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India on way to becoming 3rd richest country: Mukesh Ambani

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New Delhi: Having missed the first three industrial revolutions, India is now in a position to lead the fourth on the back of its vast tech-savvy young population and is on the way to becoming one of the three richest countries in the world, billionaire Mukesh Ambani said.

Speaking at the 24th MobiCom conference here, Ambani, who heads the oil-to-telecom conglomerate Reliance Industries, said India’s digital transformation is “unmatch and unprecedented” after it took leadership position from being 155th in wireless broadband technology adoption in just 24 months.

Back in the 1990s, when Reliance was building its oil refinery and petrochemical projects, India’s gross domestic product (GDP) was around USD 350 billion and had just come out of a severe financial crisis.

“Very few in the world thought that our country’s prospects were bright. Today our GDP is nearing USD 3 trillion, and India is well on its way to becoming one of the three richest countries in the world,” he said.

Ambani, the richest Indian, said mobile computing as a catalyst is driving massive data consumption – and this has given young Indians a fertile ground for disruptive ideas. Cloud computing and networking technologies have used broadband as a foundational enabler – leading to Indian entrepreneurs starting to make a global impact.

“In the next two decades, I can confidently say that India shall be leading the world and shall contribute to the next wave of global economic growth,” he said.

India languished on the fringes during the first two industrial revolutions powered by coal and steam and electricity and oil, respectively, and only started playing catch-up in the computer-driven third industrial revolution, he said.

“The fourth industrial revolution is now upon us. It is marked by a fusion of technologies straddling the physical, digital and biological worlds,” he said.

“I can say with full confidence that India has a chance of not just participating in the fourth industrial revolution, but also leading it.” This is possible because the India of today is remarkably different from the India of yesterday.

“India’s vast tech-savvy young population is its key strength. Just imagine the kind of connected intelligence India can create if the power of billion-plus minds is combined!,” he said.

Also, being a democracy that is run on the model of equitable and inclusive growth, it is openly embracing the digital technologies of tomorrow. It is a rich and fertile ground for entrepreneurship and has emerged as the fastest growing start-up base worldwide, he said.

“Today, the nation is home to the third largest number of technology-driven start-ups in the world. Never before has India witnessed such an explosion of entrepreneurial spirit,” he added.

Ambani said India needs to prepare itself for a period of information and digital abundance, adapt itself to the scorching pace of innovation and learn to collaborate on scale, quickly transform the idea into a breakthrough innovation, shift from a system of time-bound education to a mode of continuous learning and create more employment opportunities than what new and disruptive technologies take away.

“We have to groom our children to be digitally-savvy right from school. Schools should train students in ‘the four C-s’ – critical thinking, communication, collaboration, and creativity. These are the skills required to build the foundation for a sustained leadership in the digital age for India.

“Within a single generation, we can empower and enrich our vast and young human resources to give India a competitive edge in the world,” he said. Governments, businesses and civil society organisations should put together an ecosystem for massive upskilling of the workforce, he stated.

“We now have the opportunity to digitally reinvent all sectors of our economy – be it financial services, commerce, manufacturing, agriculture, education, and healthcare. India can leapfrog the competition and lead the world in each of these sectors,” he said.

Ambani said there was a pressing need to create a digital green revolution by encouraging adoption of technologies for water conservation, soil management, precision farming and waste reduction to enhance agricultural productivity.

Secondly, there is a need for good quality education to make India’s youth a productive asset, he said adding there is also a requirement to make healthcare affordable.

Talking about Reliance Jio, his telecom venture that stormed the industry by combining free voice calls and SMS with cheap data, he said India is ranked quite low at 134th in the global ranking for fixed broadband.

“Jio is determined to move India to among the top 3 in fixed-line broadband, too,” he said. “Our state-of-the-art digital infrastructure provides mobile and broadband connectivity across the country, with the largest fibre footprint.”

This fibre connectivity will now be extended to homes, merchants, small and medium enterprises and large enterprises simultaneously across 1500 cities to offer the most advanced fibre-based broadband connectivity solutions, he said.


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Praising notes ban, RBI’s Gurumurthy says economy would have collapsed

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New Delhi: Ahead of next week’s crucial board meeting of RBI, the central bank’s independent director and RSS ideologue S Gurumurthy made a case for calibration of its massive Rs 9.6 lakh crore reserves, saying no central bank in the world maintains such high levels of surplus.

Gurumurthy, who was appointed to the board of RBI a few months back, said the capital adequacy ratio prescribed in India is 1 per cent higher than the global Basel norms. He also pitched for easing lending norms for small and medium enterprises, which account for 50 per cent of the country’s GDP.

In his first public comments since the spat between the RBI and the Finance Ministry over a range of issues came out in the open, Gurumurthy said the stand-off “is not a happy thing at all”.

The RBI’s board meeting is scheduled to take place on Monday where the issues raised by the government, including easing of PCA norms, cutting size of reserves and enhancing credit to MSMEs, are likely to come up for discussion.

Praising the shock demonetisation of old Rs 500 and Rs 1,000 notes in November 2016, he said the Indian economy would have collapsed under the weight of high denomination currency notes which had risen to Rs 4.8 lakh crore in just 18 months and was being funnelled to real estate and gold. On the issue of capital framework for RBI, he said two different studies have put the adequate size of reserve that the central bank must maintain to guard against default risk at 12 per cent and 18.76 per cent. However, the RBI currently has reserve of 27-28 per cent, which may have further gone up due to the recent depreciation in the value of rupee.

“The appreciation in the value of the dollar is the reserve of the Reserve Bank. You bought dollar at 42-45, and it is now 70. Just like when you buy some shares and the share values go up, and you take the appreciation as your reserve, this is the reserve.

“You cannot say, come on it has appreciated so much, give me that money. I don’t think the government is asking for that. As my understanding goes, the government is only asking for a formulation of a policy as to how much reserve the central bank must have. Most central banks don’t have reserves of this kind at all, only RBI has these kinds of reserves,” he said.

Gurumurthy was delivering a lecture on ‘State of the Economy: India and the World’ at the Vivekananda International Foundation (VIF) here.

Stating that the stand-off between the RBI and government “is not a happy thing at all”, he indicated that differences could be a result of considering only the American system as the perfect ecosystem.

“But I think an alternative is necessary and exists also. That is part of an overall correction of the Indian mind,” he said.

On easing of Prompt Corrective Action (PCA) framework, he said there has been certain revisions of norms recently.

“If capital adequacy is the only ground, then much of this problem won’t be there. But there is capital adequacy-plus grounds on which this issue is there. That is the matter of dispute between the government and RBI,” he said.

The PCA framework kicks in when banks breach any of the three key regulatory trigger points — namely capital to risk weighted assets ratio, net non-performing assets (NPA) and return on assets (RoA).

Of the 21 state-owned banks, 11 are under the PCA framework. These are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra. With regard to Basel III norms on capital adequacy, he said the BIS prescribes these for only internationally active banks.

“But banks which are not internationally active, need not conform to what (they) say. The universal banks need not conform to what (they) say. We don’t have any commercial banks. We have only universal banks because our banks do term lending. But still the same Basel norms are imposed,” he said. In India, for both internationally active and domestic banks it is 9 per cent, he said.

“We are doing more than what Basel wants and so the banks have less money to lend. These are all the things on which there is no discourse in India,” he noted. There are only four internationally active banks in India, he said, adding all others are domestic lenders. “They need not have 8 per cent capital. They are forced into having 9 per cent capital. Because some people think the IMF feels happy if we have 9 per cent capital,” he said.

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High growth necessary for poverty alleviation:Jaitley

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New Delhi: A high rate of growth is necessary to alleviate poverty and ensure that benefits of development reach the poor, Finance Minister Arun Jaitley said.

Addressing the 25th World Congress of Savings and Retail Banks here, he also said an aspirational society cannot wait indefinitely for the benefits of growth to improve the quality of life of the poor.

“Economies like ours all over the world need a high rate of growth. We want to use growth as a mechanism to pull the maximum number of people out of poverty, improve upon quality of life but we are conscious of the fact that dangers of development and progress benefiting a few and leaving many others out of inclusion system are also there,” he said.

Therefore, he said, “the penetration effect of growth will certainly take place but it will be a slow process and aspirational society is not willing to wait indefinitely.”

Talking about the financial inclusion drive of the Narendra Modi government since 2014, he said the ultimate objective was to bank the unbanked, secure the unsecured, fund the unfunded and service the unserviced areas.

Banks, especially public sector banks, opened 330 million accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) in a few months, he said. Initially, it was zero balance accounts and gradually people started putting in money.

To incentivise operational accounts, he said an overdraft facility was provided to them. Noting that India predominately is an uninsured and unpensioned society, he said the government offered insurance at very affordable premium as part of the social security system through the PMJDY account.

A total of 141 million people are enrolled under accident insurance while 55 million have availed life insurance under the scheme, he said. Besides, a low premium pension policy called Atal Pension Yojana was launched, targeted at providing sustenance pension after 60 years of age.

For funding the unfunded, the government introduced the Mudra scheme. Once these accounts became operational, he said the government moved towards formalising and digitising the economy.

“To formalise the economy, the government demonetised high value currency which compelled people to put all their cash into the banking system,” he said.

The government also introduced a new taxation regime — the Goods and Services Tax (GST) — where multiple taxes were combined into one, he said, adding the tax system became completely online and brought many activities into the formal system.

This is still work on progress, Jaitley added. Speaking at the occasion, Financial Services Secretary Rajiv Kumar said enthused by the success of PMJDY, the government recently launched its second phase with a target of providing bank accounts to all individuals and doubling overdraft facility to Rs 10,000.

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Agri sector needs long-term solutions, loan waiver temporary: Naidu

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Mumbai: Terming farm loan waiver and free power supply as mere “temporary and populist” steps, Vice-President Venkaiah Naidu made a pitch for long-term solutions like infrastructure support and cheap credit to improve the agriculture sector.

Delivering the Laxmanrao Inamdar Memorial Lecture here, Naidu also called for suitable changes in the laws governing the cooperative sector in view of changed techno-economic and business scenarios to make the cooperative institutions “viable and vibrant”.

The University of Mumbai had organised the lecture to mark the birth centenary late Laxmanrao Inamdar, who was instrumental in the formation of Sahakar Bharati in 1979.

“There are many challenges in the agriculture sector. You cannot have temporary solutions to agriculture. Loan waiver, free current … they are temporary,” he said.

“What is needed is remunerative price, infrastructure support for agriculture and cheap credits. Unfortunately for political reasons, we move to populistic, temporary measures,” Naidu said adding that the governments should rather focus on long-term solutions.

He said since agriculture was becoming unviable, people were moving to urban areas from rural parts.

“You cannot reverse urbanisation, even if you want to … Even today, 56 per cent people depend on agriculture.

“The best method of (improving) agriculture according to me is the strengthening of the cooperative movement. This has to be understood by all including the planners, NITI Aayog, political parties, Parliament, people and media,” he said.

“The prime minister promised to double farmers’ income by 2022. This is a noble idea, but it is not simple. The government has raised the MSP of most of the crops. Cooperatives can help small and marginal farmers in taking the benefits of higher MSPs,” he said.

Terming India’s cooperative movement as the “biggest” in the world, he said it has led to tremendous progress in several sectors of the Indian economy.

“I am told 75 per cent of rural households have been covered through a network of over 8.50 lakh cooperatives with a membership of well over 25 crore,” he said.

Naidu, however, lamented that in recent years, the cooperative sector has faced structural challenges like dormant membership, lack of active participation of members in the management, politicisation of cooperatives and bureaucratic control.

Similarly, low level of participation by women and youth is a challenge and needs to be addressed, he said.

“Mounting dues in cooperative credit institutions, inadequate mobilisation of own resources, over-dependence on governmental and institutional support, lack of professional management have proved harmful to their growth. There have been instances of mismanagement and absence of monitoring,” he said.

“Probably, the time has come to bring requisite changes in the relevant laws governing the cooperative sector in the context of changed techno-economic and business scenario to make the cooperatives viable and vibrant enterprises,” the vice president said.

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