Govt. of India Needs to Do

8/2/2019 Govt. of India Needs to Do...

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Swati Gupta, Swedha Pati, Vishal Mittal & Vishal Thappa


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University Business School, Chandigarh 2

It is no way to run this world, but India must shape this emerging world

order, and not be a passive recipient of what happens. But in order to do

that I think we need three pillars. Two of them get noticed and debatedand discussed in India, but the third does not. First is economic strength. If

India is not economically strong, it will not have a voice. Second, we must

have technological vitality, not just innovation in a traditional sense, not

just science, but a capacity to contribute fundamentally new ideas not only

for Indias development but also for the worlds development. These twoby themselves are necessary but not sufficient conditions for creating the

world of the future. I believe moral leadership is fundamental and critical

forIndia to take its rightful place.

C. K. Prahlad


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What needsto be done ?

Financial Inclusion

Fiscal Consolidation

Calibrated exit from the

expansionary fiscal stance

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73% of Indian households not indebted to formal financial

institutions

14% of agricultural wage laborers have a bank account and 95% of

businessmen5

UniversityBusinessSchool,Chandigar

h

Process of access to financial services and timely credit needed by

vulnerable groups at an affordable cost - C Rangarajan

Committee on Financial Inclusion C Rangarajan

A Hundred Small Steps Raghuram G. Rajan


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Physical distance

Poor are not bankable

Lack of appropriate products/services

Lack of awareness, financial illiteracy

Processes too tedious and complicated


7/133University Business School, Chandigarh 7

During 1990s

25 28 %

14 - 15 %

During 2000s

20 25 %

6 -8 %

Share of SSI in total bank credit to industry

Share in total non food credit



National

RuralFinancialInclusion

Plan

Banks forRuralBanking

LABSRelationship

Banking



District LevelConsultativeCommittees

Advisoryservices forpoor

Vulnerabilityreducing

instrumentsMicrofinance



Improvements inrural infrastructure

Enhanced

productivity andvalue addition in

agriculture

Greater demandfor banking

Increase in

traditional andemerging ventures



The issue raised by these data is whether the

increased access to non-institutional sources is an

indicator of the failure of the financial system to

serve the needs of the poor, or whether it is really a

failure of public services, and of the welfare system.


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Reducing government deficits and debt accumulation.

Capping public debt

Curbs on non Plan spending

Disinvestment

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Largely structural nature of fiscal deficits

Sustainability of recovery

Public Spending to be geared towards building medium term

productivity of the economy

Effective and incentive compatible rules to be set by the government

an enabler

Modification of labor laws

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UniversityBusinessSchool,Chandigarh


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Capital starvation

Human capital

Regional Rural Banks

Measures for urban micro-finance and separate category of MFIs

B

A

N

K

IN

G


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University

BusinessSchool,

Chandigarh

Timely implementation of GST

Increasing public investment in infrastructure by unlocking government

wealth in certain PSUs

Removal of procedural hurdles for large investment projects to take off

Keeping the overall tax rates moderate, as India is one of the highest

manufacturing tax paying country in the world


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University Business School, Chandigarh 17- The Hindu, March 5, 2010


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Killing role of participatory notes

Billion of dollars of hot money

Multilayering

Beyond SEBI, ED, RBI and the CBI

Nullify exemptions available to P - Notes

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sinessSchool,Chandigarh


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Rapid acceleration of infrastructure projects

Strong support for SMEs by reduction in bureaucratic paperwork

Expansion of educational opportunities for low income families.

Inflation Cut on fertilizer subsidies

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sinessSchool,Chandigarh


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India looks to the future with confidence. We are confident ofmeeting the domestic and international challenges to fast andinclusive growth. We are also better placed than any time in therecent past to push the reform process forward. I believe wehave a bright future if we make use of strengths and theopportunities that we get.

Manmohan SinghIndia Economic Summit 2009

If we skill [our young people] andtrain them properly, they will be ahuge asset. If we do not, they will

become a liabilityChanda Kochhar,

MD and CEO,ICICI Bank, India

[In India] there is a gap betweenwhat we say and what we do. We

need focus on the say-do gap.Indra Nooyi

Chairman and CEO,PepsiCo, USA


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The Indian economy continues to be one of

the fastest growing economies in the world.

India world's 2nd largest wireless networkwith 525.1 million mobile users

India 10th largest gold holding nation at 557.7tonnes


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INDUSTRIALSECTOR

Government is targeting a growth rate of 8% in thenext fiscal with the objective of achieving 9% growth in2011-12.

Pratibha Patil


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Shortcomings in areas like health, education,infrastructure, fiscal management, and labourmarket efficiency.

Huge deficit in key sectorspower, roads,ports, airports, irrigation , and urbaninfrastructure.

Existence of Poverty (Indias Global HungerIndex (GHI) score is 23.7, which gives it arank of 65 out of 84 countries by InternationalFood policy Research Institute (IFPRI).


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7.1 million children among (15-29)yrs are out

of school and, only 2% have received formal

vocational training.

Gender Gap which, according to the Forums

Global Gender Gap Report 2009, ranked India

114th out of 134 countries measured.


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Indias manufacturers must lead by

innovation, tapping the inherent creativity and

entrepreneurial spirit of its people. GOI must invest in education and training to

resolve the growth prospects.

Almost two-thirds of its population is younger

than 35, Of the 22 million children who attend

school, only 12.4% pursue further education.

RECOMMENDATIONS


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Manufacturing sector has recorded growth

despite infrastructure deficiencies.

MSMEs contribute about 8 per cent of theGDP of the country, about 45 per cent of

manufactured output and about 40 per cent of

exports.


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MSE sector assumes importance in the economy

owing to its employment potential and regional

dispersal.

This sector also mobilises capital from the lower-

middle class sections to invest in productiveeconomic activity.

Thus, it encourages the development of

entrepreneurial skills and enhances export earnings

through the production of a wide range of products.


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Inadequate availability of modern

infrastructure.

Roads, Ports and Power to provide enablingenvironment for industry to prosper.

Reviewing of labor laws and market

regulations.

Collaboration of Research and Industry for

making innovation as a key driver of growth.


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Cost recovery is another concern to be

improved by public-private partnership.

Elimination of subsidies that are inappropriate

and are not targeted to the poor.


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Conscious effort to deliver products that give

value for money in a cost effective way.

Dumping by the foreign Industries should be

monitored.

Improving Manufacturing Employment trends.


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Exit policy needs to be designed in a waythat it removes exit barriers and at thesame time protects the necessary internalorder of the firm.


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A lot is happening on the manufacturing side.

The key impediment to becoming a global hubis not infrastructure bottlenecks, but

entrepreneurship and leadership capability.

Any country that has these two elements canovercome the hurdles.

Jyotiraditya Scindia


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India needs to invest in higher education and

research as it lacks world class universities.

Lord Patten

To eradicate poverty it has to industrialize at a

growth rate of 11-12 % and provide proper

framework to develop large scale industries.

Desai


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It is usually called governance, but I am an old-timer so I like to call it corruption. Corruption isan issue. No country that is corrupt is rich; no

country that does not build up its humanresources is rich; and no country that is corruptbuilds up its human resources. You can run theregressions yourself. It is public data.

CK Prahlad

Paul and Ruth McCracken DistinguishedUniversity Professor of Corporate Strategy,

University of Michigan, USA


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India must develop energy resources, with

alternative energy

Building a low-carbon economy and innovate

in the pursuit of environmentally sustainable

growth and inclusive development.

Acquisition of land.


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Inclusive Growth will provide productiveemployment to Indias young population andraise living standards in rural areas across the

country. Investment in vocational education and training is

needed to bridge the skills gap. Boost rural markets. India has a large domestic market and the

government needs to do more to mobilizedomestic savings.


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AGRICULTURE

Agricultural production has largely been

stagnating for the past decade. Costs of inputs like fertilizers and power have

gone up more than the produce.

More vulnerable to international price volatility. Per capita food grain availability has shrunk to

what it was three decades ago.

More than 67 % of cultivated area is held inholdings less than 4 hectares in size, compared to

just 35 % in 1953.


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AGRICULTURE

Agriculture continues to be involve the 60% of theworkforce.

Contribution to GDP has drastically dropped fromover 53% in 1950 to 20 % in 2009.

For the country to achieve 9-10 % growth,

agriculture has to grow at least by 4 %.

Adverse impact of the deficient monsoon.


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Supply side yielding of most crops has not

improved.

Net Sown area of the farm size has been

shrinking over the years.


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To boost agricultural production and ensurefood security Management of water resources Farmers, corporations and government must

work in harmony. Innovation in farming inputs and practices. Compounding problems of groundwater

depletion and contamination Diversification of Crops by farmers.


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Leveraging public and private-sectorinvestment for agricultural growth

Boosting good stewardship practices of

natural resources and preservation ofbiodiversity

Developing agricultural markets through

improved infrastructure and policies Driving economic growth through agriculture,including opportunities for small-scale farmers


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Renewed focus on increasing the productivity. Step up the growth of allied activities and non-

farm activities

Rural infrastructure for movement ofagricultural produce.

Agricultural subsidies, which drain public

coffers and distort markets, must be reduced Micro Irrigation system and Water sheds and

participatory approach for achieving.


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A new Green Revolution is needed to boost

Indias agricultural production in a sustainable

way. Improve harvests while weaning the system

away from the unsustainable application of

chemicals and excessive water and energy use.

Narrowing gap between producer prices andconsumer prices through marketing support.


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We should experiment genetically modified

crops to raise productivity

Regressive subsidies such as those of water,

electricity, fertilizers, food procurements must

be replaced by Cash Transfers and medical

insurances to cover hospitalization on at leasta linked scale for those below poverty line.


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(Pic) 49


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There is no single definition of infrastructure that seems

to be accepted, but the term is usually associated with adiverse collection of public assets that underpins theeconomy. Infrastructure includes the basic physical andorganizational structures needed for the operation of a

society or enterprise.General Categories

Rural infrastructure Urban infrastructure Physical infrastructure Social infrastructure

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A countrys Infrastructure development is very intimatelyconnected to the process of its economic growth. Hightransactions costs arising from inadequate and inefficientinfrastructure can prevent the economy from realizing itsfull growth potential regardless of the progress on otherfronts. It is indicative of the economic development and

the standard of living of the citizens of a nation.

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If our infrastructure gets delayed, our economicdevelopment, job creation, and foreign investment getdelayed. Our economic agenda gets delayedif not

derailed. Says Infosys Chairman N.R. Narayana Murthy

"India has underinvested in infrastructure for 60 years, and

we're behind what we need by 10 to 12 years," says T.V.Mohandas Pai, director of human resources for Infosys.

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Power Irrigation Rural housing Roads Healthcare Education Telecommunication Drinking water

Power Urban transport Water Telecommunication Sewerage Ports, Airports Railways Roads, Bridges Tourism Infra Health care Solid waste management

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Physical Infrastructure(They facilitate growth)


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Physical Infrastructure(They facilitate growth) Transportation Energy Communication

Social Infrastructure ( Improves standard of life)

Water supply Sanitation Sewage disposal

Education Health

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OverviewWe know the relation and importance of infrastructurewith regard to the growth of the economy.India in spite of having great potential for double digitgrowth rate is not being able to do so, and one of themain reasons for it is the weak infrastructure availablein India.

We are going to have a look at some importantcomponents of infrastructure

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India 6th largest consumer and consumes 3.4% of

world output India is hugely deficient in the energy production

because of which it has to vastly rely on imports,

mainly expensive oil. Power failures ,even in the most developed areas

very frequent. Requirement for diesel generators

for contingencies Increased demand with increased incomes. There is

a increase in demand at an avg rate of 3.6% perannum over 30 years

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Acc to CEA the total installed capacity as at endof Dec 09 was 156092 MW. But the demand isfar more than the supply increasing at about 8-10% per annum.

The need for increased use of renewablesources of energy. The deficit in power supply in terms of peak

availability and total energy availability rose

continuously from 2003-04 to 2007-08, a periodcharacterized by high growth in peak demandand total energy requirement.

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64

23.6

2.6 9.8

Percentage

Thermal

Hydal

Nuclear

Renewable sources

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The Eleventh Five Year Plan envisaged a capacityaddition of 78,700 MW, of which 19.9 per cent washydel, 75.8 per cent thermal and the rest nuclear.

The actual capacity addition during April-December 2009 was only 43.9 per cent of thetarget of 14,507 mega watt (MW) for the currentfiscal.

The power sector as a major coal consumer feltacute shortage of domestic availability, raisedquestions about the required growth in coal

production. 59


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Electricity generation by power utilities during2009-10 has been targeted to go up by 9.1 per cent

to 789.5 billion KWh. The bulk of the potential for hydel power which is

in the Himalayan region is yet to be tapped.

Private-sector participation in hydel power projectshas been staedily increasing

Under the Rajiv Gandhi Grameen Vidyutikaran

Yojana (RGGVY), 69,963 villages have beenelectrified and connections have been released to88.8 lakh BPL households up to January 15, 2010.

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Broadly includes

Roads & Highways networks Railways Ports & canals Airports Mass transit systems

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Condition very poor, undergoing muchneeded improvements

Ageing infrastructure, long planning delaysand serious capacity constraints

E.g. New Delhis Indira Gandhi Airport is builtto accommodate 12.5 million passengers

annually, but it has to deal with around 23. Hampers Tourism growth, discourages

foreign tourists

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The major ports in india areKolkata, Paradip, Vishakhapatnam, Channai,Tuticorin, Cochin, New, Mangalore port,

Mormugao, Mumbai, J.N.P.T., Ennore & Kandla Roads to the port are not properly maintained Very slow movement of goods Red Tapism, excess formalities during clearance of

goods Some ports rely on armies of laborers to unload

cargo from trucks and lug it onto ships

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Shortage of trains. Overcrowding Inadequate communication system causing

derailment, accident etc Inability to maintain timings for whatsoever the

reason.

Security Theft, Terror attacks etc. Repair & Restoration of old tracks.

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Indian Railways is the third largest rail network inthe world under a single management.

Indian Railways has launched a new class of

passenger-carrying Duronto trains in September2009.

The first-ever Yuva trains which are targeted

mainly at unemployed youth have been introducedbetween Howrah and Delhi and HazratNizamuddin and Bandra.

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Increased traffic demands more roads, widerroads, better roads A quarter of all Indian roads are congested Road maintenance very poor in most parts Around 40 % Indian village dont have access to all

weather roads Long delays with projects because of Bureaucracy,

Red tapism Encroachments alongside roads

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As against the target of developing about 3,165 kmlength of national highways under the NHDP in2009-10, the achievement till November 2009 has

been about 1,490 km. Against the target of awarding projects for a length

of about 9,800 km under the NHDP during 2009-10, projects have been awarded for about 1,285 kmup to November 2009.

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Taking population into consideration, there is a bigneed for good, efficient mass transport systems

Overcrowding in the Delhi Metro The Mumbai local trains

Has highest passenger density of any urban

railway in the worldOvercrowding is a big problemYearly more than 3,500 people die on the Mumbai

suburban railway track due to overcrowding during

peak hours. Problems in Local busesVery frequent delaysOvercrowdingPoor bus conditions

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Includes Telephones, wireless phones, internet, televisioncables, communication satellites etc. The Indian telecom sector is contributing 5.6% to the gross

domestic product of the nation There have been some contentious issues surrounding the

3G spectrum auction such as base reserve price, the numberof operators in a particular circle and the reluctance of thedefence forces to vacate spectrum was resolved amongvarious ministries.

(Third generation telecom services allow faster connectivitythan what is available now, and will enable applications suchas Internet TV, video-on-demand, audio-video calls andhigh-speed data exchange.)

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"Our rural teledensity is 20% as compared to over100% for our towns and cities. We must thereforedouble our rural teledensity in the next three

years. said Dr. Manmohan Singh on 4 Jan10. Dr Singh also pointed out the slow growth in the

telecom manufacturing sector, and announced an

ambitious project of connecting 2.5 lakh villageswith high-speed broadband across the country by2012.

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THE DELHI METRO

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THE BANDRA-WORLI SEA LINK


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IGI AIRPORT UPGRADATION


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India still lives in its villagesBasic amenitiesNeed for Health and education facilitiesOne reason for the lagging rural development is the gapbetween the actual allocation and the proposed spending in

the 11th

five year plan.An additional irrigation potential of 2,400,000 hectares to becreated, including 900,000 hectares under the AcceleratedIrrigation Benefit Programme.

Under the Rajiv Gandhi Grameen Vidyutikaran Yojana(RGGVY), 69,963 villages have been electrified andconnections have been released to 88.8 lakh BPL householdsup to January 15, 2010.

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The corpus of the Rural Infrastructure Development Fund, to beraised to Rs 12 000 crore from Rs 10 000 crore A separate window


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raised to Rs 12,000 crore from Rs 10,000 crore. A separate windowfor rural roads will continue, with a corpus of Rs 4,000 crore.

25% of the planned allocation is towards rural infrastructure.

In a pioneering initiative, the water-short state of Tamil Naduwill be automating the operation of its canal system, irrigationassets and water bodies by using the latest technologies anddeveloping an Enterprises Information Management System

(EIMS). Mr.P.Chidambaram, in his budget speech 2008-09 quoted Dr.

Muhammad Yunus, the Nobel Laureate,Faster growth rate isessential for faster reduction in poverty. There is no other trick

to it.But he might want to consider an environmental acivistswordsGrowthfor growths sake is the ideology of the cancercell

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As China is to manufacturing, India is to services.China has plowed its huge reservoir of domestic savingabout 40% of GDP into some of the bestinfrastructure you will see anywhere in the world.

India comparatively is very low on generatinginvestment through savings Indias strength is elsewhere namely, in an

extraordinary stock of human capital. And it has

deployed that strength into the creation of world classIT-enabled service companies such as Infosys andWipro and the service subsidiaries of largeconglomerates such as Reliance and Tata.

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Access to modern water supply and urbansanitation facilities in India is better than that in


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sanitation facilities in India is better than that inChina and improving at a faster rate.

Despite the much heralded informationtechnology boom in India the rate of growth ofcomputer infrastructure and computer literacy haslagged behind the Chinese rate of growth

55% of the world cement was used in China in2009

China's early steps to liberalize its economy andinvest heavily to modernize its physicalinfrastructure gave it a substantial edge over Indiain terms of income per capita levels. They alsomade China a more attractive destination to

foreign investors. 84 According to a recent news report, when India

l d 6 k f h E i i


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completed 6000 km of her Expressways in sixyears, China had done 40,000 km within that time.

And because of its authoritarian government,China gets faster results. If you have to build a roadin China, just a handful of people need to make a

decision

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The Budget 2010-11 has addressed the Infrastructure

problems with number of allocations as per thevarious aspects of the sector.

Rs 1,73,552 crore provided for infrastructure

development which accounts for over 46 per centof the total plan allocation.

Allocation for road transport increased by over 13

per cent from Rs. 17,520 crore to Rs 19,894crore. Rs 16,752 crore provided for Railways, whichis about Rs.950 crore more than last year.

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All ti f bl h b


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Allocation for renewable energy has beenincreased to Rs 1,000 crore. A separate sum of Rs

500 crore has been allotted for the setting up ofsolar and small hydro power units.

The Finance Minister has announced a Rs 10,000

crores allocation towards Indira Awaas Yojna andRs 48000 crores towards Bharat Nirman.

The govt has introduced long term infrastructurebonds investment upto Rs 20000/- u.s. 80 CCF ofthe income tax act.

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Public sector/Government

Debt from Private sector Equity financing External Commercial Borrowings FDI

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The government needs to take the rural focus asthe rural India still largely remains underdeveloped.Capacity building at local level will help improverural infrastructure.

Interestingly the highest speed clocked by anIndian train so far is 150 km/hour by ShatabadiExpress between Delhi and Agra, and inneighboring China, it is 275 km/hr. The way aheadwould be to partner with countries like Japan,China and seek their superior understanding oftechnology in order to affect improvements

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Under the 11th Five-Year Plan (2007-2012), thegovernment estimates that the country needs to


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government estimates that the country needs toincrease infrastructure spending to 8% of GDP

from 4.6% to accelerate average GDP growth from7% to the targeted 9% over the next five years.Deregulation and privatization to encourage

investment in infrastructure especially since public

financing is not sufficient to generate the levels ofinvestment needed to improve infrastructure.

A related challenge is to ensure that developmentis sustainable, meaning that the environment iscared for in the process.

Transparency

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The CII survey expressed the need for theGovernment to direct the suggested increased


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Government to direct the suggested increasedspending into Roads & highways, Low cost

housing, Power and Ports. Lower interest rates for Infrastructure projects,

especially PPP Infrastructure projects.

Simplification of rules, regulations and proceduresof according clearances for infrastructure projects.

Allow large private infrastructure companies tofloat tax free bonds.

Facilitate implementation of infrastructure bysetting up a high power implementation andfacilitation agency.

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EconomicGrowth Trade

Employment

& skilllevels

Technology

diffusion

Knowled

getransfer


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India has been ranked at thethird place in global foreign

direct investments this year,following the economicmeltdown, and will continue toremain among the top fiveattractive destinations for

international investors duringthe next two years, according toUnited Nations Conference onTrade and Development(UNCTAD) in a new report onworld investment prospectstitled, World InvestmentProspects Survey 2009-2011'.


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Source : AT. Kearney Analysis, 2010


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IndiaRegion:

South AsiaIncome category:

Lower middle incomePopulation:

1,139,964,931

Source: World bank,


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Ease of...Doing Business 2010

rank

Doing Business 2009

rank

Change in rank

Doing Business 133 132 -1

Starting a Business 169 166 -3Dealing withConstruction Permits 175 174 -1

Employing Workers 104 102 -2Registering Property 93 92 -1

Getting Credit 30 27 -3

Protecting Investors 41 38 -3

Paying Taxes 169 171 +2Trading AcrossBorders 94 97 +3

Enforcing Contracts 182 182 0

Closing a Business 138 142 +4

Doing Business Report 2010

FDI Statistics
http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89http://www.doingbusiness.org/ExploreEconomies/?economyid=89


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According to Union Commerce MinisterAnand Sharma,

Month 2008 2009 Net increase

December $ 1.36 b $ 1.5 b 10%

November $ 1.08 b $ 1.74 b 60%

October $ 1.47 b $2.3 b 56%

India is targeting annual foreign direct

investments worth $50 billion by

2012. It would double the inflows by2017.

The government has given its nod to 14 FDI proposals in January 2010alone to bring in foreign investment totalling US$ 157.89 million.

TOP INVESTING COUNTRIES IN INDIA 09-10


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RANKS COUNTRIES INFLOWS2009-10(Upto

December)

%AGE TOTOTALINFLOWS

1. Mauritius 42924 44

2. Singapore 8188 9

3. U.S.A 7577 8

4. U.K 1841 5

5. Netherlands 3687 4

6. Cyprus 6419 4

7. Japan 5197 4

8. Germany 2581 3

9. U.A.E 2824 1

10. France 1158 1

(Amount Rs in crores)

Evolution of FDI Policy


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103

y

Pre 1991

1991

1997

2000

2005-09

Allowed selectively up to

40%

Up to 74/51/50% in 112 sectors under theAutomatic Route 100% in some sectors

Up to 100% under Automatic Route in all sectors except

a small negative list

More sectors opened ; Equity caps raised in many other sectors Procedures

simplified

FDI Policy Liberalization

FDI up to 51% allowed under the

Automatic route in 35 Priority sectors

Initiative for clear, transparent and consolidated FDI policy document,liberalization of pricing & payment of technology transfer fee, trademark,

brand name etc.

Budget

2010


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Pointing out that the North East Industrial InvestmentPromotion Policy lead to investment commitment ofRs 15,000 crore in Meghalaya, chief minister of the hillstate DD Lapang said frequent changes in the policyhas put potential investors in a dilemma.

There has been significant drop in the new investmentproposals and projects cleared earlier appear to havemet a dead end as the entrepreneurs are refraining

from making investments due to the aura ofuncertainty, Lapang added.

Source : The Financial Express. 18/Nov/09

LNM slams unprepared


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LNM slams unprepared

government

In a rare display of frustration at the tardy progress in his projects in India, thebillionaire businessman pinned the blame on the countrys inability to movethings. The entire country is to be blamed for the delay in execution of the projects,said Mr. Mittal.

And in venting his ire, he joins a long list of business groups, notably the Tatas,Sterlite and South Koreas Posco, that have all seen their projects get mired inproblems related to land acquisition, environmental clearances, red tape andlack of infrastructure.

After years of waiting, Mr. Mittal rationalises that the problems may be due tothe countrys inability to handle a surge of big-ticket investment proposals,fuelled by an unprecedented interest in investing in India.

Source : The Economic Times. 08/Jan/10


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Market India by building a credible,

unique positioning for India Inc. brand

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Several actions are required to develop Indias image as a reliable and risk-freesource for valuable services. These are:


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o Define a powerful positioning of the India Inc. brand, for example:Talented resource pool, easy scalability, can offer complete solutions

Service culture, value-for-money destination Attractive, safe, and friendly tourist destination

o Improve coordination between the government and industry associationsand between several government ministries (tourism,

external affairs, commerce & industry):Alignment on initiatives; ensure consistent messages Exchange learnings

o Promote India via multiple mediums

Hire a professional PR agency to ensure that the perception of India equalsReality Identify champions in the administration in key countries such as the U.S.and U.K. to support India Specific marketing campaigns, road shows, use of web-sites, etc.

2


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While the government has lifted sectoral caps for FDIover the last decade, Particular attention should also

be paid to the removal of restrictions on FDI in the

service sectors .(Telecom, Aviation, cable n/w )

EDUCATION SECTOR

2

The services sector comprising financial and non-financial services


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The opening of the telecom sector led to rapid growth in subscriber base.From only 54.6 million telephone subscribers in 2003, the numberincreased to 429.7 million at the end of March 2009 and further to 562million as of October 31, 2009 showing an addition of 96 million

subscribers during the period from March to December 2009.Source: Economic Survey 2009-10

attracted FDI worth US$ 3.54 billion during April-December 2009-10Source: IBEF (updated February, 2010)

Education sector holds US$ 100 bn investment potential, say expertsSource: IBEF, January 11, 2010


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ADVANTAGES

The best universities in the worldlike Harvard, Oxford and MITwill come to India, facilitating

environment of world classresearch, labs and libraries. India will become a potential

education destination. Competition would force the

local institutions to change theircurricula and respond to the

immediate needs of the students Create new institutions and

infrastructure and generateemployment.

DISADVANTAGES

Culture and society Commercialization

Foreign Educational Institutional billpassed in Cabinet

Source: The Economic Times, 16 march2010

With 160,000 Indians studying abroad,spending $4 billion a year in fees, Billshould help reverse bothSource: Business standard, 16 March2010

3


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3

It may be advisable for government to eschew

selective policy intervention and focus on clear-cut and transparent policies and procedures andreducing procedural and bureaucratic hurdles.

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4

Over and above the creation of a business-

friendly environment, it may be important for a

potential host country like India to activelyundertake investment-promotion policies to fill

in information gaps or correct perception gaps

that may hinder FDI inflows.

5


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5

There needs to be greater coordination

between the centre and states to ensure that thesubstantial foreign interest in investing in India

gets translated into actual investment flows to

the state.

Gujarat, Orissa and Andhra Pradesh have received maximum investmentproposals among the states with 15.4 per cent, 12.6 per cent and 8.1 per centrespectively of the total proposed investments US$ 345.3 billion in 2009Source: IBEF January 22, 2010

POSCO CASE


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Proposed $12 billion investment

Indias single largest FDI investment

by South Korean steel giant, Posco.

Posco signed an agreement in

June 2005 to set up a steel plant in Orissa

but is entangled in a community led struggle

against the forcible take over of lands andresources, which continues till today is

Problems:

Political

Environmental

Allegations of land grabbing

This clearly has impacted credibility of

many state governments.

Posco plans Rs 4000 cr. Investment in

Maharashtra.15 March, 2010, Business Standard

6


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6

India should continue to work towardsdeveloping a deep and liquid corporate debt

market.

7


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7

Strengthen relevant infrastructure(IT, Railways, Airports, Roads, Power)


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Junk the myraid sectoral caps and opt for a small

negative list where FDI is either banned or allowed to

a limited extent with all other sectors open to theforeign investment without an upper limit.

Make the policies clear, consolidated and user

friendly.

Promote India Inc. as a brandInvest on improving Infrastructure and developing a

deep talent pool

Dear Government,


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Create a Technology Advisory Group forunique projects.

Create an Independent evaluation office,

which will evaluate the impact of flagshipprogrammes.

Create a new apex body that oversees socialsector schemes and has as its mandate thecreation of implementation oraganisations.


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ChiefInformation

Officer

TechnologyAdvisory

Group

IndependentEvaluation

Office

Social SectorSupervisory

Body

1


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1

The technology advisory group will

handle technological and systematic

issues connected with various ITprojects of the country.

2


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2

Independent evaluation office will

evaluate the impact of flagshipprogrammes.

3


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3

It is time for a new apex body to

oversee social sector schemes with a

mandate to create implementationstructures that bring together expertise

from the government, private sector

and NGOs


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DELINK WiMax AUCTIONS

FROM 3G

The Indian retail market, fifth largest retaild i i l b ll k d h


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Retail Sector In India

destination globally, - ranked the mostattractive emerging market for investmentin the retail sector .Source : A T Kearney's annual Global RetailDevelopment Index (GRDI), in 2009.

Total retail market in India currently standsat $350 billion and is estimated to attain$573 billion by 2012-13.Source: rediff Business News, February 23,2010


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Retail industry can be recognized as an industry

Policy Clarifications to allow investments by financialinvestors

Permission to operate 24*7 and Revision of labourlaws Open FDI in Retail

Create a Single Window clearance

Retail and Entertainment Zones can be created


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IT Industry In India


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Entrepreneurship in thought and action,alignment amongst actors, and speedyexecution are the keys to success. The

implications are many, and the rewards aresignificant. The only immediate investment

required is the will.


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References:http://www.ibef.orgWebsite of Ministry of Commerce and Industry, http://dipp.nic.in/.

World bank- Doing Business report 2010

AT. Kearney Analysis, 2010World Investment Report, 2009; United Nations Conference on Trade and Development.Attracting Foreign Direct Investment (FDI) to India,

by Ramkishen S. Rajana, Sunil Rongalab and Ramya Ghosh (April 2008)New India Opportunity- A report by AIMA 2010.

The Financial ExpressThe Economic Times

Business StandardrediffBusiness News
http://www.ibef.org/http://www.ibef.org/http://dipp.nic.in/http://dipp.nic.in/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/http://www.ibef.org/


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THANK YOU!!!!

Documents

Govt. of India Needs to Do