 Good morning, ladies and gentlemen. It's a great honor to welcome this morning the Honorable Finance Minister of India Arun Chaitley and we all remember Please we all remember the discussion we had last year minister and which we want to pursue today but before starting a dialogue and it should be a dialogue With the minister before starting the dialogue. I just want to take one minute to welcome you very cordially our partners members friends to this India meeting Which we call now National Strategy Day short precise action oriented and I would like to To thank particularly our partner as a confederation of Indian industry CII represented here by many members, but by the president Sumit Matsumoto and The director general Banerjee Thank you for the great cooperation. We have established Not only in organizing this meeting, but in general The theme of this meeting is delivering growth in the next context and We will Look at some of the specific challenges of India in very intensive Interactive sessions later this morning and this afternoon, but we have the great Opportunity to create a kind of framework for our discussions together with the minister of finance now minister Last year when we met you presented your reform plans When you look back, are you happy about what happens this year? What lessons did you learn from what you achieved and what you may have not achieved during the last 12 months? Well, I have a reasonable sense of satisfaction a reasonable sense of satisfaction because over the last 17 odd months I Think there are a few Present experiences the confidence of both Domestic investors and international investors and Indian economy has been restored This has happened during a time when the world is passing through very challenging moments We've set a direction For the Indian economy Consistently with every measure we are moving in that direction and we are not allowing Any policy change which is of a contrarian direction? I think India has become highly aspirational unlike what happened Let's say 21 24 years ago where Those who wanted to obstruct change and reform Were in very large numbers also Also within the ruling dispensation I think India has evolved out of that kind of situation Within the government there is an absolute consensus and unanimity about the direction to be followed The popular constituency which supports change reform and growth Now has become much bigger Than the one which resists it. I think this is on the more positive stance I'm not going into macroeconomic data, which everybody is aware of on a more challenging side Well, India is a very very highly functional democracy and a federal polity I Think the response of the states Has been extremely positive Most states Have been competing with each other In order to march forward that that's another high point that I've seen The difficulties are when I said a very vibrant democracy That you will have people For political reasons taking a political position to obstruct reforms now within the general mass of public opinion The support for that is very little But temporarily they may be able to halt or stop certain measures, but I think once a direction is set The movement for that change will go on and I must say having taken a large number of steps already in that direction I can at least look down the tunnel over the next one or two years I think I'll still have my hands full about the direction to be followed Minister, I think the vision is very clear and it's felt by everybody here such as a new spirit in India It's also of course reflected in the World Economic Forum's Competitiveness report. I never have seen such a jump in a country in a positive way But When I listened to the to the people here and I would do to our members here There are two issues which come up again and again It's the goods and services tax And of course the land acquisition bill which have been Promised and even a date has originally been set What would be your message to the business community which is so eagerly Expecting When I talk about the goods and services tax, I'll take that opportunity to Let you know generally about The direction of the taxation reform in India and I'll come to the GST as a part of that You see I had inherited a legacy Where the taxation policy of India and our processes had become Literally a drab on the economy now when I started off it was a retrospective tax it was Some exaggerated demands which were Really frightening both international and domestic investors and I had a table full of those Problems and these are not easy problems to be resolved Particularly if assessment orders have been passed you have no executive power to set them aside they can only be set aside either by a change in law or they can be set aside by a Judicial or a quasi judicial order Now consistently we worked in a direction to remove that fear of a highly adversarial And an oppressive tax structure Now I must say with a sense of satisfaction. There are very large number of those issues are now behind us systematically one by one we've been resolving each one of them that fear of the retrospective taxation is gone two or three of those problems still remain and they remain really because of legal reasons and I have publicly announced that we are looking for Processes by which we can resolve some of those issues also Even with regard to domestic taxation. I think we are making now the processes much simpler People file returns online people get refunds online. There is hardly an interaction between the Interpersonal interaction even our queries of since last week We'd only be addressed online and responses would be taken online and orders will be passed So it's becoming far more reasonable Of course, there will be aberrations which we'll try and address I have also announced the roadmap for direct taxation to bring it the corporate tax down to 25% while phasing out some of those exemptions and I think I'm going to publicly put in the public domain over the next few days Some of those exemptions which we intend to phase out in the first Round the first tranche of reduction of the corporate tax. I hope to do it in very near future Whenever the new finance bill comes up Now having said this the indirect taxation reform, which is the G goods and services tax Has been promised by us Now we made considerable headway The Parliamentary Standing Committee had recommended it the lower house by two-third majority has passed it Almost all state governments are on board and I must say even the state governments of the Congress Party had actively supported it the chairman of the empowered committee is a finance minister belonging to the Kerala government itself and we continued the practice of giving the chairmanship to the member of the largest opposition in order to build a consensus and It came up in the upper house the standing the select committee of the upper house It also approved it and therefore I must say that a national consensus has been built The trading community in India the industry the business the popular opinion all supports this Almost everybody has editorially backed it at this stage I Say this with a sense of regret That there was a policy somersault as far as the Congress Party is concerned and Regrettably it was led by the people who had moved the The GST bill itself and this policy somersault was not for any policy reasons. It was for political reasons because The policy seemed to be obstruct I've been discussing with a large number of members of the Congress Party itself and Even in the last session with all of us supporting us We had the numbers in the upper house and therefore With numbers in the upper house we could have passed it so the strategy changed you don't allow the house to function now, of course, these are Problems that we challenges we have in Indian democracy, but this can't go on indefinitely as And when it is put to vote It certainly would be approved Because I am quite confident. We have the numbers on our side in any case Within months from now the numbers in the upper house are going to tilt a lot more and therefore That that makes it far easier for us Am I willing to discuss this with the Congress Party? I repeatedly said I have I've been so far discussing it with their leaders and I can't find any At least conceptual opposition to it I'll again once again speak to them and try to make them see reason. I think GST is only a question of time It's only a question of time. They can delay it by obstruction, but since obstructions don't continue indefinitely I think as and when it's put to vote I see GST becoming a reality I have both the supporting legislations that we need to implement GST in readiness. I Also have the IT backbone necessary for it. Absolutely in readiness so the moment the upper house passes it we can get 50% of the states to ratify it at the earliest and Be in a position to put it into motion The second factor you mentioned about the land bill You see availability of land is is is a prerequisite as far as any growth is concerned Urbanization suburbanization will be a reality infrastructure Land is required for rural development land is required for rural irrigation electrification housing schemes land is required for housing for the underprivileged land is required and If you don't make land available I think the the growth process itself comes to an end now obviously the Persons who either sell land or land is taken from somebody must be paid and must be more than adequately compensated. There is no difficulty now Again here the it was the Congress chief ministers amongst others who had suggested that we needed the changes So the government in good faith accepted their advice and went ahead on a particular course of action Once we brought it to parliament They changed their strategy and said no we will oppose it We again called the chief ministers who said it's a concurrently subject where both the center and the states have a parallel jurisdiction So we know the requirements of our state. We will bring about amendments which are needed in the state Provided the center agrees to give its assent to it. We said we'll give a sent to whichever state wants it So there is a change of strategy that let the states bring about any change if they think it is necessary And the states have now set that process into motion. The first state has already sent its proposals to the center We've accepted it and they've notified it and therefore I I'm sure when the other states come up as and when and this will only happen in those states which need the land and ultimately I think This issue by this old meanwhile the ordinance has lapsed, but the bill remains before the select committee There are some changes on which a Consensus some minor changes on which a consensus is possible So we'll try and see if in the coming session that consensus can be worked out I think it's very reassuring to see is a clear vision behind now and and I look at The discussions I had over the last days. I think it's very important Such as and turn uncertainty is fast removed because it's Blockage to investments even if you had a big increase in FTIs but Minister I have seen is that Cupbacks of Indian business is not at the desired levels Now you have here Some of the heads of the big Indian companies. What would be your message to some? You see as far as Investment in India is concerned. I Am conscious of the fact that the private sector investment has been slow and It's been slow because Private sector was also conditioned by two factors One was demand along with the slowdown world over which had also impacted the Indian economy the other was a large number of Indian companies and I think Indian private sector has to seriously introspect had Overborrowed and overstretched itself and therefore with expanded capacities. They now have to utilize their existing Capacities before they could think in terms of investing more I'm conscious of that fact and therefore For me to get into a self critical exercise over this and blame them for what happened in the past I think will serve absolutely no purpose and therefore ordinarily the principle is that When growth is to take place private sector leads the government but when you are Emerging out of a slowdown mode World over its public investment which takes over and fortunately for us With the current global oil and commodity price regime the public investment resources a Digitality of those resources are available and Therefore we are making every attempt to make sure that on infrastructure and several other areas Public investment increases and I'm glad that over the last few months. It's significantly increased Not only from the government coffers itself, but I recently had last week a review meeting with the Indian public sector companies and a very large number of them have been sitting on piles and piles of cash and We've asked each one of the 35 major public sector companies which were represented in that meeting Which was sitting on huge amounts of money to start expansion programs So between the government and the public sector, there's a very large Public investment plan which is picking up and I think Along with this with the liberalization in the FDI policies that we have done India has Attracted one of the largest FDIs anywhere in the world. So with public investment public sector investment Large FDI coming in I think the investment cycle itself has revived and therefore in certain sectors after sectors I can now see for instance take a Some of our infrastructure programs like the highways Private investment had absolutely come to an end because the Those who build the highways their projects had become completely non-bankable now with a large amount of public investment thrown in I have now seen over the last few months. The private sector also has jumped in in a big way Similarly we are addressing issues of stress sectors steel is a stress sector Because of the surge of Chinese steel which is coming in So we've been by taxation policy. We've been trying to address those issues Power is a stress sector in the next couple of days We are likely to announce some major policy decision in that regard to get that sector out of stress And once that happens, I'm quite sure The the the private sector also Will will start participating you can't have a country which has a seven to eight percent growth and which aspires to get Into the next league Growth's taking place without a part private sector participation. Obviously once it picks up the private sector gets out of the current scenario and its Investment would be seen already in telecom, etc. We are seeing in IT in the startups We are seeing a big private sector investment already jumped in And I'm quite sure this is likely to expand Ministers this leads me to the next question See I think you should be commended on The progress you made in terms of the of macroeconomics the macroeconomic environment now You referred to the infrastructure investment and the figures I heard 250 billion out of which I think 120 billion Or 150 billion I'm not you you certainly have the right figures But a large proportion Will be financed by debt now, how do you see the capability of see Government Who should who should be responsible for the debt who is at the end? This is one area when we started off I Think we started With one clarity in mind that we need to build on the infrastructure But we were unsure of domestic resources and therefore even last year we'd been Calling conferences of international investors, etc. Thinking in terms of our own Investment fund with a government participation and so on which is which is still on track and Therefore how the investment figures would read Itself there was a lurking suspicion it was more aspiration than actually money that you could see and fortunately since we had the oil prices drop the commodity prices drop and I think one of the biggest unsung reforms of India in the last few months has been the subsidy reform and therefore we started systematically by Subsidy as far as oil is concerned diesel is concerned The LPG is concerned. We have now got pilot projects on food on we have a pilot project on Kerosene which is on and the DBT and This itself has helped us to save a lot of money on that front. It's a very significant amount Added to it. We used the drop in the the oil prices Passed on a lot of benefit to the consumers Put the balance sheets of the oil companies back in shape and then created the infrastructure says so it got shared three ways and That itself has helped us to put a lot more money. So I have a Very large amount of money as far as the national highways is concerned In fact, I am already running short on money as far as rural roads is concerned Which comes from the budget itself and therefore I'm thinking in terms of adding to it As far as the railways is concerned probably the biggest unreformed sector We have a massive program now from in real way infrastructure to railway stations being reed are in 400 places The tenders are going to be out very Shortly I got the life insurance corporation to put 150,000 crores as a 30-year loan on a soft loan available to the railways itself for infrastructure investment and therefore we've used this regime in a big way to start funding the these infrastructures and it to this I Think our entire proposal to get in addition to public-private partnership the international funding into The investment fund itself, which is also in the final stages of formation so that we can fund each one of these sectors Where we find a shot of investment there are some infrastructures in which Private sector is willing to come in ports for example. I think there is no dearth of Even domestic investment along with joint ventures, which is willing to come in The the big problem area for us at the moment as I speak to you is the power sector and I think that's an infrastructure issue, which we are going to be addressing Literally in the next couple of days if not in the next couple of hours itself We've almost finalized our approach in the direction Because we have a system where we are generating more power than what India needs In fact, there is the first time in history where we have surplus resource The generation companies are in a difficulty because there are no takers for that power You have a grid which can take it to every part of the country But your last mile that is the state discoms have now become Extremely vulnerable because some of the states decided that not charging people adequately for the the user charges for the power Was good politics now It wasn't good politics, but it was certainly bad economics and those Discoms are not in a position to lift that power itself because of the financial condition So how unless we are able to revive their health the whole chain itself is suffering and therefore This is one area of infrastructure which is essential Which has remained unaddressed for the last so many years I think it is one which needs to be tackled immediately and our current focus is literally on this area Minister Do I you're satisfied with the legal framework which exists now for public-private partnerships? Or could you see any improvements in order to mobilize? Particularly the private sector for the last The Legal framework Has to be Very radically changed and it has to be radically changed for instance And I'll here give you four or five Things which need to be immediately run The first is Contracts are to be performed not preached Now our Indian law as it stands today Some of the provisions Are quite obsolete. I've only yesterday had a discussion with the law Legislation department and asked them to start working on a change in our specific relief act which is Extremely obsolete in this direction it provides for damages, but not performance Enforcement of contracts For instance our arbitration processes go on and on so last week. We've already issued an ordinance Which now provides for a fast-track arbitration by a single arbitrator With very little scope for challenge to be disposed of in a time period of six months with no extensions at all So the arbitrator will have to sit day-to-day and just finish any contractual dispute thirdly if Disputes which go to court. We've now issued an ordinance against last week providing for a commercial bench in every high court The committee which was drafting the bankruptcy law. I'm told has already finalized its recommendations And is likely to submit a report to be in a couple of days I'm immediately going to translate that recommendation into legislation so that the exit law is also put in place As soon as possible My endeavor will be to try to introduce it in the next session of parliament itself Minister we shouldn't Integrate the audience into the dialogue and I would take two questions, but also two concrete proposals So let's not only have questions, but who has a concrete proposal to the minister or wish that Unique opportunity for Presenting wishes no wishes Minister you must be perfect I'm one wish one wish one one proposal I am asking a simple question, you know during the elections the BGP campaign was fantastic because you brought in domain experts from various Fields and you know you ran a fantastic campaign my suggestion and proposal is that can this government also create a framework where? Domain experts specialist from other sectors can join the government and help in your agenda for change That's a very valid Suggestion You see The prime minister himself Interacts through the social media and his own Side which he operates personally literally He's quite amenable to these suggestions but I Think there is a lot of scope Particularly with the think tank apparatus which the Niti Iyog is now in the process of creating. I had at least two meetings for that kind of a think tank which is building up and I see a lot of Positive scope there. Let me look at let's say foreign Investors sitting here in the room any Any proposal any any question? Yes, please Minister J. Leah Taland Davies from Rio Tinto and Firstly congratulations on the reforms that you and your government under the leadership of the prime minister are bringing through I know we caught up very early in the Change of government and you are doing exactly what you said to us at that outset so congratulations on that The reform of the mineral sector There's been some success in getting coal into power stations. I'm very interested that there's now a surplus of power But foreign investment in the resources sector we've talked about and as you know, we're on the verge of bringing the first Mine new mine development in India in 40 odd years But my proposal goes to the exploration and the government's doing a lot of work on exploration But when we look at the growth that you're stimulating here For Indian growth that will need metals and minerals to continue its growth Attracting foreign exploration at the very early stage of green fields and allowing that to continue through to the mine We're working with your departments on that but my proposal would be to allow that very Greenfields exploration to happen and then allow the continuity through to mine without going to auction at the intermediate stage Thank you. Would you would you would you put this in a lot to me any other suggestion? Yeah Minister you started on the railway part by saying that It's one of the least reformed sectors at the same time. We've got the soft loan from the Life insurance for that huge amount of money Actually, I would be worried for all those who are Investing in the LIC because the concern would be what is the extent of due diligence? We would go through in Supporting the railways because actually the real problem in the railways is it one of financing or is it one of internal? reforms improvement from within Because then if my belief is if that happens it will naturally attract funds. I mean railways is a sunshine sector Yeah, you see Let's look at the way a railways has been run all these years Railways has been run in a manner where you added about 10 to 12 percent In terms of track size the size In the last 68 years So we are almost a little more than where the British left us secondly our infrastructure also Broadly remained on the same pattern over the last many years consistent railway ministers Did three things one They would make sure that a Large number of trains were announced as a part of the railway budget Whether they were workable or not workable were not seen most of them never started. It was just a populist announcement Some projects would be set up in the minister's own constituency and The railway minister took pride in the fact that he would never hike tariffs in the railway budget But then there would be a hidden hike done throughout the year in order to meet the expenses The result was that railways in that sense never grew With such a vast infrastructure in terms of track in terms of train rolling stock, etc Now how do you reform it? So the first thing we decided this year was the minister said I am not going to announce any new train Since till I strengthen the existing framework. He has to strengthen the tracks in order to take the load itself Amongst the reforms he started In railway infrastructure, we've opened up foreign direct investment We've also allowed private investment to come in and do a big way some proposals. I am told have come in Additionally the whole program now to start through the private sector participation the redevelopment of 400 major railway stations through the Swiss challenge method the whole method has been finalized It'll be out in public domain soon and Therefore, you'll soon have a situation is over the next couple of months where you have 400 railway stations over the country being developed by a private sector Including international participation itself so he's now started on this whole process and Then you go into more moderns high-speed trains, etc so I think Rather than just go into populism the railway ministry is today being run Far more with a professional game plan in mind now once you embark on that Professional game plan you start a little slowly because you have to put the systems in place But as far as we've made more budgetary resources applicable We've given the comfort of the LIC money to the railways We will out private sector and foreign investment to get into that area and let us I think the railway minister is a very thinking man and therefore let us Give him a few more months before the movement in this direction itself starts the railways has to reform As a part of the larger reform process in India Minister we had breakfast and in a small circle We discussed the force coming I would call it force technology or industrial revolution and its impact on jobs and skills Now India has to create already under present conditions 10 million jobs a year now in addition you have now Robotization you have three-dimensional printing and all those new technologically innovations with which will Radical eye which will have a radical Impact on particularly on skills. How do you prepare? I mean one response is the entrepreneurization of the population to Allow young people to create as many jobs as possible and so on. What is your response? How I mean, this is such a big issue a challenge. I think if you look at three things happening or three or four things happening one the network of education in India Earlier by the state and now by even a very large private sector and civil society participation has Very hugely expanded in India So we are throwing up a lot of human resource year after year the skill development program which states have taken the central government has taken and The central government is concentrating on those 68 skilling areas With a new ministry coordinating the whole action the kind of infrastructure creation. We are concentrating on I can almost see India's manufacturing growth now I've been speaking to some of my friends in the industry who look at it from their own industries point of view And at times are worried themselves as to why manufacturing really has not been growing But I can now see trickles of growth. You see rather than in all Figures Which are assumed figures of how much we'll grow this year There is only one real figure The rest are matter of calculation and assumption and the real figure is How much is the revenue you are earning as I speak to you in early part of November where seven months of the year have passed by One of the greatest positives I can see is a huge increase in Indirect taxation revenues now indirect taxation revenues are not assumed figures. They are real figures now as of 30th of October or 31st of October The actual rise has been a Staggering 30 36.5 percent now this 36.5 percent is a Looks bigger because of certain additional revenue measures, which we took since on November last year So those additional revenue measures act to it But if I take it at par with last year's figure Dehorsed that additional revenue measures. It's still 13.5 percent So both excise duty customs and customs means raw material and capital goods service tax on A year to year basis. It's 13.5 with additional revenue measures. It's it's much more Now this is a real increase now this actually indicates that the manufacturing itself is picking up and If with a large amount of infrastructure Investment this picks up. I think that's another one area the last area which is again as I say I see it as probably a government scheme which will have the maximum impact in addition to skilling is This mudra scheme which we launched a couple of months ago now mudra is Soft loans being given by the banking system To For low-cost entrepreneurship. Now there are 25 crore 250 million families in India the least 60 million out of them in terms of their economic strength six crore out of them The object is that if we can't accommodate them in terms of jobs either in the government or the private sector Can we empower them to become? Entrepreneurs in the unorganized sector after all the unorganized sector in India has created a hundred and ten million jobs 11 crore people are employed because of them Now the banks have they used to go to private money lenders and borrow at 25 30 36 percent Now banks have started lending to them at 10 percent and so on which is a huge decline in interest rates This year out of those 60 six crore families We hope to touch about 1.75 crores and over the next four to five years about all six crore would be funded as I speak to You like the Janadan and all these other schemes About 65 lakhs this year have already been funded and these are people living in villages These are people living in slums some people take loans to become vegetable vendors fruit vendors Some young lady in a slum sets up a beauty parlour somebody steps up a small tenoring unit or a small Boutique of her own these are the kind of businesses they are planning so to address the employment generation of Indian economy While the economy grows you allow technology skills The jobs to be created. You will also have to address the bottom belly and I think that's equally important Minister we celebrated yesterday's a social entrepreneur of the year and We selected her out of 150 Proposals and it shows just the strengths of what you described What's going on in terms of social entrepreneurship? Let me let me because we are coming to an end. Let me ask you a Question related more to international matters In preparing the annual meeting in Davos, we hope you can participate Some observers say we will be very much under the impact of a Fat decision in the mid of December. That's the next meeting now Some people expect some turmoil of the markets. My question is twofold first How resilient is India? related to Market turmoil But second Maybe in a more political way What would you wish in terms of changes in the international financial monetary system? I know you made some comments on this recently So it would be interesting as far as The international situation is concerned. I think there's one Significant change which has taken place over the last few years Earlier you had a Crisis situation once in a decade once in 15 years. I Think that has now changed The world is so integrated That the newest norm in the global economy is turmoil and volatility So you now have it every now and then So if something happens in Greece, you'll have a turmoil for a few days if China slows down or if the Currency is devalued in China Alternatively if you have a payment crisis in some part of the world or you have the federate expectation in the United States This does send ripples across the world now. I can't say that Indian economy won't be impacted. There are some crises Which impact us Much lesser some impact us directly and therefore if the The federate hike takes place certainly you will find a Term oil for some period of time and then situation settles down When you had the Chinese currency being devalued you had a transient Term oil and then situation settles down my own view is that we allow Our strategy has to be to strengthen the basis of our economy to have our macroeconomic strength in place so that the impact of this is very transient and temporary and Then we are able to show some resilience and bounce back Which has been traditionally the character of the Indian economy and I think the kind of fiscal prudence that we are practicing and the Kind of data that we have today It's it's it's a very rare situation where almost every macroeconomic data Is fitting in almost perfectly and therefore likely to improve not likely to go down itself and The impact certainly would be there. I think rather than the actual change It's the suspense which has been impacting us for the last few years And then as far as changes in the international Monetary financial system, which you would wish is anything Of course we talk about IMF global governance here we do speak in terms of the quota reforms as far as the IMF is concerned and The ball is now in the United States Caught itself and The Treasury Secretary has been saying that he's extremely keen to give effect to it And he's trying his best within their domestic systems to have it cleared Thank you very much minister. I think we are coming to an end. I I Just could summarize probably what we all think here a we have to thank you for your leadership be we have to encourage you to continue with your vision and with your reform steps and Finally, we hope to see you soon in Davos Reporting on even further progress, but again, thank you very much for joining us this morning and opening