India's Report Card: Top Business Reforms 2017

India's Report Card: Top Business Reforms 2017

"Reform, Perform and Transform is Our Mantra" said India's Prime Minister Mr. Narendra Modi

Talking about current rankings as reported by World Bank's Doing Business Report, India stands at 100th rank (previous ranking 130) overall, at 103rd rank (previous ranking 136) for resolving Insolvency, at 119th rank (previous ranking 172) for paying taxes, at 4th rank (previous ranking 13) for protecting minority interest and at 29th rank (previous ranking 44) for getting credit. The improvement in the rankings deserve much applause.

It was mainly possible due to following reforms done by the India Government under leadership of Mr. Narendra Modi:

• Payment of ESIC and EPFO contributions made fully online
• GST rolled out on 1st July'17
• Corporate Tax Rate reduced to 25% (from 30% for companies with turnover of upto INR 50 cr.)
• Greater transparency requirements for interested parties transactions
• Greater shareholder protection through constitution of National Company Law Tribunal (NCLT)
• Fast track resolution of commercial disputes
• Doing away with requirement of company seal and minimum paid up capital while starting a business
• Single Window Interface for Facilitating Trade (SWIFT) implemented integrating 6 departments which made cross border trade easier
• Insolvency and Bankruptcy Code introduced of international standards
• Important decision making roles assigned to creditors in restructuring of insolvent companies
• Secured creditors are given priority over government dues for recovery
• Time taken for new electricity connections reduced from 106 days to 46 days
• 90% reduction in cost of water and sewer connection in national capital (Delhi)

While there are many more reforms in place targeting ease of business doing (& better rankings next year), a simultaneous focus is on attracting more foreign investments and targeting better employment opportunities for a better India.

Source: ET

IndiaStack: Four steps at a time by Indian Government

What is IndiaStack?

IndiaStack is a set of APIs that allows governments, businesses, start-ups and developers to utilise a unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery. The Open API team at iSPIRT has been a pro-bono partner in the development, evolution, and evangelisation of these APIs and systems. 

How IndiaStack evolved?

                    

Why IndiaStack?

What factors support IndiaStack initiative?:

• Focus of government on Digital India
• Aadhar card enabled benefits
• India is the 2^nd largest user of smartphones
• Affordable data plans
• Jan Dhan accounts
• UPI and BHIM app
• Bharat Bill Payment System

Source: https://indiastack.org

Is China Ready To Become A Free Trade Champion?

“Pursuing protectionism is just like locking one’s self in a dark room. Wind and rain may be kept outside, but so are light and air.” Chinese President Xi Jinping’s eloquence at the World Economic Forum in Davos last week.

It seems like, Under Donald Trump's leadership, the US may well turn inward and abandon its global economic leadership role, leaving a space that China is looking to fill.

I studied China's economy in detail during Emerging Market and Economies course and the study makes few points very clear where China had sown wrong seeds and reaped undesired & painful results. If China is to become a free trade champion it must deal with several challenges. 

The first is the trifecta of state subsidies, zombie companies and oversupply. The problem dates back to 2008 and the financial crisis when Beijing excessively used state-owned enterprises (SOEs) as agents of state policy. Despite of bad history with SOEs around 1990s, Chinese banks threw loans at them that were used for irrational capital expenditure, creating housing and infrastructure bubbles, as well as seeding the steel oversupply problem that has become a trade flashpoint over the past few years.

In the late 1990s, Beijing had reformed SOEs aggressively for almost a decade. But that would mean layoffs numbering in the millions. An authoritarian regime delivering double-digits economic growth during the previous round of reforms could absorb that. Thus, instead of shutting down SOEs or privatizing them, Beijing is taking the merger route instead. This does little to address oversupply and trade-distorting subsidies.

Next on the list is the Renminbi and capital controls. In 2015, when the International Monetary Fund’s (IMF) approved including the Chinese currency in the Special Drawing Right (SDR) basket, it was supposed to be the renminbi’s coming out party; instead, it has stagnated since. Capital outflows due to concerns about China’s economic performance have led to significant depreciation.

The third problem is plain old-fashioned protectionism. Take China’s surging technology sector, one of the areas of focus for Beijing as it attempts to shift the economy from smokestack industries and export-led growth. Domestic companies like Baidu and Weibo are protected by a thicket of regulations that make it impossible for global giants such as Google, Facebook and their ilk to compete effectively.

There is a common theme of attempting to extend political control in China, and it’s no coincidence. Reaching back to Deng Xiaoping, successive administrations have prioritised pragmatism over ideology, moving away from Mao’s cult of personality brand of politics. Xi has broken with this trend emphatically. He is now held to be China’s most powerful—and authoritarian—leader in the post-Mao era.

Can globalization and free trade go hand in hand with authoritarianism and rigid political control? 

(Few facts based on own study of the subject and remaining as highlighted in an article of Live Mint)