My views on currency depreciation last year on CNN TV18

https://www.news18.com/news/business/rupee-appreciates-but-experts-worried-about-further-slide-fuel-to-become-costlier-1875515.html

How Easy is it to really do Doing Business in India?

First appeared in Mint https://www.livemint.com/Opinion/j9Uew2P8hAynnV9dt42cxJ/Opinion--Contract-enforcement-needs-to-be-improved-on-war-f.html

It has been a long a arduous trek for India to move from a pathetic 142 ranking in 2015 in the World Bank’s Ease of Doing Business ranking to the 77^thrank this year. This is a very laudable achievement by any standards, especially given the complexities involved, including multiple governmental jurisdictions in India.

However, the World Bank’s methodology involves only two cities – Mumbai and Delhi. And hence, in the mammoth subcontinent of India, the World Bank’s ranking would not be representative of what the actual Ease of Doing Business in India would be. This is something that was well recognized by the Central government, which initiated a process of ranking of the States on the business process reforms achieved by them. Therefore, there was a broader based attempt by the government to spread the Ease of Doing Business beyond the two cities of Mumbai and Delhi.

But, as is the proverbial saying, the devil lies in the details. India has made impressive strides in areas such as “Trading across Borders”, wherein India’s rank has gone up from 146 to 80. Similarly, India’s ranking in “Dealing with Construction Permits” has surged from 129th to 52^ndrank and India’s rank in “Getting Electricity” has shot up to 24th. However, since this change is limited to only the two cities of Delhi and Mumbai, where there are hardly any manufacturing entities being setup, it distorts the real picture of easy it may be to setup manufacturing facilities in India. The battery of approvals needed to start construction in a state, especially of a manufacturing entity, is not something that even large investments find it easy to handle, leave alone the more modest investors who may want to setup greenfield manufacturing.

Which brings us to the aspect of merely starting a business in India. Despite the many improvements in the process of “Starting a Business”, India is still at 137^thrank out of 190. So as India improves, other countries are improving even more, making it challenging to move up the rank. More importantly, if we are not easy to start a business, then we are nipping many new businesses in their bud, and for whom the rest of ease of doing business becomes meaningless.

More importantly, legitimate businesses will find it difficult to operate in environments where there is a lack of contract enforcement. Contract enforcement is the lifeblood of private enterprise. Sadly, India stands at 164 rank out of 190 countries. As we observe business practices in India, there is significant disregard for upholding commercial contracts. Inspite of regulatory changes allowing dedicated commercial courts to be established by state governments, hardly any state has actually setup the commercial courts which could have helped in greater contract enforcement in the country. And contract enforcement is not just a challenge with other private sector entities but also with the government. Government contracts get modified or nullified post contract signing, leading to significant damage to shareholder value. This has especially been observed in the infrastructure sector, where concessionaire agreements have been summarily discarded, with the remarks that the concessionaire has made enough profits and need hence need not make more profits. This is against the spirit of the contract. If the concessionaire had made “enough” losses, would the government have stepped in and said that they have made enough losses and so government will step in make good further losses? Therefore, if contracts cannot be upheld, the risk of doing business in India goes up very significantly, which is what foreign enterprises who have recently entered India, are discovering. In addition, we are at 121^strank in terms of “Paying Taxes”, which is also a reflection of corruption in the system at the lower levels.

This is also one of the key reasons why Indian capital has been regularly investing outside of India but has been shy of investing within India. 

So, if one finds it difficult to start a business and then finds it challenging to get into any commercial contract and enforce the contract, then the rest of the aspects of Ease of Doing Business become significantly less relevant. India therefore needs to bring in improvement in ease of “Starting a Business” and in “Contract Enforcement” on a war footing, to really make it easier for legitimate businesses to flourish in India and to generate jobs and bring in prosperity.

My views on Cryptocurrencies in CNN TV18

https://www.news18.com/videos/india/reporters-project-why-india-has-banned-cryptocurrencies-1980637.html

My views on Cryptocurrencies in India

Mobility Talk with CEO of NITI Aayog, Mr Amitabh Kant

NDTV Smart Cities & Environment degradation

Should WhatsApp be held accountable for lynchings?

PUBLISHED IN THE HINDU ON JULY 20, 2018

HTTPS://WWW.THEHINDU.COM/OPINION/OP-ED/SHOULD-WHATSAPP-BE-HELD-ACCOUNTABLE-FOR-LYNCHINGS/ARTICLE24463841.ECE

(The Original Article)

We have come to witness the destructive power of social media, amplified by the advent of ubiquitous smartphones, unleashing havoc on innocent people. As the cases of lynching by mobs spread through the country, fueled by malicious videos on popular mobile messaging platforms that feed off on sheer ignorance of the masses, the obvious question that comes up is who is responsible for this?

The easiest mob mentality again is to find the most obvious entity in this value chain of
malicious videos being spread, and the lynch that entity. In this case, it being the mobile
messaging platform. Clearly, there is no doubt that the mobile messaging platforms are in a powerful position to make significant interventions to prevent such mob frenzies that are arising out of what the platform is facilitating to propagate to the masses. In fact, as good corporate citizens, it is the duty of the messaging platforms to step in and do their best to prevent such mob frenzies arising out of content being forwarded through such platforms, that is leading to gruesome lynching. However, the messaging platforms are only one actor in the value chain of malafide content being spread.

The value chain of malafide content being spread includes people who are creating such
content (and are clearly investing significant time and perhaps money), the mobile messaging platforms, the people who are forwarding such content, the people who are organizing the mobs and the enforcement authorities who are responsible for maintaining law and order.

Let us look at the first step in this value chain of spread of malafide content, which is the
content creator. This is not the first time that mob frenzy has been triggered in India through mobile messaging platform. The first such prominent case was the one that led to mass exodus of North-eastern origin folks from Bengaluru in the August of 2012. Much of the content that led to the exodus, was found to be of origin from a neighbouring country. Pretty much the same place of origin as one of the key videos on child kidnapping that has been circulating that led to many of the recent lynchings. Why did we have such a “Social Media attack” on Bengaluru and continue to have such “Social warfare” being carried out sporadically on India? Who would invest time and money to coordinate such an “attack”. Imagine the scenario where such Social Warfare is unleashed on our military itself. If an adversary is quickly learning how to spread Social Warfare from a city to the entire country, as the case is now, it is only a matter of time that the adversary’s next attack would be on institutions that would have far greater
destructive impact on the country. Is that too far-fetched? Has there been a precedence? Of
course there has been several such precedence in India itself, going back all the way to 1857, when rumours were spread that the cartridges being provided to Indian soldiers by the British is laced with cow and pig tallow. That sparked off the sepoy mutiny. The same can now be done far more efficiently using the digital instant messaging platform. So would it help if we onlyforce a single mobile messaging platform to take steps to stop the spread of malicious videos?

Yes it may help for now, but the forces that seem to be getting better at Social Warfare will use an alternate platform just as they started with MMS for the Bengaluru mass exodus and moved to mobile messaging.

We must also keep in mind that India is the only place in the world where mobile messaging has led to such widespread mass exodus and lynchings. Why hasn’t the same happened in other countries where revolutions have been triggered but not mob lynchings and mass exodus? Clearly, one of the reasons being that such behavior is being engineered by powers with vested interests that are detrimental for India. And clearly, the mobile phone game “Bluewhale” has demonstrated the ability for absolute mind control from remote locations, driving people towards destructive actions. But there is also the fact that we have a highly uneducated, under- exposed, gullible set of citizens with existing deep fissures and mistrusts. And this also includes those who are apparently highly educated and are doctors, lawyers, engineers and other professionals, but they fail to understand the power of technology where truth and untruth are hard to distinguish. This is a potent mix for targeted misinformation campaigns.

It is necessary for the government to urgently update the education curriculum to make citizens aware of not only such Social Warfare but also of other dangers such as phising, cyberbullying, cyber-blackmail etc. This is long overdue and previous attempts to create such curriculums through NCERT has not seen the light of the day.

Similar training is required for the enforcement authorities who also need to develop standard operating protocols to tackle such situations. Such a step needs to be reinforced by appropriate regulatory changes that makes it mandatory for entities in the value chain of information dissemination to share appropriate alerts with the law enforcement authorities, in a prescribed real-time electronic format. In the absence of such a regulation, information intermediaries can neither be triggered to act, nor be held illegal for any acts of omission on their part.

The current mob lynching triggered by mobile messaging is a wake-up call for India. We have earlier seen direct cyber-attacks that brought down ATM’s elsewhere and brought down a part of India’s electricity grid, that were recognized as test attacks. The mob lynching need to be viewed in the same lens and larger steps need to be taken to protect the nation and its people.

Jaijit Bhattacharya is president, Centre for Digital Economy Policy Research

Budget Analysis 2018-19

Published in http://www.mydigitalfc.com/plan-and-policy/logistics-remains-critical-focus-area

The Union Budget 2018-19, comes at a time when the Twin Balance Sheet issues continues, wherein, both the banks and the corporates have stretched balance sheets, which prevent the corporates from borrowing any further for investments, while it also prevents the banks from lending any further. In such a scenario, as expected, investments and growth has stayed challenged, even though we see early signs of an upturn in growth.

 Therefore, the only entity that can borrow significantly and can spend in order to spur growth, is the government. Hence it is not surprising that the government decided to breach the fiscal deficit target of 3.3% by 20 basis points in the Union Budget that was presented on February 01.

The Union Budget therefore envisages a total spend of INR 24.42 trillion, and increase of INR 5.4 trillion (roughly 28% increase) from the previous budget’s budgeted estimate.

	2016-17	2017-18 BE
Gross Tax Revenues (Cr.)	17,03,243	19,11,579
Direct Tax (Cr.)	8,47,097	9,80,000
Indirect Tax (Cr.)	8,51,869	9,26,900
Non Tax Revenues (Cr.)	3,34,770	2,88,757
Fiscal Deficit ( % of GDP)	3.5	3.2
Revenue Deficit (% of GDP)	2.1	1.9
Primary Deficit (% of GDP)	0.3	0.1
Net Debt Receipts (Cr.)	5,34,274	5,46,532
Total expenditure ( Cr.)	20,14,407	21,46,735
Revenue expenditure (% of total expenditure)	86.11	85.57
Capital expenditure (% of total expenditure)	13.89	14.43

This obviously raises concerns of (a) abandonment of the glide path to fiscal prudence, (b) stoking inflation and (c) sending wrong signals to investors, thus impacting their sentiments. However, given the situation of the economy, breaching the fiscal deficit appears to be a necessary evil, and it is unavoidable that the associated public spend would lead to inflation, which would happen in any growing economy. This was indeed a tightrope walk call for the budget.

But the more interesting part is how the budget proposes to make the public spending. It continued its signaling of focus on infrastructure development with over INR 50 trillion being committed to for infrastructure spend, which is not entirely through budgetary provisions, but through off-balance sheet mechanisms. The economic impact of such infrastructure spends comes in with significant lag that the economy can ill-afford at this stage. Hence, it appears that by trying to put in more money in the hands of MSME’s through reducing the corporate tax to 25%, and by putting more money in the hands of farmers by providing a minimum support price that is 150% of the costs of farming, there is an attempt to resolve the issue of distress in rural areas and with MSME’s, while also injecting more disposable income which is expected to increase consumer demand, thus kick-starting a virtuous cycle of more investments and more jobs.

The only challenge in the above story appears to be the fact that the 150% of cost support is only for the kharif season, whose crops would hit the market only by around November, thus postponing the expected relief. There are also concerns that the budgetary provisions for such a procurement is not evident.

However, as per the expectation set in the 2017-18 budget to reduce corporate tax from 30% to 25% over a period of time, atleast the same has been done for MSME’s with turnover of less than Rs 250 crores, and hence it signals the government’s intent to make India a lower tax country for corporates. But a re-introduction of Long Term Capital Gains Tax (LTCG) of 10%, while not removing the Securities Transaction Tax (STT – which was introduced in lieu of LTCG being abolished earlier), turned out to be a dampener for the storyline of being a lower tax regime destination for investments.

The theme of the Union Budget was clearly a focus on rural, women, underprivileged and the marginalized as substantial announcements were made for rural industries including fisheries and animal husbandry and for SC/ST’s. The most spectacular part of the budget is the strong intent to strengthen the social safety net by providing a whopping Rs 5 lacs per household health insurance for 100 m households (which translates to covering 500 m households). This is indeed the mother of all healthcare programs, if successfully implemented. Alongwith it, the announcement of 1 medical college in every three districts, setting up of high quality Eklavya schools and providing all-weather motorable roads to every habitat, underlines the shift towards not just providing benefits, but providing high quality benefits. Even if the above is not achieved in the short-run, it sets the agenda for all future governments to strive and deliver on these audacious targets.

Overall, the budget appears to have covered most of the bases, leaving out the taxpaying salaried middle-class, who appear to have a higher tax burden through increased cess and indirect taxes. The only concern would be the developments in other parts of the world, such as the change in US tax rates and possible hardening of US fed rates, which could suddenly put brakes on the FDI, FPI and remittances inflows. Then again, a healthy forex reserves of over USD 400 billion would help buffer Indian against any such sudden brakes on fund flows.