the second global economy, available in the last decade of the 20th century and the first decade of the 21st, shows a remarka-bly different picture. Poorer countries grew much faster, led, of course, by China and later, India. The role of globalisation in this process was shown by the steady rise in the share of exports in world GDP over the second half of the last century.

The American economist, living up to his liberal reputation, showed another chart, which plotted growth against the distribution of global income. Those at the bottom percentiles grew faster than those higher up the food chain. Except right at the highest percentile, when again, growth shot up vertically. In other words, globalised growth has been lev-eling incomes across nations, but the rich-est people of the world have been growing ever more richer.

Krugman made an interesting distinc-tion between a country’s ability to grow fast and its ability to weather adversity. During the Great Depression, fast-grow-ing US suffered far more than more stodgy Britain. Something like that played out after the financial crisis of 2008. China has shown the ability to grow faster than most nations, but when it comes to global turbu-lence, India has shown more resilience than China has been able to. China has too little consumption and too much invest-ment. India has no such problem. “China scares me,” he said. India, on the other hand, shows promise.

Of course, India has had a problem with inflation, inability to press ahead fast enough on infrastructure or on reforms. But India has shown greater resilience than China. The fact that there is such a big deficit of infrastructure here is actu-ally promising, there is so much to build, so much to drive growth.

So, while Brazil has been laughing at their self-deprecatory joke, that Brazil is the country of the future and will always remain the country of the future, India does not need to share this joke. India is definitely poised to grow. The government here understands the problems, but this, of course, is not the same thing as solving them. “India has a happy story to tell.”

You can no longer dismiss India as a minor player, feels the Nobel Prize winning economist, who’s impressed with the nation’s resilience. He also sees an unorthodox silver lining in infrastructure deficit—all the more to build and grow!

India a Nation of Future: Krugman Summit at Dawn of a New Era: Vineet Jain

READY REFORMS

It is particularly appropriate that this summit is taking place at the start of the new year and what seems like the dawn of a new era under the dynamic leadership of our PM. In the last few weeks, the govern-ment has gone on the front foot, en-acting major reforms in the areas of insurance, mining and land acquisi-tion. It has also embarked upon fun-damental reforms of the banking sector and shown great determina-tion to reform the public sector.

The big picture is that the govern-ment is moving rapidly to improve the ease of doing business in India. It has work to do, given India’s low rank of 142 on World Bank’s ease-of-doing-business list. The Make in

India initiative is long overdue and it recognises the im-portance of manu-facturing, one of the building blocks of a modern economy. India currently spends billions of

dollars importing cellular and elec-tronic items. In the years to come, we hope that these will be made in India.

Economic reforms are only one of the many building blocks of a ‘Rising India’. One of the hallmarks of a nation’s global influence is what is often referred to as soft power. While Bollywood provides a lot of that, true soft power will only come about if we have liberal policies in the field of education. We look for-ward to reforms in the field of educa-tion and healthcare, areas so far un-touched by the changes in our economy since 1991.

The budget that finance minister Arun Jaitley will present in February will be an important step-ping stone in the story of Indian eco-nomic revival.

—Extracts from BCCL MD Vineet Jain’s welcome address

The big picture is that the govt is moving fast to improve ease of doing business

ET Global Business Summit 2015

“NDA has demonstrated through ordinances that the obstinate obstructionism of Opposition parties would be dealt with”

SUNIL BHARTI MITTALChairman, Bharti Group

“Speakers you had invited are all experts in their fields and provide a good understanding in their area of expertise”

ASHOK GAJAPATHI RAJUCivil aviation minister

“News channels can only provide bite-sized information.

Print media will thrive because it is asynchronous”

NR NARAYANA MURTHYInfosys co-founder

NOT SO VULNERABLE

If we compare India & China, China scares me. They don’t have much consumption but way too much investment. It looks frightening to me. But India does not.

CRYSTAL BALL GAZING SPOTTING A STAR

Our Bureau

New Delhi: Some came an hour be-fore the event started, some came an hour into the event – but all left say-ing they wouldn’t have missed it for anything. An audience that had power, wealth and intellect in equal measure, where key ministers min-gled with corporate czars and global gurus chatted with India’s key advi-sors, was charmed and impressed.

To say the ET Global Business Summit was an evening to remem-ber would be an understatement, ministers, several India Inc nota-bles, senior officials and ambassa-dors said as they left. Prime Minister Narendra Modi had just finished speaking, and Durbar Hall, Taj Palace, the venue of ET GBS, was still buzzing.

The Prime Minister, the star of the evening, in a dapper black bandh-gala with a red pocket square, had the audience in thrall. Durbar Hall was packed and several members of the audience, VIPs and foreign del-egates among them, started using their camera to record the PM as he walked on to the stage. The PM’s speech, mostly in English, got the best laughs when he switched to Hindi to make a light-hearted point. Foreign guests received near simul-taneous translation from Indian members of the audience.

The standing ovation at the end of the speech was followed by several more notable guests photographing the PM as he shook some hands.

The PM appeared to be both in to-tal command, as he always is, and completely relaxed. As he came in, his modt important minister, Arun Jaitley, was answering a question from the audience. The PM sat and listened intently and the comfort and the chemistry between the PM and the FM were evident.

The FM, the other star of the show, had the audience listening in rapt attention as he answered questions, including from the likes of N Narayana Murthy.

The FM’s sartorial statement was his elegant shawl and he yet again demonstrated why he’s such an im-portant minister for the PM – his mastery of details was such that

ambassadors in the audience were whispering to each other that they rarely meet public officials who can illuminate complexity so easily.

Durbar Hall was packed far before the PM and the FM arrived the jun-ior minister in North Block, Jayant Sinha, started the proceedings. ET staffers on duty had the tough job of politely turning away people who didn’t have invites but insisted on attending. One gentleman said he was a guest of the hotel and he was from Gujarat and he had to attend to listen to ‘his’ Prime Minister.

The ever-polite and helpful SPG of-ficers, who would have seen ump-teen number of PM events, were quite impressed, too. One officer in-formed those manning seating ar-rangements that it was now house-ful and even guests with invites had to be sent to an adjoining room.

Speaking at the summit, Bennett, Coleman & Co CEO Raj Jain said, “The summit comes at a crucial time for the economy. The Modi ad-ministration has taken dramatic

steps to revive busi-ness confidence and quicken the pace of reforms. In the last few weeks, the government has enacted a slew of measures. Much has also been done

to build confidence in a predictable tax regime and faster environment clearances for critical projects. After a long time, the stars seem to favour us too. The recent fall in crude prices has helped push the current account deficit to below 2% of GDP. Prices of other commodi-ties have also fallen.

Some ministers broke the mould – Smriti Irani helped carry a child down the escalator and escorted her to her mother,l charming everyone and then made a typically stylish entry. She was seen in close confabu-lation with Krishna Gopal, the RSS heavyweight who is the pointsper-son between Sangh and BJP. Other ministers too walked up to the unas-suming RSS leader. It was that kind of an evening – RSS-BJP chats among India Inc stars, when do you see something like this.

Panel discussion comes to unanimous conclusion—govt is going in right direction to push growth

PANELDISCUSSION New imperatives for relaunching the Indian economy

WE HAVE A HARD WORKING GOVT COMMITTED TO THE BENEFIT OF ALL. IF THIS DOESN’T HELP INDIA REACH ITS POTENTIAL, I SUSPECT WE NEVER WILL

It was that kind of an evening— RSS-BJP chats among India Inc’s stars

CANNY QUORUM:BCG’s Hans-Paul Burkner, Bharti group’s Sunil Mittal, economist Jagdish Bhagwati, Biocon’s Kiran Mazumdar Shaw & Max India group’s Analjit Singh

Our Bureau

New Delhi: The Narendra Modi government has revived global interest in the India growth story and it can help attract plenty of invest-ment if it improves the ease of doing business in the country, top industrialists and global thought leaders said at the ET Global Business Summit in Delhi on Friday.

Taking part in a discussion on the new impera-tives for relaunching the Indian economy, top economist Jagdish Bhagwati, Boston Consulting Group chairman Hans-Paul Burkner, Bharti group chairman Sunil Bharti Mittal, Max India group founder and chairman Analjit Singh and Biocon founder Kiran Mazumdar Shaw opined that the government is going in the right direction to push growth.

Bhagwati said the government will reinforce demolition of the licence raj, kicked off by India when it liberalised its economy in 1991, and accentuate opening up of markets as free markets are the best antidote for an environ-ment beset with “rent-seeking policies”.

“Expose evil to sunlight, it will shrivel up and die,” said the professor of economics and law at the Columbia University.

Differentiating India and China’s growth sto-ries on the basis of the sort of corruption they bred in recent decades, Bhagwati said, “Corruption in China was pro-growth, where the sons and daughters of Communist party members and leaders had a stake in new invest-ments and reforms. Our corruption was more about creating rent-seeking opportunities and

monopolies based on a system full of licences.”The economist, who has mentored Niti Aayog

vice chairman Arvind Panagariya, expressed that the Modi government would bring in re-forms with greater energy, speed and determi-nation that the previous regime. “In the Manmohan Singh government, one minister asked me to chair a panel on using IT in primary education. I agreed, but never heard back from them for two years. This would never happen under this PM,” he said.

Boston Consulting’s Burkner suggested that to attract big investments, India should make lo-cal and global investors speak about their good and not-so-good experiences at global events, rather than sending big official delegations abroad and showing videos highlighting oppor-tunities in the country. “Let people talk about their own examples and their experiences of change in the country,” he said.

Also, India should ensure speed, stability and flexibility, he said. “If India and its states can ensure these, there would be lots of foreign in-

vestors in the country. The proof of the pudding lies in the eating,” Burkner said. “Companies like to start production within two to three years of taking the decision to invest, want to know what conditions are, make sure they are not changing, and want to be able to expand or cut back production quickly,” he said.

Burkner said the next two years will show if the renewed investor enthusiasm about India would translate into investments.

Sunil Mittal said the NDA government had come with a fortunate alignment of the stars and “opening scenes” of its innings have started well. “India has again become a growth story to talk about and is no more hobbled by the block-ages seen in the UPA government,” he said.

“We have a hard working government commit-ted to the benefit of all sections of society in the nation. If all this would not help India reach its potential, I suspect we never will,” Mittal said.

Analjit Singh commended the government for taking the ordinance route to raise the foreign direct investment cap in insurance ventures, which has been hanging fire for 13 years. “FDI is not the only precursor for the re-takeoff of the insurance industry,” he said, adding that though the sector is the second largest employ-er in the country, it needs a more favourable tax and regulatory regime.

“To punish the industry by taxing it in the same way as a manufacturing firm and frequent changes in policy make it difficult to grow and encourage a business,” Singh said, pointing out that insurance firms’ profits are always re-in-vested into the economy in long-gestation projects that lack adequate long-term financing.

Biz Leaders Exude Positivity, India Charged

SUNIL BHARTI MITTALChairman, Bharti Group

India has again become a growth story to talk about and

is no more hobbled by the

blockages seen in the UPA government

JAGDISH BHAGWATIEconomist, prof of economics & law,

Columbia University

In the Manmohan govt, a minister asked me

to chair a panel on IT in primary

education. I agreed, but never heard again

from them for two years

ANALJIT SINGHFounder & chairman, Max Group

To punish the (insurance) industry by taxing

it the same way as manufacturing

firm and with frequent policy changes make it difficult to grow a business

HANS-PAUL BURKNERChairman , BCG

If India and its states can ensure speed,

stability and flexibility, there

would be lots of foreign investors

in the country

KIRAN MAZUMDAR-SHAWChairperson, Biocon

If we want to be globally competitive, we can’t be

moving around with a ball and

chain. We need to be freed up

Jagdish Bhagwati feels govt will accentuate opening up of markets, as free markets are the best antidote for environment of ‘rent-seeking policies’

THINKER, WRITER,ECONOMISTPaul Krugman, ranked amongst the most influential eco-nomic thinkers in the US, is known in academic circles for his work on international economics, liquidity traps and currency crises. Outside academe, in the noisier world of the public discourse, he is well-known as a commentator on eco-nomic issues. Several of his ideas, as you will see, are of great relevance to India – our plans of becoming a global manufac-turing powerhouse, our tax policies, what have you.

NTT: Krugman proposed a New Trade Theory that made two assumptions — consumers prefer a diverse choice of brands and two, production favours econo-mies of scale

NEG: This led to the New Economic Geography. If trade is shaped by economies of scale, then regions with the most production will be the most profi table, and attract more production. Hence production will concentrate in a few regions

Liquidity TrapsThe way out was inflation, targetingwhich approaches the usual goal of

modern stabilisation policy, which is to provide adequate demand in a

clean, unobtrusive way

INTERNATIONAL FINANCEKrugman wrote a note in 2008 to explain the rapidity with which global financial crisis had spread when, “high-ly leveraged finan-cial institutions,

which do a lot of cross-border investment.... lose heavily in one market... they find themselves undercapitalised, and have to sell off assets across the board.”

Interstellar Trade

Krugman’s interest in economics

began with Isaac Asimov’s

Foundation novels

As Columnist Krugman started writing for the New York Times in 1999. These columns grad-ually evolved into a strong denunciations of the George Bush administration

Get

tyim

ages

No Less Than First Among Exclusives

THE ECONOMIC TIMES | MUMBAI | SATURDAY | 17 JANUARY 2015 5

TIMES SPECIAL | Global Business Summit

New Agenda For A New Age IndiaCommitted to non-aggressive tax regime: FM

TIMES NEWS NETWORK

New Delhi: Finance minister Arun Jaitley on Friday indi-cated he’ll initiate further steps to check a flight of investment from the country as he pitched India as “great choice” for in-vestors, domestic and overseas.

In his address at the Airtel and The Economic Times Glo-bal Business Summit, Jaitley reiterated government’s com-mitment to a non-aggressive tax regime and assured a hall packed with the country’s top CEOs and globally-renowned economists that the govern-ment had no intention to use retrospective taxation powers.

“I’ve been saying unfair and aggressive taxes momen-tarily will give a false belief that my taxation kitty is going to be very large... None of the controversial cases based on this ultra-aggressive approach have brought a single rupee of revenue. It’s only got Indian economy a bad name,” the FM said. He acknowledged that despite steps by government, some concerns persist.

“We thought a lot of Indian companies stationing their executives and professionals in Singapore, essentially for the more favourable tax cli-mate there, should shift base to India. It hasn’t happened in a big way... A group of them

(entrepreneurs) met me and mentioned that we’ve not done enough to shift them back to India. They’ve given detailed differences, particularly taxa-tion-related , which their busi-nesses enjoy. The issue is un-der serious examination,” he said after Infosys founder NR Narayana Murthy flagged it.

Jaitley said despite criti-cism over ordinances, govern-ment will push ahead with critical reforms. “We’re com-mitted to this cause that India needs effective decisions and an effective and clear imple-mentation roadmap,” he said.

The minister said persua-sion hadn’t worked with op-position parties so far and in-dicated that government won’t shy away from looking at other constitutional means to press on with legislative business, in what’s seen as reference to a joint session of Parliament. He dismissed criticism of the coal and mining ordinances. The idea, he said, was to shift from the obsolete first-come first-served system to a transparent allocation process.

Jaitley said the RBI’s deci-sion to cut key policy rates will boost demand. “This’ll leave somewhat more money in con-sumers’ hands. Hopefully, it’ll increase spending, make loans cheaper and consumer items, ... will see faster growth.”

India definitely country of the future: Krugman

India Inc all praise for ordinance moves, sees bright days ahead

TIMES NEWS NETWORK

New Delhi: India can be a country of the future and in general its prospects are brighter now than they’ve been, Paul Krugman, No-bel laureate and economist, said at the Airtel and Eco-nomic Times Global Busi-ness Summit.

India still has many problems but that doesn’t “scare” him as China does. India has weathered the US “taper tantrum” and the new government shows promise. He said the boom in capital flows to emerging markets during the taper period was to some “degree a bubble”.

“China scares me be-cause of the implications of distorted growth,” he said. China looked “very fright-ening” as it doesn’t have

enough consumption and way too much investment, he added.

He said India’s perform-ance has been remarkable but there were areas such as infrastructure, where re-forms must be carried out. “Many reforms that need to

take place haven’t yet taken effect,” he said, adding there was a lot of growth poten-tial in the Indian economy which is yet to be unlocked.

“Is India the country of the future? Possibly, if the Chinese tumble. I was look-ing at prospects that are incredibly better than any-one could imagine 25 years ago. The answer is certainly yes,” he said.

Krugman cautioned against unquestioned ac-ceptance of conventional wisdom on economic re-forms. “People extrapolate from the past and are almost always wrong,” he said. He said there was a time when “it was believed that Confu-cian values weren’t compat-ible with economic growth. Before that we believed Ja-pan was invincible.”

The present-day global

economy, said Krugman, is the second one in recent his-tory, the first being the era of steamships which cre-ated greater international migration. But the present-day economy has been dis-

tinguished by a dramatic growth of incomes for the “global middle” leading to good outcomes for global de-velopment.

He painted a fascinating picture of the evolution of economies which dominate

the global landscape and said developing economies were better placed now. Using charts he explained the growth process in a connected global economy and that in the previous era of steamships. “You can no longer dismiss China or India as major players. These are very big players,” he said.

Explaining the new growth process he said the world was more globalised and there were new forms of integration. “There’s a huge growth in trading in manufactured goods made possible by cheap shipping, the Internet. There is also for the first time growth in genuine trade in services and that’s very important for India,” he said adding that there were several rea-sons to be optimistic.

TIMES NEWS NETWORK

New Delhi: Economists and industry chiefs on Friday said the prospects for the In-dian economy look brighter as the government is ex-pected to press ahead with further reforms.

Renowned economist Jagdish Bhagwati kicked off a panel discussion at the Airtel and The Economic Times Global Business Summit cautioning that the slowdown in China didn’t necessarily mean that India will overtake it in terms of growth rate.

But he immediately struck a positive note saying that

PM Narendra Modi will push ahead with ending monopo-lies and the licence era which had resulted in corruption in India. “We’re going to see the opening of markets (during Modi government’s tenure) and there is nothing like the opening of markets to create competition and lack of rents and therefore growth. We first saw this in 1991 but now it’ll move from second gear to third because there’s nothing that can be seen in Mr Modi that could prove contrary to this prediction,” the Colum-bia University professor said.

Bharti group chairman Sunil Bharti Mittal said that the government had made a

good start, especially when the European economy hasn’t recovered, Japan is slowing down and China is dealing with its own prob-

lems. “India has again be-come a ‘must-be-in’ country after six or seven years… We all want to invest here. No one wants to miss the chance

now,” he said.While political parties

have been critical of the Modi government’s moves to promulgate ordinances in the

wake of a Rajya Sabha log-jam, business leaders seem to be cheering the move. “We’re no more hobbled by the block-ages seen in the last UPA government. They have dem-onstrated leadership by com-ing out with ordinances and it shows that obstructions of the opposition are dealt with very decisively. These are things missing in the last few years,” Mittal said.

Max Group chairman Analjit Singh too saw the In-surance ordinance as a boost but pointed out that some oth-er steps were needed to boost the sector. Asked about retro-spective tax, Singh, also the Vodafone chairman, said the

industry was watching the government’s moves. “Leave Vodafone on one side. Frank-ly, it won’t make or break Vo-dafone or India. But the fact is that style of working has bro-ken the back of business and that needs to be fixed.”

Biocon CMD Kiran Maz-umdar-Shaw suggested that the government should fur-ther deregulate and free up businesses through steps such as self-certification. Boston Consulting Group chairman Hans-Paul Burkn-er pointed out that there are three critical issues that for-eign investors are concerned about —speed, stability and flexibility.

Economist and Nobel laureate Paul Krugman delivers a special address

(From left) BCG chairman Hans-Paul Burkner, Sunil Bharti Mittal, economist Jagdish Bhagwati, Biocon CMD Kiran Mazumdar-Shaw and Max Group chairman Analjit Singh at a panel discussion

TALKING HEADS

Prime Minister Narendra Modi lends an ear to N R Narayana Murthy

Andhra CM Chandrababu Naidu hears out Bharti Enterprises vice-chairman Rajan Mittal

Power and coal minister Piyush Goyal

Fortis VC Shivinder Mohan Singh with DLF MD Rajeev Talwar at the Airtel ET Global Summit on Friday

Hero MotoCorp Joint MD Sunil Munjal in conversation with economist Jagdish Bhagwati

Gautam Adani, chairman and founder of Adani Group

‘Bring back Indian cos registered abroad’TIMES NEWS NETWORK

New Delhi: The world is fly-ing on a single engine of the US economy. Can India become the second engine, asked Vineet Jain, managing director Times Group, flagging off the year’s signature Airtel ET Global Business Summit. The Times of India and The Economic Times are wholly owned by Bennett, Coleman & Co.

Jain said the Modi govern-ment had hit the ground run-ning, enacting major reforms, resisting the obstruction of the opposition. But while speed and determination of the new government have rekindled hopes of many In-dians, there is also the uncom-fortable fact that more and more Indian businesses are

being registered overseas in countries like Singapore. Urg-ing the government to bring these companies back, he add-ed that this should be part of the Make in India initiative.

India, Jain said, needed more liberal policies in educa-tion and healthcare. These are essential aspects of India’s soft power, and have not been ad-dressed for decades.

Economicdevelopment cannot

take a nation forward on its own. We also need a society which is cohesive”➤ We have always debated about social unity, national unity and so on. We have never debated about financial unity. About bringing everyone into the financial system. This is one cause which both capitalists and socialists agree on”➤ Today, India’s cooking gas subsidy is the world’s largest

cash transfer programme… We plan to introduce direct cash transfer in other benefit schemes”➤ I believe subsidies are needed. We need to cut subsidy leakages, not subsidies themselves”➤ Development has to result in jobs. Reforms, economic growth, progress – all are empty words if they do no translate into jobs”➤ Niti Ayog is a step that will take the country forward

on the path of cooperative federalism with a competitive zeal. ➤ Niti Ayog is our mantra for creating trust and partnership between the centre and the states”

➤ I Intend to launch a massive National

Programme for PDS computerization. The Entire PDS supply chain, from the FCI

godown to the ration shop and consumer

will be computerized. Technology will drive welfare and efficient food delivery”➤ People must understand the Clean Ganga programme as an economic activity”➤ Small acts can drive reforms. What appears minor can actually be vital and fundamental”➤ Railway stations can become growth points of nearby villages”

MODINOMICS

Government has no

business to be in business

SUMMIT SNIPPETS

Innovate in India: Sinha

Calling attention to Indian innovators, Jayant Sinha, MoS, finance, said inno-vators in say, Paolo Alto, meet the needs of the world’s top billion, but what India needs is innovation to lift its millions out of poverty. “We need to innovate for the next 5 billion, not the top 1 billion”, he said. “Indian motorcycles are reliable. We need to build the same confidence in Indian medical devices. You see plastic packets everywhere. How do we process that? We need systems, products designed for India,” he said.

Land-pooling to build a capitalSharing his ‘land-pooling policy’, Andhra CMChandrababu Naidu said, “Itis a win-win situation for farmers and government.” Naidu said on this policy, farmers had “come forward to offer their land” to build Andhra’s new capital, while Singapore is making the city’s masterplan and Japan offering to develop the plan for areas outside the ‘core capital’ area. The Andhra CM also added everyone expects the 21st century to be India’s.

Milkshakes, straws and ChinaNoted economist Jagdish Bhagwati had a unique explanation for China’s growth. He said, “I think China certainly is slowing down but there is no evidence that it is slowing down to the point where we can have a free ride and overtake it. When you look at China, the corruption was pro-growth because what they did was to have nephews, nieces, sons anddaughters of the elite have a stake in whatever was going on. Imagine a milkshake. Their own people were putting straws in the milkshake so there was a need to expand the economy. Our corruption was rent-sharing or rent-creating basically.”

Times Group MD Vineet Jain at the summit

Rural development minister Birender Singh & risk analyst Nassim Nicholas Taleb

Photos: Piyal Bhattacharjee, Rajesh Mehta, Anindya Chattopadhyay

He said the Modi gov-ernment had hit theground running, en-

acting major reforms, resist-ing the obstruction of the op-position. Jain said thecountry needed more liberalpolicies in education andhealthcare. “These are essen-tial aspects of India’s softpower, and have not been ad-dressed for decades,” he said.

Raj Jain, CEO of TimesGroup flagship Bennett, Cole-man & Company Ltd, said thegovernment had undertaken aslew of reform measures andexpressed hope that the 2015-16budget would be “impactful”.Listing the measures taken byhis government, the PM said,“Improvement in governanceis a continuous process. We aremaking changes whereveracts, rules and procedures arenot in tune with needs.”

“We are cutting down onmultiple clearances that chokeinvestment. Our complex taxsystem is crying for reform,which we have initiated. I be-lieve in speed. I will push thro-ugh change at a fast pace. You

will appreciate this in times tocome,” the PM said in remarkswhich are being seen as a road-map of his reform agenda.

The PM defended subsi-dies, saying they were neededfor the poor, but also assertedthat their ultimate objectiveshould be the welfare of theneedy. “We need to cut subsidyleakages, not subsidies them-selves,” he said in his 45-min-ute speech. “The ultimate ob-jective of subsidies should beto empower the poor, to breakthe cycle of poverty, and be-come foot soldiers in our waron poverty,” the PM said.

The PM also said the gov-ernment plans a massive na-tional program for computeri-zation of the public distri-bution system. “The entirePDS supply chain, from the

FCI godown to the ration shopand consumer will be comput-erized. Technology will drivewelfare and efficient food de-livery,” Modi said.

Modi said the governmentwas committed to achievingthe fiscal deficit target an-nounced in the budget. “Wehave worked systematically inthis direction,” he said weeksbefore the 2015-16 budget, sig-nalling commitment to repairthe health of state finances.However, he also made it clearthat the pursuit of fiscal disci-pline would not be at the ex-pense of the pro-poor orienta-tion of his policies as he speltout after he was elected theleader of BJP parliamentaryparty. “This government willbe that of the poor,” Modi hadsaid. He took off from wherehe had left in May last year ashe said, “Economic develop-ment cannot take a nation for-ward on its own. We need a so-ciety and economy whichcomplement each other. Weneed to take care of the poor,deprived and sections whichhave been left behind.”

“Reforms are not an end inthemselves. Reforms must

have a concrete objective. Theobjective must be to improvethe welfare of the people,” hetold an audience of top econo-mists, businessmen, diplo-mats and bureaucrats. Modisaid the government was pre-paring the ground for India tobe a $20 trillion economy in theyears ahead. “This is hardwork. Quick and easy reformswill not be enough for creatinga fast growing economy. Thisis our challenge and that iswhat we aim to do,” he said.

Outlining some of themeasures to boost growth andimprove governance, Modisaid thousands of railway sta-tions in the country where notmore than one or two trainsstop in the day could be used asgrowth centres for nearby vil-lages and used as centres forskill development using tech-nology. He said governmentsystems need to be sharp, effec-tive, fast and flexible and thiswould require simplificationof processes and having trustin citizens. “What is maxi-mum governance, minimumgovernment? It means govern-ment has no business to be inbusiness,” Modi said.

Aim to make India $20tn eco: PM� From P 1 Modi defended

subsidies, sayingthey were neededfor the poor, butasserted that theirultimate objectiveshould be welfareof the needy

New Delhi:There’s a bonan-za in store for full-serviceflyers in India. The promiseof unmatched comfort by Tata-Singapore Airlines’(SIA) JV Vistara has madelegacy carriers Air Indiaand Jet Airways constantlycome up with passenger-friendly moves.

Jet on Friday waived pen-alty charges for changingtravel plans within 24 hoursof booking tickets on its web-site and its mobile app.

Air India has re-startedserving hot snacks or mealson flights of under an hour,instead of just biscuits and peanuts.

AI had about two yearsback stopped serving mealsand hot snacks on its domes-tic flights of under an hour asa cost-cutting move. Sourcessay the three — AI, Jet andVistara — will be in a con-stant battle to lure full-ser-vice flyers — who will now

have the last laugh. Whilelow-cost carriers IndiGo andGoAir (SpiceJet is to get newowners) were not impactedby last year’s launch of Tata-AirAsia budget carrier in In-dia, Vistara has created rip-ples for both AI and Jet.

The biggest worry forthese two is Vistara’s abilityto quickly mount long-haulflights when the 5-year, 20-aircraft rule is relaxed,thanks to Tata’s financialstrength and SIA’s famed

reputation. Also, SIA’s cloutin Star Alliance means thatVistara may enter the alli-ance sooner than later.

“It will be a double wham-my for us. Foreign airlineswill have their own interna-tional flights to and from In-dia, apart from having morethrough their JV carriers inIndia. There will be restric-tion of bilaterals in theirway,” said a senior official ofa full service carrier.

Jet, Air India gearup to match Vistara

Saurabh.Sinha@timesgroup.com

FLYERS GAIN

New Delhi:For the second timein a row, navbharattimes.combagged the award of being thebest Indian language website.The award was given by Inter-net and Mobile Association ofIndia (IAMAI), a not-for profitindustry body, linked with on-line and mobile value added ser-vices sectors.

These awards are given tocompany, organization or indi-viduals for their achievementsin the digital world. Of the sev-eral entries in the category onlythree portals — NavbharatTimes, Maharashtra Times andDivya Bhaskar managed to re-ach the final shortlisting, fromwhich NBT emerged as the win-ner. Over the last one year NBThas done various changes in itswebsite. It has also managed tosuccessfully penetrate the newsthrough mobile applicationmarket. Its mobile App, which isavailable for both windows andandroid operating system, ispopular among the users.

NBT India’sbest Indian

language siteTIMES NEWS NETWORKMumbai:Axis Bank on Friday

posted an 18.4% increase in De-cember quarter net profit at Rs1,900 crore from a year ago, onthe back of a massive jump intreasury income. The bank’score net interest income rose20% to Rs 3,590 crore during thereporting quarter, while theother income grew at higher24% to Rs 2,039 crore, becauseof treasury gains.

The higher profit comes de-spite a marginal drop in its netinterest margin at 3.93% and anincrease in gross non-perform-ing assets ratio at 1.34%. AGENCIES

Axis BankDec quarternet up 18%

New Delhi: The Supreme Courton Friday granted six weeks’time to Reliance Industries (RIL)to respond to the Comptrollerand Auditor General (CAG) 2014report, which had adverselycommented on its operations ofgas blocks in the KG basin. TNN

SC to RIL: Respondto CAG report

* THE TIMES OF INDIA, MUMBAISATURDAY, JANUARY 17, 20152424

Product: TOIMumbaiBS PubDate: 17-01-2015 Zone: MumbaiCity Edition: 2 Page: TOIMST User: dwilliam0510 Time: 01-17-2015 01:02 Color: CMYK

Our Bureau

New Delhi: The foremost priority for every economy is to get its house in order—this was the consensus that emerged at a discussion featur-ing Nobel laureate and Princeton don tur ned columnist Paul Krugman, star development econo-mist and Ford Foundation interna-tional professor of economics at MIT Abhijit Banerjee and the gov-ernment of India’s chief economic advisor Arvind Subramanian.

The star-studded panel covered a great deal of ground at the Economic Times Global Business Summit on Saturday as they en-gaged with each other on the theme of ‘American Revival: What it means for the world economy and India.’

While trade in goods is universally accepted as being beneficial to one and all, trade in services creates what Subramanian called a belea-guered middle class in the rich countries, putting up political bar-riers to expanding this exchange, he said, initiating the discussion that will set the agenda ahead of President Barack Obama’s visit later this month.

This middle class “is kind of ex-pressing reservations about open-ness and the commitment to open-ness,” said Subramanian, warning about the implication of such pro-tectionism for India.

Krugman said there was a valid reason for what Subramanian called “intellectual climate change” in the US, referring to reservations about globalization.

“I would say obviously protection-ism is not the route but to say that we do have problems which are in some ways exacerbated by globali-sation and that we need to accept that fact is a reasonable thing,” Krugman said.

The panel agreed that unregulated capital flows could be a real danger, suggesting better regulation while

admitting that financial sector re-form that began after the 2008 crisis has not gone very far. The panel was unanimous in recommending for-eign direct investment (FDI) to countries that needed investments and those that had a surplus.

“I still think one thing we really need to do is creating a climate for FDI,” Banerjee said, adding that “FDI is typically useful--everything else is questionable,” a point en-dorsed by Krugman.

“FDI, it does not have that track record of causing problems, and conversely if you do not want to con-tribute to the problems of your sur-plus country, you really should be promoting direct investments rath-er than parking your money in some place,” the Nobel laureate added.

The most sensible way to deploy savings is in infrastructure, of

which there is a serious deficit not just in countries like India but also in the US.

Krugman said there was little chance of another bubble building up right now and disagreed with the idea that low US interest rates are because of quantitative easing.

“US interest rates are low funda-mentally. Long rates are low be-cause people expect short rates to be low for a very long time and peo-ple expect short rates to be low for a very long time because they think that the expansion is fundamental-ly weak, that there is a drag,” he said.

But Banerjee does not think all this cheap money sloshing around in the world’s financial networks will help build Indian infrastruc-ture until the country fixes its banking system and bankrupt in-

frastructure companies that are undercapitalised.

“I think the bad news is that the money, even if people came to us with tonnes of money to lend, I do not think we are in a position to bor-row,” the MIT professor said, add-ing that the country’s financial sec-tor was broken like never before.

“A very large number of infra-

structure and power companies that are on paper probably still not bankrupt but I think in effect bank-rupt and that is our fundamental (problem),” he said. “Unless we solve that problem, all the capital sloshing around is not going to go anywhere.”

Krugman believes governments needlessly hold themselves back from borrowing money at cheap rates to spend on infrastructure, of-fering support to the recent idea in India that the government can step up public investment by relaxing fiscal deficit targets.

In his mid-year review of the economy, Subramanian had said the private sector was not in a posi-tion to invest and the government needed to step in.

“I do feel that we cannot afford to be very conservative. We are in

deep trouble because of this huge amount of bailout that will be need-ed and we can half do it but then the banking sector would not provide finances, it does not provide fi-nance, or growth will be slow and we do need infrastructure,” Banerjee said.

Krugman said big countries bor-rowing in their own currencies have not really bothered about rat-ings agencies.

There is a problem with debt for governments only when the debt is owed to foreigners, said Krugman, adding that foreign capital cannot really be the saviour of any econo-my. There is no alternative apart from fiscal expansion even at the threat of a ratings downgrade be-cause if growth stagnates for too long, that too could be cause for a downgrade.

Our Bureau

New Delhi: The Economic Times Global Business Summit, Day 2, January 17 - delegates were talking about Nassim Nicholas Taleb’s tweets on Narendra Modi, who stole the show on Day 1 of ET GBS.

Taleb’s tweets – first, “I’d rather open a thousand schools than a sin-gle university”, Indian PM @naren-dramodi very impressive and, sec-ond, PM Modi mentioned that ‘small is beautiful’; small is mostly less fragile than large – were unu-sual in that it’s rare for a disruptive-ly smart theoretician to find com-mon ground with a head of government.

But the 2-day ET GBS turned out to be that kind of a forum – full of unex-pected delights and char ms. Saturday’s bitingly cold, ferociously foggy Delhi winter morning wasn’t the best weather for anyone to travel to a hotel, to either give or listen to spe-cial addresses. They all came, though.

Railway Minister Suresh Prabhu, whose staff was smilingly com-plaining that their minister works all but 5 hours a day, arrived right on time, began by saying ET has been a change agent for economic dyna-mism for 20 years and ended by re-fusing to give too many details of his future plans – “I want a full page in ET after the rail budget”, he said, “I won’t get it if I give details now”.

The other two ministers were equally engaging. Ravi Shankar Prasad was seen chatting away with Paul Krugman and Piyush Goyal seemed, as he almost always does, completely at ease. All ministers po-litely fended off eager businessmen who had pitches to make.

But even businessmen with order books on their mind were transport-ed to a more interesting world by Taleb. You knew within 10-minutes

of his keynote address on ET GBS Day 2, why he’s so famous, why his books are so mind-bendingly good and why he’s so sought after. A dis-ruptive thinker who’s also a gifted raconteur, Taleb knows exactly when to show a slide and when to pause for that ‘Oh!’ moment to happen.

He alone would have kept Day 2 of ET GBS going, indeed he said he’s perfectly happy to continue for hours, but there was so much more on offer. Not the least being a star-studded panel – Krugman, Chief Economic Advisor Arvind Subramaniam and

MIT’s Abhijit Banerjee.Day 2 ending with a discussion of

that quality was the perfect bookend for an event that showcased so much political, business and academic tal-ent. Let us also add, Paul Krugman went off to see Humayun’s tomb with Coca-Cola’s Venkatesh Kini and Nassim Nicholas Taleb took to Facebook to arrange a meet-up over coffee with some fans in the city.

Taleb had said there’s so much dis-order in Delhi’s traffic that India seems a fertile ground for radical thinking. Here’s hoping he’s right.

ET Global Business Summit 2015

Our PM wants an e-literate and e-enabled population, an idea that resonates very well, particularly with the youth

KIRAN MAZUMDAR-SHAWChairperson, Biocon

Haven’t seen, heard or met a national leader like

our Prime Minister! A true inspiration

SHIVINDER MOHAN SINGHExecutive Vice-chairman, Fortis Healthcare

1. BCG India MD Arindam Bhattacharya and Venkatesh Kini, president at Coca-Cola India and South West Asia2. Viom Network’s Syed Safawi and Videocon Telecom’s Arvind Bali3. Micromax’s Sanjay Kapoor and Vineet Taneja4. Naveen Jindal and Rajyavardhan Rathore5. Raian Karanjiwala and Uma Shankar Bhartia6. EY’s Rajeev Memani

The Ties Have It The two-day event was full of invigorating conversations

2

31

Taleb’s address transported everyone to a more interesting world

Forum Kept Everyone Engaged & the Cold Out

ON DAY TWO

FDI Fine, All Else QuestionableKrugman goes with panel view in recommending Foreign Direct Investment, believes you really should be promoting direct investments rather than borrowing

‘AMERICAN REVIVAL: WHAT IT MEANS FOR THE WORLD ECONOMY AND INDIA’

654

Star-Studded Panel: Paul Krugman and Abhijit Banerjee say while trade in goods is universally accepted as being beneficial to all, trade in services creates a beleaguered middle class in rich countries

ARVIND SUBRAMANIAN INITIATED THE DISCUSSION THAT WILL SET THE AGENDA AHEAD OF OBAMA’S VISIT

FOOD FOR THOUGHT: (Top) Paul Krugman helps himself; Max’s top team— Mohit Talwar, Rahul Khosla and Rajit Mehta

PAUL KRUGMAN

Nobel laureate, Princeton Don

turned Columnist

ABHIJIT BANERJEE

Ford Foundation International Professor of

Economics at MIT

The country is looking forward with bated breath to

more and more of govt’s plans to be implemented

SUNIL KANT MUNJALJoint MD, Hero MotoCorp

It seems to me that to be worried about the next bubble is very premature. The fact of the matter is we are still living in the shadow of the past crisis

International capital flows have not been the route to prosperity, the route to success for anybody, basically, ever

Our financial sector, our banking sector is broken like nobody’s business, more broken than it has ever been

I do not think that one should start with the idea that regulation had nothing to do with it (the crisis). This was engineered by a particular regulatory stance in the US which was…irresponsible, putting it very mildly

12�THE ECONOMIC TIMES | MUMBAI | MONDAY | 19 JANUARY 2015

ET Global Business Summit 2015

CANDIDCAMERA An Evening to Remember for the Capital’s Who’s Who

LONG QUEUE: Finance Minister Arun Jaitley with top industrialists

INSTANT CONNECT: Civil Aviation Minister Ashok Gajapathi Raju

POLITICAL CONNECTIONS Amar Singh with Naveen Jindal

LOOKING OUT: Ravi Shankar Prasad & Jitendra Singh ALL EARS: Anand Burman

ATTENTION TO DETAIL: Paul Krugman & Hans-Paul Bürkner

Our Bureau

New Delhi: Reservations about glo-balization in the US could under-mine its commitment to openness in trade and commerce, chief eco-n o m i c a d v i s o r A r v i n d Subramanian said, flagging this as a key concern for countries such as India with protectionist voices seemingly growing louder in the world’s biggest economy.

“You cannot grow at 8% sustainably based on the domestic market that is completely inconsistent. So for us, it is really important that foreign mar-kets remain open,” he said at the Economic Times Global Business Summit on Saturday. Subramanian amplified on the point about public intellectuals appearing to circle the wagons in the US.

“What is common to Paul Samuelson, Larry Summers, Alan Blinder, Joe Stiglitz, Michael Spence and Paul Krugman,” he asked at the discussion on American Revival:

What it means for the World Economy and India. What makes the rest of the world nervous? “It’s com-mitment to openness is in question,” Subramanian said during a discus-sion that also featured Nobel laure-

ate Paul Krugman and MIT profes-sor Abhijit Banerjee.

“One has to worry about the ability of the United States even if it is growing because it is not growing with gains distributed across the spectrum.”

Subramanian said continued US

commitment to openness is very im-portant for India and the world in the backdrop of immigration policy and the International Monetary Fund’s quota reforms.

Saying “US commitment to open-ness is actually now under ques-tion,” he pointed to two manifesta-

tions of this tendency. First, the US is the only major country that has not signed up to IMF quota replen-ishment since 2010 when it was ne-gotiated. Second, the Senate bill on immigration is adverse, even hos-tile, to Indian skilled labour exports, he said.

Subramanian’s comments assume significance in the backdrop of US President Barack Obama’s forth-coming India visit as both countries strive to improve relations.

On the impact of a possible rise in interest rates in the US, he said India was in a better situation to face it now than when the “taper tantrum” hit financial markets in 2013, leading to markets and the rupee plunging.

“Since December, my calculation is we had about $40 billion in inflows, of which about 60% is actually inter-est-sensitive debt inflows. So any in-crease in interest rates potentially could lead to disruption,” he said. “(But) I think this time around it is going to be very different because the India situation, the macroeco-nomic situation, is fundamentally different from what it was about 16-17 months ago,” he said.

He noted that the India-US relation-ship is “underpinned fundamental-ly by human capital flows but with a lot of unrealised potential.”

Subramanian said the people-to-

people relationship is strong but the rest of the engagement between India and the US, especially govern-ment-to-government ties, has been wanting in many areas and the po-tential is unrealised.

“The US is the world’s largest econ-omy not in PPP (purchasing power parity) terms but in market ex-change rate terms and India is much smaller, per-capita GDP much low-er… so this is an asymmetric rela-tionship.” he said. Both are “under traders” with huge unrealised trade potential, he said.

“The US is our largest market for our exports. It is probably the sec-ond largest source of our imports but the other way around, we mat-ter less for the US both in terms of export markets and sources of im-ports and that is the sense in which the US-India relationship is kind of asymmetric,” he said, adding that Indians contributed $3 billion every year through social security contri-butions in the US and this needed to be changed.

CHIEF ECONOMIC ADVISOR SAYS INDIA AND THE US SHARE ASYMMETRICAL TIES, WITH HUGE UNREALISED TRADE POTENTIAL

US Commitment to Openness Vital for IndiaChief economic advisor Arvind Subramanian says Senate bill on immigration is adverse, even hostile, to Indian skilled labour exports

Call for openness: The US is the biggest market for India’s exports

James Bevan @HCJamesBevanGlad to be supporting @EconomicTimes Global Business Summit. PM @narendramodi calls UK/India an “unbeatable combination”.He’s right! #ETGBS

Shekar kapurShekhar Kapur (@shekharkapur)‘Can we not dream of India with a 20 trillion $ economy?’ @narendramodi speech at #ETGBS , must watch youtube.com/watch?v=126_Tr…

TWEETS #ETGBS

THE MODI MOMENTPM Narendra Modi talking to Narayana Murthy and Nepal’s International Trade Minister Sunil Bahadur Thapa as other listen with rapt attention

ALL SMILES : Times Internet CEO Satyan Gajwani with Rahul Sharma

WARM HANDSHAKES: Ratul Puri with Sunil Mittal

MAKING A POINT: Rakesh Mittal & Akhil Gupta LONG STRIDES: Human Resource Development Minister Smriti Irani

ATTENTION IS KEY: GVK BioChairman of DS Brar

POWER PLAY: NTPC Chairman Arup Roy Choudhury (Top);RSS’ Krishna Gopal (L) and Vikram Kirloskar (Second left)

THE BEST & THE BRIGHTESTOver 700 national and international businessmen, policymakers participated in the 2-day ET Global Business Summit in New Delhi

PENNING CHANGE: UK Minister Baroness Verma

TALKS OVER DINNER: Nassim Taleb; Paul Krugman with Arvind Subramanian; Kiran Mazumdar-Shaw

BUSINESS PITCH: Chandrababu Naidu with Rajan Mittal

Photo credits: Amrendra Jha, Ashwani Nagpal, Rajesh Mehta, Anindya Chattopadhyay, Piyal Bhattacharjee, Yogesh Kumar

15�WWW.ECONOMICTIMES.COM

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