1. FINANCIAL INCLUSION
Wehavealways
debatedaboutsocial
unity,nationalunity
andsoon.Butwehave
neverdebatedabout
financialunity
ETGlobalBusinessSummit2015
MUMBAI | 18 PAGES | .`3.00 OR .`7.00 ALONG WITH THE TIMES OF INDIA SATURDAY, 17 JANUARY 2015BENNETT, COLEMAN & CO. LTD.
THEECONOMICTIMES
WWW.ECONOMICTIMES.COM
In a rare appearance at a media event, Prime Minister Narendra Modi used the opportunity offered by ET’s Global
Business Summit to present his comprehensive economic & political vision. In a 45-minute electric speech delivered in
English, 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 as
he laid out details of his grand eco-
nomic and development vision for
thecountryforthefirsttime.Herald-
ing the dawn of a New Age India, he
said the country was making the
transitionfroma“winterof subdued
achievement”toa“newspring”.
“India is a $2-trillion economy to-
day. Can we not dream of an India
with a $20-trillion economy?” the
prime minister asked at the ET
Global Business Summit on Fri-
day in an address that detailed the
NarendraModidoctrineof develop-
ment in a comprehensive manner,
eachelementsegueingintothenext.
“Thegovernmentmustnurturean
ecosystem where the economy is
primed for growth; and growth pro-
motes all-round development.
Where development is employ-
ment-generating; and employment
isenabledbyskills.Whereskillsare
synced 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 of
economic good governance and all-
rounddevelopment.”
Drivingtheprimeminister’svision
is his desire for the uplift of all Indi-
ans, especially the poorest. Invoking
MahatmaGandhi,hesaid:“Elimina-
tionof povertyisfundamentaltome.
Thisisatthecoreof myunderstand-
ingof cohesivegrowth.”
He acknowledged that the task
won’tbeeasy.
“Quick and easy reforms will not
be enough for creating a fast-grow-
ing economy. That is our challenge
and that is what we aim to do,” he
said. “It will take hard work, sus-
tained commitment and strong ad-
ministrative action. But we can
overcome the mood of despair,” he
said, referring to growth that
slumped below 5% to decadal lows
in the past two fiscal years.
Modi became prime minister in
May last year after leading BJP to an
overwhelming general election vic-
tory. Since then the government has
kicked off policy changes — and
more are to follow — as it seeks to re-
vive growth, lift investment senti-
ment, generate jobs, make India a
manufacturing hub, improve gov-
ernanceandpromotefinancialinclu-
sionaspartof thereformsagenda.
The PM headlined a star-studded
roster of 700 speakers and guests at
the ET Global Business Summit at
the Durbar Hall of Taj Palace Hotel
in New Delhi. Nobel laureate Paul
Krugman, free-trade guru Jagdish
Bhagwati and Black Swan author
NassimNicholasTalebwereamong
thoseintheaudience.
Theeventthatkickedoff onFriday
will feature a full programme on
Saturday.
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
Indiahastoimprovetheeaseof
doingbusinessforentrepre-
neursandindustrialistsandre-
form thetaxsystemtospurthe
creationof jobs,Infosysfounder
NRNarayanaMurthysaidat
theETGlobalBusinessSummit.
“Wehavetounderstandtheonly
waywecansolvetheproblemof
povertyisthroughthecreation
of jobsbyentrepreneursandin-
dustrialists,bothIndianandfor-
eign,”saidMurthy.Alongwith
reducingfrictionforbusiness,
hesaidthegovernmenthadto
collectasmuchtaxaspossibleby
introducingasystemthatwas
easytounderstand,easytocom-
plywithandthatwascorrup-
tion-freeandbasedonfairrules.
Healsostressedtheneedtofocus
onhighereducation. 4
Make it Easier
todoBiz,Mend
TaxSystem
AndhraPradeshChief Minister
ChandrababuNaidu delivered
encomiumstoNDAallyNa-
rendraModiandmadeasales
pitchonbehalf of hisstatetoas-
sembledbusinessleadersatThe
EconomicTimesGlobalBusi-
nessSummit.Naidu,styledby
manyasthe‘CEOof Andhra
Pradesh’becauseof hisgovern-
ingstyleduringhisearlierstint
rulingtheundividedstate,urged
theprimeministertodrawupa
‘Vision2050’documentthat
wouldserveasaguidinglightfor
thecountry’sreforms.Thefu-
ture,hesaid,belongstoIndiabe-
causeof thecountry’sdemo-
graphicadvantagesandtheNDA
government’sinitiatives,among
themtheopeningupof thecoal
sectortoprivateinvestors. 4
PMModiMust
NowDrawup
Vision2050
NRN’S ADVICE ON CREATING JOBS NAIDU PITCHES FOR ANDHRA
OTHER NEWS OF THE DAY
NobelPrize-winningecon-
omistPaulKrugmanhad
goodnewstoofferatthe
EconomicTimesGlobal
BusinessSummit.Indiais
definitelyacountryofthe
future.WhileChinahas
shownabilitytogrowfas-
terthanmost,whenit
comestoglobalturbu-
lence,Indiahasshown
moreresilience. 5
Krugman:
IndiaCountry
oftheFuture
‘NothingtodowithMSG’
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
FMDaresCong
StatestoFollow
UPA’sLandAct
Govt won’t hesitate to
steamroll obstructions
to its growth plans,
says Arun Jaitley
Our Bureau
New Delhi: Finance Minister
Arun Jaitley on Friday indicated
the government would not hesitate
to steamroll obstructions to its
growth plans as he dared the Con-
gress party, which has opposed the
changes to the Land Acquisition
Act,tocontinuetofollowtheoldleg-
islation in states it rules, thereby
implicitly suggesting that even
Congress chief ministers didn’t
wanttheoldAct.
Saying India was in the throes of
“competitive federalism” with
states competing for investor mon-
eyandoneconomicgrowth,Jaitley,
speaking at the Economic Times
GlobalBusinessSummit,saidstate
governmentstodaycouldnolonger
afford policies that did not favour
attractinginvestments.
Defending the changes to the
land acquisition legislation, Jait-
ley said despite the changes to the
act brought about using the ordi-
nance route, state governments
nevertheless had the choice to fol-
low the old one.
CreepingAcquisitionofRSNumbers 16
INDIA IN THROES OF COMPETITIVE FEDERALISM
JayantSinhaaddedaterm—InnovateinIndia—tothelexicon
ofNDA’scatchphrasesastheMoS,finance,talkedupgov-
ernment’scommitmenttonew-economybusinesses. 4
Now,InnovateinIndia
ON DECISION-MAKING
...Peopleofthiscountry
aregettingrestless,peo-
plewantquick,correct
decisions…excuseson
whyIcouldnotdeliver
willneverbeanalibi
ON DEVELOPMENT
Developmentseemsto
havebecometheagen-
daonlyofthegovt…
Thatshouldnotbethe
case…Itshouldbea
people’smovement
RelianceIndustries’
consolidatednet
profitfell4.5%inthe
Decemberquarterasmarginsat
itsgiantrefinerycontracted
amidthesharpdropincrude
prices.Theweakerrefiningop-
erationwaspartlyoffsetby
stronggrowthinitsrapidly
growingretailbusinessand
highershaleprofitswhilepetro-
chemicalmarginsrose.Revenue
declined20.4%yoyto.`96,330
crore,reflectingthesteepfallin
benchmarkoilprices.Profit
droppedto.`5,256crore. 9
LowRefining
MarginsPull
DownRILNet
Wiproreportedtepid
growthof1.3%in
revenue,inaquarter
whererivalsInfosysandTCS
havealsobeenunderperform-
ers,raisingconcernsabout
slowinggrowthacrossthein-
dustry.TheBengaluru-based
companyonFridayoffereda
guidanceof1.1-3.1%forthe
fourthquarter,thelowestthe
companyhasprojectedfora
three-monthperiodthisfiscal,
andsuggestingthatitsreve-
nueswillbarelygrowatabout
7%fortheentireyear. 9
WiproRevenue
Up1.3%Amid
GrowthFears
TheNarendraModigovernmenthasrevivedglobalin-
terestintheIndiagrowthstoryanditcanhelpattract
plentyofinvestmentifitimprovestheeaseofdoingbusi-
nessinthecountry,topindustrialistsandglobalthoughtleaderssaid
attheETGlobalBusinessSummitinDelhionFriday. PAGE 5
IndiaInc,GlobalGurusLaudModi
What’sInStore
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 USHER
IN THE NEW SPRING
VISION OF
NEW AGE INDIA
COMMITMENT
to achieve
deficit target
PRICING reforms
in petroleum
products
FIRM
MEASURES
TO CONTROL
INFLATION
CONSENSUS
WITH STATES
TO IMPLEMENT
GST
INCLUSION
OF POOR IN
FINANCIAL
SYSTEM
MAKING India attractive for FDI
BOOST for infrastructure
The Government Must Nurture
An Ecosystem Where:
Economy is primed for growth &
growth promotes development
Development is employment-
generating and employment is
enabled by skills
Skills are synced with production
and production is benchmarked
to quality
Qualitymeets global standards
and meeting global standards
drives prosperity
ECONOMIC GOALS AND
OBJECTIVES - PROSPERITY FOR
THE WELFARE OF ALL
ALL AGOG: THE FRONT ROW
Can’tWeDreamofIndiaasa
$20-TrillionEconomy:Modi
TheEconomicTimesGlobal
BusinessSummithadpower,
wealthandintellectrepre-
sentedinequalmeasure. 5
NoLessThanFirst
AmongExclusives
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 SPEECH
PAGES 2, 3
PM Modi tweeted from his
handle after his rousing speech
at the ET Global Business Summit

2. TK.Arun@timesgroup.com
New Delhi: Nobel-prize winning econo-
mistPaulKrugmanhadgoodnewstooffer
at the Airtel Economic Times Global
Business Summit, both general and par-
ticular.Indiaisdefinitelyacountryof the
future,if notthedefinitivecountryof the
future.Further,heannouncedthedemise
of taper tantrums, the phenomenon of
emerging markets being roiled and their
currenciesplummetingwhenevertheUS
Federal Reserve even thought about rais-
ing policy rates, to taper off quantitative
easing that had seen it create liquidity at
anannualisedrateof nearly$1trillion.
Krugmansaidhecouldnotclaimtohave
specialisedknowledgeof theIndianecon-
omy, and confessed to having been de-
terred from specialising in development
economics when he was a graduate stu-
dent,as“developmenteconomicsactually
meantnodevelopmentinreality”.
The first global economy, towards the
endof the19thcentury,withitssteamen-
gines,telegraphandhecticcommerceand
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
grewmuchfaster,led,of course,byChina
and later, India. The role of globalisation
in this process was shown by the steady
rise in the share of exports in world GDP
overthesecondhalf of thelastcentury.
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-
elingincomesacrossnations,buttherich-
estpeopleof theworldhavebeengrowing
evermorericher.
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-
ingUSsufferedfarmorethanmorestodgy
Britain. Something like that played out
afterthefinancialcrisisof 2008.Chinahas
showntheabilitytogrowfasterthanmost
nations,butwhenitcomestoglobalturbu-
lence, India has shown more resilience
thanChinahasbeenableto.Chinahastoo
little consumption and too much invest-
ment. India has no such problem. “China
scares me,” he said. India, on the other
hand,showspromise.
Of course,Indiahashadaproblemwith
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,
somuchtodrivegrowth.
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
definitelypoisedtogrow.Thegovernment
here understands the problems, but this,
of course,isnotthesamethingassolving
them.“Indiahasahappystorytotell.”
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!
IndiaaNationof Future:Krugman Summitat
Dawnofa
NewEra:
VineetJain
READY REFORMS
It is particularly appropriate that
this summit is taking place at the
startof thenewyearandwhatseems
likethedawnof aneweraunderthe
dynamicleadershipof ourPM.
In the last few weeks, the govern-
ment has gone on the front foot, en-
actingmajorreformsintheareasof
insurance,miningandlandacquisi-
tion.Ithasalsoembarkeduponfun-
damental reforms of the banking
sector and shown great determina-
tiontoreformthepublicsector.
The big picture is that the govern-
ment is moving rapidly to improve
theeaseof doingbusinessinIndia.It
has work to do, given India’s low
rankof 142onWorldBank’sease-of-
doing-business list. The Make in
India initiative is
long overdue and it
recognises the im-
portance of manu-
facturing,oneof the
buildingblocksof a
modern economy.
India currently
spends billions of
dollars importing cellular and elec-
tronicitems.Intheyearstocome,we
hopethatthesewillbemadeinIndia.
Economic reforms are only one of
the many building blocks of a
‘RisingIndia’.Oneof thehallmarks
of anation’sglobalinfluenceiswhat
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-
wardtoreformsinthefieldof educa-
tionandhealthcare,areassofarun-
touched by the changes in our
economysince1991.
The budget that finance minister
Arun Jaitley will present in
Februarywillbeanimportantstep-
pingstoneinthestoryof Indianeco-
nomicrevival.
—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
ETGlobalBusinessSummit2015
“NDAhasdemonstratedthrough
ordinancesthattheobstinate
obstructionismofOpposition
partieswouldbedealtwith”
SUNILBHARTIMITTAL
Chairman,BhartiGroup
“Speakersyouhadinvitedare
allexpertsintheirfieldsand
provideagoodunderstanding
intheirareaofexpertise”
ASHOKGAJAPATHIRAJU
Civil aviationminister
“Newschannelscanonly
providebite-sizedinformation.
Printmediawillthrivebecauseit
isasynchronous”
NRNARAYANAMURTHY
Infosysco-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: Somecameanhourbe-
foretheeventstarted,somecamean
hour into the event – but all left say-
ingtheywouldn’thavemisseditfor
anything. An audience that had
power,wealthandintellectinequal
measure,wherekeyministersmin-
gledwithcorporateczarsandglobal
guruschattedwithIndia’skeyadvi-
sors,wascharmedandimpressed.
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
finishedspeaking,andDurbarHall,
Taj Palace, the venue of ET GBS,
wasstillbuzzing.
ThePrimeMinister,thestarof the
evening, in a dapper black bandh-
gala with a red pocket square, had
the audience in thrall. Durbar Hall
waspackedandseveralmembersof
the audience, VIPs and foreign del-
egates among them, started using
theircameratorecordthePMashe
walked on to the stage. The PM’s
speech, mostly in English, got the
best laughs when he switched to
Hinditomakealight-heartedpoint.
Foreignguestsreceivednearsimul-
taneous translation from Indian
membersof theaudience.
Thestandingovationattheendof
the speech was followed by several
morenotableguestsphotographing
thePMasheshooksomehands.
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
andtheFMwereevident.
TheFM,theotherstarof theshow,
had the audience listening in rapt
attentionasheansweredquestions,
including from the likes of N
NarayanaMurthy.
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
rarelymeetpublicofficialswhocan
illuminatecomplexitysoeasily.
DurbarHallwaspackedfarbefore
the PM and the FM arrived the jun-
iorministerinNorthBlock,Jayant
Sinha, started the proceedings. ET
staffersondutyhadthetoughjobof
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
fromGujaratandhehadtoattendto
listento‘his’PrimeMinister.
Theever-politeandhelpfulSPGof-
ficers, who would have seen ump-
teen number of PM events, were
quiteimpressed,too.Oneofficerin-
formed those manning seating ar-
rangements that it was now house-
fulandevenguestswithinviteshad
tobesenttoanadjoiningroom.
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
stepstorevivebusi-
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
currentaccountdeficittobelow2%
of GDP. Prices of other commodi-
tieshavealsofallen.
Someministersbrokethemould–
Smriti Irani helped carry a child
downtheescalatorandescortedher
to her mother,l charming everyone
and then made a typically stylish
entry.Shewasseenincloseconfabu-
lation with Krishna Gopal, the RSS
heavyweight who is the pointsper-
son between Sangh and BJP. Other
ministerstoowalkeduptotheunas-
suming RSS leader. It was that kind
of an evening – RSS-BJP chats
amongIndiaIncstars,when do you
seesomethinglikethis.
Panel discussion comes to unanimous conclusion—govt is going in right direction to push growth
PANELDISCUSSION New imperatives for relaunching the Indian economy
WEHAVEAHARD
WORKINGGOVT
COMMITTEDTOTHE
BENEFITOFALL.IF
THISDOESN’THELP
INDIAREACHITS
POTENTIAL,ISUSPECT
WENEVERWILL
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.
Takingpartinadiscussiononthenewimpera-
tives for relaunching the Indian economy, top
economist Jagdish Bhagwati, Boston
Consulting Group chairman Hans-Paul
Burkner, Bharti group chairman Sunil Bharti
Mittal,MaxIndiagroupfounderandchairman
Analjit Singh and Biocon founder Kiran
MazumdarShawopinedthatthegovernmentis
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,”saidtheprofessorof economicsandlawat
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
membersandleadershadastakeinnewinvest-
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
askedmetochairapanelonusingITinprimary
education. I agreed, but never heard back from
them for two years. This would never happen
under this PM,” he said.
BostonConsulting’sBurknersuggestedthatto
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
abroadandshowingvideoshighlightingoppor-
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-
vestorsinthecountry.Theproof of thepudding
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
comewithafortunatealignmentof thestarsand
“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-
agesseenintheUPAgovernment,”hesaid.
“Wehaveahardworkinggovernmentcommit-
tedtothebenefitof allsectionsof societyinthe
nation. If all this would not help India reach its
potential, I suspect we never will,” Mittal said.
AnaljitSinghcommendedthegovernmentfor
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-
erinthecountry,itneedsamorefavourabletax
and regulatory regime.
“Topunishtheindustrybytaxingitinthesame
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
projectsthatlackadequatelong-termfinancing.
BizLeadersExudePositivity,IndiaCharged
SUNILBHARTIMITTAL
Chairman, Bharti Group
Indiahasagainbecomea
growthstoryto
talkaboutand
isnomore
hobbledbythe
blockagesseeninthe
UPAgovernment
JAGDISHBHAGWATI
Economist, prof of economics & law,
Columbia University
IntheManmohangovt,a
ministeraskedme
tochairapanel
onITinprimary
education.I
agreed,butneverheardagain
fromthemfortwoyears
ANALJITSINGH
Founder & chairman, Max Group
Topunishthe(insurance)
industrybytaxing
itthesameway
asmanufacturing
firmandwith
frequentpolicychangesmake
itdifficulttogrowabusiness
HANS-PAULBURKNER
Chairman , BCG
IfIndiaanditsstatescan
ensurespeed,
stabilityand
flexibility,there
wouldbe
lotsofforeigninvestors
inthecountry
KIRANMAZUMDAR-SHAW
Chairperson, Biocon
Ifwewanttobeglobally
competitive,
wecan’tbe
movingaround
withaballand
chain.Weneedto
befreedup
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,
ECONOMISTPaulKrugman,rankedamongstthemostinfluentialeco-
nomicthinkersintheUS,isknowninacademiccirclesfor
hisworkoninternationaleconomics,liquiditytrapsand
currencycrises.Outsideacademe,inthenoisierworldofthe
publicdiscourse,heiswell-knownasacommentatoroneco-
nomicissues.Severalofhisideas,asyouwillsee,areofgreat
relevancetoIndia–ourplansofbecomingaglobalmanufac-
turingpowerhouse,ourtaxpolicies,whathaveyou.
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
profitable, and attract more
production. Hence production will
concentrate in a few regions
Liquidity Traps
The way out was inflation, targeting
which approaches the usual goal of
modern stabilisation policy, which is
to provide adequate demand in a
clean, unobtrusive way
INTERNATIONAL FINANCE
Krugman 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
AsColumnist
Krugman started
writing for the New
York Times in 1999.
These columns grad-
ually evolved into a
strong denunciations
of the George Bush
administration
Gettyimages
NoLessThanFirst
AmongExclusives
THE ECONOMIC TIMES | MUMBAI | SATURDAY | 17 JANUARY 2015
5

3. TIMESSPECIAL | Global Business Summit
New Agenda For A New Age India
Committed to
non-aggressive
tax regime: FM
TIMES NEWS NETWORK
New Delhi: Finance minister
Arun Jaitley on Friday indi-
catedhe’llinitiatefurthersteps
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
jointsessionof 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-
ingonasingleengineof theUS
economy.CanIndiabecomethe
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.
Economic
development 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 capital
Sharing his ‘land-pooling
policy’, Andhra CM
Chandrababu Naidu said, “It
is 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 China
Noted 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 and
daughters 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
H
e said the Modi gov-
ernment had hit the
ground running, en-
acting major reforms, resist-
ing the obstruction of the op-
position. Jain said the
country needed more liberal
policies in education and
healthcare.“Theseareessen-
tial aspects of India’s soft
power, and have not been ad-
dressedfordecades,”hesaid.
Raj Jain, CEO of Times
Group flagship Bennett, Cole-
man & Company Ltd, said the
governmenthadundertakena
slew of reform measures and
expressedhopethatthe2015-16
budget would be “impactful”.
Listingthemeasurestakenby
his government, the PM said,
“Improvement in governance
isacontinuousprocess.Weare
making changes wherever
acts, rules and procedures are
notintunewithneeds.”
“We are cutting down on
multipleclearancesthatchoke
investment. Our complex tax
system is crying for reform,
which we have initiated. I be-
lieveinspeed.Iwillpushthro-
ugh change at a fast pace. You
willappreciatethisintimesto
come,”thePMsaidinremarks
whicharebeingseenasaroad-
mapof hisreformagenda.
The PM defended subsi-
dies, saying they were needed
for the poor, but also asserted
that their ultimate objective
should be the welfare of the
needy.“Weneedtocutsubsidy
leakages, not subsidies them-
selves,” he said in his 45-min-
ute speech. “The ultimate ob-
jective of subsidies should be
to empower the poor, to break
the cycle of poverty, and be-
come foot soldiers in our war
onpoverty,”thePMsaid.
The PM also said the gov-
ernment plans a massive na-
tionalprogramforcomputeri-
zation of the public distri-
bution system. “The entire
PDS supply chain, from the
FCI godown to the ration shop
andconsumerwillbecomput-
erized. Technology will drive
welfare and efficient food de-
livery,”Modisaid.
Modi said the government
was committed to achieving
the fiscal deficit target an-
nounced in the budget. “We
haveworkedsystematicallyin
this direction,” he said weeks
before the 2015-16 budget, sig-
nalling commitment to repair
the health of state finances.
However, he also made it clear
that the pursuit of fiscal disci-
pline would not be at the ex-
pense of the pro-poor orienta-
tion of his policies as he spelt
out after he was elected the
leader of BJP parliamentary
party. “This government will
be that of the poor,” Modi had
said. He took off from where
he had left in May last year as
he said, “Economic develop-
ment cannot take a nation for-
wardonits own. We need a so-
ciety and economy which
complement each other. We
need to take care of the poor,
deprived and sections which
havebeenleftbehind.”
“Reformsarenotanendin
themselves. Reforms must
have a concrete objective. The
objective must be to improve
the welfare of the people,” he
told an audience of top econo-
mists, businessmen, diplo-
mats and bureaucrats. Modi
said the government was pre-
paring the ground for India to
bea$20trillioneconomyinthe
years ahead. “This is hard
work.Quickandeasyreforms
willnotbeenoughforcreating
a fast growing economy. This
is our challenge and that is
whatweaimtodo,”hesaid.
Outlining some of the
measures to boost growth and
improve governance, Modi
said thousands of railway sta-
tionsinthecountrywherenot
more than one or two trains
stopinthedaycouldbeusedas
growth centres for nearby vil-
lages and used as centres for
skill development using tech-
nology. He said government
systemsneedtobesharp,effec-
tive, fast and flexible and this
would require simplification
of processes and having trust
in citizens. “What is maxi-
mum governance, minimum
government?Itmeansgovern-
ment has no business to be in
business,”Modisaid.
Aim to make India $20tn eco: PMFrom P 1
Modi defended
subsidies, saying
they were needed
for the poor, but
asserted that their
ultimate objective
should be welfare
of the needy
NewDelhi:There’sabonan-
za in store for full-service
flyers in India. The promise
of unmatched comfort by
Tata-Singapore Airlines’
(SIA) JV Vistara has made
legacy carriers Air India
and Jet Airways constantly
come up with passenger-
friendlymoves.
JetonFridaywaivedpen-
alty charges for changing
travel plans within 24 hours
of bookingticketsonitsweb-
siteanditsmobileapp.
Air India has re-started
serving hot snacks or meals
on flights of under an hour,
instead of just biscuits
andpeanuts.
AI had about two years
back stopped serving meals
and hot snacks on its domes-
ticflightsof underanhouras
a cost-cutting move. Sources
say the three — AI, Jet and
Vistara — will be in a con-
stant battle to lure full-ser-
vice flyers — who will now
have the last laugh. While
low-costcarriersIndiGoand
GoAir(SpiceJetistogetnew
owners) were not impacted
by last year’slaunchof Tata-
AirAsiabudgetcarrierinIn-
dia, Vistara has created rip-
plesforbothAIandJet.
The biggest worry for
these two is Vistara’s ability
to quickly mount long-haul
flights when the 5-year, 20-
aircraft rule is relaxed,
thanks to Tata’s financial
strength and SIA’s famed
reputation. Also, SIA’s clout
in Star Alliance means that
Vistara may enter the alli-
ancesoonerthanlater.
“Itwillbeadoublewham-
my for us. Foreign airlines
will have their own interna-
tional flights to and from In-
dia, apart from having more
through their JV carriers in
India. There will be restric-
tion of bilaterals in their
way,”saidaseniorofficialof
afullservicecarrier.
Jet, Air India gear
up to match Vistara
Saurabh.Sinha
@timesgroup.com
FLYERS GAIN
NewDelhi:Forthesecondtime
in a row, navbharattimes.com
bagged the award of being the
best Indian language website.
The award was given by Inter-
net and Mobile Association of
India (IAMAI), a not-for profit
industry body, linked with on-
lineandmobilevalueaddedser-
vicessectors.
These awards are given to
company, organization or indi-
viduals for their achievements
in the digital world. Of the sev-
eralentriesinthecategoryonly
three portals — Navbharat
Times,MaharashtraTimesand
Divya Bhaskar managed to re-
ach the final shortlisting, from
whichNBTemergedasthewin-
ner. Over the last one year NBT
has done various changes in its
website. It has also managed to
successfullypenetratethenews
through mobile application
market.ItsmobileApp,whichis
available for both windows and
android operating system, is
popularamongtheusers.
NBT India’s
best Indian
language site
TIMES NEWS NETWORK
Mumbai:AxisBankonFriday
postedan18.4%increaseinDe-
cember quarter net profit at Rs
1,900 crore from a year ago, on
the back of a massive jump in
treasury income. The bank’s
core net interest income rose
20%toRs3,590croreduringthe
reporting quarter, while the
other income grew at higher
24% to Rs 2,039 crore, because
of treasurygains.
The higher profit comes de-
spite a marginal drop in its net
interest margin at 3.93% and an
increase in gross non-perform-
ingassetsratioat1.34%. AGENCIES
Axis Bank
Dec quarter
net up 18%
New Delhi: The Supreme Court
on Friday granted six weeks’
time to Reliance Industries (RIL)
to respond to the Comptroller
and Auditor General (CAG) 2014
report, which had adversely
commented on its operations of
gas blocks in the KG basin. TNN
SC to RIL: Respond
to CAG report
* THE TIMES OF INDIA, MUMBAI
SATURDAY, JANUARY 17, 20152424

4. Our Bureau
New Delhi: The foremost priority
foreveryeconomyistogetitshouse
in order—this was the consensus
thatemergedatadiscussionfeatur-
ing Nobel laureate and Princeton
don tur ned columnist Paul
Krugman,stardevelopmentecono-
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 ‘AmericanRevival:Whatitmeans
fortheworldeconomyandIndia.’
Whiletradeingoodsisuniversally
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“intellectualclimatechange”
in the US, referring to reservations
about globalization.
“Iwouldsayobviouslyprotection-
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.
Thepanelagreedthatunregulated
capital flows could be a real danger,
suggesting better regulation while
admitting that financial sector re-
formthatbeganafterthe2008crisis
hasnotgoneveryfar.Thepanelwas
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
“FDIistypicallyuseful--everything
else is questionable,” a point en-
dorsed by Krugman.
“FDI, it does not have that track
record of causing problems, and
converselyif youdonotwanttocon-
tribute to the problems of your sur-
plus country, you really should be
promoting direct investments rath-
erthanparkingyourmoneyinsome
place,”theNobellaureateadded.
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
notthinkweareinapositiontobor-
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
ratestospendoninfrastructure,of-
fering support to the recent idea in
Indiathatthegovernmentcanstep
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
amountof bailoutthatwillbeneed-
edandwecanhalf doitbutthenthe
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
tweetsonNarendraModi,whostole
theshowonDay1of ETGBS.
Taleb’s tweets – first, “I’d rather
open a thousand schools than a sin-
gleuniversity”,IndianPM@naren-
dramodi very impressive and, sec-
ond, PM Modi mentioned that
‘small is beautiful’; small is mostly
less fragile than large – were unu-
sualinthatit’srareforadisruptive-
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 charms.
Saturday’s bitingly cold, ferociously
foggy Delhi winter morning wasn’t
the best weather for anyone to travel
toahotel,toeithergiveorlistentospe-
cialaddresses.Theyallcame,though.
Railway Minister Suresh Prabhu,
whose staff was smilingly com-
plaining that their minister works
allbut5hoursaday,arrivedrighton
time,beganbysayingEThasbeena
change agent for economic dyna-
mism for 20 years and ended by re-
fusingtogivetoomanydetailsof his
future plans – “I want a full page in
ET after the rail budget”, he said, “I
won’tgetitif Igivedetailsnow”.
The other two ministers were
equally engaging. Ravi Shankar
Prasadwasseenchattingawaywith
Paul Krugman and Piyush Goyal
seemed, as he almost always does,
completelyatease.Allministerspo-
litelyfendedoff eagerbusinessmen
whohadpitchestomake.
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,Talebknowsexactlywhen
toshowaslideandwhentopausefor
that‘Oh!’momenttohappen.
He alone would have kept Day 2 of
ET GBS going, indeed he said he’s
perfectlyhappytocontinueforhours,
but there was so much more on offer.
Not the least being a star-studded
panel – Krugman, Chief Economic
Advisor Arvind Subramaniam and
MIT’sAbhijitBanerjee.
Day 2 ending with a discussion of
thatqualitywastheperfectbookend
foraneventthatshowcasedsomuch
political,businessandacademictal-
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
coffeewithsomefansinthecity.
Talebhadsaidthere’ssomuchdis-
order in Delhi’s traffic that India
seems a fertile ground for radical
thinking.Here’shopinghe’sright.
ETGlobalBusinessSummit2015
OurPMwantsane-literateand
e-enabledpopulation,anidea
thatresonatesverywell,
particularlywiththeyouth
KIRANMAZUMDAR-SHAW
Chairperson,Biocon
Haven’tseen,heardor
metanationalleaderlike
ourPrimeMinister!A
trueinspiration
SHIVINDERMOHANSINGH
ExecutiveVice-chairman,FortisHealthcare
1. BCG India
MD Arindam
Bhattacharya and
Venkatesh Kini,
president at Coca-
Cola India and South
West Asia
2. Viom Network’s
Syed Safawi and
Videocon Telecom’s
Arvind Bali
3. Micromax’s Sanjay
Kapoor and Vineet
Taneja
4. Naveen Jindal
and Rajyavardhan
Rathore
5. Raian Karanjiwala
and Uma Shankar
Bhartia
6. 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
ForumKeptEveryone
Engaged&theColdOut
ON DAY TWO
FDIFine,AllElseQuestionableKrugman 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-StuddedPanel: 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
INITIATEDTHE
DISCUSSIONTHAT
WILLSETTHE
AGENDAAHEADOF
OBAMA’SVISIT
FOODFORTHOUGHT: (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
Thecountryislooking
forwardwithbatedbreathto
moreandmoreofgovt’s
planstobe implemented
SUNILKANTMUNJAL
JointMD,HeroMotoCorp
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

5. ETGlobalBusinessSummit2015
CANDIDCAMERA An Evening to Remember for the Capital’s Who’s Who
LONGQUEUE: Finance Minister Arun Jaitley with top industrialists
INSTANTCONNECT: Civil Aviation Minister Ashok Gajapathi Raju
POLITICALCONNECTIONSAmar Singh with Naveen Jindal
LOOKINGOUT: Ravi Shankar Prasad & Jitendra Singh ALLEARS: Anand Burman
ATTENTIONTODETAIL: Paul Krugman & Hans-Paul Bürkner
Our Bureau
NewDelhi: Reservationsaboutglo-
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.
“Youcannotgrowat8%sustainably
basedonthedomesticmarketthatis
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
wagonsintheUS.
“What is common to Paul
Samuelson, Larry Summers, Alan
Blinder,JoeStiglitz,MichaelSpence
andPaulKrugman,”heaskedatthe
discussion on American Revival:
What it means for the World
EconomyandIndia.Whatmakesthe
restof theworldnervous?“It’scom-
mitmenttoopennessisinquestion,”
Subramanian said during a discus-
sion that also featured Nobel laure-
ate Paul Krugman and MIT profes-
sorAbhijitBanerjee.
“Onehastoworryabouttheability
of the United States even if it is
growing because it is not growing
with gains distributed across the
spectrum.”
Subramanian said continued US
commitmenttoopennessisveryim-
portant for India and the world in
thebackdropof immigrationpolicy
and the International Monetary
Fund’squotareforms.
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,toIndianskilledlabourexports,
hesaid.
Subramanian’scommentsassume
significance in the backdrop of US
President Barack Obama’s forth-
comingIndiavisitasbothcountries
strivetoimproverelations.
On the impact of a possible rise in
interestratesintheUS,hesaidIndia
wasinabettersituationtofaceitnow
than when the “taper tantrum” hit
financial markets in 2013, leading to
marketsandtherupeeplunging.
“SinceDecember,mycalculationis
we had about $40 billion in inflows,
of whichabout60%isactuallyinter-
est-sensitivedebtinflows.Soanyin-
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-
17monthsago,”hesaid.
HenotedthattheIndia-USrelation-
ship is “underpinned fundamental-
lybyhumancapitalflowsbutwitha
lotof unrealisedpotential.”
Subramanian said the people-to-
peoplerelationshipisstrongbutthe
rest of the engagement between
India and the US, especially govern-
ment-to-government ties, has been
wanting in many areas and the po-
tentialisunrealised.
“TheUSistheworld’slargestecon-
omy not in PPP (purchasing power
parity) terms but in market ex-
changeratetermsandIndiaismuch
smaller, per-capita GDP much low-
er… so this is an asymmetric rela-
tionship.” he said. Both are “under
traders”withhugeunrealisedtrade
potential,hesaid.
“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
theUS-Indiarelationshipiskindof
asymmetric,” he said, adding that
Indianscontributed$3billionevery
yearthroughsocialsecuritycontri-
butionsintheUSandthisneededto
be changed.
CHIEFECONOMIC
ADVISORSAYSINDIA
ANDTHE US SHARE
ASYMMETRICAL
TIES,WITHHUGE
UNREALISED
TRADEPOTENTIAL
USCommitmenttoOpennessVitalforIndia
Chief economic advisor Arvind Subramanian says Senate bill on immigration is adverse, even hostile, to Indian skilled labour exports
Callforopenness: The US is the biggest market for India’s exports
JamesBevan
@HCJamesBevan
Gladtobesupporting@
EconomicTimesGlobal
BusinessSummit.PM@
narendramodicallsUK/India
an“unbeatablecombination”.
He’sright!#ETGBS
Shekarkapur
ShekharKapur(@
shekharkapur)
‘CanwenotdreamofIndia
witha20trillion$
economy?’@narendramodi
speechat#ETGBS,must
watchyoutube.com/
watch?v=126_Tr…
TWEETS #ETGBS
THEMODI
MOMENT
PM Narendra
Modi talking
to Narayana
Murthy
and Nepal’s
International
TradeMinister
Sunil Bahadur
Thapa as
other listen
with rapt
attention
ALLSMILES: Times Internet CEO
Satyan Gajwani with Rahul Sharma
WARMHANDSHAKES: Ratul Puri with Sunil Mittal
MAKINGAPOINT: Rakesh Mittal & Akhil Gupta
LONGSTRIDES:Human Resource
Development Minister Smriti Irani
ATTENTIONISKEY:GVK BioChairman of DS Brar
POWER
PLAY: NTPC
Chairman
Arup Roy
Choudhury
(Top);
RSS’ Krishna
Gopal (L) and
Vikram
Kirloskar
(Second left)
THEBEST
&THE
BRIGHTEST
Over 700
national and
international
businessmen,
policymakers
participated
in the 2-day
ET Global
Business
Summit in
New Delhi
PENNINGCHANGE: UK Minister Baroness Verma
TALKSOVERDINNER: Nassim Taleb; Paul Krugman with Arvind Subramanian; Kiran Mazumdar-Shaw
BUSINESSPITCH: Chandrababu
Naidu with Rajan Mittal
Photo credits:
Amrendra
Jha, Ashwani
Nagpal, Rajesh
Mehta, Anindya
Chattopadhyay,
Piyal
Bhattacharjee,
Yogesh Kumar
15WWW.ECONOMICTIMES.COM
*