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India Shining

India’s growth looks unstoppable. Evolving as a leading economy among Asian countries and outpacing China, India is the fastest growing economy in the world. Shubhada M Rao, Senior President and Chief Economist at Yes Bank Ltd, speaks to WCRC Leaders Asia’s Tista Sengupta and throws light on India’s journey to the top.

According to the Asian Development Bank, ‘The longawaited emergence of India as a new regional powerhouse and the increasing integration of ASEAN economies are the new drivers of growth in Asia, now that the Chinese economy is beginning to slow down.’ Your views.
With a largely youthful population, a burgeoning middle class market, and by the way of more investment in the field of innovation, healthcare and infrastructure, the Asian region is likely to transform itself and lead the global economic growth in the years to come. Within Asia, even though China is seen to be approaching a ‘new normal’, its 7 per cent growth still remains impressive in my view. Acquiring the pole position, India is surely emerging as a global superpower, but to gain significant strength and to have a positive spillover impact on rest of the region, structural reforms in the country are important. As for Southeast Asia, the ASEAN Economic Community will come into existence in 2015 and the bloc would emerge as the world’s seventh largest economy. Since the ASEAN bloc will be 25 per cent bigger than India, it would have a more important role in the long term.

The ASEAN Economic Community will come
into existence in 2015 and the bloc would
emerge as the world’s seventh largest
economy

Do you think that India is ready to lead the Asian economy?
We are definitely better placed when compared with the rest of the Asian markets. Domestic macros have strengthened and consolidated compared to May 2013, when the Fed taper talk had just begun and the subsequent run on the currency took place. We certainly do not expect such a run on rupee now, as current account balance, fiscal balance, inflation and growth are all relatively comfortable. The sharp reduction in commodity prices has also been helpful. Massive portfolio flows into India and a relatively stable currency are proofs of positive investor sentiment.
On the other hand, China has slowed down and Japan continues to struggle with deflation concerns with massive monetary stimulus required to save both the economies. To be able to sustain and then increase the growth momentum, Indian government will have to work towards improving the quality of infrastructure. They should also make it more amenable to produce as well as export from India. In this regard, latest reforms in the direction of increasing the Foreign Direct Investment (FDI) limits, increasing public spending on infrastructure and launch of initiatives such as ‘Make in India’ or ‘Digital India’, has given me a lot of confidence that India is moving in the right direction to lead the Asian economy.

Reforms that improve the productive capacity of
the manufacturing sector, provide the ease of doing
business, enhance employability and focus on skilling
the labour force are very important

india-shining-2How do you think China, which has grown solely on manufacturing, will react to this development?
Surplus investments with low share of domestic consumption in its GDP was the most important factor behind China’s slowdown. Given that there is a distinct similarity between India’s economy today and China in early 2000; India can draw important lessons from China’s growth model. The most important learning in my view would be to work towards a port-led model of development. However, in entirety, it is unlikely that India’s growth cycle will be similar to the benchmark.
China’s economic growth has been massively aided by its state-owned enterprises. Further, China’s single-party political system has been sweeping economic reforms without facing any serious opposition. Both of these are not true in case of India. In my view, India will have some unique factors to leverage. For example, I believe India’s service sector and the knowledgebased economy will serve as a unique advantage and this would play an equally important role as will the manufacturing sector.

For India to emerge as a leading economy in Asia, what issues need to be taken care of at this juncture and what reforms or policies should be implemented by Indian policymakers?
Currently, the Indian economy is in a sweet spot. The confluence of low commodity prices, low interest rates and decisive political mandate are key enablers that have the potential to propel India into higher growth trajectory. However, in order to realise the same, it is critical that the government undertakes reforms in areas that would enable India to increase its potential growth.
For instance, reforms that improve the productive capacity of the manufacturing sector, provide the ease of doing business, enhance employability and focus on skilling the labour force are very important. Likewise, reforms that help to improve the health of the banking sector and increase access to affordable finance for small enterprises are equally crucial.

India’s dependency ratio is expected to be in its
favour till the year 2040. However, to reap this
demographic dividend, we need to ensure that the
labour pool is skilled through education and training

Politics has fettered India’s economy in the past. It might still remain to be a major hindrance in future. What’s the need of the hour?india-shining-1
Decisive mandate in the Lower House of the Parliament for the first time in 30 years has raised hopes for initiation of long pending structural reforms. However, minority status of the government in the Upper House of the Parliament has proved to be a stumbling block. The government has been trying to overcome the political gridlock though dialogue with the Opposition and other regional parties for Coal and Mines Bill. However, passage of contentious bills like Land Acquisition will require the government to build on the consensus through consultative process by taking on board diverse opinions and viewpoints. Therefore, the need of the hour is a consultative reforms process.

The World Bank’s assessment says that India will witness 6.4 percent growth in 2015. When is India poised to return to a high growth path of 8 yo 9 per cent?
India’s average GDP growth of 8.7 per cent between financial year 2004 – 2008 was an outcome of convergence of enablers like high global growth, low and stable inflation, high investment appetite, and infrastructure push of the government. In order to return to a GDP growth of 8 per cent, a multitude of factors should fall in place.
With global economy continuing to remain on a weaker footing, driver of India’s growth needs to be largely internal. Thus, government’s efforts at undertaking growth stimulating structural reforms, revival of private investment appetite and maintenance of low and stable inflation are decisive factors that will determine India’s potential growth trajectory towards 8 to 9 per cent in the years to come.

What are the steps required to target this high-growth path in India?

With oil prices falling
by nearly 55 per cent
from their peak in 2014,
India has benefitted
immensely in terms of
lower import prices

The Indian economy is fortunate to have 3Ds by its side – Democracy, Demography, and Demand. A vibrant democracy has helped in building critical institutional architecture for governance. However, to enable high and sustained economic growth, the country needs to widen and deepen the scope of its institutional architecture in areas of finance, regulation, taxation and business. India’s dependency ratio is expected to be in its favour till the year 2040. The country has the world’s largest youth population of 572 million under the age of 24 years. However, to reap this demographic dividend, we need to ensure that the labour pool is skilled through education and training and made productive through introducing conducive labour laws and their inclusion in the formal sector.
Indian economy has already crossed $2 trillion in size with private consumption constituting over 57 per cent of GDP. Over the last decade, the country has seen the highest growth in per capita income with the new aspiring middle class expected to touch 267 million over the next five years. This presents tremendous opportunities for realising economies of scale.
However, to realise this, it’s imperative to constantly create supply with emphasis on physical infrastructure and manufacturing.

india-shining-3A number of steps have also been taken to improve the ease of doing business in India. But do you think it’s easy to execute the vision ‘Make In India’ and promote manufacturing sector that only contributes around 16 per cent of India’s GDP, wherein infrastructure needs to be developed and issues related to land, taxes and processes in India should also be tackled simultaneously? Your comments.
Harnessing India’s manufacturing potential is the key to ensure sustainable long-term growth. While it is true that India has defied the conventional development process by metamorphosising from an agrarian economy into a servicedriven one, the desired dynamism in the manufacturing sector has remained more or less elusive. Given its comparative advantage stemming from low-cost and abundant labour resource and its technological capability, India has successfully scripted success stories in sectors such as textiles, leather, pharma, automobile to name a few. However, to evolve into a meaningful link in global supply chains, India must look outwards. Manufacturing success does not imply a single-handed focus on export-orientation. Import substitution and satiation of the growing domestic demand must become the other lever of a manufacturing-led growth strategy.
After coming to power in May last year, this government has unequivocally focussed on improving business climate in the country. It aims to improve India’s global ranking in ‘Ease of Doing Business’ survey to 50 over a span of two years. A modest beginning has been made through labour reforms, progress on goods and services tax, roadmap for lowering corporate tax, rationalising inverted duties and skilling of workforce However, most of these reforms are incremental and would have a gestation period in impacting investment decisions, outcomes and in turn the real economy. Continued progress on these reforms along with support of the states will be critical to actualise the government’s ‘Make in India’ vision over the next few years.

There were several suggestions to raise public expenditure. Does it work for India to lower the fiscal guard at this juncture?
We believe that lower oil prices and improvement in domestic macro indicators provided some space to the government to loosen its fiscal target. More than the 30 basis point (BPS) breach in fiscal deficit target for financial year 2016 to 3.9 per cent of the GDP, we would concentrate on credible math and the qualitative aspects of the underlying budgetary arithmetic. A much required push has been given to capital expenditure, infrastructure and other key reforms such as Make in India, monetisation of gold and announcement of a Monetary Policy Committee. All of these budget reforms are likely to pay large dividends in the long run.

With plunging oil prices, it certainly brings cheer to importers like India. But is there a worry on the global growth front with oil dipping further?
With oil prices falling by nearly 55 per cent from their peak in 2014, India has benefitted immensely in terms of lower import prices. From a peak of $15.8 billion in March 2014, oil imports are now down to $6 billion as per data received in February. Lower oil prices have also weighed on oil exports, but not as sharply as India is a net oil importer.

In terms of impact on trade, oil prices dipping further pose a higher risk if they result from slower global growth, rather than the other way round. Global growth slowing down more than expected, especially if ensuing from the United States, European Union and China, implies a risk to Indian exports. This has an impact on the current account deficit. Hence, a majority of the oil price declines that we are experiencing now is resulting from over supply and less from lack of demand or dipping global growth. So, this situation is more of a tail risk for us.

The Indian rupee is falling against the US dollar. At 63, is there a need to worry?
The rupee has been in a stable range of 60 to 63 over the last one year. With expectation of the beginning of interest rate normalisation in the United States, the dollar has appreciated by approximately 23 per cent, since the beginning of July, 2014.
While this broad based strength in the US dollar manifested in emerging market currencies, the Indian rupee has shown resilience, depreciating by just 3.5 per cent, since the month of June, 2014.
The currency is trading close to its fair value. Going forward, improvement in domestic growth-inflation dynamics, correction in twin deficits, substantial reduction in external vulnerability with record level of foreign exchange reserves and return of political stability with majority government are factors which are expected to be supportive of the Indian rupee. I am confident that these factors will help investors differentiate favorably during times of global risk aversion.

India in the next 10 years – Your views.
Over the next ten years, I expect India to become a $6-7 trillion economy from its current size of $2 trillion. By leveraging the 3Ds of democracy, demographics, and demand, I expect India to become the third largest economic powerhouse in the world by closing gaps in areas of manufacturing, technological skill, standard of living and political hegemony.

India Shining

India’s growth looks unstoppable. Evolving as a leading economy among Asian countries and outpacing China, India is the fastest growing economy in the world. Shubhada M Rao, Senior President and Chief Economist at Yes Bank Ltd, speaks to WCRC Leaders Asia’s Tista Sengupta and throws light on India’s journey to the top.

According to the Asian Development Bank, ‘The longawaited emergence of India as a new regional powerhouse and the increasing integration of ASEAN economies are the new drivers of growth in Asia, now that the Chinese economy is beginning to slow down.’ Your views.
With a largely youthful population, a burgeoning middle class market, and by the way of more investment in the field of innovation, healthcare and infrastructure, the Asian region is likely to transform itself and lead the global economic growth in the years to come. Within Asia, even though China is seen to be approaching a ‘new normal’, its 7 per cent growth still remains impressive in my view. Acquiring the pole position, India is surely emerging as a global superpower, but to gain significant strength and to have a positive spillover impact on rest of the region, structural reforms in the country are important. As for Southeast Asia, the ASEAN Economic Community will come into existence in 2015 and the bloc would emerge as the world’s seventh largest economy. Since the ASEAN bloc will be 25 per cent bigger than India, it would have a more important role in the long term.

The ASEAN Economic Community will come
into existence in 2015 and the bloc would
emerge as the world’s seventh largest
economy

Do you think that India is ready to lead the Asian economy?
We are definitely better placed when compared with the rest of the Asian markets. Domestic macros have strengthened and consolidated compared to May 2013, when the Fed taper talk had just begun and the subsequent run on the currency took place. We certainly do not expect such a run on rupee now, as current account balance, fiscal balance, inflation and growth are all relatively comfortable. The sharp reduction in commodity prices has also been helpful. Massive portfolio flows into India and a relatively stable currency are proofs of positive investor sentiment.
On the other hand, China has slowed down and Japan continues to struggle with deflation concerns with massive monetary stimulus required to save both the economies. To be able to sustain and then increase the growth momentum, Indian government will have to work towards improving the quality of infrastructure. They should also make it more amenable to produce as well as export from India. In this regard, latest reforms in the direction of increasing the Foreign Direct Investment (FDI) limits, increasing public spending on infrastructure and launch of initiatives such as ‘Make in India’ or ‘Digital India’, has given me a lot of confidence that India is moving in the right direction to lead the Asian economy.

Reforms that improve the productive capacity of
the manufacturing sector, provide the ease of doing
business, enhance employability and focus on skilling
the labour force are very important

india-shining-2How do you think China, which has grown solely on manufacturing, will react to this development?
Surplus investments with low share of domestic consumption in its GDP was the most important factor behind China’s slowdown. Given that there is a distinct similarity between India’s economy today and China in early 2000; India can draw important lessons from China’s growth model. The most important learning in my view would be to work towards a port-led model of development. However, in entirety, it is unlikely that India’s growth cycle will be similar to the benchmark.
China’s economic growth has been massively aided by its state-owned enterprises. Further, China’s single-party political system has been sweeping economic reforms without facing any serious opposition. Both of these are not true in case of India. In my view, India will have some unique factors to leverage. For example, I believe India’s service sector and the knowledgebased economy will serve as a unique advantage and this would play an equally important role as will the manufacturing sector.

For India to emerge as a leading economy in Asia, what issues need to be taken care of at this juncture and what reforms or policies should be implemented by Indian policymakers?
Currently, the Indian economy is in a sweet spot. The confluence of low commodity prices, low interest rates and decisive political mandate are key enablers that have the potential to propel India into higher growth trajectory. However, in order to realise the same, it is critical that the government undertakes reforms in areas that would enable India to increase its potential growth.
For instance, reforms that improve the productive capacity of the manufacturing sector, provide the ease of doing business, enhance employability and focus on skilling the labour force are very important. Likewise, reforms that help to improve the health of the banking sector and increase access to affordable finance for small enterprises are equally crucial.

India’s dependency ratio is expected to be in its
favour till the year 2040. However, to reap this
demographic dividend, we need to ensure that the
labour pool is skilled through education and training

Politics has fettered India’s economy in the past. It might still remain to be a major hindrance in future. What’s the need of the hour?india-shining-1
Decisive mandate in the Lower House of the Parliament for the first time in 30 years has raised hopes for initiation of long pending structural reforms. However, minority status of the government in the Upper House of the Parliament has proved to be a stumbling block. The government has been trying to overcome the political gridlock though dialogue with the Opposition and other regional parties for Coal and Mines Bill. However, passage of contentious bills like Land Acquisition will require the government to build on the consensus through consultative process by taking on board diverse opinions and viewpoints. Therefore, the need of the hour is a consultative reforms process.

The World Bank’s assessment says that India will witness 6.4 percent growth in 2015. When is India poised to return to a high growth path of 8 yo 9 per cent?
India’s average GDP growth of 8.7 per cent between financial year 2004 – 2008 was an outcome of convergence of enablers like high global growth, low and stable inflation, high investment appetite, and infrastructure push of the government. In order to return to a GDP growth of 8 per cent, a multitude of factors should fall in place.
With global economy continuing to remain on a weaker footing, driver of India’s growth needs to be largely internal. Thus, government’s efforts at undertaking growth stimulating structural reforms, revival of private investment appetite and maintenance of low and stable inflation are decisive factors that will determine India’s potential growth trajectory towards 8 to 9 per cent in the years to come.

What are the steps required to target this high-growth path in India?

With oil prices falling
by nearly 55 per cent
from their peak in 2014,
India has benefitted
immensely in terms of
lower import prices

The Indian economy is fortunate to have 3Ds by its side – Democracy, Demography, and Demand. A vibrant democracy has helped in building critical institutional architecture for governance. However, to enable high and sustained economic growth, the country needs to widen and deepen the scope of its institutional architecture in areas of finance, regulation, taxation and business. India’s dependency ratio is expected to be in its favour till the year 2040. The country has the world’s largest youth population of 572 million under the age of 24 years. However, to reap this demographic dividend, we need to ensure that the labour pool is skilled through education and training and made productive through introducing conducive labour laws and their inclusion in the formal sector.
Indian economy has already crossed $2 trillion in size with private consumption constituting over 57 per cent of GDP. Over the last decade, the country has seen the highest growth in per capita income with the new aspiring middle class expected to touch 267 million over the next five years. This presents tremendous opportunities for realising economies of scale.
However, to realise this, it’s imperative to constantly create supply with emphasis on physical infrastructure and manufacturing.

india-shining-3A number of steps have also been taken to improve the ease of doing business in India. But do you think it’s easy to execute the vision ‘Make In India’ and promote manufacturing sector that only contributes around 16 per cent of India’s GDP, wherein infrastructure needs to be developed and issues related to land, taxes and processes in India should also be tackled simultaneously? Your comments.
Harnessing India’s manufacturing potential is the key to ensure sustainable long-term growth. While it is true that India has defied the conventional development process by metamorphosising from an agrarian economy into a servicedriven one, the desired dynamism in the manufacturing sector has remained more or less elusive. Given its comparative advantage stemming from low-cost and abundant labour resource and its technological capability, India has successfully scripted success stories in sectors such as textiles, leather, pharma, automobile to name a few. However, to evolve into a meaningful link in global supply chains, India must look outwards. Manufacturing success does not imply a single-handed focus on export-orientation. Import substitution and satiation of the growing domestic demand must become the other lever of a manufacturing-led growth strategy.
After coming to power in May last year, this government has unequivocally focussed on improving business climate in the country. It aims to improve India’s global ranking in ‘Ease of Doing Business’ survey to 50 over a span of two years. A modest beginning has been made through labour reforms, progress on goods and services tax, roadmap for lowering corporate tax, rationalising inverted duties and skilling of workforce However, most of these reforms are incremental and would have a gestation period in impacting investment decisions, outcomes and in turn the real economy. Continued progress on these reforms along with support of the states will be critical to actualise the government’s ‘Make in India’ vision over the next few years.

There were several suggestions to raise public expenditure. Does it work for India to lower the fiscal guard at this juncture?
We believe that lower oil prices and improvement in domestic macro indicators provided some space to the government to loosen its fiscal target. More than the 30 basis point (BPS) breach in fiscal deficit target for financial year 2016 to 3.9 per cent of the GDP, we would concentrate on credible math and the qualitative aspects of the underlying budgetary arithmetic. A much required push has been given to capital expenditure, infrastructure and other key reforms such as Make in India, monetisation of gold and announcement of a Monetary Policy Committee. All of these budget reforms are likely to pay large dividends in the long run.

With plunging oil prices, it certainly brings cheer to importers like India. But is there a worry on the global growth front with oil dipping further?
With oil prices falling by nearly 55 per cent from their peak in 2014, India has benefitted immensely in terms of lower import prices. From a peak of $15.8 billion in March 2014, oil imports are now down to $6 billion as per data received in February. Lower oil prices have also weighed on oil exports, but not as sharply as India is a net oil importer.

In terms of impact on trade, oil prices dipping further pose a higher risk if they result from slower global growth, rather than the other way round. Global growth slowing down more than expected, especially if ensuing from the United States, European Union and China, implies a risk to Indian exports. This has an impact on the current account deficit. Hence, a majority of the oil price declines that we are experiencing now is resulting from over supply and less from lack of demand or dipping global growth. So, this situation is more of a tail risk for us.

The Indian rupee is falling against the US dollar. At 63, is there a need to worry?
The rupee has been in a stable range of 60 to 63 over the last one year. With expectation of the beginning of interest rate normalisation in the United States, the dollar has appreciated by approximately 23 per cent, since the beginning of July, 2014.
While this broad based strength in the US dollar manifested in emerging market currencies, the Indian rupee has shown resilience, depreciating by just 3.5 per cent, since the month of June, 2014.
The currency is trading close to its fair value. Going forward, improvement in domestic growth-inflation dynamics, correction in twin deficits, substantial reduction in external vulnerability with record level of foreign exchange reserves and return of political stability with majority government are factors which are expected to be supportive of the Indian rupee. I am confident that these factors will help investors differentiate favorably during times of global risk aversion.

India in the next 10 years – Your views.
Over the next ten years, I expect India to become a $6-7 trillion economy from its current size of $2 trillion. By leveraging the 3Ds of democracy, demographics, and demand, I expect India to become the third largest economic powerhouse in the world by closing gaps in areas of manufacturing, technological skill, standard of living and political hegemony.

India Shining

India’s growth looks unstoppable. Evolving as a leading economy among Asian countries and outpacing China, India is the fastest growing economy in the world. Shubhada M Rao, Senior President and Chief Economist at Yes Bank Ltd, speaks to WCRC Leaders Asia’s Tista Sengupta and throws light on India’s journey to the top.

According to the Asian Development Bank, ‘The longawaited emergence of India as a new regional powerhouse and the increasing integration of ASEAN economies are the new drivers of growth in Asia, now that the Chinese economy is beginning to slow down.’ Your views.
With a largely youthful population, a burgeoning middle class market, and by the way of more investment in the field of innovation, healthcare and infrastructure, the Asian region is likely to transform itself and lead the global economic growth in the years to come. Within Asia, even though China is seen to be approaching a ‘new normal’, its 7 per cent growth still remains impressive in my view. Acquiring the pole position, India is surely emerging as a global superpower, but to gain significant strength and to have a positive spillover impact on rest of the region, structural reforms in the country are important. As for Southeast Asia, the ASEAN Economic Community will come into existence in 2015 and the bloc would emerge as the world’s seventh largest economy. Since the ASEAN bloc will be 25 per cent bigger than India, it would have a more important role in the long term.

The ASEAN Economic Community will come
into existence in 2015 and the bloc would
emerge as the world’s seventh largest
economy

Do you think that India is ready to lead the Asian economy?
We are definitely better placed when compared with the rest of the Asian markets. Domestic macros have strengthened and consolidated compared to May 2013, when the Fed taper talk had just begun and the subsequent run on the currency took place. We certainly do not expect such a run on rupee now, as current account balance, fiscal balance, inflation and growth are all relatively comfortable. The sharp reduction in commodity prices has also been helpful. Massive portfolio flows into India and a relatively stable currency are proofs of positive investor sentiment.
On the other hand, China has slowed down and Japan continues to struggle with deflation concerns with massive monetary stimulus required to save both the economies. To be able to sustain and then increase the growth momentum, Indian government will have to work towards improving the quality of infrastructure. They should also make it more amenable to produce as well as export from India. In this regard, latest reforms in the direction of increasing the Foreign Direct Investment (FDI) limits, increasing public spending on infrastructure and launch of initiatives such as ‘Make in India’ or ‘Digital India’, has given me a lot of confidence that India is moving in the right direction to lead the Asian economy.

Reforms that improve the productive capacity of
the manufacturing sector, provide the ease of doing
business, enhance employability and focus on skilling
the labour force are very important

india-shining-2How do you think China, which has grown solely on manufacturing, will react to this development?
Surplus investments with low share of domestic consumption in its GDP was the most important factor behind China’s slowdown. Given that there is a distinct similarity between India’s economy today and China in early 2000; India can draw important lessons from China’s growth model. The most important learning in my view would be to work towards a port-led model of development. However, in entirety, it is unlikely that India’s growth cycle will be similar to the benchmark.
China’s economic growth has been massively aided by its state-owned enterprises. Further, China’s single-party political system has been sweeping economic reforms without facing any serious opposition. Both of these are not true in case of India. In my view, India will have some unique factors to leverage. For example, I believe India’s service sector and the knowledgebased economy will serve as a unique advantage and this would play an equally important role as will the manufacturing sector.

For India to emerge as a leading economy in Asia, what issues need to be taken care of at this juncture and what reforms or policies should be implemented by Indian policymakers?
Currently, the Indian economy is in a sweet spot. The confluence of low commodity prices, low interest rates and decisive political mandate are key enablers that have the potential to propel India into higher growth trajectory. However, in order to realise the same, it is critical that the government undertakes reforms in areas that would enable India to increase its potential growth.
For instance, reforms that improve the productive capacity of the manufacturing sector, provide the ease of doing business, enhance employability and focus on skilling the labour force are very important. Likewise, reforms that help to improve the health of the banking sector and increase access to affordable finance for small enterprises are equally crucial.

India’s dependency ratio is expected to be in its
favour till the year 2040. However, to reap this
demographic dividend, we need to ensure that the
labour pool is skilled through education and training

Politics has fettered India’s economy in the past. It might still remain to be a major hindrance in future. What’s the need of the hour?india-shining-1
Decisive mandate in the Lower House of the Parliament for the first time in 30 years has raised hopes for initiation of long pending structural reforms. However, minority status of the government in the Upper House of the Parliament has proved to be a stumbling block. The government has been trying to overcome the political gridlock though dialogue with the Opposition and other regional parties for Coal and Mines Bill. However, passage of contentious bills like Land Acquisition will require the government to build on the consensus through consultative process by taking on board diverse opinions and viewpoints. Therefore, the need of the hour is a consultative reforms process.

The World Bank’s assessment says that India will witness 6.4 percent growth in 2015. When is India poised to return to a high growth path of 8 yo 9 per cent?
India’s average GDP growth of 8.7 per cent between financial year 2004 – 2008 was an outcome of convergence of enablers like high global growth, low and stable inflation, high investment appetite, and infrastructure push of the government. In order to return to a GDP growth of 8 per cent, a multitude of factors should fall in place.
With global economy continuing to remain on a weaker footing, driver of India’s growth needs to be largely internal. Thus, government’s efforts at undertaking growth stimulating structural reforms, revival of private investment appetite and maintenance of low and stable inflation are decisive factors that will determine India’s potential growth trajectory towards 8 to 9 per cent in the years to come.

What are the steps required to target this high-growth path in India?

With oil prices falling
by nearly 55 per cent
from their peak in 2014,
India has benefitted
immensely in terms of
lower import prices

The Indian economy is fortunate to have 3Ds by its side – Democracy, Demography, and Demand. A vibrant democracy has helped in building critical institutional architecture for governance. However, to enable high and sustained economic growth, the country needs to widen and deepen the scope of its institutional architecture in areas of finance, regulation, taxation and business. India’s dependency ratio is expected to be in its favour till the year 2040. The country has the world’s largest youth population of 572 million under the age of 24 years. However, to reap this demographic dividend, we need to ensure that the labour pool is skilled through education and training and made productive through introducing conducive labour laws and their inclusion in the formal sector.
Indian economy has already crossed $2 trillion in size with private consumption constituting over 57 per cent of GDP. Over the last decade, the country has seen the highest growth in per capita income with the new aspiring middle class expected to touch 267 million over the next five years. This presents tremendous opportunities for realising economies of scale.
However, to realise this, it’s imperative to constantly create supply with emphasis on physical infrastructure and manufacturing.

india-shining-3A number of steps have also been taken to improve the ease of doing business in India. But do you think it’s easy to execute the vision ‘Make In India’ and promote manufacturing sector that only contributes around 16 per cent of India’s GDP, wherein infrastructure needs to be developed and issues related to land, taxes and processes in India should also be tackled simultaneously? Your comments.
Harnessing India’s manufacturing potential is the key to ensure sustainable long-term growth. While it is true that India has defied the conventional development process by metamorphosising from an agrarian economy into a servicedriven one, the desired dynamism in the manufacturing sector has remained more or less elusive. Given its comparative advantage stemming from low-cost and abundant labour resource and its technological capability, India has successfully scripted success stories in sectors such as textiles, leather, pharma, automobile to name a few. However, to evolve into a meaningful link in global supply chains, India must look outwards. Manufacturing success does not imply a single-handed focus on export-orientation. Import substitution and satiation of the growing domestic demand must become the other lever of a manufacturing-led growth strategy.
After coming to power in May last year, this government has unequivocally focussed on improving business climate in the country. It aims to improve India’s global ranking in ‘Ease of Doing Business’ survey to 50 over a span of two years. A modest beginning has been made through labour reforms, progress on goods and services tax, roadmap for lowering corporate tax, rationalising inverted duties and skilling of workforce However, most of these reforms are incremental and would have a gestation period in impacting investment decisions, outcomes and in turn the real economy. Continued progress on these reforms along with support of the states will be critical to actualise the government’s ‘Make in India’ vision over the next few years.

There were several suggestions to raise public expenditure. Does it work for India to lower the fiscal guard at this juncture?
We believe that lower oil prices and improvement in domestic macro indicators provided some space to the government to loosen its fiscal target. More than the 30 basis point (BPS) breach in fiscal deficit target for financial year 2016 to 3.9 per cent of the GDP, we would concentrate on credible math and the qualitative aspects of the underlying budgetary arithmetic. A much required push has been given to capital expenditure, infrastructure and other key reforms such as Make in India, monetisation of gold and announcement of a Monetary Policy Committee. All of these budget reforms are likely to pay large dividends in the long run.

With plunging oil prices, it certainly brings cheer to importers like India. But is there a worry on the global growth front with oil dipping further?
With oil prices falling by nearly 55 per cent from their peak in 2014, India has benefitted immensely in terms of lower import prices. From a peak of $15.8 billion in March 2014, oil imports are now down to $6 billion as per data received in February. Lower oil prices have also weighed on oil exports, but not as sharply as India is a net oil importer.

In terms of impact on trade, oil prices dipping further pose a higher risk if they result from slower global growth, rather than the other way round. Global growth slowing down more than expected, especially if ensuing from the United States, European Union and China, implies a risk to Indian exports. This has an impact on the current account deficit. Hence, a majority of the oil price declines that we are experiencing now is resulting from over supply and less from lack of demand or dipping global growth. So, this situation is more of a tail risk for us.

The Indian rupee is falling against the US dollar. At 63, is there a need to worry?
The rupee has been in a stable range of 60 to 63 over the last one year. With expectation of the beginning of interest rate normalisation in the United States, the dollar has appreciated by approximately 23 per cent, since the beginning of July, 2014.
While this broad based strength in the US dollar manifested in emerging market currencies, the Indian rupee has shown resilience, depreciating by just 3.5 per cent, since the month of June, 2014.
The currency is trading close to its fair value. Going forward, improvement in domestic growth-inflation dynamics, correction in twin deficits, substantial reduction in external vulnerability with record level of foreign exchange reserves and return of political stability with majority government are factors which are expected to be supportive of the Indian rupee. I am confident that these factors will help investors differentiate favorably during times of global risk aversion.

India in the next 10 years – Your views.
Over the next ten years, I expect India to become a $6-7 trillion economy from its current size of $2 trillion. By leveraging the 3Ds of democracy, demographics, and demand, I expect India to become the third largest economic powerhouse in the world by closing gaps in areas of manufacturing, technological skill, standard of living and political hegemony.

Powering the SME Drive

powering-1R-NarayanAn entrepreneur for the last 14 years, with a strong corporate background, as founder & CEO of Power2SME, R. Narayan’s vision for the company’s future is both bold and ambitious. Narayan started his career working in sales and marketing profile across Microsoft, Oracle and Tata. He has now set his sights on making Power2SME a billion dollar company in the next 5 years. This vision is based on the potential of the SME sector in India which contributes over 40 per cent of India’s exports and 45 per cent of India’s industrial output, the current growth rate of Power2SME and Narayan’s own proven entrepreneurial track record.
A chartered accountant by training, sales and marketing professional by choice and an entrepreneur by spirit, R. Narayan set the overall direction for the business and overseas marketing, operational and business development efforts for Power2SME. With over 24 years of general management, sales and marketing experience, Narayan has worked closely with over 2 lakh SMEs across India over the last 10 years, bringing a deep understanding of SMEs and their needs in an evolving economy. During his stint with Microsoft, Narayan managed the SME segment and distribution business of the company.
Before starting Power2SME, Narayan also set up Denave, India’s largest technology powered sales enabling company with customers such as Nokia, Cisco, HP, Lenovo and Microsoft. Denave was a self-funded venture and he was responsible for scaling up the company from a team of 100 to a 3500-people organisation over a decade and across APAC. He continues as a board member at Denave.
Narayan is also associated with FICCI as the Vice President of FICCI- CMSME (Confederation of MSMEs), an affiliated body under the umbrella of the Federation of Indian Chambers of Commerce and Industry (FICCI), an apex Chamber of Commerce & Industry of India.

powering-2The one-stop buying club for India’s SMES

Indian small and medium enterprises (SMEs) today are the undisputed power house of the economy. Not only they are generating employment opportunities but are also significantly contributing to india’s industrial output. R. Narayan, founder and CEO of Power2SME, talks to WCRC Leaders Asia’s Supriya Batra about the importance of SMEs in the current Indian landscape. Power2SME empowers small and medium enterprises by procuring raw materials for them at competitive price points, thereby enhancing productivity and impacting the bottom lines of SMEs in a positive manner. The company caters to raw materials across multiple categories like chemicals and additives, inks, paints, metals, polymer commodity and polymer engineering

When was the brand established?
Power2SME started its operations in 2012.

“Our annual turnover was Rs 19 crore in 2013, Rs 64 crore in 2014 and is expected to touch Rs 130 crore in 2015”

What is the USP of the brand/product/services within your industry segment?
Power2SME is a first-of-its-kind business initiative whereby we pool the demand of our SME clients and obtain the best possible pricing for raw material procurement. Our experienced and specialised professionals negotiate the prices directly with manufacturers and obtain prices that are considerably lower than the usual market prices that are offered to individual SMEs. We take complete ownership of the entire order process for the customers, from ensuring a quality supplier pool, best possible prices, flexible payment options, payment of taxes (sales tax, service tax and excise duty) on behalf of the SMEs to doorstep delivery. We are focussed on working with large, established and trusted suppliers so that our customers are assured of the quality of the product. So, what makes us unique is our ability to be a onestop destination for SMEs for all their business needs.

What would be your market market share and annual turnover? And what has been the Yearon- Year growth like?
Our annual turnover was Rs 19 crore in FY13, Rs 64 crore in FY14 and is expected to touch Rs 130 crore in FY15. Our YoY growth was 337 per cent in FY14.

List five most critical factors leading to the success of the brand in order of importance and kindly elaborate on each.
India’s first ‘Buying Club’ for SMEs: Power2SME is a first-of-its-kind business initiative, whereby we pool the demand of our SME clients and obtain the best possible pricing for raw material procurement, enabling us to create a larger pool of vendors for our customers. We directly purchase raw materials from the manufacturer and sell it to our customers at competitive price points across multiple products in categories like chemicals, inks, paints, metals, polymers, etc. It is a unique concept and we enjoy an early mover advantage.

Increasing profitability of the SMEs: Raw material supply is the most critical for an SME to keep its business running. We, at Power2SME, have a team of experienced procurement professionals who negotiate the prices for volumes directly with the manufacturers and get prices which are considerably lower than the market prices that are “Our annual turnover was Rs 19 crore in 2013, Rs 64 crore in 2014 and is expected to touch Rs 130 crore in 2015” offered to individual SMEs. Power2SME also provides an online platform that enables the SMEs to cut production costs and build efficiencies in their business processes.

Power2SME had less than 10,000 registered SME customers in the initial year and now the customer base is over 30,000

Complete ownership of the order process: We are accountable for the entire order process of our customers, from ensuring a quality supplier pool, best possible prices, flexible payment options, payment of taxes (sales tax, service tax and excise duty) on behalf of the SMEs to doorstep delivery. This enables us to be an one-stop destination for the SMEs that provides them with a holistic end-to-end service.

Assisting SMEs: Our core mission is to “Empower SMEs to enable the India growth story”, therefore, the company focusses on providing special assistance to the SMEs like, Damage & Theft Insurance for phone, Credit / Debit Card Fraud protection cover, 24 x 7 Assistance for emergencies like losing a wallet or phone, Hassle-Free Claim Management & Processing, Emergency Travel Assistance. Power2SME also assists the SMEs in financial and legal aspects of their business, thereby, empowering them in the best possible manner.
Collaborative Workforce: The team at Power2SME comprises professionals who are driven by a passion to help empower the SMEs in order to achieve their goals. What makes us unique is our ability to make customer engagement a delightful experience. The team comprises over 120 professionals with domain expertise in sales, supply chain, marketing, finance, human resources and IT.

What are future plans of the brand? How have these been formulated keeping points of parity and disparity with similar enterprises in mind?

Power2SME had less than 10,000 registered SME customers in the initial year and now the customer base is over 30,000. The future has a lot of offer for the SMEs as Power2SME strives to be the one-stop destination for the SME community. We believe that we have a captive customer base that is sitting with us. Our objective is to ensure that we are able to offer services to SMEs across a wide portfolio so as to be able to cater to their diverse requirements. For the same, we are exploring alliances with third party service providers. Power2SME will act as a facilitator for services across insurance, finance, sales and marketing, to name a few. It also has plans to open offices in Madhya Pradesh, Andhra Pradesh and Karnataka.

What is your outlook on SME segment?
SMEs contribute about 45 per cent of the industrial output, 40 per cent of exports, according to the SME Chamber of India. According to MSME’s 2011-12 annual report, the sector is estimated to employ about 6.95 crore people in over 2.61 crore enterprises throughout the country. Thus, we are strong believers in the potential of India’s SME market and we have a long-term vision of empowering SMEs by helping reduce their purchase costs and by catering to SMEs across multiple sectors. However, SMEs are facing numerous challenges related to pricing of raw materials, quality of the products purchased and lack of options in the materials purchased. Therefore, our customers count on us to overcome these problems. Our business allows SMEs to compete on an equal footing with large enterprises. Also, there is no single organisation that was dedicated to making life simpler for the SMEs. Power2SME is the first organisation that is bridging this gap, at an individual as well as at an organisational level.

The company has raised 3 rounds of funding amounting to over $15 million from Inventus Capital, Kalaari Capital & Accel Partners

What are the core values that drive the brand?
Our foundation is based on robust set of values – TRICE (Team work, Respect for individual, Customer orientation and excellence). Our core values have been the guiding principles behind Power2SME’s phenomenal growth.

What steps are taken to establish a connect with your target market?
With a base of 38 million SMEs, the market opportunity is huge for companies servicing the SME sector in India. Power2SME was quick to spot the needs of the SME sector and devised a model which enables the small and medium enterprises to obtain the most optimal pricing for their procurement needs. We pool the demand of hundreds of SMEs for multiple products for their business needs, thus allowing it to not only obtain the most optimal pricing but also a larger pool of quality suppliers. We buy directly from the manufacturer and sell to the SME directly. Power2SME takes complete ownership of the entire order process, including taking title of the goods, which ensure quality of the raw material at the best price with flexible payment options made available to SMEs. We also provide an online platform that enables the SMEs to cut costs and build efficiencies in their business processes, thus allowing them to compete on an equal footing with large enterprises. This platform is available 24×7 to all the customers and can be accessed without any charges. Some of our key vendors are Arcelor Mittal, Akzo Nobel, Haldia Petrochem, GAIL, JSW, Indian Oil and SAIL. Steel and polymer were two of the biggest requirements of SMEs and Power2SME decided to target this existing opportunity; first tapping the market in the NCR region through our headquarters in Delhi. We have now opened our regional offices in the west, south and th east. To market the services of Power2SME, a mix of offline and online marketing strategies were devised. Digital marketing includes SEO & SEM marketing. We have been following multiple off-line routes to reach customers including on the ground sales, providing a dedicated call centre and building alliances with leading industry bodies and organisations focussing on SMEs.

What according to you are the five competitive brands in the country and in Asia in your category?
Buying Club for SMEs’ raw material is a unique concept and we enjoy an early mover advantage. We have been unable to identify another player operating with this business model in India so far. There are several similar concepts globally but they focus on providing discounts on services.

What according to you is the impact that the company has created in the minds of the consumers?
Power2SME, being the first ‘Buying Club’ for SMEs in India, focusses on the small and medium business enterprises segment. Staying true to its mission to “Empower SMEs to enable the India growth story”, the company focusses on increasing their profitability by reducing their purchase prices and by providing financial and legal assistance. Thus, Power2SME strives to ‘empower’ businesses.

Kindly highlight the milestones the company has reached in the last five years.

Our company has raised 3 rounds of funding from Inventus Capital, Kalaari Capital & Accel Partners. They have together invested over $15 million in the company. The company has over 30,000 SMEs registered on its portal. We are spreading to other parts of the country as well. We now have our regional offices in the west, south and the east. Power2SME has won numerous awards and accolades. It was selected amongst the Red Herring’s Top 100 Global list for the year 2013. It was also chosen amongst the Red Herring’s Top 100 Asia list for the year 2013. I won the ‘Serial Entrepreneur of the Year’ award at the Entrepreneur India Awards 2013. Power2SME won the “Silicon India Company of the year 2014” for the Vendor Consultant category. In January 2015, Power2SME was recognised as ‘Top 100 Innovative Companies’ by Inc. India. Power2SME was awarded the ‘Best strategy in line with Business’ award at Global HR Excellence Awards 2015.

Mountains Calling

WCRC Leaders Asia editor-in-chief Abhimanyu Ghosh gets up, close and personal with Himachal Pradesh Chief Minister Virbhadra Singh, as the veteran leader outlines his vision to turn the state into a magnet for industries but not at the cost of the environment

Looking at Himachal Pradesh’s (HP’s) tourism potential and the interest it has always generated among people, what are the measures and approach that have been taken to boost and promote the industry? And what about drawing higher number of international tourists to the state?
As you know, HP has vast tourism potential and is the most popular tourist destination in North India. There is “everything for everyone”. This state is a true haven for tourists. Right from adventure tourism to religious destinations, from the pristine mountains to the colonial legacy of Shimla, the state caters to all tastes and preferences. May it be the captivating Dhauladhar and Pir Panjal ranges or the serene cold deserts of Lahaul & Spiti or the majestic lofty peaks or the deep blue river water, one finds himself surrounded by natural beauty and awesome landscape.
Right now, we are focussing on promoting rural tourism in a big way to provide tourists a glimpse of the rich heritage and culture of the state in its natural environs. We are constantly upping the essential infrastructure needed for this. Health and wellness tourism is also a priority.
Tourism is being given a veritable facelift with the state government introducing several schemes. We have framed a “Sustainable Tourism Development Policy”. The objective of the policy is to establish HP as a global brand in the domestic and the international market and to ensure that sustainable tourism primarily benefits the host communities; supports natural and cultural heritage preservation; and creates an enabling environment for investment in the tourism sector. The state will also focus on diversification of tourism to other potential areas with the creation of adequate infrastructure. This will not only reduce pressure on the existing tourist destinations, it will also open up new areas for the tourists to explore. Quite a few innovative steps are being taken to this effect.

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The government intends to ‘explore the unexplored’ through the ‘Public Private Partnership’ model. The state has numerous opportunities for setting up of resorts, ropeways, golf courses, amusement parks, etc. The government has created a land bank for this purpose.

The ‘Swachh Bharat’ campaign is being much talked about across India. How has HP contributed to it? What do you think will be required to make it a national success?himachal-15-2
Let me tell you that much before the ‘Swachh Bharat’ drive launched in the country, our state had already adopted measures to polythene carry bags and steps have been taken for preservation of the environment to make it “Green & Clean”. But this is a very good initiative taken by the Prime Minister and such types of initiative are required.
HP is poised to achieve cent per cent targets under the Swachh Bharat Mission (SBM) much before 2019 in order to emerge as a clean and Open Defecation Free (ODF) state. The action plan has already been prepared by the state government which involves the construction of individual, institutional, cluster and community toilets. For this, water pipelines have to be laid in all villages, enabling tap connection in households. Measures to keep villages clean, efficient solid and liquid waste management are being put in place.
The state government has identified 477 panchayats where solid and liquid management system would be put in place in the first phase and all 3,243 panchayats of the state would be covered in a phased manner. Awareness programmes are being organised on a regular basis so as to make people aware of the benefits of cleanliness. The government has made adequate provision for funds under the Information Education & Communication (IEC) programme.

himachal-15-3What is the government’s approach towards international investors?
It is true that HP is becoming an ideal destination for the big industrial houses of national and international repute. The government has already put in place a simplified procedure for the approval of medium/ large scale industrial projects. New industrial units of Johnson & Johnson, Cadbury, TVS, Honda, Ranbaxy, Nestle, etc., have come up in the state.
In order to ensure expeditious clearance from the respective departments for the setting up of a new unit, for each large/medium project, a single window clearance system and monitoring authority have been constituted to clear projects and to ensure speedy clearances/approval from various departments/ agencies. An Investment Promotion Cell has been created in the industries department to drive new investments into the state. Time-bound clearance is being given within a period of 90 days.
The state is also providing other incentives like concessions related to local taxes, labour laws, land allotments in industrial areas and estates, incentives for exports, incentives for productivity, quality, setting up of testing and R&D centres, manpower development, etc. The state is also offering concessions in the stamp duty payable by industry and floor area norms for the industry have been relaxed. One of the biggest advantages the state has is easy availability of quality power at one of the cheapest rates in the country. The state government is also contemplating to freeze power tariff for industries for the next five years. The government has also put in place a fast track and a simplified procedure for the transfer of land for industrial purposes. Such transfers, specially for industrial/tourism/hydel purposes take very little time. All these are bound to make HP an investor’s paradise.
The state government now intends to involve the private sector to exploit the potential of local resources-based industries. To attract industrial investment, “Industry by Invitation” has been the motto of the state government and it is being proactively followed. With the objective, we held three big investors’ meet held in different parts of the country.

Towards the end of 2012 just before the elections in HP, when BJP had completed a full term and was expected to win again, you were given the task to lead the Congress campaign. What did you do that the Congress won the elections so convincingly?
I am not a conjurer who can, by just waving a wand, do the impossible. It was just the love of my people and their faith in me and the policies of the Congress that they decided to part ways with the BJP. However, the BJP, during its rule, ruined the state’s finances and indiscriminately exploited the valuable land of the state. The people were wise enough to realise who can be their true benefactor and rejected the BJP. In just one and a half month, I addressed the issue of false propaganda which was being spread about me by the opposition. The people of the state love me and it was due to their faith in me that they voted the Congress back to power.
Moreover, the Congress has a strong cadre base at the grass root level and all the office bearers of the state Congress unit were united in their resolve to rout the BJP.

What are the plans on developments of new industrial areas in HP to promote industry and what about the infrastructure to support it?himachal-15-4

Industrialisation plays a vital role in the economic development any nation. In an agrarian economy like HP’s, industry absorbs under-employed and un-employed workers of agricultural sector and thereby increases the income of the community. Pollution free and peaceful atmosphere, rich natural resources, uninterrupted power supply, sound infrastructure, attractive incentives and responsive administration are some of the major attractions of HP.
The state government has reduced electricity duty applicable to industrial enterprises in case of extra high tension from 17 per cent to 15 per cent, for existing medium and large industries from 15-17 per cent to 13 per cent. For new medium and large industries, electricity duty has been fixed at 5 per cent for the first five years, and so on and so forth. Going a step forward, only 2 per cent electricity duty would be charged for the first five years from an enterprise generating employment for 300 bonafide Himachalis.
Besides the industrial belt in the Baddi-Barotiwala-Nalagarh and the Paonta Sahib-Kalaamb-Tahliwal-Mehatpur areas, three state-of-the-art industrial areas are being developed in Una, Kangra and Solan districts. World class facilities would be provided in these industrial areas to entrepreneurs for setting up their ventures. Land has been transferred for developing industrial area in Kandrori in Kangra district by spending an amount of INR 106 crore. Similarly, INR 112 crore would be spent on developing an industrial area at Pandoga in Una district. Another industrial area is also being developed at Duttnagar in Shimla district.
Due to the relentless efforts of the state government, capital investment subsidy at the rate of 15 per cent on the value of plant and machinery subject to maximum of Rs 30 Lakh for large enterprises and Rs 50 Lakh to micro, small and medium sector for new industrial units has been extended till March, 2017.

Which are the key industries that the government is planning to promote and how?

HP, because of its topography, can’t be a house for heavy steel industry or similar industrial set ups. The state has received offers from pharmaceutical industry players and at present many units are operating in the Baddi-Barotwala- Nalagarh area.
There is also a vast scope for the promotion of the handicrafts and handloom sector in the state besides sericulture. Promotion of industrial activities in form of guidance policy formulation, providing training to the rural artisans and prospective entrepreneurs through Entrepreneurship Development Programmes (EDPs), Industrial Awareness Programmes (IAPs), and Industrial Awareness Workshops (IAWs) will go a long way in generating employment for rural, educated and unemployed youths. It will also motivate them to set up their own ventures.

What is the vision of this government for the next 10 years?
We want HP to be on top in every field so that it can emerge as a role model of development for the rest of the country.

What makes you one of the most successful chief ministers in the country?
I have to credit it to the love of my people whom I also love dearly. I respect them a lot and they are aware of the efforts I made for developing my state in my 50 years of political career.

HP has been able to keep a lid on environmental pollution in spite of high tourist influx. What measures have been taken and what policies have been implemented to achieve this?
The state government, in its endeavour to maintain its serene environment, has taken innovative steps to this effect. The HP State Pollution Control Board looks after curbing all kinds of pollution and is a nodal agency for planning, coordination, prevention and control of pollution. The board has always endeavoured to strike a rational balance between economic growth and environment preservation. The board regularly monitors water and air quality and compiles data on cement, textile and pharmaceutical industries. Continuous efforts are being made to fulfil the demands of emerging environment concerns, challenges and new statutes.
Last but not the least, the government has launched many awareness campaigns, including the Total Sanitation Campaign, not only in schools but also in Panchayati Raj Institutions (PRIs) to make the people aware of the benefits of conservation of our natural resources by preserving the environment.

Who moved my meat? And is it such a bad thing?

For some years now, TV channels have been censoring themselves to preempt any reaction or action by self-styled upholders of morality and an over-cautious government. Words such as ‘beef’, ‘sex’, ‘gay’, ‘mosque’, ‘chick’ have been beeped out or replaced with ‘less offensive’ synonyms, to ridiculous effect. Shows with decidedly mature target audience.

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such as Californication, Two and a Half men, or even innocuous food and travel shows, have often been stripped of their essence so as to appease a certain section of the audience. The recent ban on Comedy Central is a case in point. The channel has been showing somewhat risqué content ever since its launch in 2012. But most of the potentially contentious shows were slotted over the weekends and late in the night, with an eye on a very niche, discerning and mature audience. It was only after the I&B ministry observed that a couple of its shows objectified women as “commodity of sex” and that it would “deprave, corrupt and injure the public morality and morals” that a 10-day ban was forced upon the channel and the same upheld by the Delhi High Court. The channel subsequently was back on air after a Supreme Court judgment, that also challenged the provisions of the law that allowed the I&B Ministry to take action against TV channels and brought up the hotly debated issue of what exactly is ‘objectionable’ and how the government should tackle such content.

As a nation we seem to be easily offended. Take the instance of the Telangana CM who ensured that the two channels TV 9 and ABNAndhra Jyothi, that reportedly aired a satire on the political affairs were yanked out of service, without nothing ‘official’ about the blackout. The chief minister, K. Chandrashekhar Rao, went on to declare a ‘war’ against the media, stating that that any such offenders would be ‘buried alive.’ The CM’s threats incurred the wrath of media bodies and TRAI, which rapped the Multi-system Operators that had ‘voluntarily’ blanked out the channels.

Interestingly, the MSOs insisted off the record that that the ban was ‘ordered’ by the state government even though there was nothing officially conveyed to them. The KCR government too claimed it had nothing to do with the episode.

” Comedy Central has been showing somewhat risqué content since its launch in 2012. But most such shows were slotted over the weekends and late in the night “

All this, if anything, is only driving the TV viewing audience to the digital platform, which is unfettered by moral and political policing. And that alone should serve as a wakeup call to broadcasters who are heavily dependent on advertising revenues to drive business. Unlike in the West where television is driven by subscription, and viewers are willing to pay a premium for no-ads channels, in India, advertisers call the shots. And sometimes with disastrous effects, as we have seen in the case of the Amul Adani sponsored Masterchef India, which is willing to alienate a majority of its viewers to cater to the culinary and religious sensibilities of the Gujarat-based corporate giant.

“This is only driving the TV viewing audience to the digital platform, which is unfettered by moral and political policing. And that should serve as a wakeup call to broadcasters”

The increasing emphasis that broadcasters are putting on distributing their content on the digital platform could be an indicator of where things are headed. Uncut movie clips and trailers have already been generating eyeballs on YouTube. Brands have been launching special promotional movies customised for the digital and social media platforms. Comedy shows have their wild, loyal fan following on social media, where they are unafraid to tackle humourless TV anchors and politicians with a healthy dose of laughter.

TV viewing habits are changing across the country. From the scenario where we had one family gathered around the TV set to view their programmes ‘by appointment’, we are moving to the more personalised screen. Globally too, people spend more time watching content on their mobiles than on their television, and there too Smart TVs with their ability to play from your phone or YouTube puts the ball firmly in the viewer’s court.

Censorship on television, in the avatar it has been rearing its head, could well be undone in the not-so-distant future. What may remain however is the covert control exercised by corporates that now own media conglomerates, who decide what exactly to put out there. And that, is a different story altogether.

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