www.businessworld.in | RNI No. 39847/81 I 28 JANUARY 2023 Rs 150 MAHA CM: EYEING $1-TRILLION ECONOMY A blueprint to promote Gen Next wealth creators will help Union Budget meet long-term national goals and realise Vision 2047 WEALTHY, ASPIRATIONAL INDIA’S GREEN HYDROGEN PUSH SHILPA SHETTY ON INVESTMENTS
4 | BW BUSINESSWORLD | 28 January 2023 Faith is the bird that feels the light when the dawn is still dark — Rabindranath Tagore Dear Reader, WE LIVE IN interesting times. The spectre of a global recession looms large. The Ukraine war has led to a disruption in global supply chains. Our neighbourhood of China faces crises on multiple fronts. Faced with these global headwinds, many agree that India continues to be a bright spot. Speaking at the recently-held Madhya Pradesh Investors’ Summit, Prime Minister Narendra Modi said: “This optimism for India is driven by strong democracy, young demography and political stability. Due to these, India is taking decisions that boost ease of living and ease of doing business.” Precisely for this reason, in the run-up to the Union Budget, we decided to do a cover feature on how the Budget could help create more wealth creators, entrepreneurs and job creators. And, further India’s onward march. To create an entrepreneur is to create multiple job opportunities. There is no other viable mechanism to address the unemployment crisis facing India today. There’s a greater realisation, across the political spectrum, that while job creation may be a great slogan, we need to focus a lot more on creating “job creators”. This means that the private sector plays a key role. This also means that a number of states are pro-actively collaborating with industry. This is a welcome development. Maharashtra, for instance, has roped in an advisory board with industry leaders as its members. In this issue of BW Businessworld, we have an interview with the Maharashtra CM where he talks about how infrastructure-led growth will help the state realise the $1 trillion vision. This edition of the magazine has some interesting features like an interview with Bollywood actor and entrepreneur Shilpa Shetty who also talks about investments. In the forthcoming issues, we have lined up a series of new features. Of course, we will bring to you a special edition on the Union Budget. This issue of BW Businessworld has all other regular features and columns. Do keep sending in your inputs and feedback. Happy reading! ANNURAG BATRA [email protected] MAKING INDIA WEALTHY, HEALTHY, WISE EDITOR-IN-CHIEF’S NOTE
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8 | B W BUSINESSWORLD | 28 January 2023 MAILBOX YOUR COMMENTS TALK BACK SUBSCRIBER’S COPY NOT FOR RESALE I RNI NO. 39847/81 I 14 JANUARY2023 Rs 150 Narendra Modi Prime Minister Shivraj Singh Chouhan Chief Minister SHIVRAJ SINGH CHOUHAN Chief Minister, Madhya Pradesh THE FUTURE READY STATE MADHYA PRADESH “WE HAVE SET A TARGET TO BE A USD 550 BILLION ECONOMY BY 2026” www.businessworld.in A YEAR OF CONSOLIDATION This refers to the editorial (“Time To Stay Invested”, BW, January 14). The article was insightful, to say the least. The author states that 2023 will be a year in which intelligent investors will prevail while speculators will despair. Hence, investors could do well to stick to their target asset allocation resolutely, and continue to invest aggressively into equities with a staggered approach and balance risks using a judicious mix of liquid funds, medium-term debt funds and longer duration gilt funds. He also advises investors to keep 10 per cent of their portfolio in Gold ETFs or Gold Funds as a buffer in case of an unforeseen deterioration in the geopolitical situation or an increase in risk-aversion. The author rightly points out that since a year of consolidation with a positive bias appears to be the probable case for both equities and fixed income, investors need to be pragmatic, especially while making decisions. SHALINI NAIR, EMAIL RESILIENT REAL ESTATE This refers to the editorial (“Strong Domestic Demand To Drive Growth”, BW, January 14). It is good to know that the Indian real estate sector has remained resilient, with all asset classes faring well in the last year. And, with one of the strongest growth rates in the world, India will continue to fuel demand for real estate. The author points out that in 2023 investment activity will remain strong primarily in the land acquisition space for greenfield developments across office and residential sectors. Also, alternate /emerging sectors, specifically data centres could continue to see interest across investor categories. Overall, 2023 is poised to be a very promising year for the real estate sector. KUNAL SURI, EMAIL BLIPP THIS PAGE TO GIVE US YOUR FEEDBACK INSTANTLY Submissions to BW |Businessworld should include the writer’s name and address and be sent by email to the editor at [email protected] or by mail to 74-75, Scindia House, Connaught Place, New Delhi-110001
10 | BW BUSINESSWORLD | 28 January 2023 Cover design by SHIV KUMAR Nurturing the Wealth Creators BW Businessworld makes a case for the Union Budget to further push the process of generating wealth creators and entrepreneurs who are seen as being key to India attaining the status of a high-income developed economy by 2047 34 12 Jottings ‘Magic of India Stack’ moves Microsoft chief; Lagging behind or delayed? The other story of India’s freedom struggle; Red carpet for global varsity, and more 14 Columns Minhaz Merchant (p. 14);Vikas Singh (p. 16);Srinath Sridharan & Steve Correa (p. 18); Srinath Sridharan & Nilanjan Ghosh (p. 20);Prakash Iyer (p. 22);KA Narayan & Sunandan Bhanja Chaudhury (p. 24);Ajai Kumar Dayal (p. 26); Kiran Karnik (p. 28);Amit Kapoor & Navya Kumar (p. 30); Srinath Sridharan & Steve Correa (p. 94);Acharya Praveen Chauhan (p. 96) EXPECTATIONS FROM THE BUDGET 46 In Conversation Bibek Debroy, Chairman, Economic Advisory Council to the Prime Minister on the current state of the Indian economy and the preceding two years ravaged by the Covid-19 pandemic BUDGET EXPECTATIONS 2023-24 50 A Tightrope Walk Why Budget 2023-24 is expected to see enhanced capital expenditure, continued push on infra spending, and a possible relief to the taxpayer 56 Will Populism Prevail? A look at how in the past, governments have given in to populist pressures in election eve budgets, and whether Nirmala Sitharaman will prove to be an exception 60 Infra Focus How the infrastructure sector will remain a priority and focus area all through 2023-24 for the Narendra Modi government 62 Tech Matters A lot needs to be done for the technology sector in the upcoming budget to augment the digital-first approach that the country is taking to become a $5-trillion economy CONTENTS VOLUME 42, ISSUE 07 28 JANUARY 2023 Photograph by Vectotaart
11 | BW BUSINESSWORLD | 28 January 2023 The pages in BW Businessworld that are labelled BWi or Promotions contain sponsored content. They are entirely generated by an advertiser or the marketing department of BW Businessworld. Also, the inserts being distributed along with some copies of the magazine are advertorials /advertisements. These pages should not be confused with BW Businessworld’s editorial content. TOTAL NO. OF PAGES INCLUDING COVER 100 98 Last Word Yogi, mystic, author and Isha Foundation founder Sadhguru on the really meaningful New Year resolutions we need to make as human beings 74 Interview with Maha CM Maharashtra CM Eknath Shinde on the Nagpur-Mumbai Expressway project and how it will help the state in becoming a $1 trillion economy COLUMNS 38 TV Mohandas Pai, Aarin Capital & Nisha Holla, C-CAMP 40 Meghnad Desai, British Economist 42 Soumya Kanti Ghosh & Ashish Kumar, SBI 44 Milind Kamble, DICCI 48 Srinath Sridharan 54 Krishan Kalra 66 Colin Shah, Kama Jewelry 68 Ashish R. Puravankara, Puravankara 70 Hydrogen Push A look at the energy players that have announced a slew of projects and committed investments to develop green hydrogen following last year’s policy pronouncement 78 In Conversation UpGrad co-founders Mayank Kumar, Ronnie Screwvala and Phalgun Kompalli on the robust educational services they have built and how that enabled them to grow manifold in 2022 amid turmoil in the edtech sector 80 BW Roundtable How the country’s largest banks have come to realise that working towards financial inclusion backed by technology is the only way to survive and thrive in the era of digital 84 Remembering Suman Management consultant Sundar Hemrajani remembers former PepsiCo India head Priya Mohan (Suman) Sinha as someone who brought so much passion to the brand 86 In Memoriam Brand guru Harish Bijoor recalls the many facets of R. K. Krishna Kumar, his boss at Tata Tea & Consolidated Coffee, who passed away on the first day of January 2023 88 Retail Summit The Retail Leadership Summit 2022, organised by BWBusinessworld recently, sees industry leaders lauding the India consumption story 92 In Conversation Actor Shilpa Shetty on her recently launched fitness and health app Simple Soulful, its growth plan, her investments in the startup space, and much more Photograph by Suresh Gola
12 | BW BUSINESSWORLD | 28 January 2023 JOTTINGS WHAT IS THE STATUS of the ‘Housing for All by 2022’ mission announced way back on 25 June, 2015 and later extended till end-2024? Is it lagging behind its objective? Announced as part of the Pradhan Mantri Awas Yojana (Urban) Mission, the original objective was to provide housing for all in urban areas by 2022. As per the latest data obtained from the Ministry of Housing and Urban Affairs, of the sanctioned houses totalling around 1.20 crore, only around 50 per cent or 64 lakhs have been completed. The rest are in various stages of construction. The Atal Mission for Rejuvenation and Urban Transformation (AMRUT), also launched on 25 June, 2015 in 500 selected cities and towns across India also seems to be some distance away from achieving its objective. The LAGGING BEHIND OR DELAYED? Photograph by Bivash Banerjee I NDIA’S TECHNOLOGICAL prowess in the ‘digital public goods’ segment has seen innovations such as the Aadhar card, Unified Payments Interface (UPI) and DigiLocker, which have helped make lives easier for most citizens in the country where problems are aplenty. Collectively called the ‘India Stack’, their sole aim is to unlock the economic primitives of identity, data, and payments at the population scale. And the efforts so far have been phenomenal and lauded by many leaders across the globe.Now this innovation fostered by the Indian government has been hailed by the CEO of one of the world’s best-known tech companies, ‘Magic of India Stack’ Moves Microsoft Chief Microsoft. During the Bengaluru leg of his four-day trip to India in the first week of January, Microsoft Chairman and CEO, Satya Nadella, hailed the “magic of India Stack”. Hyderabad-born Nadella said, along with the “yojanas and policies”, these digital public goods could be the greatest contributions that India could make to the world. Tech visionary and Infosys Chairman Nandan Nilekani, who engaged in a candid conversation with Nadella at the Bengaluru event, said that the journey of India Stack was perhaps halfway through. It will be interesting to see if anything can beat the scale of UPI in the second half. — Rohit Chintapali mission focuses on development of basic infrastructure in selected cities and towns, in the areas of water supply, sewerage and septage management, storm water drainage, green spaces and parks and non-motorized urban transport. Till date, 4,700 projects worth Rs 33,000 crore have been completed, but another whopping 1,174 ongoing projects worth Rs 49,000 crore are still pending. —Ashish Sinha
13 | BW BUSINESSWORLD | 28 January 2023 The Other Story of India’s Freedom Struggle THE FIGHT FOR INDEPENDENCE of people anywhere in the world invariably spills out of yellowing parchment and quill inked records to popular versions of more sanitised history. They inevitably live on in public memory as tales of valour, of heroes and knights who vanquished the evil invader or aggressor to emerge as saviours. The gradual releasing of classified documents by many governments has now begun to bring more information into public domain, which too like the old archives, may not influence text book history, but will certainly prove a treasure trove for academia. On the closing year of India’s Azadi ka Amrit Mahotsav (75th anniversary celebrations of Independent India), comes a novel tome from member of the Prime Minister’s Economic Advisory Council, Sanjeev Sanyal, titled ‘Revolutionaries: The Other Story of How India Won its Freedom’. The former Principal Economic Advisor to the Finance Minister is not just the author of the Economic Surveys. He has a very credible collection of treatises to his credit, that span from the realm of fiction, history and environmental issues to of course, economics. In his new offering, Sanyal tells the story of the multi-pronged armed resistance Photograph by CANVA RED CARPET FOR GLOBAL VARSITIES to British rule in India – and the revolutionaries who spearheaded them – that culminated in the freedom movement led by the Indian National Congress. For the record, Sanjeev Sanyal is a grand nephew of Sachinendra Nath Sanyal, who had mentored revolutionaries like Bhagat Singh, Chandra Shekhar Azad and Jatindra Nath Das. — Madhumita Chakraborty PRIME MINISTER Narendra Modi has taken the first steps toward allowing premier global institutes to open campuses in the country and award degrees. The University Grants Commission (UGC) Chairman has said that this may happen within the next two years. The objective is to make international education affordable to Indian students and make India a hub of the best institutes in the world. The UGC has drawn up guidelines for a fee structure and the educational programmes, which have now been made public for feedback. The UGC Chairman is also writing to every embassy and reputable foreign higher education institute for their input on the proposal. According to these guidelines all institutes entering India would need to be screened and approved by the UGC, which would be valid for 10 years. All programmes will have to be full-time and offline and the course content would have to respect the national interest of India and maintain the standards of higher education here. The fees charged by these institutes would need to be “fair and transparent,” although the universities will have autonomy over the final pricing and admission standards. Scholarships will be available too. — Vasudha Mukherjee
14 | BW BUSINESSWORLD | 28 January 2023 OW BIG REALLY IS INDIA’S ECONOMY? Bigger than most believe. The Goods and Services Tax (GST) has unearthed lakhs of small enterprises that hitherto operated under the regulatory radar. But many more remain hidden, their output missed by private agencies like the Centre for Monitoring Economy (CMIE) and even the National Sample Survey Organisation (NSSO). Goods and Services Tax collections, however, provide a clue. In 2018-19, the first full year after GST was introduced on 1 July 2017, average monthly GST collections were Rs 0.95 lakh crore. In the first nine months of 2022-23, average monthly collections have averaged over Rs 1.45 lakh crore. That’s a rise of 52 per cent in the five years between 2018-19 and 2022-23. This increase has taken place despite the economy being pummeled by two Covid-impacted years and severe trade disruptions caused by the Russia-Ukraine war. India’s GDP between 2018-19 and 2022-23 is estimated to have expanded by less than 20 per cent over five years. Growth was 6.5 per cent in 2018-19, four per cent in 2019-20, flat in 2020-21 and 2021-22, and 6.9 per cent in 2022-23. Overall in these five turbulent years, the Indian economy has grown at a compounded annual growth rate (CAGR) of less than four per cent a year, with two Covid years of near-zero growth bringing the average down. In the same five years, GST collections have risen by 52 per cent or a CAGR of over 12 per cent. Thus a robust growth rate of 12 per cent a year in GST collections in the same five-year period when overall economic activity had slowed significantly, implies a move towards greater formalisation of the economy. Companies previously under the radar are gradually coming out of the closet and into the tax revenue net. This obviously has implications on how total Indian economic output is measured. In the past, around 30 per cent of the Indian economy was recognised as being outside the purview of GDP computation. That figure has possibly come down to 15 per cent today – still a significant number. Credit Suisse agrees. In a recent interview with Business Standard, the research head of the Swiss bank’s Indian brokerage arm, Neelkanth Mishra, said: “India is growing faster than what is captured by the country’s official data, and it presents a case for an upgrade of equities outlook. There is scope for growth of up to 14 per cent on benchmark indicies. The country will grow at 7 per cent in 2023-24, as against the consensus estimates which peg the real GDP growth to slip below 6 per cent. “Consensus estimates are based on official data alone, whereas the brokerage analysis has taken into account a broad data set to arrive at its expectation. We are expecting a stronger acceleration in India’s GDP growth in 2023 owing to several domestic growth drivers. Revival in government spending, increase in low-income jobs and easing of supply-chain bottlenecks should partly offset the impact of rate hikes, a slowing global economy and the need to reduce the balance-of-payments (BoP) deficit.” India’s Hidden Economy H Minhaz Merchant COLUMN MINHAZ MERCHANT IS THE BIOGRAPHER OF RAJIV GANDHI AND ADITYA BIRLA AND AUTHOR OF THE NEW CLASH OF CIVILIZATIONS (RUPA, 2014). HE IS FOUNDER OF STERLING NEWSPAPERS, WHICH WAS ACQUIRED BY THE INDIAN EXPRESS GROUP
15 | BW BUSINESSWORLD | 28 January 2023 January 2023: “The rise in the unemployment rate (to 8.3 per cent) was not as bad as it may seem, as it came on top of a healthy increase in the labour participation rate, which shot up to 40.48 per cent in December 2022, the highest in 12 months. Most importantly, the employment rate has increased in December to 37.1 per cent, which again is the highest since January 2022.” India’s GDP in 2022-23 is expected to be $3.60 trillion, assuming real growth at 6.9 per cent for the full fiscal and an inflation deflator of six per cent. If the informal economy that escapes computation – estimated at 15 per cent of the total – is factored in, India’s GDP would already be the world’s fourth largest at $4.14 trillion, ahead of Germany ($4.10 trillion) and within striking distance of third-placed Japan ($4.94 trillion). Sceptics routinely point to India’s low per capita income of $2,500, as measured by nominal GDP. Obviously, per capita income tied to an overvalued dollar exchange rate does not take into account vast differences in living costs and wages In most advanced economies GDP figures accurately reflect economic output. India’s informal economy has long led to the country’s real GDP being undercounted. This obviously needs to change. Another metric that provides an inaccurate estimate – and which has a bearing on overall economic activity – is unemployment data. According to CMIE, India’s unemployment rate was 8.3 per cent in December 2022. This, however, misses informal employment in at least three areas: first, among Using the WB and IMF conversion ratios, India’s per capita income (PPP) in 2022-23 is estimated at around $7,500; China’s per capita income (PPP) is estimated at $20,000. If India’s hidden informal economy emerges from its self-imposed penumbra, the country’s per capita income, in both nominal and PPP terms, will rise proportionately between countries. To correct the picture, the World Bank (WB) and International Monetary Fund (IMF) have apportioned a ratio for every country to convert nominal per capita income in US dollars to purchasing power parity (PPP) per capita income in US dollars. The conversion ratio for India is 2.8. For China it is 1.8. For most West European countries, it is 1.00, implying broad congruence in dollarmeasured living standards in the rich world. Using the WB and IMF conversion ratios, India’s per capita income (PPP) in 2022-23 is estimated at around $7,500; China’s per capita income (PPP) is estimated at $20,000. If India’s hidden informal economy emerges from its selfimposed penumbra, the country’s per capita income, in both nominal and PPP terms, will rise proportionately. All of this does not mean that poverty in India is declining rapidly. It is not. Covid delivered a harsh blow. The economy seized up. Jobs were lost and remain scarce. But the NSSO and CMIE figures do not provide a complete – or accurate – picture of the state of Indian unemployment or the size of the Indian economy. those (especially women) who are selfemployed; second, small enterprises below the minimum GST threshold; and three, unorganised farm labour. Over 60 per cent of Indians earn their livelihood from the agricultural sector. Farmers with large land holdings employ farm labour. Precise employment data for such seasonal work escapes both the NSSO and CMIE. Similarly, small enterprises which employ semipermanent staff fall outside the normal purview of monitoring agencies. As Mahesh Vyas, managing director of CMIE, conceded to Reuters on 1 Photograph by Indiapicturebudget
16 | BW BUSINESSWORLD | 28 January 2023 Must Revisit Business Models I NDIAN TECHNOLOGY ENTERPRISES have changed the country’s landscape in more ways than imagined. They drive scale, enhance both productivity and efficiency and they optimise impact. They are key to bridging the ‘middle’ – something that the large corporates need to be efficient at. Their role in the B2C space is even more visible and profound. They empower and make life simple for the consumers. The network effect is truly an economic multiplier, its role in societal upliftment is equally impactful. However, there is trouble brewing for these celebrated organisations, visibly manifesting as layoffs. Layoffs are Sweeping Across the Tech Sector A year ago, techies were coddled, wooed. The shift is dramatic both in substance and in tone. Global behemoths are cautious. They foresee the headwinds and are ‘rightsizing’ their manpower strength. Amazon has ‘counted’ 10,000, Meta, Google and Microsoft have identified similar numbers. Elon Musk may lay off 80 per cent of Twitter employees. Uber, Airbnb, Netflix, Spotify, Shopify, Stripe and Robinhood too have announced ‘austerity and optimising’ plans. The storm started in the western world and has landed on India’s shores too. Most tech unicorns are stretched. Uncertainty lurks around. Most paid little attention to the fundamentals of the business. The goal was to be the ‘last one standing’, based on the maxim ‘winners take all’. Employees call it sacking. Employers term it as shedding fat and ‘tightening’ the belt. Apex leadership is admitting to ‘fixing’ mistakes. The ‘invested’ see the trend as ‘reining in’ to tide through a volatile and stormy period. Downsizing Alone Will Not Make Organisations Competitive The markets love downsizing. Investors see it as an attempt to enhance both growth and profit metrices, and eventually value creation. However, every downsizing is not perceived positively, especially those that are ‘survivor’ centric or play on cost reduction. Downsizing and cost cutting won’t be sufficient. The new-age companies need to ‘redefine’ their goals; strategise to restore high productivity, and higher growth rates. They need to walk a different path. Unicorns and even those listed will struggle unless they remodel the business ethos. The tightening of monetary policy has choked funding. Valuation by the secondary market, unlike series and angel funding ‘tests’ business models on a dayto-day basis. The stock market questions business robustness every quarter. The listed ‘new tech’ companies have neither demonstrated their robustness nor their future value stream. There are several macro challenges too. Evolving markets, consumer dynamics has deepened the uncertainty. Tech businesses have created value adding products, enhanced efficiencies for businesses and simplified life for the consumers. Business challenges however, remain and need restructuring of the model, focusing both on disruption and productivity. Unfortunately, none of the home-grown businesses have been able to catalyse the network effect (in spite of many creating one), that triggers the virtuous growth cycle i.e., demand feeds supply and vice versa. Weak Moat, Low Entry Barriers They operate in ‘crowded’ markets with many ‘me too’ offerings and as a result face increasing competitive pressure. They have tried addressing this by customer acquisition through aggressive ‘offers and paybacks’, resulting in high COLUMN By Vikas Singh TECH UNICORNS OVERVALUED.
17 | BW BUSINESSWORLD | 28 January 2023 acquisition cost. The porous nature of the marketplace has meant ‘easy and regular’ customer abandonment to the ‘new and the less expensive’. Most tech providers have failed to hold on to consumers. This phenomenon (high customer acquisition cost, regular customer abandonment) lowers customer lifetime value yield. It has amplified the pain. Funding is drying up, and the cost of funds are going up. Profits (if any) are drifting down. Valuation is plummeting and may well be a true indicator of the intrinsic value; and the ‘worth’. The impatient among the investors are beginning to question the very viability of the business model. There is skepticism all around. Methods, numbers, and models are all under scrutiny. It must worry these unicorns. While people are still using apps like Zoom and Google Meet, we’re past the pandemic days of ‘everything’ virtual. Outside of work, the situation is even more stark. During the pandemic online life became the only life, and business surged, particularly prospects don’t look healthy, draw and design a compelling and implementable business model. Layoff is an admission of excess, and equally a signal that remedial action is underway. However, sustainability will depend on demonstrating that the restructured model has worked. Many who are equating the layoffs of the global tech giants with our unicorns may have got it all wrong. For the gorillas and the whales, layoffs are not ‘survivor’ centric, but more profit motivated. Downsizing in the unicorns conveys a totally different picture. Navigating tech growth has never been easy. Growth is lumpy, disruptions are common, equally frequent and its impact deeper. Our unicorns grew too big too quickly compared to what it takes for brick-and-mortar companies. This is less understood and rarely appreciated. A Mile Wide But Temporary Some suspect a deeper malice and believe jobs may not come back for the next couple of years. However, we are not in for a dark winter. There are lessons aplenty. Google, Apple, and Microsoft are slowing hiring, monitoring every cost item but focus is squarely on productivity. Others faced with slowing growth are revisioning strategies. Netflix is releasing a lowerpriced service subsidised by advertisements. Similarly, Amazon, is ‘harnessing’ expansion plans, closing operations that are ‘not core’ or not likely to yield returns. Till their business models metamorphose, growth and valuation are unlikely to rebound for India’s new-age tech companies. Many who are equating the layoffs of the global tech giants with our unicorns may have got it all wrong. For the gorillas and the whales, layoffs are not ‘survivor’ centric, but more profit motivated The author is an economist and columnist for the tech companies, fueling a hiring frenzy, and several other excesses. The aggressive online consumer spending provided a heightened, and false sense of demand. Initial success made many believe this to be the new normal. Growth, and Scale are Intoxicating It’s not easy to ‘pass’ growth, any growth. Fed on the steroids of cheap capital and spurred by investors, many companies went on an acquisition spree – some related to their business and others not. Many who could not acquire businesses in their own sector, entered unrelated sectors and into non-lucrative geographies. They have adopted business models that may crumble on weak footing. Unicorns must come clean. It’s comforting, to lean on the resurgence of the ‘normalcy’ (back to work, travelling etc.) for the slowing growth. Admit the obvious that growth Photograph by Aleutie
18 | BW BUSINESSWORLD | 28 January 2023 birth or education. We were fortunate to have the ovarian lottery, as well as the mentoring of countless individuals who liberally shared their time, advice, and wisdom. By no measure, did we get anything easy. Nor did we get any success without many failures and disappointments and stupidity from our part. Also, this is not a comparison with someone materially more successful or not. Perfectionism, the Worry “If you look for perfection, you’ll never be content.” — Leo Tolstoy, in ‘Anna Karenina’ I Shaping Excellence vs Chasing Perfection PEOPLE TALK By Srinath Sridharan & Steve Correa N OUR EARLIER ARTICLE, we wrote about celebrating being ordinary. As expected, it evoked many reactions and messages ranging from an emotionally dismissive, ‘ask the author to be ordinary’, to the other counterpoint agreeing that ‘you can get anywhere from being ordinary’ to some even querying ‘what is ordinary?’. Ordinary does not mean sub-par or not working to an individual’s potential. Everyone faces life-obstacles, mental blocks, constraints etc. and we should be respectful of this and how each one navigates her / his journey. This work celebrates extra-ordinary achievements. We are not denying the social parameters of success or celebration. Yet, many a times they are flawed. Flawed enough to bend the next generation. Frazzled enough to break our spirit. When we mean ordinary, especially in the job market, we refer to being above the median measurement of whatever is measured: intellect, work ethics, job knowledge, etc. which might get one a role. By being ordinary, one can still have a life that offers contentment. But with social pressures, we often forget what’s being contented. Being extra-ordinary does not guarantee material success, happiness, or human development factors. If being a topper at the best school and college possible were to guarantee continued success in the corporate world or entrepreneurship, and in personal life, then none of the worldly effects would be in play. But we know that such is not the case. As a society, we are obsessed with perfection. The perfect look for the cameras or the selfies. The perfect scores for college admissions. The perfect kid for school admission. The perfect address (locality to live in) for the right school. The perfect club membership. Perfect seems a disease that eats us inexorably. Luckily, neither of the two authors can claim to be extra-ordinary individuals, by Excellence and perfection while used interchangeably, are not the same. Excellence is a standard of quality that is very high, but it is not necessarily perfect. In sports, Virat Kohli and Sachin Tendulkar are known for their pursuit of excellence and their relentless work ethic. They set high goals for themselves and worked tirelessly to achieve them Photograph by Sanjay Sakaria
19 | BW BUSINESSWORLD | 28 January 2023 seeking ways to improve. Excellence and perfection while used interchangeably, are not the same. Excellence is a standard of quality that is very high, but it is not necessarily perfect. In sports, Virat Kohli and Sachin Tendulkar are known for their pursuit of excellence and their relentless work ethic. They set high goals for themselves and worked tirelessly to achieve them, both becoming renowned cricketers. In business, companies like Toyota and IBM are known for their pursuit of excellence and continuous improvement. They have implemented systems and processes that allow them to constantly seek out new ways to improve themselves and their products, services, and operations. Perfection, the Mirage “When you stop expecting people to be perfect, you can like them for who they are.” — Donald Miller in A Million Miles in a Thousand Years: What I learned while editing my life’. A mirage is an illusion that deceives us into believing that something is true. We are captivated by what we think we see and start the delusional journey towards it. Perfection is like a mirage, a state of being without any flaws or mistakes. Social pressure for perfection has increased dramatically over the past few years, especially with the advent of social media. We expect perfection – be it in the photos of fabulously plated food to perfectly edited family pictures, to well-set photo-filters on every selfie. Our society pushes us to believe that such perfections make who we are as individuals, and that such perfections would throw happiness at us. Behind many of such perfect-photo scenes, aren’t there much of human brokenness – be it in relationships, attitudes, limited thinking? Now is always a good time to accept excellence as a choice, and not chase perfection. Drop perfection, Embrace Totality. One is an obsessive goal, the latter a living in current life experience. Life is Unique. You are unique. There will never be another like you. Our society pushes us to believe that such perfections make who we are as individuals, and that such perfections would throw happiness at us. Behind many of such perfectphoto scenes, aren’t there much of human brokenness – be it in relationships, attitudes, limited thinking? How do we know if our high standards and expectations have crossed over into the territory of perfectionism? For a perfectionist, getting things 100 per cent right, ticking and re-ticking all the boxes, is a necessity. It dominates their thinking, obscures more important priorities and prevents tasks from being completed on time. The DSM IV manual of mental disorders links perfectionism with a variety of clinically related disorders, such as depression, anxiety, eating disorders and obsessive-compulsive disorder (Flett & Hewitt, 2002). While struggling is part of life, there should not be pressure to accomplish tasks without struggle or give the impression that one had things happen easy to them. The expectation to be flawless and excel in every moment is perpetuated by social standards. For someone who is a driven perfectionist, however, the costs can be unacceptably humungous and even debilitating. Finding Excellence To be in search of excellence, you need to have a strong desire to improve and strive for the highest level of achievement in whatever you are doing. This means setting high goals for yourself, working hard to reach those goals, and being willing to learn and adapt along the way. It also means being open to new ideas, seeking feedback, and continuously Srinath Sridharan is author of Time for Bharat & a corporate advisor Steve Correa is Executive Coach and OD Consultant Photograph by PIB
20 | BW BUSINESSWORLD | 28 January 2023 sink and carbon sequestration, erosion prevention, extreme event moderation, etc.) cultural services (tourism, recreational, aesthetic, and spiritual benefits) and supporting services (lifecycle maintenance for both fauna and local, element and nutrient cycling). The Economics of Ecosystems and Biodiversity (TEEB) termed these ecosystem services as “GDP of the poor” as the majority of the poor’s livelihoods and incomes are drawn from the ecosystem services. South Asia has been a major contributor to the global food basket through its fisheries sector, with the artisanal fisheries in the Bay of Bengal region, contributing more than 80 per cent of marine fish production. The fishing sector employs 15 million people in India and ranks second (6.3 per cent) in the world’s fish produce (Rs 10 billion in 2015-16). Coastal and Maritime Tourism that represents five per cent of the world GDP and is expected to generate job opportunities for approximately 8.5 million people by 2030, has been a prominent sector providing large-scale employment and livelihoods in South Asia. G-20 By Srinath Sridharan & Nilanjan Ghosh T IS COMMONPLACE for us to understand and speak of trade that happens on Land. We understand it as a commodity and an economic driver. Guess what? As much as 80 per cent of world trade happens using the seas, 40 per cent of the world’s population lives near coastal areas, and more than three billion people access the oceans for their livelihood. The value of the “natural capital” of the Blue Economy is estimated at around $25 trillion, with the annual value of produced goods and services estimated to be $2.5 trillion per year, equivalent to the world’s seventh largest economy in gross domestic product (GDP) terms. Yet, there is hardly any universally accepted definition of the Blue Economy. According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.” The European Commission defines it as “All economic activities related to oceans, seas and coasts. It covers a wide range of interlinked established and emerging sectors.” The Commonwealth of Nations considers it “an emerging concept which encourages better stewardship of our ocean or ‘blue’ resources.” Ocean Holds the Key The importance of the oceans for the global south can be understood from the roles it plays in human livelihoods, through the provisioning of the various ecosystem services on which the coastal community is dependent. The Millennium Ecosystem Assessment talks of the services provided by the blue economy through the organic functioning of its natural ecosystem. These can be classified as provisioning services (fisheries, building materials, food, etc.), regulating services (carbon India’s G20 Presidency can Shape Blue-actions I
21 | BW BUSINESSWORLD | 28 January 2023 forced by the fact that the Blue Economy has a separate connotation for the Global South, as compared to the Global North. India’s engagement in the Blue Economy has been rising, with its active involvement in international and regional dialogues on the Blue Economy, maritime and marine cooperation. Ocean resources, physical infrastructure for maritime economic development, marine amenities, and coastal management services are all part of the plan to ensure economic growth and sustainability, as well as national security. While an estimated $174.52 billion per year is needed to fund SDG 14 (the United Nation’s Sustainable Development Goal 14: Life Below Water), barely $25.05 billion is spent annually indicating a funding gap of $149.02 billion per year. More innovative “blue financial products” like blue bonds and loans, and blue derivative products will have to be thought of, to finance SDG14. Nations have to come together, and to find collaborative solutions, more hastily than climate action. The global track record on climate actions have been poor, and we need better behaviour in blueactions. With unsolved climate crisis, issues of lack of finance for climate solutions, the exhaustion of marine resources and coastal deterioration alongside a volatile global economy, the G20 needs to shape convergence of global security (including food and energy), economic growth and integrate them with the blue economy. Blue actions need to cover economic actions, as well as sustainability commitment. India’s G20 Presidency brings about the unique opportunity to prioritise the Blue Economy for the purpose of growth, green economy and social equity. With India’s track record of collaboration with global players for shared goals, it can bring a lot of its positive energies, policy-heft and blue-leadership to the G20. It can help raise the profile of the discussions and focus on the Blue Economy. It has the intent, content and context to use its G20 Presidency to push forward the agenda of ABCDE – Air, Blue-economy, Climate-action, Digital, and Equity. With unsolved climate crisis, issues of lack of finance for climate solutions, the exhaustion of marine resources and coastal deterioration alongside a volatile global economy, the G20 needs to shape convergence of global security (including food and energy), economic growth and integrate them with the blue economy. Blue actions need to cover economic actions, as well as sustainability commitment The Indian blue economy, accounting for four per cent of the GDP, is a subdivision of the national economy that includes the complete ocean resources system as well as human-made economic infrastructure in the country’s legal jurisdiction marine, maritime, and onshore coastal zones. India has significant diplomatic interests in the Indo-Pacific, as well as global commitments in the region under the UNCLOS, such as Search and Rescue, seabed mining, and counter-piracy. The Blue Economy in the Indian Ocean region is an important global economic corridor, with it being the world’s third-largest body of water, covering 68.5 million square kms and rich in oil and mineral resources, and the countries in this region constitute one-third of humanity. Blue Action Policy Development India taking over the G20 presidency from Indonesia is significant, as it makes India the middle of the triad (Indonesia, India, and Brazil) from the global south to preside over the G20. The Blue Economy (BE) imperative for the Indian G20 Presidency gets rein- Srinath Sridharan is author of Time for Bharat & a corporate advisor Nilanjan Ghosh is a Director at the Observer Research Foundation Photograph by Vlad61
22 | BW BUSINESSWORLD | 28 January 2023 APPY NEW YEAR! You’ve probably received several messages at the start of the year wishing you the usual ‘happy and prosperous new year’. Some folks might have wished you success and joy too. But if you look carefully, there’s something else a lot of people have been wishing each other this year: a healthy new year! Maybe it’s the events of the last couple of years that have brought good health right on top of our wish list. Which is why you should hear about what happened in the commentary box in a recent test match between Australia and the West Indies in Perth. Ricky Ponting was in the commentary box. And as he talked about the action on the field, he felt a sudden, sharp pain in the chest. He started to feel a bit unwell, but since he was on air, he didn’t think too much about it. He stretched his arms, sat up a bit, gently rubbed his chest. The usual stuff we all do when we feel that tinge of discomfort before telling ourselves it’s no big deal. When he finished his stint in the commentary box and walked back gingerly, he told his fellow commentator and long-time team mate Justin Langer about the chest pain he had felt. Langer quickly swung into action. He got in touch with a doctor on site, who checked Ponting out. Then they made arrangements to rush him to a hospital where Ponting was attended to by a team of specialists. Luckily for Ponting, no major problem was detected. All was well. Ponting was given the all-clear sign. And he was back in the commentary box the next day, ‘all shiny and new’. You are probably thinking so what was that fuss all about? There was no problem right? Why the over-reaction? Fair questions. But I think there’s a lesson from Ponting we all need to learn. Ponting, who is 47 now, spoke about how people his age don’t easily open up about health issues. We want to maintain the tough guy image. So we dismiss that fleeting pain in the chest. We keep it to ourselves. But Ponting did the right thing. He spoke about his problems. He asked for help. We should all be like Ponting. Talk about our problems. If you are feeling unwell, say it. If something is bothering you, speak it out. Hiding your problems from the world doesn’t do any good to you – or to anyone else. Be it a health issue, or a relationship challenge, or a problem at work. Talk to a friend. Being vulnerable is a sign of strength. Not a sign of weakness. And we should be like Langer too. When a friend says he has a problem, do something about it. Don’t just say you should see a doc. Take him to one. Fast. I do think we all need to have a Langer around us. Someone who cares enough to take action to help us. Truth is, there is already a Langer close to each of us. Ready to help. But we aren’t telling him about our problems, our fears, our concerns. Be like Ponting. If you have a problem, talk about it. Be like Langer too. When someone tells you about a problem, do whatever it takes to help. You will, won’t you? Be like Ponting, Be like Langer! H PI TALKIES Prakash Iyer is an author, speaker and leadership coach and former MD of Kimberly Clark Lever
23 | BW BUSINESSWORLD | 28 January 2023 T he Institute of Management Studies (IMS) Ghaziabad, one of the trusted Business Schools in India with 32 years of academic legacy, offers a PGDM programme which is approved by AICTE and accredited by the National Board of Accreditation (NBA) and recognised by the Association of Indian Universities (AIU) as equivalent to MBA. The institute is also accredited globally by ASIC, UK, and is a proud member of AACSB Business Education Alliance, USA. “At IMS Ghaziabad, we are aware that the modern-day manager must be capable of IMS GHAZIABAD adapting to the inevitable turbulence and radiating confidence in a highly volatile and uncertain scenario replete with cutthroat competition. Our approval by AICTE; uninterrupted 20 years of accreditations by NBA and globally by ASIC, UK; equivalence to an MBA by the AIU; certification by Management Systems for Educational Organisations (EOMS, ISO 21001:2018); consistent impressive rankings and the success of our students in the business world by way of 100 per cent placements are testimony to our commitment to excellence in management education,” says Dr Urvashi Makkar, Director, IMS Ghaziabad. The institute has reinvented management education to reflect the latest ideas, thinking and practices in business. The educational ethos of the institute is taking forward its mission of crafting global business leaders of the future. A three-pronged strategy with an all-encompassing approach towards achieving academic excellence, corporate readiness and providing a global interface is an integral part of the PGDM programme. In line with the need to develop efficient and trained professionals for Industry 4.0, the focus is on developing content skills, cognitive abilities, complex problemsolving abilities, social skills, and environment-conscious thinking in the students. IMS Ghaziabad offers numerous novel initiatives for skill enhancement such as value-added certification programmes, value-added shortt e r m t r a i n i n g p r o g r a m m e s , a Centre for Innovation & Entrepreneurship, student outreach and competency mapping. There are several initiatives for developing life skills such as personal and professional skill programmes, mentoring, a psychological counselling p r o g r a m m e f o r s t u d e n t s , a n d department clubs. Corporate readiness initiatives include a placement readiness enhancement programme, CSR activities, a Pre-Placement Preparedness Committee and a corporate interface series. Global interface initiatives comprise a distinctive talk series, global academic collaborations and an international study tour. Then there are corporate interface initiatives such as a Corporate Development and Excellence Centre, AICTE sponsored programmes, and conclaves. All of these initiatives have been interwoven in the tapestry of the PGDM programme. We are aware that the modernday manager must be capable of adapting to the inevitable turbulence and radiating confidence in a highly volatile and uncertain scenario replete with cut-throat competition, says Dr URVASHI MAKKAR, Director, Institute of Management Studies (IMS) Ghaziabad REINVENTING MANAGEMENT EDUCATION Dr Urvashi Makkar, Director, IMS Ghaziabad
24 | BW BUSINESSWORLD | 28 January 2023 How Sapient Leaders Use Context! OW OFTEN have we wondered about the strong traits of successful leaders! There is a lot of research on whether leaders are born or made. Beliefs around pedigree, past experience and upbringing abound. Hence everyone who aspires to be a leader looks up to someone he admired and tries to emulate him/her. We are now putting out a different hypothesis for the success of leaders across the world. We believe that the primary driver of performance for leaders is vision and clarity of goals and the hunger to achieve the same! Also most of us are driven by monetary and nonmonetary incentives like promotion, status, perquisites etc. However, often we give less credit to the “context” in which leaders succeed or fail. “Context” is the lay of the land … the “environment” and the “operating system” in the organisation. This includes not only clarity of vision and goals but more importantly the understanding of and adapting to the people and nature of the organisation. This is a crucial factor for leadership to succeed or fail. This factor becomes more pronounced particularly when we have a lateral hire at the leadership level who is parachuted into a role assuming that his past credentials will automatically play out in the new environment. It may well be true that great leaders carry their competencies wherever they go. Nonetheless, whether domain knowledge or leadership skills alone help them succeed at every level, is a point of a larger debate. We have had occasions to hire great leaders who have an unmatched track record of performance in one organisation but when they are put in a different environment, they struggle to adapt. For that matter there are cases where a leader coming from a great organisation like P&G may struggle to succeed in Unilever. Similarly, Coke and Unilever have different work ethos. We have also observed people coming from great companies like GSK, Reckitt, Mondelez and similar companies, finding it hard to switch between American, British and European cultures in their ways of working. H ‘IN THE CORNER’ with KAN and SU! By K. A. Narayan & Sunandan Bhanja Chaudhary We have had occasions to hire great leaders who have an unmatched track record of performance in one organisation but when they are put in a different environment, they struggle to adapt. For that matter there are cases where a leader coming from a great organisation like P&G may struggle to succeed in Unilever. Similarly, Coke and Unilever have different work ethos
25 | BW BUSINESSWORLD | 28 January 2023 This challenge becomes even more amplified when a leader switches from an MNC to an Indian promoter company where navigating through the legacies of erstwhile successful leaders becomes a major challenge. We, therefore, argue that success of leaders is relative and not absolute. It depends on multiple factors: THE PITCH: As in cricket, even seasoned great players and coaches first worry about the pitch. Is it meant for pace or spin? Often, even veteran batsmen get bewildered by the bounce or the spin and this is entirely due to the pitch condition! THE ADVERSARY: Every organisation is an aggregation of vintage leaders, naysayers and some open minded individuals. So a leader will have to first know the mindset of the system as a whole rather than assume that his past successes will give him the right to win in the present. Some employees welcome newcomers or even internal promotees as good for the change while some others are constantly waiting for the new incumbent to fail. Hence understanding the adversary is very critical to the success of a leader. CLIMATE: As in any game, be it cricket or football, the understanding of the climate of the day plays an important part in determining the way the game is to be played. In the context of an organisation, climate is equivalent to the mood in the system, reflected by employee morale and engagement. Hence leaders need to be mindful to understand the underlying sentiments of the system, to accept new initiatives, understand the appetite for change and collective readiness. When we accelerate change or transformation, it creates cynicism, positivity and anxiety, depending on the vantage point of each employee. Over years of experience, we find that most leadership hiring errors are due to one or all of the above factors! It’s primarily because the organisation and the leader misses to take cognisance of these aspects! In conclusion, while many will say Content is King, Context is certainly the Crown Prince! K. A. Narayan, President -HR, Raymond Ltd, is fondly known as KAN in industry for his well-known ‘Can Do’ attitude. Sunandan Bhanja Chaudhury, Client Partner, Pedersen & Partners, is known as SU by friends and family, both off and on the golf course! As in any game, be it cricket or football, the understanding of the climate of the day plays an important part in determining the way the game is to be played. In the context of an organisation, climate is equivalent to the mood in the system, reflected by employee morale and engagement. Hence leaders need to be mindful to understand the underlying sentiments of the system, to accept new initiatives, understand the appetite for change and collective readiness Photograph by Hofred
26 | BW BUSINESSWORLD | 28 January 2023 HEN BOB DYLAN first released his iconic song Times they are a-changin’, marketing was far from his mind. In fact, Kotler’s first landmark book which more or less established the discipline, appeared only in 1967 and boy, have things changed since then! Marketing as we learnt, was meant to determine how an organisation could provide what people genuinely want, need, desire. This was the guiding principle and the ideal organisation strived in every way to fulfil these needs. Across all levels and functions each person was expected to act and make decisions with this one goal in mind. Why? Because success depended on satisfying the customer, making her happy. This was how we increased purchase and built loyalty, a satisfied customer bought again and a happy customer became our ambassador. This meant that a lot of time was spent on thinking, research, surveys, focus groups, trying to get to grips with what the customer really wanted. What made her tick? The sharper the insights, the greater the chances of success and growth. It took an iconoclast like Steve Jobs to turn this thinking on its head when he said ‘It’s really hard to design products by focus group. A lot of times, people don’t know what they want, until you show it to them.’ And genius that he was, he created serial revolutions changing how people behaved with a whole stream of life changing products. The time for the idea that perhaps the maker knows better than the buyer had come and it has exploded across the world as more and more ‘creative’ products are introduced in rapid succession. Driven by this never-ending stream of innovation, mankind has been enveloped in a shroud of consumerism. The Japanese had been masters of this art, constantly producing clever products for the strangest, perhaps some would say inane applications. If you need to know more about these, just check on Google and look on in wonder. A lot of these innovations were eventually enhanced, modified, redone and spread across the world while others simply died. In these years marketing has changed. The starting point today is no longer what the customer wants and needs, but rather, what the customer should want and need. This is a lot like going back to the old days of people sitting by the roadside, hawking exciting oils and herbs to oglers who would be seduced into buying things which they expected to change their lives. Today we are constantly bombarded with products which are not just unnecessary, but often harmful. Toy makers are most proficient in this, making kids pine and whine for the newest and latest versions of games, figurines and toys. Just walk into any toy shop and see how many new barbies or little ponies or versions of water guns or dart pistols are on display. It is astounding, that there is so much back-to-back branded influencer content on channels like YouTube, which keeps talking all day about PokeHas Marketing Changed for the Good? W Ajai Kumar Dayal COLUMN
27 | BW BUSINESSWORLD | 28 January 2023 Could it be that we are pandering to all the baser instincts of buyers like envy and pride? Or are we helping to enhance people’s insecurities? Are we fanning the growing problems plaguing society like depression, lack of self-worth and esteem for those who have the product, or those who don’t? The tools we employ have evolved, driven by the intensity and focus that digital marketing provides, enabling the targeting of messages straight to individual consumers, unlike earlier broad stroke advertising based on market segments which we thought then, were well identified and defined. It seems marketing is not just directing thinking into the commercial world, it has far transcended these barriers and crossed into other areas of people’s consciousness. Politicians cannot survive without it, continuously creating new perceptions and desires, many of which actually did not exist in their constituencies and in the bargain also masking their true intentions. Even in the field of religion which was earlier meant to be a matter of personal conviction and faith, it is now being used extensively all around the world to push ideologies, often also erecting barriers or even fomenting trouble. Times are-a changing and so are the marketing tools. We have ended up with an ecosystem which helps create many of the problems that surround us – rampant consumerism, shallow political thinking and distorted religious expression. Perhaps it’s a price to pay for ‘progress’. mon cards – reviewing latest releases, analysing special collector versions, discussing the powers of the characters and also talking prices and values. Kids are glued to this, sitting and absorbing it for hours if not days. And I am not even talking about the animated films. Observe how products which are perhaps harmful to buyers are positioned, for example colas, or mass burgers. Recently I was amused when a large consumer company released a new range of flavoured milks called Smoodh. The product was being represented by uberfit Varun Dhawan in a fun colourful way. When the company was asked about the sugar content and if this new drink was really healthy for consumers, the response was, “we have made the pack half the size, so the consumer will only get half the sugar content that they would from other drinks.” Okaay! As someone who has spent a large part of my life in marketing, I have often been plagued with these thoughts. Is there actually a consumer desire that this product fulfils, or are we, with the stories we are so assiduously crafting, trying to create new ones. Be they fashion, bags, clothing, watches or what have you, the question is, which needs are we really aiming to satisfy? Driven by this never-ending stream of innovation, mankind has been enveloped in a shroud of consumerism. The Japanese had been masters of this art, constantly producing clever products for the strangest, some would say inane applications The writer has over 30 years’ international experience in marketing, managing brands, retail and ecommerce businesses and consults and comments on these areas Photograph by 1/Gow27
28 | B W BUSINESSWORLD | 28 January 2023 EBRUARY 1: few fixed dates in the calendar have as much importance to businessfolk as this one. For the last few years, this is Budget Day (supplanting the earlier “last day of February”), awaited with both expectation and trepidation. It is the day on which the government presents the equivalent of the country’s annual accounts, along with economic and taxation policies, and an unveiling of new initiatives. Millions in the country, as also thousands of investors and analysts abroad, keenly listen to the Finance Minister’s speech to unravel what the year may hold for them: for many personally, and to others for their company or business. As a result, the live telecast draws a large audience – not quite as much as a T20 cricket match, but more than a usual news programme. The FM’s speech is traditionally interspersed with a generous number of quotes from different sources, demonstrating his/ her erudition. Because of these embellishments, the speech provides greater insight into the persona of the FM than it does about the true state of the country’s finances! Economics is often referred to as the “dismal science”; to lighten the gloom – also, to celebrate good times when the economy is booming – all FMs turn to poetry, and whom BUDGET BLUES AND BOOMS F KIRAN’S KONTRARIAN KORNER and what they quote reveals much about them. The poets and the original languages are as diverse as our society (may it stay so; no, “one country, one culture/language”), and also include foreign poets (resonating with “vasudhaiva kutumbakam”). Amongst the sources are Tagore, Manzoor Hashmi, Chanakya and the Mahabharat (Nirmala Sitharaman); Vivekananda and Thiruvalluvar (P. Chidambaram); Shakespeare and Kautilya (Pranab Mukherjee); Victor Hugo and Allama Iqbal (Manmohan Singh). The last also threw in a brief bit of personal history, providing a rare glimpse into his personal life. Those who may be affected listen with rapt attention, though it is often a lesson in patience. In this, our present FM is a tough teacher: in 2019, she broke all past records with a speech of two hours and 17 minutes, surpassing this in the very next year with one that lasted 162 minutes. She proved her fortitude by doing this when visibly unwell and had to leave a couple of pages unread. Manmohan Singh’s historic “reform budget” speech in 1991 which began with the ringing declaration that “we shall prevail, we shall overcome”, was a record 18,650 words! Since every word matters, one has deep appreciation – and sympathy – for the writer, orator and the millions of readers. Despite (or because of?) their length, the Budget speeches and documents make sure that one is lost counting trees and misses the forest. There are innumerable details of small tweaks in duties, levies, taxes, and surcharges. Inevitably, barring experts, others have to wait for a detailed analysis which takes into account all the fine print and unstated points. With much else – in government, industry, and elsewhere – transforming into crisp power-point presentations, why can’t the budget follow suit and present all the key features in 30 well-illustrated slides, supplemented with a commentary by the FM? Why not a far sharper focus on clearly defined outcomes that the budget targets, with clear responsibilities and the achievements of the past year? Outcomes must include economic growth, but also job creation, equity By Kiran Karnik
29 | BW BUSINESSWORLD | 28 January 2023 Kiran Karnik loves to think in tongue-in-cheek ways, with no maliciousness or offence intended. At other times, he is a public policy analyst and author. His latest book is Decisive Decade: India 2030 Gazelle or Hippo (Rupa, 2021) (Gini coefficient may be a good measure), health, education and other social indices (housing, sanitation, power and water supply). It must include data – qualitative and quantitative – on changes in capital assets, including infrastructure, and human and natural capital (soil health/degradation; water table; forest cover; air quality; river, lake and sea pollution). In a sense, the Budget must cover both the flows and the stock in the economy (akin to an Income & Expenditure Statement and a Balance Sheet), with assigned responsibilities for meeting goals. A good start is inflation: there is a defined target (within the range of two to six per cent) and responsibility (RBI). Having failed to keep inflation within the upper bound in the last nine months, the RBI is required to give the government the reasons. In a similar manner, can the Budget be a time for the government to report to the people why it failed to meet the set targets? Not only will this be an example of transparent and accountable governance (TAG, in keeping with the fashion of acronyms, though the names now must be in Hindi), but will lead to outcome-based allocations. In this, it is vital that the outcomes cover key areas, some of which were noted above, rather than the present focus on narrowlydefined macro-economic measures like GDP, fiscal deficit, and inflation. Important factors that affect people are ignored. Though the economy is said to be doing well in comparison with the rest of the world, one analysis shows growth slowed to about 2.5 per cent per year from 2019, as compared with about five per cent prepandemic, placing us amongst the slowest to bounce back within large economies. Despite growth, expected to be a healthy seven per cent this year, there are deep concerns which the Budget should address. The first is jobs and livelihoods. Measures like labour force participation rate point to a crisis, particularly for women. One indicator is the demand for work under MGNREGA, which has increased from 16.4 million in 2015 to 30.7 million in 2021. After the amazing performance in the decade from 2005 (271 million pulled out of multi-dimensional poverty), this is a clear regression. Those above this level too are badly hit: for example, domestic two-wheeler sales are back to 2013 level, having declined by 36 per cent since 2018-19. Clearly, growth is being both driven by and benefitting primarily the rich (evidenced by the robust demand for luxury cars), exacerbating the rich-poor chasm. Will the budget address this growing and worrisome inequity? More importantly, will it re-examine the model of development that promotes this? Will it outline policies and spell out targets on poverty reduction, equity, job creation, health, education, and environmental sustainability? Will 1 February mean budget blues or a boom of blossoming buds? Economics is often referred to as the “dismal science”; to lighten the gloom – also, to celebrate good times when the economy is booming – all FMs turn to poetry, and whom and what they quote reveals much about them. The poets and the original languages are as diverse as our society (may it stay so; no, “one country, one culture/language”), and also include foreign poets (resonating with “vasudhaiva kutumbakam”). Amongst the sources are Tagore, Manzoor Hashmi, Chanakya and the Mahabharat (Nirmala Sitharaman); Vivekananda and Thiruvalluvar (P. Chidambaram); Shakespeare and Kautilya (Pranab Mukherjee); Victor Hugo and Allama Iqbal (Manmohan Singh) Photo courtesy: Lok Sabha TV
30 | BW BUSINESSWORLD | 28 January 2023 global conditions than contemporaneous emerging economies (EMEs). The real GDP grew by 6.3 per cent year-on-year in Q2 FY 2022-23 and was bolstered by strong private consumption and investment despite rising inflation. The domestic demand-induced growth in the first half of the financial year led the World Bank to revise its GDP growth forecast for India to a robust 6.9 per cent in FY 2022-23, 0.4 per cent higher than its previous prediction in October 2022. In the light of the recent Covid scare, India’s relative insularity to global shocks is threatened. In case of a return to prior restrictions – either in reaction to actual cases or expected cases – the depression of domestic demand and private consumption combined with the mounting borrowing costs can overwhelm the economic ecosystem. SLIVER OF HOPE materialised when the World Health Organization’s Director-General, Dr Tedros Adhanom Ghebreyesus, declared at a media briefing that the world had ‘never been in a better position to end the pandemic’. The statement came on 14 September, 2022, against the backdrop of the lowest recorded number of weekly Covid-19 deaths the previous week since March 2020. However, the holiday season was dampened by concerns over a Covid resurgence as infections rapidly swept across China. The recent spike in cases is attributable to China’s sudden and arguably unprepared exit from its contentious zero-Covid policy of three years amidst widespread citizen protests. Equally worrisome is the lack of reliable sources on the ground. Experts warn of massive underreporting owing to the country’s narrow measurement criteria for Covid-19 deaths and reduced testing, making it challenging to assess the health crisis currently gripping China accurately. The world once again grapples with uncertainty over the future of the pandemic in 2023. China as the hotspot of the virus at the turn of the year seems unnervingly reminiscent of the pandemic’s beginning. Some precautionary shifts are already being embraced by India – growing consumer demand for masks, sanitisers and health supplements, and a prompt revision to India’s international travel guidelines that will require international travellers from China, Hong Kong, Singapore, South Korea, Japan and Thailand to submit Negative RT-PCR reports. However, no noteworthy uptick in Covid cases has yet been recorded in India. As on 1 January, 2023, the Ministry of Health and Family Welfare reported 2,706 active cases and a total of 5,30,705 deaths. More than 220 crore vaccine doses have been administered. China’s pandemic spike can reasonably be said to effect changes in India in three interrelated ways; transmission of the variant and subsequent upsurge in infection, changes in behaviour and policies in response to the threat of rising cases, and disruptions in China’s trade channels impacting global demand and supply chains. Despite the burgeoning challenges of the international economic environment driven by the Russia-Ukraine war, growth slowdown, high commodity prices, and supply-chain disruptions, the Indian economy proved resilient in 2022. The World Bank positioned India to be in a better position to tide over adverse ARTHSASTRA by Amit Kapoor & Navya Kumar From left to right : Amit Kapoor & Navya Kumar A Old Fears of the New Year
31 | BW BUSINESSWORLD | 28 January 2023 According to Ministry of Commerce data, as on 30 December, 2022, China is India’s top importing partner, with imports valued at $67,916 million and exports at $9,904 million. The pharmaceutical industry, which can typically benefit during health crises under certain conditions, could become vulnerable as China is a major exporter of Active Pharmaceutical Ingredients (APIs) globally. The initial outbreak in China revealed this susceptibility right at the beginning of 2020[1], and the Government of India has since taken steps to reduce this dependence in the form of Production Linked Incentive (PLI) schemes. Hyderabad Pharma City (HPC) is a step in the same direction. Nevertheless, it may be a long time before the whole fruits of these undertakings are borne, and till then, India and the world continue to rely on China for raw materials for drug production. Other contact-intensive segments of the services sector, such as retail trade, restaurants, hotels, and public administration, may also experience negative growth due to rising risk perception. Standing three months’ shy of the pandemic completing three years, the unrelenting waves of Covid-19 have proven a difficult yet worthy lesson in capacity building. It has decreed mismatched obligations to open collaboration and aspirations of a fully Atmanirbhar Bharat, insisting on national self-reliance that necessarily integrates global cooperation. In many ways, India’s response to any potential surges in the future will test the productivity of its crisis-curbing measures during these three years. The uneven recovery of the labour market in the rural and urban areas and the differing impact of the pandemic on different sectors reveal the cleavages in India’s long-term resilience. What would also determine this variance of effect is how well the various industries can espouse the transformed adaptation models from the pandemic. For instance, technology emerged as a winning pivot around Covid restrictions. Whether the education sector can reap the benefits of a growing digital infrastructure as effectively as the retail sector’s adaptation to online modes of commerce will determine each respective sector’s trajectory in times of resurgent crisis. Efforts should thus be sustained in the direction of devising sector-specific emergency responses, keeping in mind that the uncertainty caused by the pandemic is here to stay for a while, even if the virus itself – we hope – is not. As on 1 January, 2023, the Ministry of Health and Family Welfare reported 2,706 active cases and a total of 5,30,705 deaths. More than 220 crore vaccine doses have been administered. China’s pandemic spike can reasonably be said to effect changes in India in three interrelated ways; transmission of the variant and subsequent upsurge in infection, changes in behaviour and policies in response to the threat of rising cases, and disruptions in China’s trade channels impacting global demand and supply chains Amit Kapoor is Chair, Institute for Competitiveness, India and Lecturer, Stanford University. Navya Kumar is researcher, Institute for Competitiveness, India Photograph by AS photo777
#FutureOfManagementEducation CONCLAVE 2023 REGISTER NOW THE PARK, NEW DELHI >>> EMINENT SPEAKERS FOR SPEAKING & OTHER OPPORTUNITY: Priyanshi Khandelwal +91 84508 44111 [email protected] FOR SPONSORSHIP OPPORTUNITY: Aparna Sengupta +91 99580 00128 [email protected] Ravi Khatri +91 98913 15715 [email protected] CSR +91 932422 62859 [email protected] Priya Saraf +91 97322 47222 [email protected] DR. NAGARAJAN RAMAMOORTHY Director IIM, Amritsar DR. SUBIR VERMA Director Institute of Management Nirma University DR SANJEEV CHATURVEDI Director Gniot Institute of Management Studies PROF. (DR.) S.V. RAMANA RAO Director Siva Sivani Institute of Management DR. ABHAY GUPTA Founder & CEO Luxury Connect DR. SK MAHAPATRA Director, KIIT School of Management PROF. PRAVEEN GUPTA Director Lal Bahadur Shastri Institute of Management AMIT SHARMA Chief People & Culture Ocer Volvo Group, India DHEERAJ MODI Vice President & Global HR Head NLB Services SANDEEP GIROTRA Executive Director & CHRO DCM Shriram Ltd. YUVARAJ SRIVASTAVA Group CHRO MakeMyTrip KARTIK RAO Group Chief People Ocer The Good Glamm Group DR. RADHA THEVANNOOR Director & Registrar SCMS Group of Educational Institutions PROFESSOR (DR.) MAYANK DHAUNDIYAL Dean Jindal Global Business School DR. ASIT K BARMA Director, Bharathidasan Institute of Management (BIM) Tiruchirappalli NASIR SHAIKH Group CEO Lexicon Group of Institutes Multifit & Educrack DR. NOOR FIRDOOS JAHAN Professor & Head, Department of Marketing, RV Institute of Management, Bengaluru PROF S SREENIVASA MURTHY Director Institute of Public Enterprise IPE DR NIHAR AMONCAR Chairperson - PGDM ExP Program, Faculty - Strategy, Innovation and Entrepreneurship IMT, GHAZIABAD DR. POOJA JAIN Professor, and Director, JIMS Rohini DR. SANJAY SHRIVASTAV Vice Chancellor MRIIRS VISHWA MOHAN BANSAL Chairman New Delhi Institute of Management DR. HIMADRI DAS Director General IMI DR. ANNURAG BATRA Chairman & Editor-in-Chief BW Businessworld & Founder, exchange4media SUDHAKAR RAO Director ICFAI Group DR. VISHAL TALWAR Director IMT, Ghaziabad PROF. MP JAISWAL Director IIM, Sambalpur PROF. MADHU VEERARAGHAVAN Director T.A. Pai Management Institute Manipal (TAPMI) ANISH SRIKRISHNA CEO TimesPro DR. URVASHI MAKKAR Director, IMS Ghaziabad PROF. PAWAN KUMAR SINGH Director IIM, Tiruchirappalli RAM KUMAR KAKANI Director IIM Raipur ANIL SOMANI Chairman FOSTIIMA Business School New Delhi PROF. DR. M. VISHWANATHAIAH Director IFIM College DR. MANASA NAGABHUSHANAM Director (Academics, Research & Administration) Ramaiah Institute of Management PROF B.S. SAHAY Director IIM Jammu DR. MADHU CHITKARA Pro Chancellor Chitkara University DR. BHIMRAYA METRI Director IIM, Nagpur DR. DEBASHIS SANYAL Director Great Lakes Institute of Management, Gurgaon DR. JITENDRA DAS Director General FORE School of Management EMINENT SPEAKERS MEDIA PARTNERS EDUCATION PARTNER CO PARTNERS ASSOCIATE PARTNERS SUPPORTING PARTNERS INSTITUTE PARTNER EDUTECH PARTNER B SCHOOL PARTNERS COLLEGE PARTNERS SUPPORTING PARTNER
#FutureOfManagementEducation CONCLAVE 2023 REGISTER NOW THE PARK, NEW DELHI >>> EMINENT SPEAKERS FOR SPEAKING & OTHER OPPORTUNITY: Priyanshi Khandelwal +91 84508 44111 [email protected] FOR SPONSORSHIP OPPORTUNITY: Aparna Sengupta +91 99580 00128 [email protected] Ravi Khatri +91 98913 15715 [email protected] CSR +91 932422 62859 [email protected] Priya Saraf +91 97322 47222 [email protected] DR. NAGARAJAN RAMAMOORTHY Director IIM, Amritsar DR. SUBIR VERMA Director Institute of Management Nirma University DR SANJEEV CHATURVEDI Director Gniot Institute of Management Studies PROF. (DR.) S.V. RAMANA RAO Director Siva Sivani Institute of Management DR. ABHAY GUPTA Founder & CEO Luxury Connect DR. SK MAHAPATRA Director, KIIT School of Management PROF. PRAVEEN GUPTA Director Lal Bahadur Shastri Institute of Management AMIT SHARMA Chief People & Culture Ocer Volvo Group, India DHEERAJ MODI Vice President & Global HR Head NLB Services SANDEEP GIROTRA Executive Director & CHRO DCM Shriram Ltd. YUVARAJ SRIVASTAVA Group CHRO MakeMyTrip KARTIK RAO Group Chief People Ocer The Good Glamm Group DR. RADHA THEVANNOOR Director & Registrar SCMS Group of Educational Institutions PROFESSOR (DR.) MAYANK DHAUNDIYAL Dean Jindal Global Business School DR. ASIT K BARMA Director, Bharathidasan Institute of Management (BIM) Tiruchirappalli NASIR SHAIKH Group CEO Lexicon Group of Institutes Multifit & Educrack DR. NOOR FIRDOOS JAHAN Professor & Head, Department of Marketing, RV Institute of Management, Bengaluru PROF S SREENIVASA MURTHY Director Institute of Public Enterprise IPE DR NIHAR AMONCAR Chairperson - PGDM ExP Program, Faculty - Strategy, Innovation and Entrepreneurship IMT, GHAZIABAD DR. POOJA JAIN Professor, and Director, JIMS Rohini DR. SANJAY SHRIVASTAV Vice Chancellor MRIIRS VISHWA MOHAN BANSAL Chairman New Delhi Institute of Management DR. HIMADRI DAS Director General IMI DR. ANNURAG BATRA Chairman & Editor-in-Chief BW Businessworld & Founder, exchange4media SUDHAKAR RAO Director ICFAI Group DR. VISHAL TALWAR Director IMT, Ghaziabad PROF. MP JAISWAL Director IIM, Sambalpur PROF. MADHU VEERARAGHAVAN Director T.A. Pai Management Institute Manipal (TAPMI) ANISH SRIKRISHNA CEO TimesPro DR. URVASHI MAKKAR Director, IMS Ghaziabad PROF. PAWAN KUMAR SINGH Director IIM, Tiruchirappalli RAM KUMAR KAKANI Director IIM Raipur ANIL SOMANI Chairman FOSTIIMA Business School New Delhi PROF. DR. M. VISHWANATHAIAH Director IFIM College DR. MANASA NAGABHUSHANAM Director (Academics, Research & Administration) Ramaiah Institute of Management PROF B.S. SAHAY Director IIM Jammu DR. MADHU CHITKARA Pro Chancellor Chitkara University DR. BHIMRAYA METRI Director IIM, Nagpur DR. DEBASHIS SANYAL Director Great Lakes Institute of Management, Gurgaon DR. JITENDRA DAS Director General FORE School of Management EMINENT SPEAKERS MEDIA PARTNERS EDUCATION PARTNER CO PARTNERS ASSOCIATE PARTNERS SUPPORTING PARTNERS INSTITUTE PARTNER EDUTECH PARTNER B SCHOOL PARTNERS COLLEGE PARTNERS SUPPORTING PARTNER
BUDGET EXPECTATIONS 2023 ESSAY peaking at a recent event, former Niti Aayog CEO and G20 Sherpa Amitabh Kant said that India needed “10,000 Ambanis and 20,000 Adanis” for it to grow. He could have added that India also needs hundreds, if not thousands, of Kaivalya Vohras, Aadit Palichas and Neha Narkhedes. Narkhede’s is an inspiring story. The 37-yearold Pune-born Indian American, who counts Indira Gandhi and Indira Nooyi as her influences, is the co-founder of Confluent, a US-based streaming data technology company. With an estimated wealth of Rs 4,700 crore, Narkhede was featured as the “youngest self-made woman entrepreneur” in the IIFL Wealth Hurun India Rich List, 2022. The process of wealth creation that got a boost with the opening up of India in 1991 has well and truly got democratised now, with many Gen Next leaders riding the startup wave and making it big. The Transformative Years India’s three-decade post-liberalisation journey has been remarkable. Will the Union Budget further push the process of generating wealth creators and entrepreneurs? To create an entrepreneur / wealth creator / job creator is to create multiple employment opportunities. This is an area which needs constant encouragement and push By TEAM BW ASPIRATIONAL, INSPIRATIONAL 34 | BW BUSINESSWORLD | 28 January 2023 s
TCS, Infosys and HDFC Bank were next in the pecking order. The report said that “Top 100 wealth creators of India Inc. generated wealth of Rs 92.2 trillion in the 2017-22 period, the highest ever so far”. It added that public sector companies’ share in wealth creation during the period “was the worst so far”. Adani Group Chairman Gautam Adani said something interesting at Banaskantha recently. “I firmly believe that India holds the potential to build 100 Adani groups and there could be no better place than India to be an entrepreneur today.” The Startup Revolution The trend to encourage grassroots business leaders with innovative ideas, that began in 1991, got a huge boost with the startup revolution — kick-started in 2016. With 84,000 startups, and with almost half of them in Tier-2 and Tier-3 centres, startups are ticket to stardom – and moolah – for many. Kaivalya Vohra and Aadit Palicha’s Zepto, an online grocery delivery platform, is the quintessential example. The two Stanford dropouts conceptualised Zepto during the Covid ASPIRATIONAL, INSPIRATIONAL There is a growing consensus that governments have no business to be in business. Wealth creation is no longer despised; it is, in fact, an aspirational value. Enterprise is encouraged and respected. New-age entrepreneurs are often treated like rockstars. The policy framework respects and encourages wealth creators even if there remain formidable challenges. Writing last year in The Times of India on three decades of economic liberalisation, RIL Chairman Mukesh Ambani observed: “India transformed from an economy of scarcity in 1991 into an economy of sufficiency in 2021… (With the decision to open up the economy) the government placed the private sector at the commanding heights of the national economy, which the public sector had occupied for the previous four decades. It ended the licence-quota raj, liberalised trade and industrial policies and freed up capital markets and the financial sector. These reforms liberated India’s entrepreneurial energy and inaugurate(d) an era of fast-paced growth.” Motilal Oswal’s Annual Wealth Creation Study 2022 observed that Reliance Industries and Adani Enterprises were the top two wealth creators in the 2017-2022 period, while Photographs by Adekvat 35 | BW BUSINESSWORLD | 28 January 2023
BUDGET EXPECTATIONS 2023 ESSAY pandemic. Vohra, around 20, is the youngest entrepreneur to have been featured in the Hurun 2022 India Richest List. The startup revolution has made India a talking point, worldwide. While the unemployment problem is a real one (besides statistics, see, for instance, the turnouts for railway recruitment examinations, or Agniveer tests), it is also true that the startup revolution has brought about a mindset change. A good number of Gen Next leaders today explore ways to launch their own startups after their formal education. Little wonder then that diverse governments and political streams now stress on creating “job creators”. The new National Education Policy is tailored towards this larger objective. Yet, challenges remain. When India crossed the 100 unicorns mark in 2022, it was said that “reaching the 1,000 unicorn mark by 2030 is achievable”. After a buoyant 2022, however, the pace of unicorn formation has ebbed. A recent intervention in the Rajya Sabha claimed that “less than 10 per cent startups turn 5 in India”. Pushing innovative ideas and grassroots wealth creators, therefore, must be reemphasised. Wealth Creators in Focus In his 2019 Independence Day speech, Prime Minister Narendra Modi said: “… The need of the hour is to recognise and encourage wealth creators of our nation. They should receive more honour. If wealth is not created, wealth cannot be distributed. Further, if wealth is not distributed, we cannot uplift the poor of our society. Such is the importance of wealth creation for our country which we need to facilitate further.” While the Modi government remains committed to the Antyodaya philosophy – ensuring that welfare measures reach the last man in the queue – there’s been a consistent focus on ease of doing business as well. While the upcoming Union Budget aims for a roadmap for growth, fiscal consolidation, job creation and infra push amid global headwinds, maybe it should also reiterate its objective to promote wealth creators and entrepreneurs. Blessed with a demographic dividend, India has set its sights on 2047. As it marches towards a high-income developed economy status, the wealth creator and entrepreneur will play a key role. After having displaced Britain as the fifth-largest economy recently, and India changing gears, while one will have to guard against monopolies and duopolies in different sectors, it’s equally true that the democratisation of wealth creation has given rise to a new generation of leaders and wealth creators. In the following pages, eminent columnists debate their blueprints for Union Budget, where they also discuss how wealth creation can be further boosted. If wealth is not created, wealth cannot be distributed. Further, if wealth is not distributed, we cannot uplift the poor of our society. Such is the importance of wealth creation for our country...” NARENDRA MODI, PM 36 | BW BUSINESSWORLD | 28 January 2023 Photograph by PIB
37 | BW BUSINESSWORLD | 28 January 2023 I t’s a whole new world brewing with businesses, some established, some Unicorns, some start-ups, but all agile towards changes afoot. Changes in the business world are nail-bitingly swift, continuous, and ever evolving. As businesses face this dynamism head-on, they demand for the ideal new-age professionals. And, what makes them ‘ideal’ and ‘new-age’ is their resilience to change in this VUCA world. Global Exposure: Student Exchange Programs with 100+ Global Partner Universities facilitate international mobility of the students. Renewed Focus on Personality Development: With continuous industry interface, incubation center, career coach concept, students transform into exemplary & responsible corporate citizens. WOXSEN LEADS THE CHARTS IN DELIVERING NEWAGE MANAGEMENT PROGRAMS ADVERTORIAL Breaking the Conventional Approaches towards Management Studies Global Student Cohort at Woxsen University EMPOWERING MBA GRADUATES WITH REAL-WORLD KNOWLEDGE MBA degree is a powerful tool by itself, but an empowered MBA graduate demonstrates real-world knowledge and its application. MBA (General), MBA (Financial Services), and MBA (Business Analytics), all the programs draw a strong alignment to the new-age careers. Woxsen’s MBA programs are evolutionary and avidly include disruptive fields such as Data Science, Artificial Intelligence, and Business Analytics. Students stay ahead of the curve with rigorous experiential learning, which brings them face-to-face with business settings and allows them to immediately put theory into practice. From globally benchmarked labs, industry interfaces, inclusion of latest technologies, Woxsen offers the best infrastructure to facilitate application of knowledge. For instance, with Woxsen’s Bloomberg Finance Lab (amongst the largest in India), students train on real-time capital markets and trades, garnering a hands-on experience that is demanded from aspirants by the Financial Services sector. Needless to mention, the best training gained is on the playground. The program curriculum integrates a full-fledged apprenticeship and live projects. Woxsen’s track record of leading companies scouting talent from the university, is a strong testament to the academic rigour and contemporary skills showcased by its students. Reckoned as one of the disruptive B-Schools in the country, Woxsen University’s MBA programs embrace reality. The range of programs focus on developing skills that ensure adaptability to the current work environments and developing a business mindset that is future proof. Industry Endorsed Curriculum: With strong industry connect, on-going dialogue with the corporates & the initiatives taken by the Academic Advisory Board (AAB) ensures the curriculum is globally relevant. Curriculum Delivery: An envious mix of leading academicians & industry experts from across the world, deliver the curriculum with minimum 40% of the design focused on application-based learning.
38 | BW BUSINESSWORLD | 28 January 2023 BUDGET EXPECTATIONS 2023 TAXAT ION Column By T.V. Mohandas Pai & Nisha Holla Budget 2023-24 has the opportunity to make the Indian tax regime globally competitive, settle deep-rooted taxation issues, and provide the Indian citizenry incentives towards accelerated growth, wealth creation and job creation. India is today the fifth-largest economy globally and third in purchasing power parity. The economy has recovered strongly from the effects of the pandemic. Advance estimates of the FY23 nominal GDP stand at Rs 273 lakh crore. The economy could grow by 6-7 per cent in real terms and 11-12 per cent in nominal terms in FY24 translating to around Rs 32 lakh crore in added GDP, a significant amount. Buoyant Tax Revenues Tax revenues are doing exceptionally well and may exceed the Rs 28 lakh crore budgetary estimates (BE) to reach an estimated Rs 32-33 lakh crore in FY23. Tax buoyancy occurred in FY22 as well when revenues exceeded BE by Rs 5 lakh crore. Continued tax buoyancy in FY 24 could increase revenues to Rs 37-38 new structure’s utility by comparing its adoption rate with the existing structure’s retention rate. Surcharges Must be Abolished In particular, surcharges which take the tax rate to a significant 43 per cent must be done away with, as excessive taxation has led to a disturbing exodus of HNIs from India (source: Visual Capitalist). India is among the top 10 countries worldwide for millionaire emigration, losing the thirdlargest number of wealthy people at 8,000-plus in 2022, reportedly 2 per cent of India’s HNIs. Many emigrate INCENTIVISING ACCELERATED GROWTH lakh crore. With Budget 2023-24, the government must seize the opportunity to resolve persistent taxation issues. Income tax (IT) rates have remained almost constant for some time despite high inflation. The current IT structure is teeming with deductions for housing, savings, interest, etc., aimed at individuals aged 25-55 who are saving for the future. This structure is of little use for people aged above 55 and retirees. Now, expectations are high that the government will streamline the tax slabs with something like no tax on income up to Rs 5 lakh; 10 per cent tax for the Rs 5-10 lakh bracket; 20 per cent for Rs 10-20 lakh; 30 per cent for above Rs 20 lakh; and a nominal surcharge of 12 per cent above that. The rearrangement will simplify the tax structure and do away with all exemptions except 80G for donations and 80D for health insurance. This can be offered as an alternative, and the government can evaluate the
39 | BW BUSINESSWORLD | 28 January 2023 With the rise of India’s startup ecosystem and many founders becoming HNIs, it is imperative to fix these issues immediately. Startup founders are already domiciling elsewhere to avoid the problems prevalent in India. Investigative agencies like IT, CBI and ED are quick to launch raids and give undue publicity to it, and then the ensuing matter crawls at a snail’s pace if that is challenged. In India, excessive publicity like this damages the reputation of the people at the receiving end. Tax Terrorism a Big Worry Tackling tax terrorism is one of the NDA government’s few unresolved significant promises. The trend of tax officials making high tax assessments which are then reduced or overturned in tribunals or courts is worrisome and stems from a long-standing system of assigning annual tax collection targets. Budget documents show Rs 12 lakh crore worth of tax disputes are pending, compared to Rs 4.5 lakh crore in 2014. It remains a significant issue, resulting in a waste of taxpayer money and time, as well as the courts’ time, and impairs India’s ease of doing business. India must strive to protect and maintain individuals with legitimate wealth creation while identifying and appropriately dealing with individuals with illegitimate wealth creation. The rule of law must always prevail. The nation must invest in the tools and capabilities of the investigative agencies, train them in using these, and institute the necessary processes and judicial capacity to execute speedy investigations. Once a matter is opened, it must be closed within a reasonable period without unnecessarily hurting citizens’ rights and reputations. Budget 2023-24 comes at the tail end of a successful decade of governance. The NDA government has boldly tackled two major issues in India – delivering development to the aam aadmi and speeding up infrastructure connectivity. By focusing on removing the barriers to wealth creation, the government will open up multiple new avenues towards large-scale job creation, innovation and domestic consumption that will propel India over the coming decades. to Dubai, Singapore, and other regions with favourable business and tax climates to save and invest in. In conversation, these HNIs reveal that often the reason to relocate their investment offices is an uncertain business environment in India jointly caused by the exercising of arbitrary powers by tax authorities, a lack of judicial focus and clarity, and lengthy, drawn-out investigations by investigative agencies, often without adequate basis or evidence, in addition to the excessive taxation. Specifically, while the budget speech stated that the surcharge would be applicable only over the threshold amount, the ensuing law made it applicable over the entire income, not just above the threshold. This creates an unnecessary tax burden. Budget 2023-24 must set this right by applying the nominal surcharge only on the income above the threshold. Flight of Wealth Creators The government must, indeed, enquire into and thoroughly investigate why so many Indian wealth creators are leaving and take steps to ensure none of the tax and investigative authorities is responsible for the emigration. Every high net-worth family domiciling elsewhere means a consumption loss of Rs 3-5 crore/year/family (multiplying this by the 8,000 HNIs who emigrated in 2022 amounts to a significant loss of Rs 24,000-40,000 crore to the country), and loss of income as they build overseas assets and pay taxes in a more favourable business environment. They will tend to build a global portfolio instead of investing in India. HNW families also tend to provide the largest number of jobs. Pai is Chairman, Aarin Capital & Holla is Technology Fellow at C-CAMP Photograph by Siraanamwong
40 | BW BUSINESSWORLD | 28 January 2023 Budget day is near. I am blue. This is because the global economy has been going through a bad period since early last year. We have inflation in western developed economies – the US, UK, EU, etc. China is slowing down and many emerging economies are caught in a debt trap. Energy prices have risen in NATO countries since last February when Russia launched an attack on Ukraine. There is no peace in sight, nor any easing for energy prices, except for India which has worked out a deal with Russia. But, even so, India is not immune from global shocks. India has been performing creditably, and every day we hear about its fifth rank in global GDP. Remembering that is for total and not per capita income, we can see that the status of a middle income country, let alone a high income country, is going to take more than wishful thinking. India has always had flashes of good performance with false dawns. Yet except for the period 1991-2016, India has not had another five- or ten-year run of sustained high growth in its 75 years of existence. The first 40-odd years, 1947-89, were wasted in pursuing capital intensive BUDGET EXPECTATIONS 2023 ECONOMY BUDGET DAY BLUES Column By MEGHNAD DESAI manufacturing under public sector, trashing of the private sector, enacting labour laws to make labour expensive and neglect of agriculture. No wonder the economy crashed and India had to pledge its gold reserves. Success as a Service Economy The success when it came relied on export of one commodity that India has exported for 300 years -- labour. This was in 1990s, when India succeeded in exporting skilled labour online, without anyone moving home. Even though the manufacturing illusion still survives (under various slogans), India has succeeded as a service economy. Over the last six years, the pandemic discounting, India has been a success story of ecommerce, fintech and digitisation. Let me simplify the India success story. India has roughly 20 per cent seriously rich, 40 per cent middle income and 40 per cent at the back of the queue. But the 20 per cent means 200 million-plus consumers, three times as large as UK. The global economy has noticed this, so FDI is pouring into India, especially now that China is emitting red signals. This is what explains the unicorns. There is a lesson to be learned here. India does not need to make its own goods. As long as it has good infrastructure and a reasonably well working government in the major sectors of the economy, it can import manufactures, export skilled labour and make itself a seriously rich country. Lack of Fiscal Prudence The key to this is fiscal prudence. This is very difficult in Indian politics at Union and state levels because the Photograph by Tarun Gupta
41 | BW BUSINESSWORLD | 28 January 2023 which party is in power. The answer is to be realistic, admit that the deficits will persist and let the exchange rate take the strain. The cost of a depreciated exchange rate will fall principally on the top 20 per cent. Doing the Japanese Way The better long-term answer for India to achieve top status is to look at East Asian countries and copy them. Japan, not China, should be India’s role model. The Japanese model is to bring together political leaders and big business to chart a national strategy for continued growth. It is forgotten now that India had a vibrant private sector with a worldclass textile industry. It was the seventh largest industrial sector. Then came Independence and a slew of misguided policies. India suffered from the delusion of socialism; not as a programme for equality but for a prejudice against the private sector. Nehru thought profit was a dirty word. The most socialist moment of Indira Gandhi’s reign was the nationalisation of commercial banks which led to Himalayas of NPAs. These NPAs are the deficits generated by misguided socialism, which nurtured crony capitalists. What needs to be done? South Korea, which was ruled by Japan as a colony, followed the Japanese model which allowed it to jump from a per capita income lower than India in 1950 to currently, an income of a multiple of more than 20 times. Taiwan, Singapore, Vietnam, Cambodia have all done it since the oil shock of 1973. India failed to be part of the Asian miracle because of its delusions of socialism. India has to play to its strength. It has to regain its position as a successful capitalist economy which it was for decades before Independence . Its success since 1991 was based solidly on youth, education and skills despite no government plan to do so. Time has come for India to shed its delusions of sticking to failed ideologies and join the dynamic prospect of rapid growth. 40 per cent at the bottom (who vote regularly) require fiscal support via various schemes. These schemes are increasing, not diminishing at any level. Even excluding the various concessions to OBCs and other groups, the Government of India behaves like a welfare state for its own employees at all levels. OROP, or one rank, one pension, is a prime example of an unfunded pension scheme which is hard now to reform as it involves the armed forces. Various other pension schemes are also similarly unfunded. It would be a great achievement if the FM got experts to produce a report on the true state of Indian public finances. The UK has an Office of Budget Responsibility to scrutinise the Budget independently. India should contemplate such a measure. But that is a utopian wish. Success as a Service Economy There is no chance that the government salaries and pensions will ever be monitored for their long-run fiscal fitness. The farmers’ movement proved that expensive privileges will be fiercely guarded in India, no matter Desai is a well-known British economist and a former Labour politician India does not need to make its own goods. As long as it has good infrastructure and a reasonably well working government in the major sectors of the economy, it can import manufactures, export skilled labour and make itself a seriously rich country Photograph by PIB
42 | BW BUSINESSWORLD | 28 January 2023 BUDGET EXPECTATIONS 2023 ECONOMY Column By Soumya Kanti Ghosh & Ashish Kumar Aready reckoner for the growing prominence of a nation should be how many times it gets talked about -- at hallowed policy meets in governance circles to savvy investment decisions made in marquee fund houses to sharp and conspicuously flummoxed media choir through pointed cover stories as also the ‘looking up’ mindset her frontline leadership receives from the peer group. Juxtaposed against these macro threads, India should emerge as the single-most serious contender for the primus inter pares spot in the bygone year 2022, a year best remembered for its intrepid fights -- against runaway prices to newer variants of the virus to territorial aggression in Europe. As the new year begins with recognising and capitalising on new possibilities, the upcoming Union budget should be a great start to discuss building bridges that seamlessly and sustainably create and transmit wealth across the socio-cultural-economic fabric of our resurgent nation. Looking at the tepid growth predicted for advanced economies and the willingness of the central banks to walk the extra mile in cooling the inflationary pressure in foreseeable period, the pivots dictating terms of trade will definitely be challenging, to put it mildly. Committed to Wealth Creation The underlying theme of the budgets in past few years has been laying overarching architectures that promote laying channels towards creating substantial wealth while the framework is continually chiselled to ensure the flow of wealth is all-encompassing, reaching the last of diverse strata with least fraction. Towards this end, giving further fillip to India’s digital stack should be a key area in the budget as the enabling digital infrastructure has a force multiplier effect on proliferation of various economic activities in a synchronised, data-driven manner, ultimately faster generation and transmission of wealth. We have seen structural changes taking place in formalisation of economy of late and bringing in suitable reforms and statures that promote businesses/enterprises to migrate to formal status at the earliest should be a win-win situation as they get better access to diverse geographical markets and credit facilities while consumers have the power to choose from a wide pool, quality and experience being the two utmost critical denominators. CREATING MORE WEALTH CREATORS
43 | BW BUSINESSWORLD | 28 January 2023 and GoI’s various strategies viz. FTAs, dedicated trade corridors, I2U2, ODOP, recalibrating export mix, engaging consulates and embassies in harnessing the existing as also potential opportunities in select jurisdictions. While our services exports have been in better shape on comparative scale, we need to promote exciting areas in open banking, fintechs, select DeFi and startups through enabling legislation to capture much larger slice, dethroning select European nations first. Also, making MSMEs a part of the pragmatic export story through better information dissemination, financial accessibility and affordability, credit guarantee mechanism (preferably through revamping the CGTMSE) could have a sea effect on wealth as also job creation. The Production Linked Incentive (PLI) scheme under Make in India has been a game changer and more sectors need to be added judiciously for making the country a new destination for meeting the world demand without hiccups, filling the ‘trust deficit’ and strategic realpolitik at play in South China sea. There is much talk on China+1, but enough opportunities should arise from keeping lateral focus on Europe+1 and some announcements to align the two should work wonders. Housing as Consumption Driver Housing, having an emotional connect within the Indian context, has the potential to change the aspirational landscape further, becoming a lynchpin for fuelling unbridled consumption growth under the security of a roof for each family. Transition to clean/ green energy and mobility demands aggressive pitching, at a bigger canvas, lest we lose the first-mover advantage. Capital markets, often lauded as a gauge of long-term wealth creation globally have seen quantum addition of crores of retail investors, mostly millennials, through the pandemic period. They should align more with investments in their quintessential search of better yields and risk-taking ability Regulators needs to impart better safety nets to this stratum. NRIs/FPOs need to be offered simplified investment avenues in diverse areas. FPIs would repose greater faith if our decisions woven around tax impacts could be clarified. The changing algorithms in uncertain times mean time is of much essence. We cannot certainly watch the paint dry. Building on the JAM code and anchored by India Stack, OCEN, ONDC, UPI, RuPay and CBDC, connected at strategic nodes, could herald a better tomorrow at population scale, in synchronisation with an eager world where they are being dubbed as architectural marvels. Internationalisation of the rupee, in a CBDC dominated future, requires some groundwork now and framework to incrementally use the same between friendly neighbours can be promoted among India Inc. Enabling changes in trade policies, Companies Act, payment & settlement Acts through budgetary announcements should catalyse innovations sans boundaries, creating a level playing field as the transition from physical assets to financial assets gains speed. Expanding the Global Outsourcing Pie Better digitisation should also give a fillip to expanding basket in global outsourcing pie, which should gain significant scale as IoT and Blockchain emerge as frontier technologies of tomorrow, upending the landscape in existing domains of software development, business processes/customer service outsourcing. With a young population having high skill sets, investments in best-fit reskilling and upskilling tools through creating right education and training hyperweb will be highly remunerative in attracting global players, drawn by cost and efficiency competitiveness on offer. The GIFT city, envisioned as a citadel by way of tie-ups with foreign varsities of repute, can work on a hub and spoke model to dispense right skills, educational training and incremental competency mapping. Exports as a Key Growth Enabler Exports have, of late, been rightly recognised as a key enabler to nudge India’s journey towards attaining an advanced economy status much within the Amrit Kaal Ghosh is Group Chief Economic Advisor, State Bank of India and Kumar is AGM, SBI. Views are personal Photograph by JEGAS-RA
44 | BW BUSINESSWORLD | 28 January 2023 BUDGET EXPECTATIONS 2023 MSME s Column By MILIND KAMBLE The International Monetary Fund (IMF) recently forecast a modest 6.8 per cent growth for the country in the current financial year. Not only that, the UN agency warned that the country’s fiscal space is at risk and called for an ambitious and well-communicated consolidation. This comes even as the Narendra Modi government has set an aspirational goal of India becoming a $5-trillion economy by 2025. Clearly, as the country strives to get to this goal, the economy is facing headwinds and has slowed to a 5-year low of 6.8 per cent rate of growth. Manufacturing Hub Debate India can emerge as a manufacturing hub especially with the ongoing policy reforms like the Performance Linked Incentive (PLI) scheme. The Ministry plays a critical role in Atmanirbhar Bharat. The Modi government has taken a lot of steps to inspire, promote, motivate and push exports of traditional goods through “One District One Product,” and cluster approach. The MSME sector in India continues to demonstrate remarkable resilience in the face of global and domestic economic and geo-political circumstances. But MSMEs also need handholding to get to the level MSMEs KEY TO MAKING INDIA A GLOBAL PRODUCTION HUB of Defence is pushing for defence exports. The reduction of imports and the objective of self-sufficiency has led to a larger participation of the private sector in the defence sector in design and development. It is argued that the extension of PLI schemes to design in manufacturing and solar power equipment would expand capacities as well create more opportunities. A recalibration of customs duty for electronic goods would enable growth of domestic manufacturing and also encourage procurement from SC/ST entrepreneurs as part of the public procurement policy. Ways to Create Wealth There are three broad areas which can be presented for wealth creation: a) The slowdown in many parts of the world provide an opportunity to position India as an attractive investment destination. Export
45 | BW BUSINESSWORLD | 28 January 2023 preneurship and innovation which are important pillars for lifting the nation’s capacity in shifting towards the manufacture and exports of sophisticated high-tech products and help move up the global value chains. To build and sustain competitive manufacturing enterprises, both large and small, and to realise the vision of Make in India for the world, MSMEs need to be strengthened and supported. To make the best of the opportunities arising from the biggest challenge of this century, Indian economy needs a thriving MSME sector. The substantial contribution that the sector has made to the economy has got it to be acknowledged as the “backbone”. It is also true that this backbone has been hit severely by the pandemic and as the economy tries to stand up on its feet, strengthening of the backbone assumes an imperative task ahead for the policymakers. where they can engage successfully in international markets as well as address growing domestic demand for high quality goods and services. b) To enhance India’s share in global trade, and sustain it, especially in the wake of tough business environment, domestically and internationally, it is imperative for us to enhance our levels of competitiveness and also give due importance to technology and innovation. The Ministr y of MSME has launched a zero defect zero effect policy to boost and encourage Indian MSMEs to be more productive. The scheme is an extensive drive to create proper awareness among MSMEs about zero defect, zero effect (ZED) manufacturing and motivate them for systematic innovations for sustained growth. c) The next ten years will bring fundamental changes to our work methods. To adapt, employees in almost every role and industry will need to acquire new skills. Capacity building by investing in human capital and skilling will particularly help. Kamble is Founder & Chairman, DICCI Wealth creation isn’t possible without nurturing private enterprises and entrepreneurs, investors and consumers. A conducive business ecosystem and supportive regulatory climate can go a long way in ensuring sustained wealth creation in the country. Interlinkages between the sectors would help increase the success rate of manufacturing units. Bolstering the MSME Sector While infusion of liquidity could help the distressed MSMEs recoup the losses in the short term, in order to really hit the ground running and help the economy realise its potential, strategies and policy actions with a long-term vision in mind need to be enacted urgently. The focus has to be widened from survival in the short-run to building a productive and competent MSME sector for the future. The MSME sector can be used as a catalyst to exploit the opportunity and realise the dream of making India a global production hub. MSMEs are the harbinger of entrePhotograph by Bivash Banerjee
46 | BW BUSINESSWORLD | 28 January 2023 “BY 2047, INDIA SHOULD HAVE A PER CAPITA INCOME OF $10,000” On India & the pandemic India, along with the world, lost two years from the development trajectory because of the Covid-19 pandemic. It left scars – in terms of mortality, health outcomes, educational outcomes, etc. India has, however, done far better than the rest of the world. Two years ago, it was said that India would not be able to handle the pandemic. In April 2020, it was said that millions of people would die. It was said that India would not be able to vacciof the developed countries). On deceleration in growth & supply side reforms India’s economy had begun to decelerate even before the lockdown. This financial year, there is a consensus, not in the government but even outside, that we would end the year with the real growth rate at 6.8 per cent to 7 per cent. The Narendra Modi government, since May 2014, has done a lot on supply side reforms. Supply side reforms lead to efficiency gains in the long run, even if they don’t lead to immediate gains. It’s true that fiscal deficit has gone up, but since 2014, the government has been fairly conservative, fiscally. Some developed countries are in trouble because fiscally they were reckless. The Union government has fundamentally spent on capital expenditure apart from the food part. nate its people. It was also said that it would not be able to produce its own vaccines. Such voices have been proved wrong. India not only produced its own vaccines, it exported them, too. We have handled this completely exogenous crisis reasonably well. One of the reasons why we handled this relatively well is because of the Union government’s emphasis, since May 2014, on providing “basic necessities” -- health, subsidised food, sanitation, toilets, all of that. On the role digital played during Covid Add to that the digital part of it. The fact that things were digital made it all the more easier. I am sure one of the things that India would like to flag at G20 meetings is its success in handling the pandemic and also its success in digital financial inclusion (the vaccination certificate, to cite an example, especially when compared with many Photograph by Himanshu Kumar INTERVIEW Bibek Debroy, Chairman, EACPM discusses with BW Businessworld the current Indian economy as well as the preceding two years ravaged by the Covid-19 pandemic. Excerpts:
47 | BW BUSINESSWORLD | 28 January 2023 I think, in the medium term, we are in the band of 6.5 to 7 per cent growth rate. There has been a structural break from the deceleration of 5.5 per cent. Next year, I am inclined to think it is going to be 6.5 per cent. Exports are going to be in somewhat bad shape because of what is happening in the world, on the Russia-Ukraine front, protectionism etc. Government expenditure, primarily capital expenditure, is the challenge for the Finance Minister. On consumption and investments, there are signs that recovery is happening. By 2047, we should have a per capita income of $10,000, which takes India to the upper middle income category. India should be in the high human development category by then. On transparency in fiscal numbers With the current Union Finance Minister, numbers have become much more transparent. She doesn’t get enough credit for this, though. Whatever is promised, we get it. On fiscal deficit & debt In 2025-26, the FM has said that we aspire for our fiscal deficit to be at 4.5 per cent of GDP. So, from 6.4 per cent, it has to come down to 4.5 per cent. Is it possible, given the time band? It’s possible, but difficult. We will have to wait for the budget for the numbers, but I think, in this budget, one will have to reduce it from 6.4 per cent to 5.8 per cent, to adhere to the target. Fiscal deficit is the end product. The critical issue is debt. The Union government’s debt has gone up, yes, because of Covid, but it’s not alarming. On private capital expenditure On private capital expenditure not taking off, I would say these are early days. There was excess capacity in some sectors. Now consumption is beginning recover. Private capital expenditure will go up. It’s a matter of time. It has recovered in some sectors. In some sectors, the investments are happening, and India is becoming part of the global supply chain. Europe is heading towards a recession. The US economy is not in a very good shape. India is much better prepared as far as any Covid exigency is concerned, especially in the context of the Covid surge in China. On whether a higher growth rate is possible now In the face of external uncertainties, yes, we will not achieve 9 per cent growth rate, but I can certainly hope to have 7 to 7.5 per cent rate of growth. Apart from growth there is a greater volatility – forex markets, capital markets, commodity markets. Preparing for the worst means several things. In an uncertain world, it’s dangerous to be import-dependent on one single country. We are dependent on imports for oil. We need to diversify. Photograph by Maglara In the face of external uncertainties, yes, we will not achieve 9 per cent growth rate, but I can certainly hope to have 7 to 7.5 per cent rate of growth. Apart from growth there is a greater volatility – forex markets, capital markets, commodity markets. Preparing for the worst means several things. In an uncertain world, it’s dangerous to be import-dependent on one single country
48 | BW BUSINESSWORLD | 28 January 2023 BUDGET EXPECTATIONS 2023 (A)MUSE & MUSINGS Column By SRINATH SRIDHARAN EXPECTATIONS THAT the upcoming Union budget, as much as those in any other year, can change anything drastically is misplaced. The Union Budget is a statement of accounts for the Government of India, and not the only policy announcement window. In addition, the budget announcement is only a plan for the year ahead, and it would be incomplete unless each line item is tallied with delivery of those plans, as the year progresses. Not an Event This government has shown alacrity when required, prudence when needed, practical spending when a must, to safely steer the economy. It has not waited for the Union Budget to celebrate it as an event, as much as the news industry wants to. On a lighter side, with the news industry benefiting from the incremental ad revenues Earlier in December, the Finance Minister had observed that the budget would set a framework to prepare India for the next 25 years (Amrit Kaal) and to “follow the spirit” of earlier budgets. It would be to reason for an equitable society, if the policies could focus on growth across all segments of the population, and not just chase aggregate growth. The combined fiscal deficit of the Centre and all states is above 10 per cent of the GDP. This is the reason why WHY IT WILL BE A REALISTIC BUDGET, NOT A DREAM ONE for its run-up to and the budget-day coverage, the government might benefit from levying a budget-day cess. Expecting a Union Budget, in a single day, to dramatically change the economic destiny and build social development, is like expecting a truant child to mend her or his ways overnight. Especially in the context of the past three years of global events – the prolonged Covid wave, supply chain disruptions, the Russia-Ukraine war, currency fluctuations, inflation and geopolitical issues have impacted all global economies. A Framework The Indian economy has performed much better than almost all other global economies. Practically to forecast a sustainable large growth this year ahead, with the continued global turmoil, is an unfair one. Also the base effect that post-Covid offered as a growth rate in FY 2022-23 may not continue.
49 | BW BUSINESSWORLD | 28 January 2023 income tax slab rates, and to widen the net, it would be a welcome change. Of course, taxing agriculture is an option that we need to make up our political minds on. As our economy scales up, we need to be pragmatic that we need to tax this sector too, for equality of treatment to all earning citizens. Urbanisation Cess While the concept of increased Wealth tax, albeit in the form of a rich-tax, is worth a debate, the challenge is how and how much. A state can tax its citizens when it offers comfort to enjoy their earnings. A look at the state of our urban infrastructure and lower quality of living is sufficient to have the worry that any rich tax might force those to migrate to better comfortable shores. Instead, one of the ways to boost the tax revenues might be to have an Urbanisation Cess to pay for civic upgrades to our crowded metro cities. After all, the bulk of tax revenues also come from these cities. If at all this budget can, it should indicate a policy path, to nudge the banking sector for better credit access to non-corporates. Globally, governments and corporates borrow from the bond markets, while the banking sector focuses on SME, MSME and retail. In India, banks largely lend to corporates, while the lower end of the entrepreneurial value chain does not have easy access to credit. By thumb rule, we need twice the number of current banks or banking sector size, to play active credit dispensation for the economy to grow. We also need larger domestic banks of global scale. Hopefully, the government can nudge the banking regulator to either bring in minimum lending guidance for banks to do incremental lending to these marginalised sectors, or allow for digital-only-sectoral-focused-banks. The writer is the author of Time for Bharat & a corporate advisor, @ssmumbai Photograph by Maximusdn Surely, with India’s enhanced global roles in various national blocs and multilateral units, it has showcased its concerns for those with lesser access to development. One would expect this budget to further focus on socio-economic empowerment. Call it a W.A.R.M focussed budget wishlist – focused on women, agriculture, rural and the MSME much of the capex spending into newer projects and capacity expansion would have to come from private industrialists, entrepreneurs and private investors. Will this budget see a warmer reception to them? Politically, the year 2023 will see nine states going to elections. If political pundits get their forecasts correct, probably the national elections due in April - May 2024 might also happen by end-2023 or early-2024. In the light of these facts, and going by past trends, the budget may not be a populist one. W.A.R.M Budget Expectations But this is one opportunity for the government before the next national elections to showcase any large budgetary allocation to widen the taxation net or to promote domestic entrepreneurship or to attract global investments. Surely, with India’s enhanced global roles in various national blocs and multilateral units, it has showcased its concerns for those with lesser access to development. One would expect this budget to further focus on socio-economic empowerment. Call it a W.A.R.M focused budget wishlist –focused on women, agriculture, rural and the MSME. Wishlist Queue One of the long-standing wishes is to unburden the honest tax payers. For lack of widening the actual tax net, the same set of regular tax payers bear the burden. It is not just unfair to them, but also allows for other earners to get away. If there is a way to reduce personal
50 | BW BUSINESSWORLD | 28 January 2023 BUDGET EXPECTATIONS 2023 FINANCES There is good news for the NDA government heading into its last full budget on February 1. India’s GDP (gross domestic product) is likely to grow 7 per cent during financial year 2022-23, if the first advance estimates are to be believed. “Real GDP or GDP at constant (2011-12) prices in the year 2022-23 is estimated at Rs 157.60 lakh crore, as against the provisional estimate of GDP for the year 2021-22 of Rs 147.36 lakh crore, released on 31st May 2022,” the Ministry of Statistics & Programme Implementation says in a statement ahead of the Buoyed by robust tax receipts, Budget 2023-24 is expected to see enhanced capital expenditure, continued push on infra spending, and a possible relief to the taxpayer By Ashish Sinha BALANCING EXPECTATIONS: A TIGHTROPE WALK Photograph by Honza Hruby