 Hello and welcome to the NDTV WEF debate here at Davos and I have to say we are here to discuss India's next decade and you can see what a difference one year makes. Last year here at Davos, same discussion and there was a mood of almost complete pessimism and what's India doing and where is India headed and what the future is and there was an air of gloom and doom and now here we are a year later and suddenly at Davos there seems to be a sense of great optimism so we are here to discuss whether that optimism is entirely justified whether a lot of work obviously needs to be done before it translates into actual action. Part of that optimism is because the new government is here and we have Mr Arun Jaitli with us who's going to tell us some of the steps that they are taking partly because of the new government and partly of course also because of global factors not least the drop in the price of oil. So we have great panel here to take us through what India's next decade is going to be like starting with Arun Jaitli who's not just the finance minister of India but also somebody really really senior influential in this government, advises Narendra Modi, the Indian Prime Minister on just about all the issues and therefore has a very clear sense of where the new government wants to take India and the things that need to be done. So Mr Jaitli it's wonderful to have you with us. Nuri Rubini is arguably one of the most watched economists in the world the person who successfully predicted the recession the crash of 2006-2008 professor of economics and international business at the Stern School of Business at New York University. Professor Rubini you are no doubt going to tell us where the price of oil is going and what is happening with India and everything else. We'll get the full prediction from you in just a short while. Chandakochir is CEO of ICICI it's a pleasure to have you with us and Hari Bhartia co-chairman and founder of the Jubilant Bhartia group. So thank you all so much for being with us. Actually Professor Rubini if I could just start off with you. A couple of months back and you make lots of predictions and all of them get watched at you know with great interest. One of the predictions that you made in November which perhaps didn't quite cut the attention that it deserved is you said that it is possible now that the Indian tortoise could overtake the Chinese hare. Do you still believe that and if so why? Well I do believe that in the sense that China is slowing down. It used to grow 10, 11% now growth is closer to 7%. I expect by next year Chinese growth is going to slow down below 6%. So the statement is a relative one. There's also is a statement about the fact that we've economic reform structural fiscal and otherwise the growth rate potential and actual of India can accelerate over the next few years. I would say with basic reforms India could reach a growth rate of about 7%. To achieve a growth rate significantly above 7% more radical reform will have to be undertaken. They're going to lead to then that growth to be stronger. Of course that implies that for the first time in maybe three decades also Indian growth could be higher than the one of China. I think that's something very likely in the next decade. But the base from which India is starting in terms of growth per capita GDP or absolute GDP of course is much lower than China. So some people say that with the slowdown of China less demand for commodities by China. The stronger growth of India can compensate for that for countries like Australia and other commodity exporters. Unfortunately it will take maybe 20 years of 7%, 8% growth in India until the GDP level is going to be such that the impact of India on the global economy could become as significant as the one of China. But anyhow this is also not a zero sum game. If China does well it's good for India. If India does well it's going to be good for China. But I would say my statement is conditional on implementing a series of reforms that are going to accelerate the potential growth rate of the country. Of course demographics, rule of law, many other things are also beneficial in the case of India when you compare it to China. Okay a series of reforms need to be rolled out and I will ask you in some detail what the specific steps are that you think need to be done. Ironically a lot of the reason for the renewed optimism is that there's a new government in place and there are two aspects to this one. The government is saying it is going to do a lot of the steps that people feel are required. The reforms that are necessary, the focus on governance, the focus on implementation. And also because this is the government that actually does have the mandate certainly in the lower house not so much in the upper house to be able to get a lot of its agenda through. How confident are you that you will be able to push through all the steps that you think need to be taken and do you agree with what Professor Rubini said that India does need serious meaningful reforms in the next few years? Undoubtedly I agree but this whole debate from the last question I just take off from that. I read a decade ago or 12 years ago articles written by reputed people with top international credentials as to why the Indian model is a preferred model over the Chinese model. Ours is more market determined and not entirely state determined and so on but notwithstanding that if we seriously introspect why we got left behind because almost everything that could be done to take the wrong turn we tried to do it and therefore the possibility of even competing with China let alone overtaking them was completely lost out. Lots of self-goals you're saying. Whether you call it self-goals I think the priorities change and instead of going into the details of the priorities I've been explaining where we erred. Instead of concentrating on high growth rates instead of concentrating on reforms required for high growth rates we went into this notional debate of what is pro-poor and pro-rich and so on and therefore we went into the symbolism of all that. So instead of increasing productivity in India which would bring you higher growth rate we concentrated only on distribution and that's I think how the last 10 years got lost out. Once those last 10 years got lost out I think history never provides you with these opportunities over and over again but by a curious set of circumstances this opportunity has come back to us. It's come back to us you have a government in India which has an absolute majority in Lok Sabha. As I mentioned slowly we are moving in the direction of having a reasonably good figure in the upper house. Don't forget that since the last eight months seven state assembly elections have been held in India and those who obstruct reforms have lost all seven. The pro-reform groups have won everywhere and the earth is currently on in Delhi. This is now coupled with the global factors. The oil prices is one important factor which goes to our advantage. The fact that economies which are competing with us to attract that investment internationally are not exactly doing very well. So with these all circumstances favouring us I think we just have to take the right turns and not repeat what happened in the last 10 years. If we continue to do that and the government is fairly clear we are determined to do that. I think it's reasonably possible for us to go back to our actual capacity of a high growth rate. Chandakochar how optimistic are you that India will take the right turns this time because they are having a series of missed opportunities. A lot of things need to be done. Some of the decisions that need to be taken aren't necessarily always easy or comfortable ones. Are you reasonably optimistic? I'm very optimistic by the fact that we are already taking the right turn. I think what is important is to continue on this path and continue doing what more is required. But I think the whole opening up of FDI into various sectors which was not open so far. The resolve to actually solve problems around mining whether it's coal and so on I think that will have a very positive impact. The solutions or the simplifications around land acquisition act I think all these are all indicators to say that we are here to make ease of doing business better and with that we can actually accelerate investments. So I think that's one part about what's happening in India with our action taken. The second is if we look at just the macroeconomic factors. I think we are at a very very sweet spot today. And we spoke about the last 10 years and how things have changed. If I were to just put in perspective last just 20 months how things have changed. It was just not very long ago around May 2013 when globally this concept was coined of the fragile five. And India was the most fragile economy amongst all those. And today what our researchers have actually looked at and seen is that in these 20 months today amongst all the emerging economies we have turned the strongest. In terms of improvement around six factors it's the GDP growth rate control on inflation control on fiscal deficit. The current account deficit. The cover of imports that we have you know visa we are reserves. The proportion of external debt to total debt and to reserves. I think all those factors have improved substantially. So I would say that if we take advantage of the sweet spot and continue taking the decisions and you know keeping the pace of decision making I think we'll get to our potential. Hari Bhartia your coach here at here at Davos this year. When you see the sense of optimism I'm sure you're reminded a bit about 2006 2007 when once again India was the flavor of the season at the World Economic Forum and India is going to overtake China and isn't it fantastic. You know what's happening. And as we know after that things did go down and went down reasonably fast as Mr. Jetley was saying a lot of it may have been self-inflicted but it did change. This time is the optimism for real and is it going to stay. I think so but first let me tell your audience in India. You know this time in Davos there's an amazing interest on India. I've met almost 100 CEOs in the last three days and they see this new government which is a majority government elected on the platform of governance and economic issues. So they see them driving the agenda I think in a very positive direction. So it's nice to be here in Davos because I remember the last two three years I think there was some kind of hopelessness about India in terms of our ability to move into reforms. Now but what you see what people see here is also a very smart government. They have learned from the mistakes of the last 10 years and I'll just give you one example. Look at financial inclusion a project which Prime Minister started led by our Finance Minister. What amazing results I was told in fact today the last three days data by the Finance Minister that we have got 100 and we will reach a target of 120 million people with bank accounts in the in what four months five months. Now that's an amazing ability to deliver. So I think what I see is a government which has learned from the mistakes of others in the last 10 years they are and even if you look at subsidies it's not about cutting subsidies it's about delivering subsidies in an effective manner at the right place and you know people talked about ordinances. I think what is being perceived here in Davos and by the international business community that this government wants to move ahead even if there is blockage in the upper house they want to move ahead they want to deliver and the mother of all reforms GST you know we had lost hope in the last three four years. And you think it's going to happen now? I think it's going to happen it's moved ahead I believe the states have agreed and the good advantage is a lot of states have now come into the fold of the ruling government in the center so I think it's a it's a great time great time to move things along. I am seeing Mr Chandrababu Naidu here in the audience maybe I'll be asking him that question as short while as to how much the states are going to go to cooperate but Mr Jaitley just coming back to what actually took the mood down from the India this is India's decade the last time we were doing debates saying that India this is India's next decade what changed the mood you're right there were a lot of self-goals that were done and you may have to do a lot of the damage control and I'm sure you've been doing it here at Davos simple things like retrospective taxation policy flip flops aggressive tax administration you yourself in your manifesto called it tax terrorism what what have you done here at Davos to assure many of the global CEOs that that's not going to happen again and that when India says this is the policy it's going to stick to it for a certain period of time. You see it's very clever people and very competent people who come to Davos so therefore merely merely merely merely glip talk by us to say we won't repeat what happened is not enough believe me each one of the persons of the groups I've spoken to has been keeping away keen in a close eye on India they're not going to judge us by what assurance we hold out here but actually the direction that we have been following in the last few months now as far as taxation is concerned which I thought was a big sticking point against India the global community wants to be convinced a wide global community the Indian taxpayer wants to be convinced that he will invest in India only if there is a stable taxation regime it has to be non adversarial I can't tell him after five years that I am now retrospectively legislating and this retrospective legislation is going to upset your entire business plans I can't come up with unreasonable demands which nobody had anticipated and I have repeatedly both in India and here gone on record and said that all these controversial cases or high-profile cases that we read about have actually not yielded us any revenue we have a very strong judicial structure in India the the the agreed assesses go to some tribunal or court they are getting favorable orders and what we are left with is a losing battle and a bad name and a taxation policy which was scaring people away therefore the tax department itself had to be given a clear message and I'm quite certain they've taken this message that those who are supposed to pay taxes must pay taxes and those taxes which are not payable are just not payable so we must have a fair and a reasonable regime which has to be completely non adversarial and this is a message which I've been giving from day one that this government assumed office and that's a message which we've been carrying to Davos right professor rubini you did say that the the surge of India is going to be conditional on some crucial steps and some crucial reforms you've heard some of the steps that are already being taken what to your mind is the unfinished agenda and which minister jetli would be well advised to try and do something about um well I think there are things that are in the macro space and there are things that are in the structural and they're related to each other and one observational make is that last year India was part of the fragile five twin current and fiscal deficit falling growth rising inflation uncertainty about policy things have improved but in part they've improved because of luck I mean the collapse in all prices is just a manna from the sky that came regardless of any policy change it reduced the budget deficit it allowed the phase out of some of the energy subsidy it reduced the current account deficit it reduced inflation now it's aligned the RBI to start cutting policy rates so all these things have improved but they improved that just because of luck last year's budget was mostly a placeholder fair enough the government was just coming into power I think this year is going to be a real test of whether significant fiscal reform is going to occur and in spite of all this positive shock coming from all improving the macro imbalances growth is improving but there's not been exceptional right you know in the current fiscal year they're just finishing maybe close to 5.5 percent and what's also happening is that the private sector investment has not picked up and in order to increase actual and potential growth investment as a share of GDP has to rise significantly uh there are questions of why that's happening I think it's happening because many of the firms in the private sector are highly indebted and that's a burden on their ability to borrow and invest and hire more in the financial system you have state-owned banks that have been involved into direct lending to favorite sectors for a long period of time and the cleanup of the financial system creating new private banks they're going to create more dynamism provision of savings to investment is going to be key and important so there is a question of whether the fact that there are policies now to increase infrastructure spending more needs to be done to avoid the restrictions that occur to do that that investment that investment has synergies with private investment private public partnership but again the good news is that the financial imbalances are improving the bad is growth is not improving and is not improving yet because investment in private sector is not occurring and there are balance sheet problems in the financial system in the corporate sector still an improvement in confidence but not to the level in which the private sector is significantly investing more and then there is the agenda of a long list of structural reform the government I think fairly says we've not done maybe big bank reforms because politically harder it's better to do gradual steps reform that over time they build up that that's correct but there are big things that have to be done eventually from labor market reform to land reform to privatization to capital account liberalization to you know FDI for the liberalization to even overall broader tax reform in addition to the GST one and that's going to be the challenge of more radical reform that will be needed to significantly increase potential growth the good half of the glass it's positive that the steps are being done the constraints there are lots of interest groups that are going to be against those types of liberalization so obviously you you're not going to be telling us exactly what's in the budget I mean feel free to do that if you if you should so desire but assuming you're not going to tell us what's exactly coming up in the budget professor Rubini said that the last budget was a placeholder you have also tried to under emphasize you know that not everything should be done in the budget but those reforms that he was talking about whether it's labor law whether it's labor whether it's land some of them you're already doing will we be seeing this in the near future will you continue to have a gradual approach going forward let me tell you when we speak in terms of the kind of reforms I always prefer to understate and underplay this but now that this question has been raised opening out sectors like railways and defense it's not a small reform in an economy like India opening up almost every conceivable sector we have a more liberal FDI policy today than most parts of the world now reforming the entire taxation structure with the GST kind of a reform the land law which I thought was a was a legislation which could have actually halted India's progress it could have halted India's industrialization infrastructure creation township creation housing problems etc in one structural in one surgical manner we did away and reformed that to the law partly it's not a small reform the entire energy sector now for the from 2006 to 2014 it was a complete standstill nothing was done the companies which have invested into that had lost their credit worthiness coal was not available which was our major resource now we've reformed that sector completely mining a major resource we are still with an obsolete procedure now to come out with a more modern legislation in tune with the times of the day was not a small reform now these are all steps which we've been taking from the first of Mr Hari Bhartiya just now mentioned the the financial inclusion scheme to get to visit almost 22 crore out of the 25 crore families in India paring left-wing extremism and border areas and inaccessible areas get every Indian to be a part of that system and not only a part of that system you now have started immediately from the first January onward the state support subsidies going into that system so the leakages are going to be plugged in the first phase my problem really is when I look at investment into various sectors and increasing it in the social sectors etc from the kind of revenues we earn at this modest level of growth are all committed to a fixed governmental expenditure in the last 10 years we've added to that expenditure so whether it's salaries it's pensions it's the defense expenditure it's repayment of debt and the so-called expenditure incurred because of this rights-based approach now this rights-based approach was not not always the most logical approach to have an erroneous impression that you increase subsidized gas cylinders from 6 to 12 and this will completely win an election for you it just didn't happen now the consumers of gas cylinders are not the poorest in India these are these are people who have a certain level of affordability now if I put that amount which has gone into these additional gas cylinders into India's health sector or education sector that was a far more deserving priority now we have to unravel this entire process so it's a long journey it's a government which is here for a full term and we've just about started all right Chen that question obviously a lot of the private sector will also have to play a rule and that's what we keep hearing from the government as well because there will be massive investment that will be required so one of the points that Professor Rubini was talking about about the balance sheets of a lot of companies in the private sector in India they are heavily indebted interest rates are still very high okay now they started to come down a little bit but interest rates are still very high so is it going to be simple for the private sector to play its part in India's next decade or is it again going to take time for that debt burden to be unraveled so I think the private sector definitely has to play its part in this whole investment cycle but to enable the private sector to play that part the most immediate requirement is to actually unravel the existing projects I think you know the reason why the indebtedness of the Indian corporate sector has gone up is because a lot of investments are underway the debt has been taken for those investments and actually very good quality assets have been put on the ground and that's the positive part of it it's just that there are the last mile issues of either the last mile approvals or you know the raw material not being tied up for instance coal etc which is not allowing these projects to generate cash flows and thereby reduce the leverage levels so I think the most important priority for all of us is now to resolve those issues around existing projects and I personally believe that even if we and as we are taking this whole solution up to its logical end by end of March and with that if we get the 20,000 megawatts of existing power capacity working which is not working today we can through direct and indirect benefits add one percent to the GDP of the country now not just that that will enable the corporate sector to then start servicing the debt that is taken towards those projects and it is only then will the private sector get that confidence both financially and you know psychologically to think of the next round of investments so I think the corporate sector recognizes that there's a huge potential to invest the corporate sector has the capability to invest and the financial sector has the capability to support but as of now the priority has to be to unshackle the existing projects and in the meanwhile I think we can ignite some amount of investments through the government projects you know whether it is partly on railways partly on highways if we start giving that kind of a push ignite the economy and gradually solve the existing projects so Hari if a lot of these projects did get stuck so there was various reasons are given for it just sloth and bureaucratic apathy corruption is quite often blamed for it and you know corruption in some of these these projects it's often also said that one of the things that happened in India is with so much concern about corruption quite often honest decision making was also just blocked with nobody wanted to sign a file nobody wanted to put their signature on any piece of paper because you know who knows who wants to get into trouble and tomorrow the investigating authorities will come how do you start changing that mindset is is changing in a very subtle way and I'll I'll give you another example how and professor Rubini also talked about second generation of reform see reform is not only about what is being done at the central government it also has large implication where state governments are involved because doing business in India that's where the states that you go to the state and that's where most of your permissions are required and issues about corruption I must tell you it was here and to our Indian audience a very interesting phenomena is happening states are now competing with each other finance minister was in West Bengal Mamta Banerjee and finance minister standing on a common ground on economic issue and West Bengal trying to market and getting investment and look what is here happening in Davos we have a make in India lounge where you get great Indian food and we have two chief ministers in two coroners promoting their own states Chandrababu Naidu is here doing a fantastic job if each state starts to promote investment is promoting India look at the multiple effect that we will have and I think that is a also solves your issues about corruption because if states have to attract investment they have to make it easy for doing business and that is about reducing corruption and inspector Raj but orangeately corruption of course has been a big issue in India and corruption has two aspects to it one is big level corruption which is at the government levels and at cabinet minister levels but a lot of the impact of corruption and really draining some of the energy out of the Indian economy is at lower levels and at grassroots level people sitting on files how can you and the government empower honest bureaucrats to take decisions without fearing that if they put their signature on a file tomorrow CBI will come after them or somebody will come after them because that is one of the reasons why things slowed down so much in India not the only reason but one of the reasons you see one of the great setbacks of the last decade has been credibility of governance declined and therefore other structures became more powerful the CAG became more powerful the CBI became more powerful the courts became more powerful because the general presumption was that governments act for collateral reasons and not for honest reasons now this is the greatest damage which was done to governance in the last 10 years now in the process there are many decisions when you talk of these large projects some were held up because of environment some were held up because of some permissions but I can tell you a large number of decisions are held up in governments both at the center of the states because everybody wants to play a game of just passing the parcel so he who has the last who's the last in the queue to have the parcel is at hand is going to be eliminated similarly in governmental decision making which has commercial connotations I believe we have unrealistic laws unrealistic in the modern era of liberalization the prevention of corruption act in particular is a 1988 law it was redone it predated the 1991 liberalization and almost every decision including an honest decision can be brought within the ambit of that law I know for certain that three extremely honest secretaries of government of India are today being investigated or prosecuted by the CBI for decisions taken over the last 10 12 years and decisions which were commercial decisions taken on good commercial considerations and logically there is no reason I had the responsibility of the defense ministry for a brief while and I found that everyone wanted to just make a query and ask for a clarification and send the file up he didn't want the parcel to be in his hand once once the bell was sounded now I personally do believe that time has come for us to review disproportionate assets of course it's an offense bribery of course it's an offense but to simply say giving an unfair advantage to a private party now people who do businesses with government will get an advantage now whether it's a fair advantage or an unfair advantage at the end of the day becomes a whole matter of entire description for which a secretary or a joint secretary will then face prosecution after his retirement for the next 20 years so will you give them protection therefore therefore if you remember in this whole debate on Lokpal etc demands were being raised there should be no sanctions before prosecuting politicians or civil servants or public servants I had always deferred with this now in in a reactive situation you can take these extreme positions speaking for myself I do believe that time has come that even the provisions of one of the sections requires a relook particularly section 13 1d under which every honest decision taken on commercial consideration could go into the ambit of a cbi investigation I think it requires a relook today particularly when why is it that the we had the the bankers conclave at Pune the prime minister and I were there and all the bank had said when assuming they want to settle with a possible company and give some discounts and recover what they can recover alternatively seeking that this is a project where you can give him some more so that he survives and therefore is in a position to rebate back now a banker in a public sector bank has to take a decision on purely commercial consideration if mrs. kocher took the decision as a private sector banker nobody can touch her but if the head of the state bank took that decision and the decision eventually proved to be incorrect she'll be liable for prosecution so the bank chair persons are not acting on commercial considerations and therefore I think we have to empower the civil service we have to empower those who are to decide on commercial considerations rather than just be swayed away by these agitations and propaganda and this nostal concept of are you pro-corrupt because you are suggesting this change I think if you have to run the government of India and we have to go back on that eight percent nine percent growth rate we have to make these structural changes right that's that's that's that's probably music to a lot of people's ears professor I mean you just want to come to some of the bigger macro themes that have also been playing out at at Davos and seeing how they affect India you were talking about the drop in the price of oil it's been an area of concern for so many people here for India it's actually made mr. Jetley's job so much simpler the twin deficit that we were talking about drop in price of oil helps you know the current account deficit because mr. Jetley is now taxing you know petrol products it's it's also helping helping the fiscal deficit do you see the nine times I've passed the benefit to the consumer also but you also taxed so which is fair enough but do you see this that the price of oil remaining at these levels which is probably very good news for India or going back up for now all prices are going to stay at current level but I expect that there is there'll be under investment in your capacity as high marginal cost producers whether a share in US or other are going to get out of the market this is the bottom of those prices and maybe oil prices by the end of this year could be closer to 60 dollar per barrel and over the medium term closer to 70 the good news is that they're not going to go probably back to the level they had a few years ago but they're going to go slightly higher and I would say overall for emerging markets we have to realize that there are many changes in the global economy they imply that what happened in the last decade is not going to happen mechanical next decade for the last decade there were a bunch of tailwinds are becoming headwinds China was growing 11 percent you had the commodity supercycle you had zero policy rates and quantity of easing today China is slowing down the commodity supercycle is over US however slowly has finished with QE it's going to start raising rates of course if you are a commodity imported like India you benefit from that slowdown in commodity prices but there are also two other factors that thing are important one is that in the decade where things were easy there were macroeconomic looseness in many emerging markets including India monitor and fiscal and credit loosening the lead those twin deficits and because times were good many government did not do the kind of structural reform they increase the productivity of the private sector if anything many of them moved away from that towards models of state capitalism China Russia but even India in the last decade or Brazil or South Africa and you name it now that has to change and you have to do in the actual structural reform to increase your potential growth so the global outlook for emerging market living inside the fact that all is a positive for India is a much more complicated one but in terms of capital flows global headwinds macro imbalances need for structural reform and I think the dividing line within emerging markets is going to be between countries like Mexico hopefully India under the new government and others are going to do the structural reform that are needed to increase their potential growth and those that don't have the political institution and the social to make those important changes at the end of the day this is the time for doing the structural reforms all right gender culture another one of the themes that I've been hearing a lot here at our versus on gender issues and gender disparities and gender gap and obviously in India there's there's been a lot of concern about the rights of women the attacks of women's security on women but there is a flip side too which is that in India unlike many other countries there's not really the glass ceiling isn't there to that same extent and you know people can rise to the top women can rise to the top of the corporate sector without anybody thinking twice about it what is your take on that I'm sure you've been asked that question often here is as well at Davos yeah one is I think you know on the flip side first that you spoke about I think we as a country need to be proud to say that on this issue at least in the corporate sector India is doing much better than many other countries in the world I don't know of any country in the world where the banking sector more than 50% of the banking sector would be run by women so I think that's think of a bank which is not run by a woman in India it's a bit tough too I'm racking my brains a bit yeah so I think that that's one the the second is in that context when people ask me you know what needs to be done to make this happen frankly you know I think what most of these organizations have done as I've seen all these organizations is just to create a level playing field between men and women I think as long as you create no discriminations against women as long as you don't have inhibitions saying a woman would not be able to do this job or would not be able to take that responsibility I think women are thriving on their merit so this is really on the corporate side but of course on the other side that you spoke about you know the safety the security of women and so on I think we need to do a lot more 50% of our population is women clearly to strengthen the laws clearly to strengthen the execution of those laws and the safety security measures we all need to do as a country as companies we focus on doing this for our own women employees but yes we need to continue to do that so Bhartya the other thing we've been hearing a lot about obviously is inclusion and making sure that there is inclusion and also digital inclusion which is the next big thing that people are talking about because as the internet keeps on growing but people just get left behind if they don't have access to proper good quality digital infrastructure no but one thing that has changed this digital inclusion part is the smartphone population is increasing quite a bit so what you see is in villages in cities in urban India that everybody has access to telephones and now that that cell phone gives you a lot of digital access it's anecdotal but let me give you an example that we sell pizza in 180 cities and 30 percent of the orders are online now that's a sign it's almost 50% of a developed economy if I compare what happens in a developed economy but this is this is an urban example so I would not take extend it to the rural part of India but definitely if 4g comes in and if the rates remain competitive and the penetration of the mobile telephony increases certainly it will impact I think in the digital part of India it will certainly impact but I must you know we talked about a lot of good things but one of the the challenges continues to remain for for our for our growth is obviously this new set of youth population that is coming into the job market and their employability and their education because we have double impact a rural India which is you know 50 percent of people are employed in the agricultural economy with with 15 percent as part of GDP is not sustainable so they are coming into the urban part to find jobs and while the new set of young people coming into the job market the biggest challenge that we have is how do we make them employable and I think that's where business and entrepreneurship can play a very important role I think creating sustainable jobs and enterprise right so obviously employment is going to be a big big concern going forward and and there is of course this overlying theme that as the world is becoming more and more digital what does that by itself mean about the nature of a corporation the nature of business now yesterday we did hear google facebook microsoft all of them were saying that the biggest the greatest public good now is is going to be the internet and having broadband access to everyone and the suggestion was made which I must get your views on on the fact that spectrum should actually not be licensed or sold but should be given away free because it's such a major public public good that denser fiscal deficit a little bit so that's why I wanted your reaction I just now answered your last question by saying when institutions of governance became weak the others took over you try selling spectrum free in India I'll be in patiala house courts for the rest of my life that's the law which has been declared by the supreme court now these descriptions in Indian society have been taken away from the government now if a government is to legitimately decide at some stage that to encourage a particular sector the input cost has to be reduced so that the consumers get it cheaper now these are all decisions which have to be restored back to governance on a policy primacy now unfortunately we've had as a hangover of the last 10 years judicial parameters being laid down so I don't think with the law as laid down in the 2g case in India anybody would either risk or even dream of doing that I mean that's actually exactly the point in 2g which at that time you did argue that you know why was this done in a particular manner so you don't see that happening in the near future well I don't think with the law as it is today anybody is going to even take a chance as far as that is concerned all right before I turn to the audience and get some views from here I just wanted to ask each of you what could possibly go wrong and we should be always watchful at a time of optimism to see what could possibly go wrong and therefore what is it that we should keep your eyes open from how you want to start then I'll come this way what do you think would go wrong in India see I I constantly worry about the education part how do we bring in this large number of people into workforce because it's the first time to give a job the first job is the most difficult part because people come from very poor families where the parents are agricultural labourers and how do you bring into the job market so how do you give them employable skills even soft skills and I think the management of that at the state level and at the central level both in terms of policy and effectiveness and the amount of money that we put into into skills and education I think that's where the challenge lies actually you're talking so much about the states before and let me just get Chandrababu Naidu and before I come to the others on that let me get his sense if you can get a microphone to Mr. Naidu out there just wanted to ask you a couple of the questions out here the competition for the competition among Indian states to try and get investment and secondly the question of whether reforms and doing being doing good things economically is good politics you paid the price in the past by trying to be too reformist has the world changed since then now thank you now all over the world if you see even if you do populist schemes also if you do in the wrong way then automatically you will be caught and also you will be lose the elections for the last one decade it is a reflection but in India as on today we are very happy for the last seven months things are moving very positively everybody is here they are coming for the last so many years to Davos this is the first time I'm seeing in Davos so much of hope and also hype everybody is talking you are given a title India decade I want to correct it India century this century belongs to India I don't have any doubt about it I have seen so many investors here and also corporate sector everybody's talking we are having one advantage demographic dividend and also biggest democracy and also market above all these things there is a stable government and also one of the best administrator at the helm of affairs if anything will go wrong it is a beyond expectations according to me all right so beyond expectation that anything will go wrong chanda kosher what could go wrong see India has two basic advantages one is its demography and one is its potential for investment and I think the same two factors can turn into disadvantage if we don't handle them well so what could go wrong is the same demography if we do not provide employment opportunities employability of these people then you're going to have a problem at hand similarly the same potential to invest which can add percentages to your GDP if we do not invest in infrastructure then that can become a bottleneck so according to me the only thing that can go wrong is if we do not harness our potential fully we have to work we have a lot of strong points with us we just have to make sure we keep working and harnessing that potential professor opinion what could go wrong well I would say that you know trade globalization and technology innovation has led initially to offshoring of jobs from advanced economies to emerging markets say manufacturing for china it services and software you name it for india but things are going to change and their pace of change is going to be radical radical today a radiologist in mumbai can do the same job as a radiologist in new york for one fifth of the salary but tomorrow there may be a piece of software can do it better and cheaper than anyone around the world today the call center in bangalore can do the services for united states companies but tomorrow there'll be a series style of virtual assistance can do the same kind of thing so this is a time in which initially trade globalization pushed jobs into emerging markets but now technology is becoming increasingly capital intensive skilled buyers and labor savings even in china millions of manufacturing jobs are going to be lost because foxconn is going to go into automation now india's advantage at still labor costs are very low and you can never build up of manufacturing or services is also a domestic economy but this is a time in which change in the world according so rapid that unless you do reforms very rapidly you could be in a situation which the world technology and other things gonna push you behind so this is not the time for temporizing but actually to aggressively go in the direction the world is becoming more globalized competition is more aggressive and no country including india can take anything for granted which is actually one of the questions that i'm sure you've also been asked here davos as i have is that is is social cohesion a possible problem going looking forward in india because even linked to your government and your party there's there is a certain right wing and economic thinking which is helps with all the decisions and the reforms and other measures that you're talking about there's also a right wing when it comes to religious or social factors which could potentially lead to other sort of problems you see with the a great amount of difficulty and past taking the benefit of the past experiences i think india started to accept the economic agenda as the center stage agenda of the country so if you've seen in the last few months or even before the elections the debate has essentially been around those issues so a large number of other issues political social caste dynasties families charismas have all taken a backseat i hope they do continue to take a backseat and they just try issues like that therefore therefore when you ask me what can go wrong in a country like india we must not allow this center stage agenda to be derailed or deflected under any circumstance now if any of the other things happens and somehow we trip the last government trip when it came to corruption if you remember a similar example in 1984 the government came up with under mr rajeev gandhi with great hope first two years were reasonably good and suddenly the government tripped and then nothing seemed to be working i think we have to be extremely careful that this roadmap that we've said for ourselves we should determinedly doggedly go on to this and not allow agenda to be taken over by any of the other factors which have currently taken a backseat including potentially your own supporters but including potentially and that's why the prime minister was the first one to take a strong line against them all right let me turn to other people in the audience in each case you but yeah just get your mic the audio wasn't entirely clear so he's asking about the oil price and what happens if it goes back up well once the fundamentals of our economy are sound our manufacturing can go back to the desired levels of investment both private sector and international can come in addition to public spending on infrastructure i think we would be in a position to take the shocks even at 80 and 100 dollars we've taken the shocks and still grown well in the past so that won't deal us completely but as the professor mentioned our comfortable level would be where the figures are now or maybe slightly higher great see pat lukha are you are you one of those people rushing to invest in india get more money in or if you have a question we've had a large operation in india and have been successful there but i think you know you're you're all right you're on the eve of a lot of good things happening with with oil prices with the reforms in the us our issue is we're facing you know jobs and education educating the population to take the jobs of today what specifically are you doing in india to dovetail you know getting more education education for what business needs for what the knowledge sector needs are there specific proposals and programs on how you're going to get that better in india we certainly need to do that in the us as well education well i've always believed that this is one sector where we need to do a lot more when we started reforming in terms of economy this remained an unreformed sector but today fortunately a lot of investment even private sector has come up institutions are expanding we have a huge skill development program of the government which has now started in order to train our people and prepare them for the jobs this also in a relation to an earlier question that you'd asked with regard to gender equality go to any educational institution in india and i get a chance to visit them for convocations and so on i am now finding across the board throughout the country 60 to 80 percent of those in in quality institutions are women and therefore when you have been providing with a level playing field that is one sector in which you can actually see a changed situation on the ground right let me quickly take three or four questions and comments and then come back to final thoughts on the panel yeah hello i have a quick question it is truly impressive the number of reforms that are being done and the pace at which it is being done do you think there is enough depth in terms of the number of people that you have in terms of the depth of bureaucracy to kind of implement all of this at the pace at which you would like or is this something that's going to be slow and it's going to take time in which case you might want to condition people to expect that we're not jumping to eight percent growth in the next year all right great mr nk saying you had a you had a comment my question is do comment a question of whatever it is is to professor rubini that in terms of exogenous variables which the finance minister has himself conceded has been one of the favorable factors to propel the india story what are the probabilities which you feel that the world could once again tip over and apart from the factor of oil in terms of the export market shrinking in terms of the appetite for risk in terms of foreign investment what would you say are the probabilities of risks of that kind of an exogenous nature which india must protect itself all right i'll just take two more comments or questions gentlemen there and then i'll go down that thank you and pull me in from bailing company just coming back to private sector investment we heard that the private sector is not investing yet we're dealing with unraveling a lot of sunk cost we haven't heard too much from the panel about the growth potential in manufacturing value added the technology sectors what what incentives are we being created to encourage more investment there particularly given the high relative high cost of capital today in india all right mr hindu chai you had a question or a comment and then the gentleman there okay i'll come to you i do have a question with professor norovini i'm been knowing him for a long few years now uh your prediction for the world global economy has been so accurate i'd like to know what is your future prediction for the global economy how do you see the world and what do you think about the economical changes which are going to take place and what is the setback going to happen in the world okay while we get the mic to the gentleman there you want to quickly respond on exogenous shock and uh and prediction for the world economy well i would describe the global economy like an airplane that has four main engines one is the U.S. the other one is the europe eurozone the third is japan the fourth one is china the good news is the U.S. is recovering and doing better the eurozone has been stalling in terms of growth near recession deflation we'll see what the action of the cb will do japan made the policy mistake by front loading is on fiscal consolidation and now they have to postpone it and china is slowing down quite sharply my view is going to slow down more sharply than than otherwise now in the case of india it's a less open economy than others so it's more sheltered from global shocks but the economy is going to open up much more given the policies to trade to foreign direct investment and so on there are certainly two channels of transmission among others that are important one is the financial flows the country still running the current account deficit has to attract portfolio and financial capital if the fed were to exit faster than otherwise if risk aversion because of what's happening the world will lead to risk off rather risk on you could have capital outflows rather than inflows that's going to increase the cost of capital for india secondly right now all prices are low commodity prices are low that are net benefits india that is a net commodity importer but you can tell scenario even geopolitical of shocks that could lead to a shock to supply of oil energy or other commodities and therefore those are the two channels through which the world among others is expanding and finally as you open up more of course i've been able to also grow not just through domestic demand but net exports becomes more important and what's happens in the rest of the world affects the competitiveness of of the country you also have a lot of foreign currency liabilities of some elements of the financial system and the private sector if the dollar was to strengthen too much those balance sheet effects could add to the financial constraints that the corporates and the financial institution would face all right i think we have just a couple of minutes left so let me get some quick quick additional thoughts in a new indian government that's great importance to the manufacturing industry right i'm making india the question is how what kind of patriot policy are you going to take particularly regarding the outset the india join this you know outset the uh how do you say supply chain the competition in the supply chains would be you know much uh i'd say for india it would be very very advantageous that that's my assessment so what what do you think about here trade policy what what's are you going to do all right we're just going to react to a minister or i see i see on the top con sitting out there maybe we should get him and i get an answer from him but all right the lady at the very last ray and then in the meantime there was a comment from here so if you can get one mic here i'm going to try and squeeze all of this in i'm told i just have a minute to go so i'm not sure quite sure how to squeeze it very simple question i have to the learned panel india is not the first country to take the route to reform there have been several others before us so i would ask the panel what are the two things we can easily emulate rather than reinventing from successful reforms elsewhere and what are the two things which india will be well advised not to do having learned from the mistakes of others and something on lighter note with permission from chanda i think now that women have captured practically the banking industry it is the economic ministries which seem to be the next frontier thank you but i thought they are starting to make inroads there as well but mr mojial you had a comment uh one of the key points being brought up was about employment mr minister will be useful for us to hear about entrepreneurship because that is a real multiplier for job creation right the lady there yeah hi i'm sindhu remitter to add to what mr mojial said we just heard from jack ma just earlier today on how we created uh from zero to forty three billion dollars in just ten to fifteen years so i think my question is how do we create scale and entrepreneurship and an innovation uh an ecosystem for entrepreneurship like there is i mean we have indians in the us in silicon valley actually creating these businesses but how do we have them your home grown in india and actually scale these businesses up all right fine i'm going to get thoughts on all of that from from the panelists here but mr amit abhkanth was setting out here i want to respond to the make in india uh campaign that you've been doing out here has been getting receptive noises here at a time when if you can get a mic to him yeah so how many how many factories have moved to india in the last year i think it's important to realize that we're in a globalized world and you know indias if indias to compete indias to be a very efficient manufacturer and indias to compete in several areas it has to get into areas of biotechnology nano technology advanced manufacturing but it also has to get into labor labor intensive manufacturing in a very big way and we are focusing on many of these areas but i think the key thing to all this is the focus on huge focus and emphasis on ease of doing business in terms of just just scrapping of rules procedures you know acts rules laws and to my mind over a long period of time that will give india the competitive edge all right i'm told we have to wrap so maybe some quick final thoughts from you on some of the questions and themes that you've heard well two to two particular points i don't find any resistance from the civil service or the bureaucracy in india and i see particularly if the government and the political executive is absolutely clear about what cost to pursue with regard to laterally inducting talent into the government or into the system i think governments in india have been increasingly open to it the last government also in some measure tried to do it after all they got the governor of the reserve bank as the chief economic advisor at that time we've got the new chief economic advisor we've got the vice chairman of the niti iog and i'm i'm quite certain before the factories move to india the best minds also must be available to the government of india irrespective of where they are in terms of incentivizing manufacturing it's very much on our agenda even though we had only a few days during the last budget we did give to msc and so on several incentives because we wanted the sector to pick up and that's a priority which is fairly high on our agenda all right well thank you all so much for being with us we're talking about the mood in india it's certainly upbeat it's certainly positive may well become a lot more upbeat if india actually wins the world cup in a couple of months from now which doesn't see actually i should ask you that question you've been so involved with cricket is who do you think is winning the world cup quick guess i'm not so sure what kind of pitch is that australians and the new cylinders have prepared new cylinder the pitches i'm particularly scared of all right so meanwhile let's work hard enough to make the winner of world economy as india all right so whatever happens in the world cup make the winner of the world economy india maybe that's that's an easier bet right now thank you all so much it was a it's a pleasure having all of you with us