 Good morning everybody. Good morning everyone. My name is Andrew Ross Sorkin of CNBC and the New York Times and it is my pleasure to have the finance minister here of India at a very important time in the world and an important time for India, really at perhaps an inflection point, which feels like an inflection point. We will find out how much of an inflection point. We are going to break the rules of this particular session, which was originally not intended to include all of you asking questions, but given that there's so many people in the room who I know want a shot on goal, we want to make this as interactive as possible a conversation. So we're going to talk for a little bit, but then we really do want to open it up and allow everybody to to get involved in this conversation. So first well thank you for being here. You know I think the big question just to start with is this is a country there are very high expectations now that have been set into motion. There was a time that this country had GDP of 9%. Realistically over the next two or three years what do you think is a realistic GDP number? Where do you think the country's economy could really go? Not a decade from now, but sort of in the very foreseeable future? Well I think our real potential is 9% plus and therefore we'd like to take India in that direction. We've had problems and challenges. We went below 5% which by Indian standards is a very disappointing rate. Hopefully we'll do a little better this year. Next year I think is going to be significantly better and if we can continue to take decisions at the pace we are and eventually attract investment into India, I think then India is going to move much faster and achieving our real potential will then appear to be more realistic. Let me read you something. This is from the Economist magazine. It says that when Modi first one hopes that the new government would adopt economic reforms that had proved beyond the brittle coalitions of the past, yet in defiance of the maxim that bold steps are best taken early, he has so far not had dramatic change. So cuts to subsidies such as fuel and fertilizers which cost GDP 2.3% last year have been deferred. There's no firm timetable the article says for a national goods and services tax. India's many states caps on foreign direct investment in many areas include supermarkets remain in place and the question that the article asks is the chance to reshape India's economy slipping away already. I ask it to be provocative. I think you've picked up an economist which must have been a July deadline. So that's not in tune with what's happened. That's not in tune with what's happened in the last six, eight months. Now what is to be done in a large country like India almost a size of a continent with the goods and services tax? We've negotiated with the states. A constitutional amendment bill has already been introduced in parliament. It's been broadly welcome and in the coming session of parliament next month I hope to pass that bill. So that's going to be one of the most monumental tax reforms in India since independence. I was asking last evening the secretary of the department which deals with the FDI. He's here. I asked him a question which are the sectors which are broadly still unreformed as far as attracting international investment is concerned. He's still struggling to prepare a list and therefore sectors which were the forbidden areas in India, railways, defense. In the last few months we've opened up those sectors also. In fact the criticism is not that Prime Minister Modi did not live up to the expectation. If you pick up the Indian newspapers the editorials are why is he going so fast? Why don't we want wait for parliament to pass all the bills and do away then with his reforms? Why is he going by the executive legislation mold which we call ordinances in India? And therefore I think this government had a mandate to act fast and we are moving at a very rapid pace in that direction. Let me ask you about oil prices because that should have an impact on your economy in a big way. And I imagine sharp declines should be good as a net importer. How much of a boost did the declining oil prices have on the economy? Well the declining oil prices certainly help us in many many areas. They help us in cutting down subsidies. They help us in our current account deficits. And of course they help us in bringing down inflation which we have succeeded. And in India it's not merely the declining oil prices or the declining commodity prices. Our food prices have also been under control as a result of which we've been able to maintain a fairly acceptable rate as far as inflation is concerned. Of course there are areas where they vicariously hurt us but we are willing to live with them. For instance most states in India are losing out on revenues and therefore the regions are a little disturbed but then they have to live with this realistic situation because the advantages are a bit too many. You're going to announce a budget I believe in the next two weeks and you have to pay for a lot of things that you've talked about and promised the people. How do you pay for it? Can you give us a little bit of a sneak peek as to what we should be thinking about? Well we earn and spend. We've also had a bad tradition of borrowing and spending and therefore since last year we've raised this debate. In fact I said it in my first budget speech that how long can India continue to borrow and spend so that we spend today that the next generation is left in debt and they have to raise higher taxes in order to repay that debt and that is where we started this whole debate on cutting down of or rationalizing the subsidies. I can tell you elimination of subsidies in India a country where one third of the people are still living in poverty conditions is not possible. It's not even desirable. In fact the more India grows the more we have to earn in order to bring those people pull them out of poverty but we have to rationalize our subsidies. We not only started a debate and since that was a line from the economists that you mentioned petrol is now linked to the market which was subsidized. Diesel has been linked to the market. As far as LPG is concerned the first subsidy reform has started this month. On the 1st of January all subsidies with regard to cooking gas now go directly into the bank accounts. So almost 150 million families in India will get them. The next stage we have to carve out the families were not entitled to it and therefore that will be the reform as far as the cooking gas is concerned. There are of course areas where there is a misuse of kerosene subsidy. Kerosene is used both as fuel and also in dark areas in India. But kerosene is also being misused in many areas. So the next area we intend tackling is kerosene. I had appointed in the very first month an expenditure management commission. They've only three days ago given me the interim report with regard to rationalizing some of these subsidies. The prime minister last week in a major address on economic issues that said subsidies for the poor will remain but we intend rationalizing them. And that's the area where we intend to move in order to cut down some part of the expenditure in order to finance our own activities. We have targeted a fiscal deficit of 4.1 percent but that's not also acceptable as far as we are concerned. We have a roadmap to bring it down to below 3 percent over the next couple of years and we intend to maintain those targets by taxes. Well we've said that we are not a high tax government and therefore last year I almost didn't increase a single tax. We believe in putting more money into the hands of consumers. Therefore there were three sets of reliefs that I had given in the very first interim budget to small and medium level taxpayers so that they could spend more. We look at taxes. We are correcting the inverted taxation which can hurt certain sections of the industry. But of course taxes are needed in order to finance the running of the government. Let me ask you about corruption. I walked over here on my way to visit with you this morning with the CEO of a multinational company who does business in your country who's in the middle of building several projects and he said to me that we just went through the process of 170 different permits to do this. And he said along the way amidst those 170 permits I am sure that we have had to pay people and do things that he said I wish I don't even know about whether he does or not I don't know. How big a problem do you think this is in reality? Well I can't say that this was not a problem but let the CEO of the multinational not commit the same mistake as the economist because if in last eight months there's one word which has not been mentioned in India that's corruption. Nobody's even whispered that there is any allegation as far as corruption is concerned. The whole environment is changed. In fact every legislative change which we are bringing whether it's allocation of natural resources, elimination of descriptions, grant of environmental permissions which are required. These are almost in the most non-discretionary mechanism. All allocations are through a market mechanism. There's certainly no governmental description which is involved and a major part of the corruption which was alleged against the previous government was in these allocations. So it's the whole system which is now changing. You've been here now in Davos. You have a huge contingent of people here. I know you're looking for more foreign direct investment. What are the biggest challenges that you hear multinational saying to you about investing in the country? Well we have legacy issues and in terms of legacy issues I think the two important legacy issues which we have one is in relation to stability of policy particularly taxation. We didn't exactly have the best track record in that and I think a very adversarial tax policy was counterproductive for India. It scared investment away. Now we've spent a major part of the last eight months trying to correct that impression and therefore systematically slowly but surely we are reversing the whole policy and coming to a very non-adversarial system. We have announced that we are not going to resort to the sovereign power of retrospective taxation. We are trying to put acquiters to as many disputes and issues which had arisen. We are setting up mechanisms within the department of revenue where a lot of these issues could be resolved. We are creating procedures both for international and domestic investors for advanced rulings so they know what their tax liabilities are going to be even before they spend the first dollar. I think we are conscious of this fact. The second fact we have to ease in the doing of business in India. The less number of people come to government that means situation is working well things are happening on their own and we don't want people to be rushing to ministerial offices or secretaries for help that their files or their papers are blocked somewhere. We want to create a mechanism where permission should be granted at the earliest. In this process we are also trying to solicit the support of the state governments particularly because the activity is rarely in the states and the activity being in the states it's the states which have to realize that the more they make their procedures simpler the more they are going to attract and invite investment into their states and I'm glad we traditionally used to speak of India in terms of cooperative federalism. We've added a new chapter to that debate by saying that it's also competitive federalism. He who makes his procedure simpler will get more money from the investors so the investors are not going to go into a complicated area they are going to go into a rather simpler area and I'm quite glad that state after state is now trying to organize these global summits of investors trying to invite them into their states trying to offer them additional incentives once we are able to create this environment in India I think the procedures will become simpler. I want you to speak to one other challenge if you will and then I want to open it up to the audience which is a social issue but it is something that business people think about a lot which is sexual violence against women has been a huge issue in the country. What are you doing about it? What do you think it is about the culture? Why do you think the problem exists the way it does? In fact the Prime Minister in one of his first major speeches after being elected that's the independence day speech referred to it as a major point. A lot of people felt that this wasn't a point worth mentioning as an independence day speech and he said my head hangs in shape when I read about these incidents which are happening and the regrettable part is it's the male members of our own families who are responsible for this misbehaviour. Even during the tenure of the last government we had been jointly unanimously able to strengthen laws but I'm quite conscious of the fact that laws alone are not going to resolve this problem. There has to be a campaign of disgust against this kind of a behaviour so that from the very elementary education people can be trained, educated, almost indoctrinated against this culture of misdemeanours against women of various kinds. And I'm sure it'll have to be a sustained campaign in India before we are able to rid ourselves of this disgraceful scar on our face. I would just follow up with a specific question which relates to the story about Uber which is that you have Uber the taxi limousine service which you have shut down in part because it was an awful tragic incident related to this. Do you ever think you connect corporate behaviour with personal behaviour? I don't think they were shut down because of that incident. There were certain permissions which were required in some states and they've been asked to comply with the procedures. The person who was accused of that offence, the police investigation has now revealed that he was a serial offender and therefore that serial offender was there even before he was a part of this company. So I think the company's service in some of the states was affected for some time because they required some permissions. But whether this person was misbehaving because he was a company employee, I really can't say that. Let's open it up because I know there's a lot of people in this room who have a lot of questions for you this evening. If you raise your hand, we will, we have some microphones. Go ahead. Honourable Minister, there was a lot of discussion on encouraging manufacturing in India for India and for exports. So I was very curious to know your views on MAT and how you see that perhaps being lowered or what your view is on that and maybe how that could also encourage and incentivize and encourage more manufacturing in India. Thank you. Certainly, if I was in a position to get rid of MAT as many people, particularly in the SEZs, etc., also been saying, it'll help you in lowering the cost. But then I also have a problem of balancing my budget. I can't reduce MAT and then increasing income tax because the money has to come from somewhere. And therefore, till such time, we are not in a position to balance our accounts for any finance minister to give withdraw this tax or withdraw this tax is not so easily possible. In the current year, I may just indicate, we made a significant progress as far as our direct taxes are concerned. But when you have a low on manufacturing, the manufacturing taxes collection is suffered. And therefore, it's a great challenge for us to balance our budgets. So unless we are in a position to up the manufacturing so that my overall tax kitty moves up, it's not so easy for any finance minister to then start offering rebates. There's a question in the back over here. Thank you very much, Mr. Minister. Nelson Cunningham with McClarty Associates in Washington, DC. Mr. Modi has really made a substantial effort to turn the page on what had been a period of somewhat scratchy relations between India and the United States. He had a very successful visit to Washington last fall. He's invited President Obama to India for Republic Day this coming Monday. What is Mr. Modi's vision, your vision for the relationship between India and the United States? And what outcomes can investors expect from the meetings that will happen on Monday? Well, there is a packed agenda as far as Monday is concerned. But I can tell you, I won't describe it as a patchy or a scratchy relationship. Over the last decade and a half, the Indo-US relationship has fairly well stabilized. When we were in government on the last occasion, the relationship, the building process of that relationship had started. And the last UPA government continued to build upon those initial gains that we had. The advantage of having two major democracies and two large nations in a continuous relationship is that the relationship has matured to an extent that even though we may have differences in some areas, it's not possible to agree on everything. The majority of the relationship is visible that you still can sustain that comfortable-driven relationship. The fact that President Obama is visiting India for a second time in his term is the first time that a U.S. President has come to India twice. He's going to be our chief guest on our Republic Day, the first American president to be so. And by negotiation, we are narrowing down the areas of differences and expand the areas of cooperation. So I think it's the relationship between India and the United States being a relationship of two very large democracies, as I mentioned, is a relationship around economic and security issues. And it's in these areas that the roadmap for the future of this relationship really lies. Let me follow up and complicate the question. Putin really recently visited New Delhi. How would you describe the relationship between India and Russia? Well, I think India and Russia have been always great friends. And therefore, I see absolutely no contradiction in a country being extremely friendly across the globe with multiple nations. Through historical times and through even our most difficult times, India and Russia have had a great relationship. Russians have stood by us in our critical times. And I think irrespective of the color or complexion of the government in India, that relationship has been maintained. We were at one stage very dependent on the Russians for our defense equipment and so on. So today it's a much broader basket, but that relationship still continues. We have a little bit more time to sneak in a couple more questions from the audience if we have any. This is a very humble and modest group. Excuse me. Do you have a question? Please. The other thing we could talk about is immigration policy. And one of the questions that I had for you oddly enough is what you think of the immigration policy in the United States vis-à-vis so many of the people who are coming from India's top talent network to work overseas? Well, we've always believed both in our bilateral relationship and in the multilateral forums that this is one area where the United States has to open up more because human resource traveling from one part of the world to another is a very important segment of the services sector. And therefore the more we are able to restrict them, the more our ability to expand both trade and services gets restrictive. The United States has conventionally been a great supporter of the idea of opening out in various areas. And therefore in consonance with that idea, I think subject to what their own requirements are, the immigration policy to be liberal. We like more Indians everywhere in the world. This is a different question. When you got this job, when you got this job and you started looking at other countries, I mean, when you started looking at other countries, perhaps, I don't know if you did this as models, who do you look at right now and go, you know what? I like what they're doing on this issue. I like what they're doing on this issue. I'm just curious because I assume when you get a job like this, you start thinking. When you get a job, you see in India we always look at the last few decades of missed opportunities, particularly in manufacturing. And therefore, India is a liberal society. We are willing to learn from anywhere in the world. And when you look at manufacturing, a question which every Indian asks himself, what if we had started adopting some of these policies in the 1970s? Would we have kept pace with China as far as manufacturing is concerned? Today, foremost on the agenda, that's one of the questions with regard to Matt, which was asked just now. The real answer is we have to learn from economies like that how to improve our core competence as far as low cost manufacturing is concerned. One of the components may be taxation, but there are several other components which we have to really learn from their experiences. We have to learn from economies which pass through challenging moments, but discipline themselves didn't go in for only populism. And within a year or two, got out of those crisis situations so that in the long term, there was a much greater advantage as far as the country is concerned. Britain did it recently in the last few years. And I think we have to learn from that how to generate wealth and then let that be scattered between your people rather than just distribute existing resources to the people. We have to look up to economies like the United States. And I think Indians, when I mentioned in the last question, travel all over the world and become parts of those societies. Indians in India are very entrepreneurial. They want to learn from the best experiments in the world. I think this is what we are really looking at. You've inspired some more questions. We're going to have to cut it off in a second. Now they're giving me the now they're giving me the timeline, but why don't we go here? Vivian Riefberg with McKinsey and Company in Washington D.C. If we go back to the discussions with the U.S., what is the one thing that you want to most see change? Well, as I said, the economic and security issues are foremost in our mind. I think our economic relationships have been progressing well. We are also concerned about our region. And our region throws up challenging situations, particularly with regard to security. And we'd like a much greater understanding with the United States with regard to the regional issues as far as India and the region is concerned. I think we have one or two more questions back here and over here. What do we do? My name is Adi Behmed. My question is on an economic, I mean financial sector. It's actually two-folds. The first fold is that recently there has been an announcement and of course the spirit is very high for the NARA is to actually invest back in India. So the first question is about the recent licensing procedure on a small bank that recently came up. But we were very surprised to see that there was a restriction on NRA investment on the sector because 51% needs to be resident Indian ownership companies. On the second fold of my question is, at the junction now where there is a lot of need for investment in infrastructure, there has been a camp on investment in banks in India which restrict to on an individual capacity is around 4.99%. Is there a possibility that this limit would be increased? Well, on the eve of the budget I won't give you an answer in yes or no. But I'll take your question as a suggestion. In fact, your suggestion with regard to attracting more NRI investments is an issue which is actively under consideration. Yes sir. Sir, is there a question with this? Is there a question? Yes. Okay, good. We have talked many times about creating something that allows us to go to a body that can help and we don't seem to have that like arbitration. We seem to end up with everything in the second round of litigation, third round of litigation and people get tired. The only other alternative is I think you have a valid point and you have a valid point for two good reasons. In contractual matters, the rule is enforcement and not breach and if there is breach, the legal system has to undertake to enforce. Unfortunately, we are still governed by our old concept that the event of a breach, the rule is damages and not enforcement. Now, I think that's become obsolete. I had requested the law commission in 2003-2004 to reconsider it and they did submit a report. I have again requested the law commission to reconsider it. That's directly not under me and I would personally like to push, I've been, it's a part of my own conviction that in 2015 you can't come out with an obsolete law that if you built an airport and there's a breach, then go into arbitration and take damages or go and file a civil suit and take damages then the answer has to be to enforce. The second as far as arbitration act is concerned, when we replaced the arbitration act in 1996, the way it's been interpreted by courts, there is too frequent an intervention. On basis of the law commission's recommendations, some corrections have been made. I think some further improvements are required which is being worked out and so that it becomes completely internationally compatible. That's under consideration and hopefully in this coming session they'll be introduced in parliament. I apologize but we are out of time. I wish we could, we can try to do it after. I want to thank everybody for your questions. I want to thank the finance minister for this candid conversation. On behalf of all of us we wish we wish India very very well and we hope that all of the things that you hope happen, we do too. So thank you.