 Good morning, a warm welcome to all of you and to our panelists on stage. This session is called, How can India plan for resilient growth while ensuring equity and sustainability? It's more of a discussion conversational format. This session is a partnership between the World Economic Forum and Time. I am Zahra Abdul Karim. I am the Asia Editor of Time. The India growth story has so far basically focused on numbers, GDP growth figures, FDI, stock indices. But often these numbers mask, do not give sufficient attention and mask problems that are happening elsewhere in the country. The issue is how can we create prosperity that is sustained as well as sustainable and much more inclusive? In short, how can we create a kinder and gentler India? These are the questions that we will be addressing this morning. And we have a terrific group of people, very, very super smart group. To my immediate right is Ajay Chibber, who is the Assistant Secretary General of the UN and Director Asia and Pacific for the United Nations Development Program. In alphabetical order, we have Harish Khandi, Managing Director of Selco Solar Life. He's a social entrepreneur based in Bangalore. Then we have Arvind Mayaram, Secretary, Department of Economic Affairs, the Ministry of Finance, and one of the key movers behind the reforms that we have seen kickstarted again very recently. We have Zia Modi, who is Managing Partner of AZB and Partners. She needs no introduction. One of India's most prominent corporate lawyers. And then we have David Tomlinson, who is Global Head, Geographic Strategy and Operations for Accenture. Again, a company that needs no introduction. I want to bring up three things first that I would like our panel and all of you in the audience because we will try to make this as interactive as possible. I will make some opening remarks. Then we will go to each panelist. And each panelist should feel free to interject at any time. We really want to make this a conversation. I mean, we'll keep it civilized. You know, we won't come to blows. But we would like to make this as conversational, as free-flowing as possible. Recently in the FT, Mohammed Al-Aryan of PIMCO and Nobel Laureate Michael Spence wrote that India has yet to move beyond first-generation structural reforms, namely state-managed controls to more market-based ones. Basically what they're saying, much more elegantly, is that basically India has done the easy stuff. You know, they've picked a low-hanging fruit. So the question is that where does India go from here? In Time Magazine, in the issue that is available outside rethinking India, Akash Kapoor, who is an Indian author who wrote the book India Becoming, wrote in the issue that India is at an inflection point, that it's grasping for a new model, people are losing optimism, they're looking for growth with justice. He's seeking a new idea of India, although it is hard to articulate what that idea will be, and maybe we will actually get some ideas today. So that's the second point that I would like our panelists to keep in mind to inform their remarks this morning, as well as you in the audience. Recently, I was at an Asian society conference in Hong Kong, and this is actually not to do with the elephant in the room, but with the dragon in the room. The conference was on China, and it was about China's 12-5-year plan, which is how they want to reorient the economy away from fixed investment, fixed capital investment, infrastructure, and so on, exports to a much more consumer-based society. And someone in the audience asked that if you have 1.4 billion people spending like crazy, what is that actually going to do, you know, the environmental degradation, the loss of values, the materialism? And someone in the panel who is an advisor to the Hong Kong government, a pro-China gentleman, said, well, that will be the end of the world. Now, that's apocalyptic hyperbole, but it is something that I would also like our panel to keep in mind as we talk about growth beyond numbers, which is the theme of this session. I want to turn first to Ajay Chibber, because Ajay, of course, in his capacity and in his years with the World Bank and the UN, has seen a lot. He has seen development models everywhere, and I think that he will be able to draw on his own experience, and be seen and heard in terms of where a country like India makes the next step. Good morning to everybody. First, let me thank Time and WF for inviting us to this very distinguished meeting and panel. And I'm personally very happy to be here because I have no electricity in my apartment in New York, and I have electricity in my house in New Delhi, so I never thought I would be able to ever say that. So I think with the election of President Obama in the US, I hope that they will be able to restore my electricity by the time I'm ready to go back to New York, but there's another storm coming today in New York, so we don't know yet. But I'm also very happy to be here because of this discussion and other chance to meet so many distinguished people here in this meeting. But let me make two points, Zohar, related to what you said. One is, you know, you're absolutely right. I mean, India, we were, as described, very brokely by Vijay Kelka, we were on the Golden Turnpike of growth. There was a period between just before 2008 where India was growing at 9%, there was talk of going into double-digit growth, and he appropriately said, oh, we are now coasting on the Golden Turnpike of growth. You know, we can only go up from here, we can't go down. And yet a few years later, we have exited from that Golden Turnpike, and we are now in what would be, you know, a pothole side road, if you like, back to 5%, 6% growth. And we are now talking about how to try to get back, well, at least try to maintain this pothole growth rate of 5% to 6%, and then, of course, hopefully over a period of time, trying to get back to the Golden Turnpike of 8%, 9% growth, and maybe even higher, because the potential for India is even higher than that. So what went wrong was that there was this sort of, because there was the global crisis, but we have, India's growth rate has gone down 3 to 4% of points, whereas other Asian, big Asian countries like China and Indonesia, their growth rate has been affected much less than ours, although they are much more exposed to the international environment than we are. So a lot of our problem on the growth is self-inflicted. And I think your point about, that you mentioned this thing about the first generation reforms, the second generation, is very appropriate, because I think now there's a realization that we were coasting, we were not doing enough reforms to get back to growth, so we need to do that. But unlike the first generation reforms, when we had a deep crisis in 91, when Prime Minister Manmohan Singh was the finance minister, you know, you had a clear blueprint, of course, driven by a crisis, of how to get to faster growth. And now we are trying to make that effort, but we don't have a well-defined blueprint of second generation reforms. We have some efforts now for FDI in retail, we have some efforts to control the budget deficit, but I haven't seen anywhere a well-articulated argument of a series of second generation reforms from the government, I haven't seen. I've seen it in the press by various analysts, et cetera, but, you know, a well-articulated argument. And then you look at the five-year plan. Also, it's a good plan, but it's not connected to programs and policies. We have sort of a kind of a distinct situation where we have a five-year plan which talks about capital expenditure and what's needed to be done to get education and health and this and that and the other. And then we have a finance ministry that focuses on annual budget survey that talks about what's needed to be done that year. We don't have anywhere a well-articulated strategy from the government of these second generation reforms that are so badly needed. Unlike, say, in China where if you read the Chinese five-year plan, you will see a very clear articulation of policies, programs, and expenditures. So I think we need to think about that as well. It's still one item at a time. We're talking about FDI in retail, we're talking about something else, but nowhere do we have a well-articulated framework for these. That's one point I wanted to make, but quickly a second point which is that during this period of very fast growth that we saw, brief period, nevertheless, somehow people got into their head that because there was this growth and the growth was not so equal, we had to set up a welfare state to take care of the poor. And so we then have, in my mind, taken up this view that the way to reduce poverty is not to keep this growth going and make it more inclusive, but then to dole out a whole series of welfare programs for the poor which are very costly, which are now affecting the budget in a very significant way, which are actually hurting growth to some extent because with the high inflation we have now had a weakening of the rupee, etc. So we need a welfare system, but we could do this much more cheaply and in a much more targeted manner than we have so far to take care of those people who would not be able to fully participate in this growth process. Of course our main effort should be to get more and more people into the growth story as we go forward. Dr. Meyer, would you agree with that, that the government does not have a real grand plan for reform that the government actually doesn't love reform? Thank you first for inviting me to come and speak here. I thought we were not talking about numbers, so I didn't prepare myself for numbers. I thought we were talking about growth beyond numbers, but we have got stuck again to the same debate about growth and how growth should take place. Let me also answer that part. I think it is interesting that we tend to look at a document and then decide that there is no game plan. I think the answer to the question that we have a game plan and that game plan is in line with the topic of today's discussion, which is growth beyond numbers, is where you are looking at what is now termed as a untimely welfare measure that the government has taken. The question is this. In a country where you have estimated 35% of the people below the poverty line, should you be looking only at growth or you should be looking at inclusive growth? To my mind, the answer to that is very clear, especially if you are a democratic country where you pride in accepting the values of democracy where people determine how governance should be through voting. Look at one program which is often seen as profligacy on part of government, Mahatma Gandhi, National Rural Employment Guarantee Act. For 60 years we had a minimum wages act. I have a very, very eminent lawyer sitting to my right and she will bear me out. Minimum wages act was never enforced, especially in the rural areas, in the unorganized sector because there was a surplus of labour and the relationship was that employer drove that. So people have lived. In fact it is my thesis that India's economy for a very long time has been subsidized by the poor, not the other way around. It has been subsidized by the poor because what is it that we went out and told everybody? Poor, cheap labour. Nothing else is negotiable but labour is cheap because labour cannot negotiate. And therefore what Narega did is this, it put a benchmark and forever we have changed the employer-employee relationship in the rural areas. I am talking about growth beyond numbers, I am talking of equity, but also the fact. I think one needs to look at closely at statistics before announcing a judgment. In the last three years the total expenditure on Narega has steadily come down. The total number of people who have gone and asked for jobs and Narega has come down, it's on the website, go and have a look at it. What does this mean? It means that the government is not giving out dole and people went for work to Narega as long as the employers were not willing to pay them fair wages. Now when the market wages have come higher, now the employee is now able to bargain for better wages. On Narega works which is under the act you can demand for work, the number of people are going down. So I think we also tend to be intuitive in our responses to government policies when we look at it. I am not here to say that we should not be looking at growth. This is a major concern to us. We need to look at growth, we need to get back to the same trajectory, but as Mr. Chipper said here, India is not isolated. I mean one may say one may contest whether Indonesia 6% is better than 5.5 or 6% of India. I mean one can contest that, but the issue is that there is a global slowdown. The best governed within inverted commerce countries are facing fiscal cliff. Next year we do not know how that landing will be and that's going to affect everyone including India. So let's not lose sight of the fact that the slowdown is also because of global factors and how they have affected the countries around. That's a very pertinent point Dr. Mayaram. I'd like to turn to David because I know that there's been a lot of negativity about India in the last couple of days at the World Economic Forum, but I know that you have a sense of looking at the glasses being half full rather than half empty. That's one point that I'd like to ask you about. And I do want to come back to growth in the rural areas. I know Harish has also very clear thoughts about that, but you also have ideas about how to make the urban centers the traditional centers of growth and places where the government tends to focus on and big business tends to focus on how to make them smarter, smarter infrastructure, more technologically advanced and so on and so forth. So these two points I'd like you to address, David. Thank you very much Sir. It's a real honor and privilege to be here. And let me give you a view somewhat from the outside of India although I am a frequent visitor. It's interesting actually I look after the global geographic activities within Accenture and just this year have moved my base to Shanghai and China so I thought that if we're going to focus on the emerging markets I'd better be part of it. And it's interesting contrasting and I'm sure a lot of the last couple of days has been China and India. I suppose I'll come to one of the priorities but the experience of landing in Shanghai airport and going to my apartment in Padong is somewhat different to arriving in cities here. And if you just look at infrastructure it's a very different experience. But let me come back to the theme. I felt yesterday a lot of the panel discussions were focusing on the challenges, on the problems and I'm sure they're very real so I don't want to undermine them. But to me and I think the theme of this session is look at the opportunity. Look at the opportunity for India as a great nation in the global context. And if you say build on your strengths one area which is clearly and there's a lot written about of the population demographics compared to China which I think is going to have significant challenges with an aging population. India has a very vibrant population. Today nearly 20% of the world's population, one third under 15, projected to be the world's largest population by 2030. And that in itself creates an enormous opportunity. From my perspective the priorities would be firstly infrastructure, basic infrastructure around power. We were talking about renewable solar power being very interesting, opportunity in rural areas, water, transportation. And again the contrast with China is quite marked. And to me the key thing is find ways to do it. I think some of the bureaucracy, some of the difficulties of making decisions and getting things done here are a challenge. Secondly education but particularly relevant skills. My sense is that a lot of the education maybe as traditional hasn't really attuned with the needs for people to be job ready. I heard in some of the research that those projects need to be 15 million people per annum in India with job relevant skills and additional 15 million. And that again is a huge opportunity if we can actually make that happen. Healthcare clearly is a priority but underpinning it all and coming back to your question, I think information technology and some of the current developments in IT are an enormous opportunity for India to address some of these problems. And I would particularly talk about broadband and I know the Indian government has a very active and broadband policy but then linking that with mobile computing just in the last three years the advancement in terms of handheld devices access to information. And this truly I believe creates an opportunity to deal with the divide, to deal with the rural disadvantaged people and maybe to make them future champions. So to summarize I think lots of opportunities. I think today we have a real time where IT which of course India is already advanced in could dramatically change and remove some of the barriers and actually give India the opportunity to leapfrog other countries in terms of its advancement. David you mentioned the demographics and clearly a country with a sizable young population tends to, there's a lot of potential for growth because younger populations tend to be frankly more creative, more dynamic. They create resources rather than use up resources. Not just in China but of course in Asia the country with the biggest problem on that front is actually Japan. But at the same time this can be a double-edged sword. Rajya Kanoria of FICCI was telling us, was telling time that you know talking about this half, the glass half full or half empty that the demographic issue in India it can be a demographic dividend or it can be a demographic time bomb because you have to find jobs for all these people. Does anyone someone wish to address that? I mean is that actually realistic that all these young people first thing they're going to get educated and second that they will be able to get good jobs? Anyone? Dr. Mayra? Yeah, actually if you look at the points which have been made I think they're very relevant. In fact even in the 12th plan if you look at it and otherwise we have a skill development mission now. Recognizing this fact that we require you know skilling at least 10 million people every month if you really want to reach the number of 500 million by 2022 which is what is targeted. There is a huge challenge for providing the right type of skills which will match the demand of the industry. And therefore one very innovative area of the skill development mission is to work with the private sector for creating training infrastructure skill development infrastructure and a lot of work has been done there. In fact a very unique public private partnership company has been created as a national skill development corporation where government has 49% and the private sector has 51% ownership but the government provides the funding for this private company to on lend or take equity positions in skill development companies and create and develop these skill development companies through which skilling will take place. A large number of companies have already come into being and they are doing very good work on that side. So that I think is an area which is now fully addressed. I know that you want to perhaps one of the rare officials in the Indian administration that is actually a proponent of public private partnerships but at the same time people say the bureaucracy is more of a problem than even the solution. I want to bring Zia Modi in here. I mean I think you have thoughts about that. You're not in business but you deal with a lot of business people and of course you have to deal with all the legal hurdles and hoops that you have to jump through. I think what I see in the last few months at least that there is a definite awareness by government that there are things that just need to get done and therefore the bureaucratic will, the political will as I see it is to clearly try and find solutions. The legacy of all the problems I don't think go away overnight and I don't think I'm a believer of a big bang reform theory by our government. I believe in small steps, effective steps at a time because I am convinced that we have to take the social fabric along with us. Otherwise the demographic dividend does become the nightmare that we talked about but in terms of public private partnerships my view is that India Inc. is more than willing to engage not because it's charitable because it benefits India Inc. Government is at the end of the day the giver of concessions the giver of land, the giver of minerals and if the country has to grow the government and India Inc. cannot do it alone. So there is an awareness but there is also a sense of will it happen soon enough? I think there are issues of corruption that stay in the minds of India Inc. I think there is a cleansing which is taking place over the last few years that I personally have not seen before but there is still much to be done. So every time you have land acquisition, permits, leases all of these come with a bundle of anxieties. If you have public private partnerships you have always banks around the corner at some stage and lenders are anxious foreign lenders are even more anxious take out financing if we have our infrastructure with our public private partnerships you need a trillion dollars where is that really going to come from? I don't think our balance sheet for the banks is that broad or deep so are we going to get enough investor confidence in the country with a true public private partnership? Some have worked, some have still to work. I personally believe that in health and education those are easier to do because the inclusiveness is a given to start with. So you are not disconnected in philosophical ways in resources it is them versus us but in health and education it just has to be together. You look at 900 million mobile subscribers I think the government is clear that with the IT technology and the UID program that Nandan is putting together for the government that has to be a way to make it more inclusive. You look at 250,000 gram panchayats that the government is committed to get broadband to very soon that has to open up e-learning that has to open up doctors being able to communicate with health workers in the villages. These are very natural, robust and possible private partnerships with the government. I want to come back to corruption and to the big business initiative by the 502 major business houses in India but I want to turn to Harish. Dr. Mayaram was talking about the Runega scheme which is the biggest employment scheme of its kind in the world. You go out into the countryside a lot. You mix with the real people of India, the real people of India not in this room in some ways. Is the government doing enough? Can the government do more? Should I take my chair a little forward rather than getting hit by both sides? We deliberately put you there. I'll start with a statement that you said should India be kinder or gentler? I think India should be sensitive. It's not about kinder or gentler. We're becoming more and more insensitive. For example, look at the media and look at everybody else who was talking about Sandy, Hurricane Sandy, but nobody was really talking about Neelam which had much greater human disaster in Andhra Pradesh in the last one week. None of the newspapers is on the front page. Ten times more than Sandy. We're still talking about in our papers. It's not only you because you're personally affected but nobody's talking about AP, right? Andhra Pradesh, much larger and that is the insensitivity I'm actually scared about. And that disconnect, that disconnect between many of us in this room is tackling and that I think it's not about the government, it's not about it's together. We're talking about, I agree with Mr. Kumar, we're on the subsidies of the poor but on the other hand, we're also using the poor, in terms of when we come to our climate change negotiations in terms of because we're saying that oh, we have so many poor people. I think on the name of the poor, our consumption level in the rich is increasing, right? And so I think there has to be a sense of sensitivity, inclusiveness in a growth where we create ecosystems for the poor to equally be part of this long growth story. And then the Andhra scheme, the thing is that, yes, it was a fantastic scheme, it is a fantastic scheme, but as I said earlier, we have also created enough loopholes to actually create so much loopholes to actually misuse the Andhra scheme in many ways, right? I think we need to broaden the scheme. Andhra scheme has today become digging, a scheme of digging in the sense that digging tanks, digging tankbonds, I think we should broaden the services of Andhra. We need to use the utilization of so much of money that's there in the government to build the ecosystem for the poor to create enterprises. It's classically that's there, but I would still rate it at 4 out of 10 of what's happening in the rural areas. Can I say, because UNDP is actually the only international organization that the government has invited to work with it in Andhraga. So we have been working very closely with the government and of course we believe in the philosophy of Andhraga. But like you said, you know, you don't want a permanent dole. You want a system that will create assets, help people with water problems, land degradation problems, basic infrastructure in the rural areas. So from that perspective, the scheme has been designed in that way well, but you do want to be able to create assets so that you don't have to keep doing these handouts all the time. We need to give people a hand up, not a hand out forever. So many of these schemes were designed with the right intent, but they have become so costly, there's so much bureaucratic inefficiencies and leakages that you could end up... I think we are missing the point. Actually we have now gotten into discussing the scheme. I mean, that's not the idea of this discussion. I mean, I can accept there may be problems and then it's asymmetrical, it is state specific and so on and we can be improved. That's a point. We can have a different session on Narega and dissect it. The fact is that Narega was meant to do a server purpose and that major objective it has served, namely providing the bargaining power to the poor in the rural areas. Now, it has been done well, it could be done better, etc., is another issue. We can discuss that subsequently. But what is more important we need to see when we are looking at growth beyond numbers and that's why we need to come back to this broader discussion that we are doing. One, for instance, is this whole issue about whether we are being able to move on to the next level. I think on public-private partnership it is very well spoken of that we now require to broaden the canvas and that's why we are now looking very, you know, at this point of time we are engaged with looking at the possibility of licenses to new banks because you need to expand the financial sector in that manner. We have recently launched a infrastructure development fund scheme where, in fact, already we have a list of about seven which have already got listed. Now, IDFs, which is the take-out finance, that one trillion dollar that we are talking of, this is a take-out finance, which comes in one year after the COD of a project. And there is a great enthusiasm in sovereign wealth funds and others abroad. I have recently spoken to many people from Hong Kong and from other places who are looking at this IDF with great interest. So there is a method in our madness. Let me say this. If everybody thinks there is no plan that the government doesn't work to our plan but I think it is not correct. We are seeing the entire thing and we are working on it, which is one part, which is on the growth part, but at the same time, there is this very large area which has been mentioned of the poor which need to be taken care of. I think you have missed out on one announcement with the Prime Minister made recently. And this is part of the plan document also if somebody reads it carefully. Next five years, subsidies will be cash subsidies and targeted to the poor through the unique identity program. Now, which is a very major step in a country where, as I said, 35% are below poverty line. So the numbers, I mean, we need to be looking at numbers. It's very easy for us to speak of this should be done and that should be done and it should be done more efficiently and it should be done more effectively. I don't deny that, but when you look at numbers, 35% translates to more than 350 million people which would be about the population of European Union. So what I'm saying is you're right, it should be done better. But there is a plan to it. It's not as if nobody is looking at it and it's going by default. No, but we are also letting the other people get away. So it's not only the role of the government in our country. It has to be the role of the citizen, the corporate sector and the media, I think which is also not playing the role of the poverty level. So I would rather look at India rather than China. I would rather look for the future because this is a country, I would rather today in China I will not be able to sit with the Secretary of the Finance and have a debate, number one. And telling is wrong. Yeah. Right. That I have to guard sitting outside waiting for me. Right. And secondly, the thing is that if I have to create innovations in the rural areas as a private citizen, along with the rural banking sector, this is a country, this is a country which will show the future of innovation for removing poverty in a sustainable manner for Africa, Indonesia and rest of the developing world of 4 billion people. That's why I have hope on because today if I have been working in 18 years, it's not, I mean there has been no interference but for me is the greatest barrier is the insensitivity of the rich or the people who have made it. That's for me is more dangerous and that I think everybody should realize that this is a country that has 500 million poor people and is the second fastest going. It's a paradox. I think you can make that paradox in a way becomes the center of innovation for the poor for the world. I think that's what China will not be able to prove that. I think we have that opportunity. David. I'd like to pick up on this public-private partnership because I think that this is a very powerful enabler. It was interesting two weeks ago I was in Seoul in South Korea actually looking with the government there who are very actively looking at what they call a tripartite relationship between business, government business and the citizen. And if you look at some of the examples and look elsewhere, I would probably single out Brazil as being a country which has really, really made advances just in the last couple of years in terms of the city regeneration. So I think you'll look to examples and build on those. Since I was introduced as having a half full view I'd like to, I'm happy to have that view. But you can look at problems and I'm sure that bureaucracy, corruption are very real issues we need to deal with. But it's interesting if I just look at Accenture actually India is by far the largest of our global business. We have over 80,000 people now employed in India across all dimensions of the country. And we've had a program running for two years around building skills for people particularly disadvantaged people how can they get job ready skills and already we've had more than 15,000. I mentioned that, it's a small number in the context of what we need to do but I think build on what's already happening. And also look outside India to Brazil, to other countries on how you can really make progress and beyond the obstacles. I'd like to, the time permitting as Harish and Ajay about specific examples of rural development that they have seen that they have experienced or spearheaded elsewhere but before we get to that if we have time towards the end I want to, all of you have good intentions. You are all patriots. Even David you are a patriot as well. Perhaps the most zealous. But the one thing that again a recurring theme here is that a big curse that India is undergoing is the C word, corruption. I was at a discussion on Tuesday morning about corruption that was a closed door session and it seemed that we were having tremendous difficulty arriving at solutions. We were comparing with other countries but it just didn't seem to apply. There was talk about creating an anti-corruption agency in India but some people said that that would just turn into another bureaucratic ministry or department that would actually become the most corrupt. Zia I know you have thoughts about this. How bad is the problem? What actually realistically can be done about this? I mean everyone is concerned about it. I think the solution is not with me but I think the concerns. I saw your hand was moving this way. I think the solution lies with the problem. I think it's a question of really balancing out why corruption exists and seeing if we can give some incentives to stop it. I've always been of the view that the numbers of petty corruption, they say in India 80% of the corruption is petty corruption. The traffic cop, the cylinder, the ration card and if you look at 80% being that then you wonder why is it so much at the lower level. And logic then leads you to the conclusion that the people that are taking these sort of petty bribes are those that are poorly paid. Compared to, as I've said earlier, you have a grade four public official who earns maybe 15,000 a month, 20,000 a month. He has four children to get married. He has to pay dowry still for his girl child. It is not physically possible for him to sustain a livelihood at that level. Now I've often said why doesn't government increase the salaries of these people? Government turns on and says it's just not these people. It's then millions and millions of people. But if we take a balance of how much we lose in corruption, not only in the monetary loss but also in the perception loss in all the softer issues that come with it then maybe there is a case for us to say if somebody ought not to be corrupt because he has enough and can sustain himself, then you can hang him. But to take away, to talk in very grand ideas that corruption can be just brushed away, there's much more to it. Nobody is justifying it obviously and cannot. But I think that 80% being petty corruption, I think there are solutions there that could be through the system made viable. So perhaps higher pay, better education, values, family values and so on and so forth. Ajay, you've seen experiences elsewhere. I think it comes back to the second generation reforms because if you look at the doing business index you are the last in the world in the amount of time it takes to get a construction permit and many other permits that you need. You're almost the last in the world in contract dispute resolution. So you have done the first generation reforms but you still have so much government interference at so many levels and it's not just petty. It's at all levels. Unless you carry out a raft of what we would call clearing the brush as it were of all these regulations and interferences you will inevitably have corruption. Now of course salaries will help a little bit but to increase government salaries you would have to halve the size of the government otherwise you couldn't afford it. And that's what China did. China has not solved the corruption problem entirely China carried out a very major public administration reform under Prime Minister Churong Ji some 15 years into their reform. We need to get that kind of a reform going as well. So it's all connected. Corruption is just the symptom of a dysfunctional interface between the public sector and the rest of the society and that's what we need to address. Setting up a corruption commission will not solve this problem. May I just add? The governance I think is going to be a huge step in the right direction and I think the government again as I see it is committed to it. Two things have helped. One is the Right to Information Act. The government has passed it. And the government is saying sometimes it regrets the left which it went but it basically says you can see how we function. Okay, that has to be a deterrent to functioning in a completely arbitrary manner. And when you have e-governance where you see how your application is moving why it's moving in a certain way that again has a natural check and balance in the system. So I feel that if e-governance is increased more proliferated especially in the states where really the problem is when we go for infrastructure, when we go for permissions it's not just a central subject. It's a state subject as well. Some states have actually gone into e-governance. Some should be going into e-governance. Land should be, you know, everybody's land should be basically made available as a title document. So I think these steps which are moving in the right direction will improve but I think that there still has to be a structural incentive for many, many people in the government at the lower level to feel that now it's really not justified to take that particular aspect. Let me just say this. I think corruption should be seen from three perspectives. One, petty corruption as you've said is one part of it. But one is what we call collusive corruption. In fact my complaint always is that people who speak from such rostrum actually collude to create corruption in the system. Income tax is a very easy example for instance, corporate tax. So you will pay a tax officer so that you will have to pay less tax. And then you will stand and say the bureaucracy is very corrupt. So I mean there is a collusion in there. I think we need to have a very clear... Very pertinent point, yeah. Number two, we must understand that today our awareness of corruption is much, much more because of some of the laws that have been passed like RTI for instance or the freedom of media. So therefore we are more aware of corruption. It is not as if corruption has increased that much but the awareness is much greater now than it was earlier and that I think is a starting point of dealing with it because once you get more exposes then more people are also careful in terms of not being corrupt so that they will be caught and they will be charged and they will be punished. The third part here is government needs to import greater predictability in its functioning. And many state governments have started doing that. For instance if you look at Bihar in the state of Rajasthan many other states have also done. They have passed laws because the service delivery acts where they have prescribed timelines that if you put an application for something it will take 15 days for a response. If it is 30 days this much and that. If an officer does not do that in time then that officer is punished. So there is now a law which prescribes this which brings a certain predictability to the government system. It seems also that Indian society has reached a turning point where you have got this critical mass of now anger about corruption that it is truly a huge, huge perhaps a single biggest problem that India faces in terms of progressing. I want to open things up to the floor. Anyone who feels free to make a point or ask questions I ask that you stand up and identify yourself. You have to stand up so that the cameras can get you. So this is really for the record. Yourself please. Your name and your whoever you represent or whatever you represent. Nisha Agarwal. I'm the CEO of Oxfam India. It's an NGO. I think the session was about how do we make India shine for everybody. We heard some concrete suggestions from Mr. Tomlinson the comparison with China saying we need to invest much more in health education and infrastructure. I don't think anybody in India would disagree with that that that is a way of spreading growth. The problem is we don't seem to be having the will to collect enough resources to invest in those things. If you look at our collection of taxes it's 9% of GDP. Almost a similar amount is given away as corporate exemptions. Now if the corporate sector wants India to be competitive in the long run, is it not better to collect that 9% of GDP that is being given away as exemptions and actually invest in health education and infrastructure which would make us more competitive in the long run and spread the benefits of growth. So that's one question. What is a better use of our resources? I think a second question to Ajay. He was saying the trickle down model is really not the right way to deliver inclusive development in India. We seem to have a theory that let the rich grow, tax them and then provide welfare. Many other parts of the world have defined inclusive development very differently. I think people haven't defined it here. So Ajay, if you could describe what that model is in your head that you said is an alternative way that other countries have developed, delivered much more inclusive growth than India is doing. Thank you. Would someone like to tackle that for the first part? Or you'd like to go first. I think Secretary mentioned, you know, labor and you talked about the demographic dividend. Of course our biggest, the most valuable factor of production we have is labor. And if we want to create a more inclusive growth model, then we have to be able to have much greater manufacturing employment in this country, small scale and large scale as well. But we have actually made, in the interest of protecting our labor, we have made our labor very expensive because we have the most arcane labor laws that you can find anywhere in the world. So it makes it very hard for people to really think of India as a destination for large scale manufacturing simply because the labor laws come, there are other problems, infrastructure and land acquisition and all are also there. But labor laws have been a major hindrance now to the employability of labor in regular jobs in which they are not classified as working poor. We did a survey after the 2008 crisis together with SEVA in five or six different business centers in India, Coimbatore, Surat, Ludhiana, you know, looking at how did people cope with the crisis that came in 2008. And what we discovered was increasing casualization of labor. Basically employers shedding whatever little labor they had so that they could then rehire them back in contract labor. Most of these people became then the working poor. They still were working four, five hours a day but they were much more on this what we call casual labor in India, contract labor basically. So we need to think about changing those labor laws in a way that will really help build this country up along with other factors like infrastructure into a major manufacturing hub which will be much more inclusive. I mean the Secretary mentioned of course access to finance which I think is a very important area also for more inclusive growth in this country. So we have to think not of a model in which there will be growth and then we will tax these people and then we will take care of these poor people. We have to get people much more involved in the economic processes that will lead to permanent reduction in dependence and in poverty. Harish, can you give us an example from your own experience of either a program or a scheme that has worked whether it is your own organization in the countryside where we can get away from the urban centers? No, exactly. I like the bureaucracy if it's delayed because otherwise people would have overrun the poor. Absolutely. People getting faster permissions so the poor would have actually suffered in terms of lads and I look at it that way so I'm very happy. But the question to, yes, we also understand there are 40,000 banks in this country, rural areas. No other country has this infrastructure. Let's take the example of how Green Revolution actually took place. You have 40,000 banks, rural gamina banks which financed to the end users. You have 800 plus technical institutes like the ITIs and the root cities. So you have institutes that can create the ecosystem human resources to balance the people who actually take the loan from the, like whether the farmers who take the loan from the rural banks, you have the ecosystem to develop that. Today what we need to do is that a lot of the capital is for English-speaking entrepreneurs. You do not have equity investments in Auria-speaking entrepreneurs. You do not have equity investments into Bengali-speaking entrepreneur. We have created English as a class. I think we need to break that. There's a solid infrastructure of 40,000 banks, 608,000 plus technical institutes to create thousands of enterprises which a country like China will not be able to do. The democratization of enterprise, democratization of energy services, democratization of water resources, it's all there. So the hard work of creating infrastructure was done in the 70s. We just need to do a little tweaking of the efficiency and we are there. We are running a marathon, not a 10,000 meter race, like China or the US. I think we'll get there. Let me also add to 40,000 branches that you've spoken of, government's decision to set up by next March in every habitation of 2000 or more, which does not have a branch, a banking business correspondent which will provide financial inclusive services of the nature which you're mentioning, is already underway. And by next year, March we would have all the habitations with a population of 2000 and more having business correspondence. So what I want to add is we need to respect the non, we need to create equity instruments and debt instruments for the non-English speakers and that's, I think the people in this room we are all become middlemen and we are not letting... I mean, it's all of us together, we have not created the instruments for them to come up and you tell me, so one example of equity instrument because everything is word, excel sheet and PowerPoint, 70% of the country does not know that and we need to break that barrier. May I just shift into one comment which is if we want a gentler India and an India beyond numbers, we've not talked about our gender and the World Bank has said that one of India's lowest hanging fruit is its 250 million women and I think they're the plans of the government to bring the women into the microfinance space, into the grand panchayats that I think is going to be a huge push into growing beyond numbers. So maybe Dr. Mayaram could tell us what, I think much has been done but the targeted focus on this class of what can propel India to some extent I think would be fascinating. I think the first starting point is that again coming to the same program Narega which is much maligned and much extoll there the premises for opening bank accounts for the women and the other interesting thing is that in under Narega no wage is paid other than through a bank account. So every worker who registers and more than 50% are women gets a bank account and the money gets transferred to her account. So there is already a very conscious effort for getting women into the economy, the organized economy of the country. They always have been in the economy of the country but in the organized economy there is a very conscious effort in that direction. David you wanted to say something? Well firstly just picking up on the comment and coming back to technology I actually think right now with broadband mobile computing increasing the access to banking in rural community we're seeing this some very big advances in Indonesia and I'm sure this is going to become a very relevant enabler. The first question from the audience I'm not going to be qualified to talk about the allocation of taxes so I'll leave that to our people here but in terms of my perspective a key message for India when you contrast to China is getting things done my sense is the big difference and I mentioned earlier I live in Padong in Shanghai which people have been there in incredibly bustling metropolis 15 years ago it was marshland and that is a great example of decision making, implementing doing things. In the World Economic Forum Global Competitiveness Report which was circulated to everyone the top three issues inadequate supply of infrastructure we talked about corruption inefficient government bureaucracy those were three top issues identified in the corruption index my sense actually is that again technology will be an enabler e-government starts creating transparency maybe the opportunity to improve and streamline processes I would still like to put a rider on the manner in which for instance Shanghai is developed I put a rider on that whether we would wish to go that way because the kind of decision making that you are extolling at the moment is not a decision making where citizens have any say now if we are saying we should go that way then we need to go to a more fundamental question of what kind of governance we should have so I think we need to be extremely careful when we give examples in that manner which also should then give the underpinning of that decision making whether we would really wish to go that way I mean I don't think we will wish to go that way can I say I totally agree and understand that point but I think if you look at why is progress not happening then you need to work out how do you move for barriers how do you streamline there again I will point that progress is not happening at the pace at which we wish it should happen it is not why progress is not happening I think that too people do have a visceral reaction to that I was meeting an Indian executive a few days ago and she had just seen the latest Bond film Skyfall and you will notice there is a scene when James Bond Daniel Craig goes to Shanghai and that's real that's not a CGI those scenes of those Shanghai she thought when will Delhi and Bombay ever have that Ritika I want to ask give you a chance to ask something but could you identify yourself and where you come from please my name is Ritika Khera and I teach at the Indian Institute of Technology Delhi but that's a recent identity I've actually spent the past 10 years doing quite a lot of work in rural areas issues including NRAGA so I'll just take two minutes if that's all right we'll eat into a little bit of the community break time because I see right now nobody's leaving okay so then I'll take three two, two, two two okay so I want to I want to go back to what you started with which is this thing from Akash Kapoor which say you know people want growth with justice but actually I think people at least in India I've seen people want justice with growth their main concern is with justice which means access to education, healthcare, food employment, livelihood etc and I find it really incredible that somebody can say today in India that we're spending too much on welfare according to Monti Singh Alovalia's paper in EPW all our social spending including health, education NREGA, PDS etc is about 2.2% of the GDP revenue foregone which Nisha alluded to earlier tax revenue foregone according to the budget is 5% of GDP so I really think there's something very problematic and I think Harish is exactly right 35% of the people are below poverty line the poverty line is at 35 rupees a day I'm not sure if you can buy anything in this hotel for 35 rupees a day and we're setting aside 2% of our GDP for this 35% so I think there is an element of hypocrisy and an element of lip service to the question of inclusiveness we talk about UID but UID is not going to do anything about inclusiveness unless we increase our spending on welfare we talk about inclusiveness and I'm happy you brought up the question of education and skill training but you can't expect the country to participate in opportunities if they can't read and write so you know we really have to get our priorities right and we just sort of missing the big picture we don't want to take the tough decisions which is really to tax more to widen the tax space because I think there's plenty of scope for that I'm sure there's like 10% or 20% of the population that pays taxes so you know there's immense scope for increasing the size of the budget I don't think the Indian government if you look at something as simple as teacher pupil ratios across the world India isn't doing very well if we had too much government then our ratios would be comparable to the rest of the world so I think there is this hypocrisy and the lip service to inclusiveness is quite problematic does anybody want to push back I think that's right I mean we have we have something called the Human Development Index right it's a set up of income education and health and we focus a lot on inequality in income but actually when you look at inequality in health and in education it is much larger in India the inequality in health and education is much larger than the inequality even in income and we are concerned about income so we should be even more concerned about the inequalities in education and access to education and health and that's of course very right I mean yes if we can get the GST going and we can raise our revenue to a modern state requires about 20% of GDP in government today to run at least 20% we don't have that as Nisha said and of course finance ministers trying to bring the GST and all that and that should raise these assumptions would be a very good idea and reforming our tax system would be a good idea and raising but that said given where we are today I don't mean to say that we are not we are spending enough on education or health or not but we could be with much better targeting along the lines of these gas transfers etc we could protect the poor much better than we are today with much less expenditure incurring so I think that is the point that we are as you said in the name of the poor we are doing things programs are being doled out but actually the poor are not really benefitting from those programs better targeting could get money to the poor much better than the schemes that we have but I am still very optimistic I don't want to I'm sounding a bit too pessimistic I remain very optimistic because this elephant India has been described to being like an elephant the elephant started to move in the 90s and then somehow it stumbled again and if we can get this elephant back again moving I think India will have a very very bright I think we need to be very careful because I think we get into rhetoric very quickly very easily because the words sound nice to us if we said at all benefit the poor is it our case that poverty has not been reduced in this country is this our case I don't think that is backed by any statistics including the UN statistics I'm quite sure if one looked deeply into it poverty levels have come down I mean they are less poor people now than they were 20 years ago I mean nobody can deny that fact is and I agree with you that we need to do more and that's the point I started with that in my thesis poor subsidize have subsidized the economy for a long time which is a fact now question about more taxation less taxation it's a very fine balance I have seen times in the government when our taxes were very high one of the reasons why investments would not take place why black money would get accumulated was very high taxation then we said international standard of taxation let us bring it down to 30% which is worth everywhere is we did that compliance became better more investments started coming in triggered growth ultimately without growth you cannot have any poverty reduction programs either I mean they may be done much better they may be targeted much better I mean I'm not denying all that but you still need growth so how far do you make this balance these numbers sound very nice from where you are I mean just now Mr. Chipper spoke about the elephant I think we also sometimes become like the six blind men looking at the elephant and trying to decipher it depending on from where we are looking at it so we close our eyes and say it's a wall and you know like so it's like that it's an exercise all the time looking at India different people are looking at it differently from a social activist point of view I would completely agree that we should remove all tax exemptions we should raise taxes to 60% we should completely squeeze out the capitalist and then do the good things for the poor people I mean it's a point of view on the other hand the entrepreneur would say give me freedom give me enough incentive to make profit which is how I will contribute to growth these are balances that we need to do in a society you don't go swing from one side to the other side so we need to find a balance and I think that is what we pretty much must do but at the same time I grant we need to do things better we cannot say you know claim victory that we have done everything the best way that we should have there are huge number of improvements that need to be done but at the same time I do not see any cause for pessimism as far as India is concerned I am extremely optimistic and I do believe next two years time you will see the trajectory going back again and the interesting thing is the funny thing is the numbers determine our mood also it's like you know so when the growth is 9% everyone sitting here will speak nothing but pains of what is good with India when the number goes to 5.5% or 6% everybody is so pessimistic about the entire history of India I think that is what surprises me very much I would still say balance we need to look at the balance one question from the floor and then I am going to ask Harish to end please identify yourself my name is Satish Patil my question is about the whole theme of this discussion today about somehow I get a sense as if the growth rate is quite contradictory to the social upliftment and as if they are mutually exclusive if you see the per capita income of the Asian economy is about couple of decades ago with India they made a rapid progress in their overall per capita income by way of economic growth so why do we here say that it has to be inclusive and if you say inclusive is it not automatically ensured when there is a more inflow coming or social upliftment otherwise where the money is going to come from so why do we think of them as contradictory or mutually exclusive things Harish I was going to turn to you anyway and I think you are the right person for this anyway no I think it is very I mean if you look at please please take some time for a month in travel sir travel no no come with me sir with me I will I mean it is easy to say that the trickle down effect today is about rather than having two maid servants so trickle down effect is I will have now four more houses and I will hire three more drivers that is not trickle down effect the money should be gone to create of jobs and enterprises in the rural areas where rather than looking at the poor as future employees we should look at the poor as future employers very good and they become why can't a poor become head of a corporate tomorrow that is more scary sir and secondly I also the thing is that we all talk about again a challenge to the see the problem I am pessimistic about the urban youth I am optimistic of the rural youth and because urban youth is spending too much of time on research I think the urban youth needs to get down and look at look at what it is in the rural areas I see lack of urban youth actually saying that forget what corruption is forget what the policy forget what the government is doing let me now handle something on my own I see for us the solution is the best form of protest for this young country I think we need to create more and more solutions and I think for example last time I had 300 applications for internships five Indians five Indians so my question is to the young of the country you also have a sense of responsibility that you need to show for the rest of the country and I think yes our generation is also fault that we are not creating enough icons I think we need to we need to create solutions I think I that's why I find a lot of the younger rural youth coming up and we need to create that ecosystem for the younger youth of the rural areas to actually be that employers of the future that will change this country and will change and I'm very hopeful about this thank you very much I think I might require to sum everything up but I'm not going to do it because it's just not going to be possible for me to do it so thank you very much all five of you terrific terrific discussion thank you for taking part thank you very much